Will the demand for Executive talent be high in 2021?

I’ve been asking my network of contacts these questions since late last year. As this is a sector I am connected to, trying to anticipate where the demands for talent will be is a key part of my job. Let us start by confirming what most of us already know. 2020 was not the best year for recruitment, and executive appointments was no exception.

Using LinkedIn Talent insights, the amount of new appointments year by year at Board level was as follows. It is worth noting that there is 501k people listed as a current Managing Director or CEO on LinkedIn and his will include the full spectrum from the self-employed to FTSE 100 board members. The stats relate to those on LinkedIn that changed employers, it is not a conclusive report but it is indicative of the market as a whole. It shows that 22,768 people at MD / CEO level changed employers in the last 12 months (or listed a change on LinkedIn). This is 4.5% of the market. Compared to the previous year this was a 51% decrease.

So, what can we expect this year?

With COVID-19 still prevalent as we enter into the new year, it might be premature to think it would bounce back to pre-2020 levels, but also there is a strong collective belief that it will be nowhere  near as low as 2020 as we have all learnt to adapt to COVID-19 in our life and business is no exception.

It has been incredibly challenging times for many businesses’ leaders and of course the wider workforce in general. The UK’s blue-chip share index suffered its worst year since the 2008 financial crisis, the FTSE shares listed in London fell by 14.3% during 2020 and its biggest decline since 2008. The pound rallied to its highest listing against the US dollar in more than two and half years, boosted by the fact that the UK – EU free trade deal had finally been agreed.

Employment has suffered also during this and many experts still believe the effects have yet to be fully felt. Much like the recent surge in COVID-19 and pressures on the NHS, that is only experienced weeks after social mixing took place. Just how many businesses will fail due to the ongoing lockdown measures, perhaps we do not fully know yet.

That is not to say that we have not already felt massive impact on the employment market due to previous lockdowns earlier in 2020. If we look at the effects of March to June lockdowns, we saw some alarming statistics on redundancies take place in the quarter July to Sept 2020 (See fig1. Data from the Office of National Statistics). In that quarter alone redundancies rose by a record 181,000 in the quarter to a record high of 314,000. The annual increase was the largest since Feb-April 2009.

So back to the question, how will this effect appointments at executive / board level?

The expectation amongst many, is that we will see a big increase in executive appointments compared to last year, with some experts believing it could match even pre-COVID-19 levels. As always leadership and executive boards will be a crucial factor for success in 2021, but perhaps more than ever, business will need their leaders to be at the top of the game to navigate their way through the challenges and opportunities ahead.

The increase in executive appointments will be in part be influenced by:

Success

It would be easy to assume that it has been challenging for all business in all sectors. We all know that the retail, tourism, and leisure industries have been hit incredibly hard, but there are lots of businesses that have thrived. The tech industry continues to be a driving force for growth and development, in particular software and cloud-based solution providers. Online retailing and couriers / delivery businesses also have never been so busy. Success has created opportunities and senior appointments to drive growth in these markets has increased.

Rescue and turnaround projects

There will be a lot of business that are currently in a distressed state having lost significant turnover in 2020. Businesses that in normal trading conditions would otherwise be strong, healthy and completely viable. Due to COVID-19 may find themselves vulnerable and may need to restructure, reorganise to survive or thrive in a post COVID-19 world. Organisations that during good times may have wasted resources, only now realise what is important and where to tighten the belts and where to relax the purse strings for investment. The need for cost rationalisation will be important, not always a project that is as exciting as fast growth projects, but leaders who can make these tough decisions to ensure success and survival will be in high demand.

Transformation

Tech savvy businesses are more likely to have performed well during this pandemic. Organisations that already had a more cloud-based way of working, cultures that embraced work from home models, will not have experienced as much change as others. Virtual meetings are not exclusive to the progressive tech companies anymore!

