The Next Wave is Coming
Six months ago, the global economy was strong, unemployment was at an all-time low, stock markets were at an all-time high, and the demand for talent significantly outstripped the supply. Companies of all sizes continued investing in talent acquisition, and executive recruiters were enjoying another record year of activity. The talent markets were hot, and the competition for leadership talent was intense.
Fast-forward to today, and we find ourselves in a different world in the midst of a massive reset. As the impact of the pandemic has touched all of us, it has also impacted every company; with the vast majority experiencing a significant drop in revenue and an unclear future. The natural reaction for many of us has been to hunker down and ride out the storm while working from home. While companies have put searches on hold and turnover has all but disappeared, several trends are accelerating.
Emphasis on Innovation
With all of the discussion around digital transformation over the last several years, one aspect of innovation has been become paramount. We’re all going to work from home for a very long time. Prior to the crisis, digital transformation efforts were largely viewed as big bang, top-down programs only large companies could afford, and now every leader should understand two critical components of digital transformation; improving the employee experience, and driving operational efficiency.
As one CEO recently told me, “I never believed that technology could replace good old fashioned in-person interaction, but now I see how inefficient and unnecessary all that travel and time in the office was.” While the implications for investments in office space and technology are obvious, the new operating environment requires a new kind of leader. As companies look internally and externally for new leaders, they will emphasize agility and appreciate the importance of hiring leaders who not only embrace innovation but drive it.
Internals and Interims
Prior to the current crisis, companies were increasingly understanding the importance of retaining the next generation of leadership coming up in the organization. Succession planning efforts resulted in proactive programs to develop future leaders, but the competition for talent and the sheer activity level in the talent markets made it extremely difficult to retain these leaders. If your company wasn’t doing the right things to keep you, you typically had multiple opportunities to leave and advance your career.
So, how have companies reacted during the crisis? First and foremost, searches have been put on hold or postponed unless it is absolutely necessary to either make a change or replace someone. While this has dramatically reduced the number of opportunities in the market, we’ve also seen an emphasis on promoting internal candidates or naming interim leaders. This totally makes sense as the challenges in meeting new people makes it difficult to conduct searches, and companies are going with the people they already know or postponing a change.
Video interviewing isn’t new. Recruiters and hiring managers have been using video technology to drive efficiency and cycle time during the initial phases of a recruiting process for several years, but in-person meetings were still the important last steps in any senior level search. Today, it simply isn’t practical to ask candidates to fly or ask your leadership team to meet candidates over dinner. While the initial steps in the process can be enhanced through the use of video, the final stages are much more difficult and require some thoughtful action.
Two of the most obvious implications of embracing video technology are; 1) your interviewers must know how to effectively use the technology and engage effectively through video, and 2) the frequency and variety of video interviews should be increased. How many of us have been frustrated by poor connection quality and clunky logins during our video meetings? Remember, the effectiveness of the interview depends on smooth connections and a professional experience, so take it seriously. Secondly, you need to increase the number of interviews, and have the candidate run a meeting. The hiring team needs to see the candidate on multiple days in different situations.
In addition to these obvious ways to use video technology, it’s important to place greater emphasis on referencing and assessment. Without the benefit of significant in-person interaction, the importance of a thorough referencing process can’t be overemphasized. Reference early to avoid wasting time, but also incorporate the observations gained through referencing in your final interviewing steps. In addition, use consistent assessment tools and methods. Whether you use Hogan or some other tool, make sure your recruiter knows how to incorporate assessment data, and make sure you fully consider the implications of what you learn. By doing a better job on referencing and assessment, you’ll reduce the risk of a bad hire and offset the lack of in-person interaction.
The impact of demographics on the leadership and talent markets has been widely discussed for many years dating back to McKinsey’s War For Talent observations released in 1997. For many years, the movement of baby boomers through the management ranks was the key bell weather, and the lack of adequate leadership talent to replace boomers as they age and retire has been seen as a key component of the shortage of talent.
As the crisis unfolded, the initial reaction by many was to rely on experienced, “been-there-done-that” leaders. During any crisis, experienced and battle-tested leaders are in great demand, and it appeared boomers might get one last curtain call to lead. We’ve seen this trend supported in interims being named and senior execs extending their contracts, but we’ve also seen growing evidence that boomers may exit in greater numbers as the crisis passes. A resilient stock market and lofty home values may allow boomers to conclude they have enough money to retire, and the pressures and anxiety of the moment may result in boomers deciding its time to pass the baton.
The Next Wave
While none of us knows how long this current crisis will persist, what we do know is that the competition for talent and the movement of leaders will dramatically increase when we rebound. The nature of the economic slowdown and the sudden shutdown in the talent markets will have major implications on how companies compete for talent and how leaders think about their careers. The difference between winners and losers will be stark, and when the recovery sets in, economic activity and the competition for talent should ramp up considerably on all fronts.
Those who believe we will experience a V-shaped recovery will likely to be disappointed, and those who believe we’ll return to the old way of doing things are most likely mistaken. The extended reset will force companies and leaders to make changes and to embrace innovation. Utilizing technology to drive operational efficiency, improve the employee experience, and streamline the recruiting and hiring process will become commonplace, and those who do it best will attract the best talent. And finally, the likelihood that boomers will meet the demand for talent is unlikely, so get ready for the real War for Talent; the next wave is coming.