Evolving Expectations in Executive Search
“Necessity is the mother of invention.” -Plato Last year, companies of all industries and sizes were able to quickly establish the technology, structure, security and controls allowing people to work remotely. According to PwC, 83% of employers say the shift has been successful, and 55% of employees now prefer to be remote at least three days a week. Today, as organizations strategically sunset their “pandemic mode,” leadership teams face the difficult choice to continue working remotely, recalibrate back to an office environment or balance both options through a hybrid approach. While the answer is different for each business, it’s clear that these expanded work options have added an extra layer of complexity for hiring teams and candidates alike. The Year of the Individual For many professionals, the pandemic was a period of profound self-reflection. Ignited by new flexible work capabilities, they have made an array of lifestyle decisions that include switching careers, moving to a more geographically desirable location and accepting a safer, less challenging position in order to focus on other passions. Though a uniquely individual process, these changes, sparked by the same catalysts, have happened en masse and are beginning to affect the way companies identify and hire new talent. During the interview process, organizations now need to ask a new default question: “What are your expectations for in-office work?” When we pose this to candidates, the reaction is all over the place. Depending on the work structure the company has decided to adopt, this single vital question may render useless a once-ideal executive talent. When a company considers engaging a firm like Townsend in a new executive search, we have to be aware of what the work structure is going to look like. If they allow for a fully remote role, then the question for us is, “Does this now become a national search?” The Deep End of the Talent Pool If our search was in, say Madison, Wisconsin, we historically looked for people in the center of the geographical bullseye and expanded out to an acceptable commutable distance. Now, we still start relatively close to the employer, but if the position is fully remote, we then expand the search to the same state, then to the same time zone, then again to the entire country. While the potential for higher quality talent is raised exponentially through this method, the sheer size of the pool can often give hiring managers and search firms alike choice overload, to the point where it can become unmanageable. Having a more thoroughly defined box and parameters in your search helps pare down the excess, while also ensuring the attraction of top talent to the organization. Evolution of Economic Structure Another marginalized trend that will soon become mainstream is the change in economic structure to offset the deltas between lower- and higher-cost markets. An emergence of remote opportunities means companies now have to compete on a national platform, so compensation, benefits and perks have to be elevated to some level—whether you’re remote or not—to capture and retain talent in your region. Evolution of Company Culture Think of onboarding like an organ transplant. When placing an organ (a new hire) into a body (the employer), it’s only a matter of time before you can tell if it’ll be accepted by the host. Talented surgeons (hiring managers) know which organ will best fit the body, and can—with close attention—ensure it has all the conditions to thrive. The rise of remote work has made this delicate operation much more difficult to perform. While efficiency, connectivity and productivity all remained strong, many companies find it difficult to cultivate and maintain culture in a virtual environment. Companies onboarding remotely must make additional investments in programs that effectively communicate, cultivate and substantiate culture. The Townsend Difference Having completed searches from Sacramento to Charleston, Townsend has the unique ability to convey great company stories, utilize top-tier technologies and select the best talent for the organization—making us more efficient, effective and personalized than other firms. Get in touch and experience The Journey to placing top executive talent, customized to any and every work structure your organization offers.
The Importance of Storytelling in Search
"During our selection process, much like driving a car, we’re looking for candidates who can do more than simply hang onto the steering wheel and keep it between the lines, but take control, track overall performance and pilot down new roads." What makes Townsend lethal in the recruiting process, and the reason we’re able to attract the best talent the market has to offer, is our ability to understand and convey the complete story of the company we’re working with, rather than push the bullets of a generic job description. We accomplish this by first getting to know every detail about the organization—company history, future outlook, brand strategies, obstacles, needs, culture, sights, smells and sounds. Once we understand the moving pieces in your company, we then assemble it together in the context of the open position. I strongly believe the first section of a position description is the most important. Here, the company’s history and future can be communicated in a way that allows candidates to conceptualize the vision they’re meant to execute against. During our selection process, much like driving a car, we’re looking for candidates who can do more than simply hang onto the steering wheel and keep it between the lines, but take control, track overall performance and pilot down new roads. We look for executives with a continuous improvement mindset who can take our story, outline a roadmap and provide vital insight that the business doesn’t currently have. Most executive-level candidates are motivated by their ability to come in and truly affect change. If we’re able to tell that story properly, a passive talent can become quite motivated with the prospect of becoming that change agent. Where many big search firms are transaction resume mills, Townsend takes ownership of a search, to the point where candidates often assume we work for the company internally. Great hiring managers that want to see real success with a placement will tap a search firm that shows the interest, desire and storytelling ability to truly make change happen for the organization.
