With almost 25 years of experience in retained executive search, I am often asked about what we are seeing in the market and what I expect to see moving forward. I feel as though I can speak for the search industry, not just McDermott + Bull, as I have relationships with many individuals across our various global search competitors. In this piece, I summarize what we’ve seen in the executive recruiting space over the last 24 months and make predictions for 2023.
As I believe most are keenly aware, what we have experienced with executive recruiting over the past two years has been historic in nature. Most firms within the search industry have been at or, in many cases, over capacity since Q4 2020.
The drivers for this activity include:
- The dramatic increase in executive recruiting, which began in November of 2020, came after almost two full quarters of extremely light activity given the uncertainty of business during the COVID-19 pandemic.
- The need to “catch up” and execute new search engagements played out quickly as 2020 came to an end.
- With this material increase in recruiting activity, a supply and demand imbalance began, leading to the increase in executive compensation that we’ve all been up against since the early months of 2021.
- Within months, the “candidate community” became keenly aware of the dramatic increase in cash compensation and individuals became more likely to answer calls from executive search firms.
- We saw some topgrading during this time, but demand fed off of the need to replace those who decided to retire or those who were poached by a recruiter to join a competitor, all leading to the “Great Reshuffle.”
- Somewhat surprisingly, we’ve had clients become increasingly open-minded, entertaining quality candidates who may have a couple of recent moves or other items that would have previously been disqualifying factors for their roles.
- And lastly, and I get this question quite a bit, during this period we did not see equity increase as a part of the compensation package as we saw with the cash portion of the offering. Whether this be restricted stock unit grants, options, real equity from private equity-sponsored portfolio companies, or synthetic equity, we didn’t see a material change in this area.
