The last few years in the hiring market have been full of ups and downs and many changes to work as we know it. We’ve seen a trend toward more remote work during and in the wake of the COVID-19 pandemic. Last year was particularly tough for executive searches, as many companies engaged in executive hiring wars due to a talent shortage.
We often receive questions about our outlook for hiring executives. In this article, we address the current executive hiring trends and provide general advice for companies preparing to begin their next leadership search.
While the economy is cooling, it’s not all bad news. The most recent jobs report shows that the U.S. economy added nearly 517K jobs in January, shattering initial expectations of 188K new roles. The unemployment rate dropped to just 3.4%.
People concerned about job instability because of recession fears and recent layoffs can relax. Companies that instigated most of the layoffs are in the tech sector. That particular sector saw significant hiring waves in 2021 and 2022, and many suspect that organizations may have simply overstaffed their teams.
Additionally, the IMF just released a report stating that inflation has passed its tipping point. The organization indicated that global economic growth would reach 2.9% in 2023 — higher than its original estimate of 2.7%.
Another positive indicator is wage growth, which slowed over the last few months of 2022. That’s excellent news for companies planning to expand their workforce and suggests that compensation rates are steadying.
In the high-growth years of 2021 and 2022, large tech firms built up their workforces, pushing to develop new products and services that would attract consumers.
However, when the economy began to dip, companies like Meta and Amazon saw a negative impact on their financials. They cut enormous swaths of their teams, laying off entire departments or reducing them to essential staff.
Over the next year, we anticipate large tech firms and other organizations will concentrate on the basics of their operations, seeking to grow revenue and stay profitable. There will be less emphasis on developing the next big thing and a laser focus on maintaining cash flow. Meanwhile, small to middle market tech companies continue to hire and benefit from said layoffs.
Following the COVID-19 pandemic, companies faced a choice: reopen the office or allow remote work indefinitely. Organizations that forced their employees to return full time found that they weren’t as competitive as their peers.
In short, workers wanted flexibility. They recognized the need for connection with colleagues but were less willing to give up the autonomy gained by working from home. Many organizations gave in to their demands and allowed employees to have more flexibility regarding their office hours and remote work.
Now, companies that offer flexible work arrangements are more likely to win the ongoing war for talent.
There are multiple reasons why companies collaborate with professional executive search firms when looking to identify top talent. A few of the most common include limited internal resources or search expertise and the need for confidentiality.
Organizations recognize that hiring executives is much different from hiring lower-level employees. An executive sets the tone for the entire organization. If the wrong person takes the helm, they can adversely impact revenue, workplace culture, and strategic vision.
Sometimes, it just makes sense to lean on an experienced search firm that can find the appropriate fit the first time.
When it comes to hiring a new executive, timing is everything. Most executive searches go for two to six months before landing on a suitable candidate. It’s essential to plan well for a leadership hire, and there’s no better time to start than the present. Every day an executive post remains unfilled, the company loses time and money.
Organizations should seek to hire executives quickly to avoid costly interruptions while also being mindful of finding the right person. Typically, it’s more challenging to find suitable candidates during the summer months and winter holidays since decision-makers and candidates alike tend to take vacation time.
While you might be tempted to look at a search firm as an outside resource to begrudgingly rely on, this will only serve you poorly. A trusting partnership with an executive search firm can be a great asset to your organization, and you should consider it as such.
For example, rather than hiding the reason why you need to hire another executive all of a sudden, be honest and fully explain the situation. After all, a good search firm is only going to find out anyway, so it’s better to be upfront and honest.
Firms understand that organizations will invariably go through uncomfortable changes, and they can see you through to the other side and improve your infrastructure along the way. The right firm will be a valued partner in the early phases of a recruiting effort and all the way throughout the entire interview process.
Many organizations need help understanding the actual costs of recruiting. It’s not simply the money spent working with a search firm or posting a role on a job board. Recruiting expenses are also intrinsic. They involve looking for a proper fit, interviewing and assessments, and internal discussions.
It’s essential to streamline the hiring process for every executive hire. That way, you have a strategic plan that accounts for every aspect of filling a role. Your team isn’t operating on the fly; instead, there are standardized procedures that everyone follows.
Working with an executive search firm like Cowen Partners provides you with the necessary due diligence to make a decisively informed hire.
While we saw some economic headwinds in 2022, Spring 2023 presents a good time to start your next executive search. The economy is returning to normal and compensation expectations are slowing. There’s also less demand for talent, making it easier to attract qualified candidates for your top leadership roles.
However, it’s essential to remember that leaders aren’t quite ready to give up flexibility and benefits such as remote work. You can find a well-suited executive for your leadership team with the proper strategy that addresses the candidate’s desires while ensuring a strong alignment with your organization.
Cowen Partners is the nation’s executive search firm, enabling companies to harness the power of human capital to fuel their success. Cowen Partners gives our clients access to the top 1% of human capital to create opportunities that accelerate their growth and market share. With Cowen Partners, clients can grow at scale, create value, and drive results with world class talent.
Our clients are both small and large, publicly traded, pre-IPO, private, and non-profit organizations. Clients are typically $50 million to multi-billion dollar revenue Fortune 1000 companies or have assets between over one billion. Successful placements span the entire C-Suite and include VP and director level leadership roles.
With our proven processes and guaranteed results, we have successfully placed hundreds of candidates in industries including technology, healthcare, manufacturing, retail, financial services, and private equity.