One of the benefits of a 30 year career in Executive Talent is that I am ‘plumbed’ in to a wide community of professionals outside my specialist field of Interim Management. Principal amongst these are the Executive Search professionals I have worked with over the years, and the HR Directors and Heads of Talent who are their clients, and currently they are all telling me the same thing.
Whatever your historical view of the buzz phrase ‘The War for Talent’, it’s here, it’s now and it’s having a major effect on most business’ efforts to secure high calibre senior talent.
My own view is that, for a long period during the recession, The War for Talent was a way for many in my field to ‘talk up’ the market. It may have been true of certain roles – principally in technology – but most clients could secure good quality talent without too much angst and without provoking the wrath of the RemCo.
However, the picture has rapidly changed and, currently, it is as difficult to secure senior permanent hires as it has ever been.
Demand is up. Businesses are unwinding from lockdown, moving on from Brexit and looking to the future. Roles iced in more uncertain times are being recruited, ExCos are being refreshed and businesses are looking for new types of leaders, with diversity of thought to face the challenges out there.
In short, it would appear to be a good time to be an Executive Search professional.
However, my friends in this world inform me that it ‘aint as simple as all that. Many are struggling under the weight of enquiries and are actually turning work away. This isn’t simply a workload issue – never believe a headhunter who tells you they are too busy – but is more about client expectations not matching up with realities of the marketplace.
Demand may be up, but the supply isn’t there.
Senior executives open themselves up to conversations with headhunters, and their clients, for a number of reasons. Principal amongst these is that they need a job or know that they are ‘at risk’ currently, but this is a diminishing pool in an improving market and there aren’t enough displaced individuals of quality to fill all the roles out there. Next most important is that they are open to hearing about ‘the glamour role in the market leading competitor for double the money’, but, forgive me if I am wrong, we aren’t quite there yet. The market may be improved, but it isn’t 2006 and most opportunities out there are for second quartile businesses paying third quartile money!
Many of my headhunting pals are very skilled and can get high quality people into processes, but the final big issue they face is the hardest of all – getting the preferred candidate to take the offer.
While the collective consciousness of business can sweep aside their memories of COVID and Brexit, and look beyond the headwinds of inflation, energy prices and Ukraine, it is much harder for individuals to do the same. Candidates are dropping out of processes, turning down offers and taking ‘buy backs’ from current employers with increasing regularity, leaving important roles unfilled and clients frustrated. A buy back doesn’t even need to involve a comp hike currently, and a fire side chat with the CEO is normally good enough to tempt a candidate to stay.
There are straightforward solutions to this problem.
Pay more. Expect less. Or both.
Pay more? The logic appears rock solid. Pay top quartile money to lure second quartile talent to your third quartile business, and many leaders, when looking at empty seats around the top table, do just that. Unfortunately the strategy seldom works short term and always leads to issues down the track. Average people join businesses for the wrong reasons, fail to deliver the required uptick in innovation and performance and unsettle all their colleagues, who are on 30% lower packages. Not a sustainable solution, even if it is a straightforward one.
Expect less? This appears to be what many businesses are doing currently. Trust in youth, in a candidate of calibre and ideas who, although somewhat lacking in what the job requires, can grow into it over time. This can work, and has more to recommend it that just writing a bigger cheque, but it is inherently risky, with a high failure rate. It works best in large companies, with deeper pockets and forgiving timescales, but the majority of businesses can’t wait for their Execs to get up to pace and don’t have the money to indulge in a ‘failure is OK’ business culture.
It is obviously a major simplification to suggest these are the only two ways of filling ‘problem’ senior posts, and a wholesale shift in an organisation’s Employer Brand Proposition will always be the most effective solution, but this isn’t quick and it isn’t cheap.
What are the other options to successfully and sustainably fill a senior role?
An increasing number of clients are calling me – and others in my field, if I am being completely honest!
Most businesses, when a senior role is vacant, are facing competing imperatives.
First, there is the obvious pressure that a vacant senior seat brings to the business, especially when there is no clear idea whether it will be empty for 6 months, 12 months or longer. This issue is exacerbated further if the role has arisen due to the failure of the previous incumbent, with lack of morale amongst their team, headwinds to face into and a requirement to deliver improved performance.
Second, there is the requirement to look to the long term. A sustainable hire, appointed at the right level and for the right reasons, will deliver in time and energise the team, particularly if they are an internal appointment. Good companies become great companies by their ability to build their people as well as building their profit lines.
If these two imperatives sound like they require two different people, it’s because they require two different people! One role, two different people, one seamless process.
The first person is an Interim Manager; skilled, experienced and used to driving significant change at pace. Their objective will be to stabilise the position, bring calmness to the team, create the plan to meet the short term objectives of the leadership and do the heavy lifting. Interim Managers don’t want to outstay their welcome – they don’t want the permanent role – but their legacy is important to them, meaning they are excellent at identifying and inducting their long term successor. As well as delivering their business objectives, they should be able to work with the Talent team and external Search Partners to scope the role, assess candidates, sell the opportunity and bed in the successor. Then it’s time to get out of the way, but always at the end of the phone if required.
The second, and long term person, will benefit immeasurably from the tenure of their predecessor. Rather than taking over a long vacant seat, and a department which smells of decay, they will inherit a functioning team and a to do list with the big, nasty stuff crossed through. This is particularly important if they have been promoted from within or have not operated at this level before. Their six month plan can focus on bringing the new thinking they were hired to deliver, rather than wrestling with the legacy issues of the past.
Interim Managers have multifarious uses, and many of these will still be fixing problem businesses, turning around failed programmes and making sure the payroll can be met next month. However, increasingly, they are playing their role in winning The War for Talent on behalf of their clients, and becoming the BFFs of Search professionals and Talent heads in the process.
Unexpected upsides indeed.
Steve Rutherford is a Partner in the London Office of Valtus, Europe’s largest Interim Management provider