Transition to Private Equity Partnership
"The transition of a family-owned and operated business to private equity ownership can be sensitive and requires a thoughtful and decisive leader who has high emotional intelligence, fits the organization's culture, and respects the company history while balancing shareholder needs." Our client, a Midwest based private equity group, recently acquired a portfolio company and retained us to conduct a CEO search as part of the transition. The company was family owned and operated and the sale was part of a two-year transition process, over the course of which the family owners would phase out and retire. Our mission was to secure a highly-credible industry CEO to work collaboratively with the family and employees during the transition to new ownership, while maintaining a cohesive culture and strategically creating shareholder value. We began our process by consulting with the current CEO and private equity group to gain extensive knowledge of the business, industry dynamics and outlook, in addition to the organizational structure, business objectives, culture and team dynamics. We focused on understanding the organization's history or "story" to develop position specifications and qualifications before performing deep industry research to identify all prospective candidates and referral sources. After going-to-market, screening, and interviewing many qualified professionals, we ultimately presented the top CEO candidates to our client for consideration. The family and private equity group unanimously agreed on a particular CEO candidate to lead the business after several rounds of tactful interviews and assessments. We led negotiations, representing the best interest of both the client and candidate to find a successful and meaningful outcome that aligned all parties on future equity creation. The transition of a family-owned and operated business to private equity ownership can be sensitive and requires a thoughtful and decisive leader who has high emotional intelligence, fits the organization's culture, and respects the company history while balancing shareholder needs. We completed the process after selecting a CEO who had a history of professionalizing and growing organizations, plus experience working in family and private equity-owned companies with geographic ties to the area; not to mention industry-specific expertise. We are proud to report that the new CEO has bonded with the family and allowed them to transition out of the business, while at the same time working closely with the private equity group to execute on strategic growth initiatives and lead the company into the future!
How's the Market?
Private equity firms remain active in the market today, a strong indicator for continued growth. Their work in the market leads to consistent opportunity for quality talent. This is the question that I hear more than any other. Over the past decade I feel like Woody from Toy Story, when you pull his string, he says “There’s a snake in my boot!” Well, my response has been, “The market remains strong”. Recently, the question is less rote, and carries with it the question of whether the market is softening. My response, in turn, has been less canned. During “The Great Recession” of 2007 - 2009, the search market and our business remained healthy. Companies took the opportunity to “top-grade” their teams and change the mix of skills they possessed. Executives who performed well in a steady-state or growth environment did not always do so in a distressed or underperforming situation. Moreover, private equity firms remained active during these periods, taking advantage of relatively attractive purchase price multiples and the omnipresent need for institutional funds to deploy capital. Market corrections also provide the best circumstances for special situation funds to capitalize on performance improvement opportunities. Private equity firms remain active in the market today, a strong indicator for continued growth. Their work in the market leads to consistent opportunity for quality talent. From our perspective, the demand for talent is strong and we expect it to remain so. Great leadership is always needed, and with a growing economy this demand will only increase. About supply, two primary factors contribute to our assessment: demographic trends and workforce participation of specific age groups. Broad demographics indicate a shrinking workforce. Over 30 percent of the Southeast Michigan workforce is over 55 years of age. Meanwhile, the number of Michigan births hit a 76-year low and the number of high school graduates is projected to decline by 9.7 percent according to WICHE. These trends do not exclusively impact our region or Michigan. According to the Bureau of Labor Statistics, workers 65 years and older are expected to make up 25.2 percent of the workforce by 2028, which is over twice as much as the 12.4 percent working in 1988. Conversely, due to increased time spent in education, the labor force participation rate for those ages 16 to 24 is projected to decline by 51.7 percent by 2028. An aging population remaining in the workforce, compounded by a new generation with a declining birthrate and increased time in education dramatically impacts supply. The market is strong, and opportunities exist for executives across industries. Experienced candidates have extended their careers which allows companies to benefit from longer employment terms of their executives. However, the dwindling numbers of younger populations, coupled with restricted access to advancing roles shows that the next generations leader’s may not be as prepared as our current market of executives, thus demand for new leadership will be greater than ever. Sources: New Release – Bureau of Labor Statistics: Employment Projections 2018-2020 https://www.bls.gov/news.release/pdf/ecopro.pdf