Over the years we have seen examples of well-established brands that have been slow to adapt of change who have been caught out in this pandemic. For example, retailers slow to embrace online trading, only recently felt the full effect of that lack of progression. We all know online sales have rocketed during 2020 the high street, through no fault of its own, has suffered irrevocable damages.

Many businesses with traditional large office set ups will be considering what their operating model looks like going forward. Although manufacturing operating models will not radically change compared to many office based / service industries, there will be a lot of companies playing catch up and looking to implement change quickly. Almost 10 months since our first lock down in the UK , there will be those who have jumped into change, that now need to appraise how it is working and how to adopt into a longer-term strategy.

Mergers & acquisitions

During boom or bust there always seems to be strong opportunities for mergers and acquisitions, but there is a growing feeling that there could be a big increase in 2021. Businesses that historically have been strong, profitable, and performed well could now be available for M&A at a much lower market value. Businesses that otherwise would not have looked to sell, now will. The appetite for partnerships and the merging of services and capability could be greater than ever. And investors with strong cash and balance sheets could look to diversify into new markets that can thrive in the times ahead. All in all, there are deals to be done and with this increased activity comes the demand for new executives.

Reputation and cultural change

Business reputations and the engagement of their employees will be crucial for 2021. A lot of companies will have enhanced or damaged their reputations during COVID-19 with how they responded to stresses and challenges. Perhaps the effects of this, will only be fully understood once things calm down, as people have long memories do not forget easily. Reputation management is not an easy change. If reputations and employee engagement has dropped, then restoring this will be a challenging prospect for many leadership teams.

Exponential growth of new start ups

Fast growth start-ups are not the exceptions to the norm. If you look at how the FTSE 100 has changed over the last 20 years you will see plenty of examples of companies that have grown from start-ups to be some of the worlds leading brands. Top executives are more motivated than ever to be part of accelerated success stories and see themselves as custodians of a business there to deliver specific projects. Many look for immediate impact opportunities and see appointments as a much more short-term, to get in, to see a job done and then move on. As more start-ups emerge this drives the progression of executive hires.

Change for changes sake

We increasingly live in a society that demands immediate results, and more and more, employers employ people to do a specific job or project.. At executive level this is the same; to satisfy shareholders, investors or private owners. Sometimes this will mean that regardless of current executive teams being more than capable to meet the demands of the challenges ahead, the need to see and observe executive changes will be greater than ever. Many boards may prefer make changes and run the risk of failure or success, than not having made any changes.

There are many influences as to why it could be a strong year for executive appointments, no one could have realistically foreseen and prepared for the events at the start of 2020, but it has acted as a catalyst for many businesses to accelerate change and transformation.

If there is one lesson, we have learnt from 2021 it is that we can adapt quickly when necessity dictates and that we do not need to be afraid of uncertainty. Generations before us, never had the level of peace and security that we have experienced over the last 50 years, but 2020 has reminded us that we are equipped to adapt and evolve both as society and as private and public enterprises.

Whatever your situation, I wish you and your business the absolute best of success for the year ahead and if I can be of any help, please let me know.

Patrick

Patrick Bell: I work for businesses and individuals that need to identify C-Level and Executive Board Directors discretely and confidentially. Through the introductions I make, we help clients with:

▪ Transformation or restructure
▪ Turnaround distressed / underperforming businesses
▪ Cost rationalisation / profit maximisation
▪ Accelerated growth
▪ International expansion
▪ Prepare for IPO or exit
▪ Integration following mergers or acquisitions
▪ Post flotation or VC / PE investment.

I’ve been working in recruitment for 22 years and network extensively at board level, so if I have sent a connection request, I hope you will accept. I am a straight talking, results driven, ethical recruitment leader, who loves his job. I have built a business where the people I work with, and work for, understand that people deserve to pinpoint the right talent or opportunities, without having to tolerate all the BS. I am a big believer in the first rule of the “All Black” New Zealand rugby team! (If you know…. you know)