27 Trends in Executive Searches for 2015

Executive Summary

With the New Year and the finalization of 2015 businessExecutive Trends 2015 - Now Hiring - budgets, many corporations will soon begin executive searches for existing openings and new positions.  Many companies will launch these searches in-house, typically with inside Human Resources personnel.  Many others will turn to executive search firms to find their candidates.

As they proceed with these searches, they will face several challenges.  First, companies are looking increasingly to contain costs of executive searches.  Second, they largely seek to attract high quality executives with growth potential and the ability, over time, to learn on additional functional responsibilities.

For CEO searches, executive recruiting is largely completed by large executive search firms.  But, at least for N-1 and N-2 executives, smaller boutique firms are gaining favor and increasingly obtaining a larger market share at the expense of larger executive search firms.

Our research shows that the industries with the biggest demands for executives in the year to come are in the fields of digitalization, data security, risk, compliance, tax and M&A. New executives are increasingly required to utilize fairly extensive digital skills.

All in all, we have identified 27 trends that are likely to be predominant in executive searches in the year to come.  Our findings:

Board Level 

1. Board director remains a closed profession held by executives also belonging to the corporate world. Each director typically has held two to four positions within companies within the same general geographies, and most incumbents are current or former CEOs or CFOs of Fortune 500 companies.

2. Women are in demand. The presence of women on large companies’ Board of Directors is currently 13% and slowly growing. Fortunately, it now seems easier to access open executive positions when women are in a N-1 role in large, well-known corporations than for men in the same roles with the same competences.

3. Companies closely-held by families or owners are doing much better over the past three to five years because they tend to see their company as long-term assets. These family-owned companies often favor long-term high-yield investments that maximize shareholder assets. Even though they typically pay a slightly lower salary, family-owned companies keep their key talent for longer periods.

4. Adaptive vs. Disruptive innovation. Listed companies whose current investors mostly expect steady results prefer adaptive innovation rather than disruptive innovation, which carries higher return but longer payback periods and higher risks. This has great impact on companies’ culture, especially in large corporations.

5. More and more VCs are betting hundreds of millions on breakthrough innovation, and these companies can attract top-notch executive talents, and allow several years to create, execute and deliver e.g. over $500M have recently been invested in Magic Leap developing virtual reality by 7 major VCs and Google. It is hard even for the board members of a large profitable corporation to make such a bet. This is not only happening in Silicon Valley but also in Asia and Europe e.g. Blablacar, a Paris-headquartered startup raised $100M in its last round led by Index Venture, to develop an alternative transportation network by sharing seats in private cars.

Executive Level:

6. More transparency and more accountability are expected from CEOs and their executive teams. This is the immediate effect of social media.

7. Domain expertise is required even for top jobs. Being a good generalist is usually not enough today. Analytical skills and digital savviness become prerequisites to leverage data.

8. Gender diversity is now expected. Some Boards of Directors are getting impatient and have ordered CEOs to deliver this diversity in 2015 in their senior ranks.

9. Cultural mismatch is the most frequent reason for failure to integrate an executive coming from the outside into companies’ senior management.

10. At 53 years and older, it remains much more difficult to switch from one company to another in a corporate job, except for very senior positions.

11. The growing impact of the Internet on companies is spreading across all industries. This is creating for executives both major business opportunities and also creating a lot of stress for the slow-adopters. 

Talent Market

12. Recent crisis situations have led to urgent demand for: VP, Compliance; VP, Risk; VP, Data Security; and VP, M&A in mainly in banking, insurance and retail industries.

13. Digital transformation is leading to growing demand in N-1 and N-2 positions, including: VP, Digital; VP, Mobile; VP, eCommerce; VP, Online; VP, Omni channel; VP, Data; VP, Analytics; VP, Loyalty and VP, Transformation positions across all industries.

14. Roles allowing short-term profit with minimal risk such as VP, Tax, VP, Real Estate or VP, Design are in high demand in all industries.

15. Software teams with 100-500 persons are built in retail, manufacturing and media companies e.g. GE. They are to embrace the new opportunities of Mobile, Internet of Things, Wearables and Networks.  To attract the best talent, all companies compete with the big four (Amazon, Apple, Facebook and Google) and the high-profile startups.

16. Talent war is happening across all industries on rare executive profiles. For instance, banking is recruiting in insurance and insurance in banking. Consumer electronics is recruiting in luxury goods e.g. Apple and fashion in consumer electronics e.g. Under Armour.

17. Some executive job responsibilities are shifting, even if they carry the same titles. For instance, a VP, Marketing is now often seen as a VP, Growth with strong analytical skills to deal with data and to acquire new customers rather than someone with great creativity to produce exceptional advertising. 

Recruiting:

18. For CEO searches at most large companies, the five largest executive search firms continue to dominate the market (Egon Zehnder, Heidrick & Struggles, Korn Ferry, Russell Reynolds and Spencer Stuart). The reasons these five maintain such industry prominence is they meet companies’ governance requirements and can assure boards that they have performed the best possible due diligence and research in finding CEO candidates.

19. For executive positions beneath the CEO role, high-service, smaller boutique firms are providing extensive searches and are largely providing the best possible service such as N2Growth, Preston and Partners or Lincoln Associates.

20. HR departments are being asked to trim down their executive search budgets in 2015, which typically range between $5 million and $10 million. The executive search industry’s usual fee practice includes 30 percent or more annual cash compensation of an executive’s salary now reaching fees as high as $100,000 to $300,000 per search.

21. Current fee structures do not encourage long term performance.  After receiving the first installment payment, the headhunter’s focus may drift. To maximize profits, the executive recruiter might look to save on costs by cutting corners: the research is not as thorough as it should be, and the reference checks are lighter. Consequently, in some cases, the selected candidates and the employer do not fully match. After a few years, the company is back to square one, still needing an executive and now suffering with various damages created by the former executive at the company.

22. VP, Executive Recruiting positions that report to the SVP, Human Resources now exist at most Fortune 500 companies. Incumbents for these VP positions come after several years of experience at prestigious headhunter firms and have global assignments.

23. Global executive recruiters are often assisted by a head of search responsible for calling candidates and a data analyst researcher responsible for identifying applicants.

24. Competent regional recruiting teams in EMEA, LATAM & APAC have been set in many large corporations to match their subsidiary needs in talented executives and localize the global assignments.

25. The same methods used by executive recruiters are now also used by internal recruiters.  They use the same CRM and the same software. They both subcontract some of their searches to the same phone firms. Some talented recruiting experts provide consulting or seminars to share the best practices e.g. Scoutrock or ESIS.

26. Executive databases. Because of their corporate policies or simply reluctance, less than 20 percent of top executives are on LinkedIn. Very few reliable sources happen to exist to identify and recruit these top executives. As a result, research, including investigation, cold calling, and personal relations are essential for scouting the unbeaten path.

27. Beyond recruiting, internal executive search teams also develop long-term relationships with applicants, make timely proposals to executives who are in transitional periods and follow competitive organizations that may have qualified passive candidates.

 

About Thomas Lot

Thomas Lot is the CEO & Founder of The Official Board. In his own executive roles as head of Apple Europe's retail team and then VP of Amazon Europe, Thomas enjoyed the value of executive networking and recognized the need for clear company org. charts. Now, with the org charts of all the medium & large companies displayed on The Official Board, many more executives can benefit. Please [email protected].