The global economic and political landscape of 2023 has witnessed unprecedented transitions and challenges, shaped by the aftermath of the pandemic, continuing energy crisis, rising inflation, and on-going conflicts in Ukraine and between Israel and Palestine. Executive search – a profession that heavily relies on confidence – is closely tied to geopolitical dynamics, and this is reflected by the current uncertainty in the UK labour market[1]. Economic instability looms as a top threat to organisational health in the next 12-18 months, with 68% of leaders citing this and the availability of key talent and skills as a top five threat. [2]  

Global Market Conditions: How this affected the r2r market

With challenging global market conditions, we witnessed a subdued and cautious R2R market during 2023. Risk management was a constant theme, with offers harder to obtain and general acceptance rates lower. For clients, there was a reluctance to pull the trigger on offers. Many were cautious with market conditions continuing to fluctuate. Others felt the effects of over-hiring in 2022 and the impact of  fee income dropping with a higher cost base. When offers came through, not all were accepted. Many individuals were reluctant to leave their ‘safe seats’ unless the compensation package or platform reassured them that changing jobs was worthwhile and provided long-term security

At a Research /Senior Associate level, tougher trading conditions in 2023 led to us fielding more direct enquiries about compensation schemes. Standard of living concerns were paramount, and many sought reassurance that they were benchmarked accordingly.*

Although a challenging market, several firms did utilise the market conditions astutely. We saw several Partners leave established search firms to join boutique specialists. An attractive proposition is a firm that can highlight a robust balance sheet, strong client portfolio, higher commission take home and the opportunity to be more entrepreneurial.

Interest in overseas opportunities continued to rise. Sydney and North America being the two most popular destinations we encountered.

Sectoral Insights

Despite market challenges, cleantech and sustainability sectors held up well. Green roles continue to gain prominence, evidenced by a 677% increase in sustainability-related roles since 2019[3]. We have also seen a resurgence within software technology due to firms changing strategies or replacing leaders[4].

Fee-earners with experience across Legal, HR, CFO continued to attract interest; however, clients were quite explicit in their demands.  Individuals needed to be able to showcase their own network and a proven track record. Clients were wary of consultants highlighting one good billing record in 2021-22. In some cases, individuals were over-reliant on a specific Partner to bring in their own fee income.

Compensation trends

In 2022, executives entered the year with well-defined financial targets, growth plans, and hiring budgets, fuelled by strong optimism despite challenges in finding candidates across sectors. The escalating difficulty in recruiting top talent prompted executive search firms to respond to inflationary pressures by significantly increasing base salaries. While some adopted a blanket approach, raising base salaries for all staff, others opted for fixed time periods or one-off bonuses. This shift in pay structures and compensation schemes continued into 2023, driven by inflation and heightened talent competition. The importance of pay was evident in candidate preferences, with work-life balance (44%), flexible working hours (44%), financial bonuses (37%), and additional holiday leave (37%) topping the list of desired perks[5].

Navigating a candidate-driven market

As we navigate the evolving landscape of the workforce in 2023, several pivotal changes have reshaped the dynamics of talent acquisition and retention.

Workplace culture

Firstly, a total workplace culture revolution has permanently reset the values of the workforce. Employers now focus on what matters most to talent to gain a competitive edge, as loyalty loses its lustre. The challenge of retaining staff will continue.

Information-driven talent mobility

Secondly, information has become a driving force behind talent mobility. Real-time updates on job opportunities, facilitated by app notifications, email alerts, and messaging apps, have made it easier for individuals to explore new roles. In response, recruiters have embraced continuous candidate engagement by ensuring regular and timely communication, tailoring job descriptions, and providing resources to create the best candidate experience they can. On top of this, artificial intelligence has emerged as a game-changer in recruitment. Automated resume parsing in application tracking systems, AI-powered recruitment tools, and digital interviews have streamlined hiring processes, making them more efficient and inclusive. While AI has made significant progress in 2023, innovations such generative AI tools and AI image generation are expected to play a more prominent role in 2024[6]. Moreover, a heightened focus on employer branding has taken centre stage, as companies recognize the significance of preserving and developing their brand to attract top talent[7]. Candidates now prioritize being associated with reputable firms, prompting recruiters to thoroughly promote employer brands.

Pandemic-induced work dynamics shift

Lastly, the pandemic has irreversibly changed the working world, elevating employee expectations of work and employers. Work-life balance, fundamentally rewired during the pandemic, now emerges as the most significant influencer of job satisfaction, surpassing pay, training, benefits, and other perks. Flexibility has become a new basic need, alongside pay and career progress, prompting employers to adapt their employee experience strategies to prioritize work-life balance and well-being[8].

Future outlook into 2024

Looking ahead to 2024, the business landscape remains uncertain, with a mixed outlook among owners. Recruiters face the challenge of engaging those open to strategic moves while outpacing competition for actively seeking candidates. In the face of an economic slowdown, organizations must balance hiring adjustments and strategic shifts to retain talent. The 2023 economy calls for a dual focus on attracting new talent with innovative strategies and investing in the existing workforce to address burnout concerns. Despite labour market challenges, 59% of employers express confidence in recruiting needed talent in Q4 2023, highlighting the potential for another upturn coming into 2024[9].

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References:

1. Heidrick & Struggles (2023) https://www.linkedin.com/feed/update/urn:li:activity:7130575829893312512/
2. PageGroup (2023) https://www.page.com/sites/page-group-v3/files/2023-10/q3-2023-trading-statement.pdf
3. NGS Global (2023) https://www.ngs-global.com/index.php/perspectives/articles/8-perspectives/articles/815-2023-predictions-executive-search
4. Page Insights (2023) https://www.michaelpage.co.uk/talent-trends
5. Recruit CRM (2023) https://recruitcrm.io/blogs/recruiting-trends-that-shaped-this-year/
6. Recruiting News Network (2023) https://www.recruitingnewsnetwork.com/posts/how-the-economy-is-shaping-the-recruiting-landscape-in-2023
7. Russell Reynolds (2023) https://www.russellreynolds.com/en/insights/reports-surveys/global-leadership-monitor?utm_source=linkedin&utm_medium=social-organic&utm_campaign=global-leadership-monitor
8. Total Jobs (2023) https://www.totaljobs.com/recruiter-advice/hiring-trends-index/

 

[1] Russell Reynolds (2023)
[2] Russell Reynolds (2023)
[3] TotalJobs (2023)
[4] NGS Global (2023)
*Our 2024 Compensation Guide will provide more detailed insight into the differing compensation schemes offered for Research/Senior Associates. Further enquiries can be made to dc@drydensearch.com
[5] Total Jobs (2023)
[6] Recruit CRM (2023)
[7] Recruit CRM (2023)
[8] Page Insights(2023)
[9] Total Jobs (2023)