Executive Search COVID-19 Analysis

At the beginning of the year, we surveyed four-hundred executive search professionals to discover their challenges, priorities, and predictions for the year ahead.

Heading into 2020, respondents expressed some concern about the future of the economy but were hugely optimistic about the outlook for their own business. Challenges and priorities centered on candidates: the talent shortage was the number one challenge by a landslide, and candidate acquisition was the number one priority. Leaders nearly unanimously agreed that technological innovation was the only way forward for success.

Then everything changed. Over the course of several months, COVID-19 directly and indirectly altered the outlook of the executive search industry and the world at large. 

Many are in a dramatically different situation than they were at the beginning of the year. Where does the industry stand now? What has changed and what hasn’t? How do leaders and practitioners feel about their businesses and the economy and where are they prioritizing their efforts? More than 200 global respondents shared their thoughts; here are the top findings:

Economic Impact and Expectations

Understandably, much of the conversation around the COVID-19 impact has centered on its financial ramifications for the industry and the economy as a whole. While the findings certainly reflect economic hardship, a sizable number of respondents expressed some optimism about the future.


Executive Search Firm Performance


As one might expect, only 19 percent of respondents report that their businesses are doing better or as well as they were at this time last year. More than a third of respondents reported a severe downturn in performance compared to Q2 2019.


  How is your business performing compared to Q2 of 2019?
  Better   7%
  About the same   12%
  Worse by 0-10%   10%
  Worse by 10-20%   18%
  Worse by 20-30%   17%
  Worse by more than 30%   37%

Sector Spotlight


  Industry   Better or the same   Worse by more than 20%
  –Q4: Healthcare   20%   51%
  –Q4: IT / Technical   18%   56%
  –Q4: Tech / Media / Telecom   17%   53%
  –Q4: Consulting   15%   56%
  –Q4: Engineering   13%   68%
  –Q4: Marketing / Creative   12%   64%
  –Q4: Finance and Accounting   11%   59%

The sectors that a firm serves has had a telling impact on its performance since the beginning of COVID-19. Even the highest-performing sectors haven’t seen an increase in performance, but when it comes to avoiding losses, the sector a business serves matters.

Firms specializing in healthcare and IT were the most likely to observe stable performance and the least likely to suffer dramatic losses. On the other end of the spectrum, firms servicing marketing, engineering, and finance professionals experienced more instability than their peers in other sectors.

Hopefully, the sector a firm serves didn’t significantly impact their predictions for the future of their business or the economy, suggesting that even struggling firms believe their outlook will improve. 

Spotlight: Executive Search Professionals Speak Out

“I think many of our clients look long-term and if there was ever a time for competent leadership, it is right now. Many of the roles we are covering are with long-term investments in mind."

“Our own executive search business was very traditional, and we were forced to go 100% remote. It hasn't impacted productivity. It some ways it feels we are more connected as a team than when we were in the office."

“Ultimately, success is going to depend on demand. If demand doesn't rise to the optimum levels, then it is going to be very difficult for the businesses to survive."

Internal Employee Retention

Exec search firms, like many other businesses, have had to reduce the number of internal employees as a result of COVID-19, but just how commonplace are these cuts? Thirty percent of executive search businesses have conducted layoffs—a rate lower than the average for all businesses, and significantly lower than staffing and recruitment businesses (48 percent).


  Has your company reduced internal employees (including furloughs)?
  Yes   30%
  No   58%
  No, but we plan to in the next few months   9%

Economic Outlook

The majority of respondents believe that we’ve moved past the peak of COVID-19’s economic disruption, and that the economy will improve this year. Twenty percent expect the industry outlook to improve in the next three months. Business performance during the pandemic had no impact on this outlook; respondents who have seen an improvement in revenue and those who were hit the hardest were equally likely to expect the economy to improve.


  When do you anticipate the economy will start to improve?
  In the next three months   20%
  By the end of 2020   37%
  In the first half of 2021   25%
  By the end of 2021   10%
  Some point beyond 2021   1%

Notably, very few respondents predict a sustained recession or depression. Just 11 percent expect the recovery process to start in the second half of 2021 or later and only 1 percent expect a downturn to extend past 2021.

Business as usual?

While it’s clear that executive search professionals have had to tweak how they approach their businesses, not everything has changed. Going into 2020, respondents said that managing relationships was the top area they needed to focus on, and it remains a top priority now.


  Top Priorities
  Improving management of client relationships   59%
  Brand development and marketing   52%
  Managing cash/controlling spend   45%
  Optimizing remote work   45%
  Managing cash/controlling spend   29%
  Engaging candidates/improving the candidate experience   25%
  Automating and optimizing key processes   24%
  Reassessing business model   18%
  Internal staff training and development   12%

So what has changed? While relationships are still a top priority, client relationships have taken center-stage. Heading into 2020, respondents equally prioritized client and candidate relationships (39 percent). Post-COVID-19, it appears that businesses are spending less time on candidate relationships (down to 25 percent) and potentially reallocating their resources for client relationship management.

Controlling spend (45 percent) and optimizing remote work (29 percent) are now top of mind for respondents, while neither goal registered as a priority going into the year. Nearly one-fifth of respondents also reported that they’re reassessing their business model. Firms are entertaining a large number of options when it comes to reimaging their business model, from the sectors they serve to the services they offer. In particular, respondents have reported a growing demand for consultancy services, as employers look to executive search firms for guidance in navigating the current landscape.


Customer Challenges: New and Old

Customer relationships are the top priority for respondents, but in order to win and retain clients, firms are forced to navigate a broad range of obstacles. 

While the financial health of executive search businesses and their clients loom large, notably, the most severe consequences of hardship—clients failing to make payments, client churn, and firms losing the resources to maintain client relationships—land on the bottom of customer-related challenges.


What are the top customer-related challenges have you faced since the beginning of the COVID-19 crisis?
  Reduction in demand   76%
  Increased difficulty in winning new customers   73%
  Lack of communication from clients   32%
  Shifting or challenging role requests   23%
  Clients are unable to make payments   17%
  Increased client churn   5%
  Reduced internal resources to maintain existing client relationships   5%

Although most firms aren’t reporting a huge loss of clients, they are seeing demand from existing clients shrink in volume. But volume isn’t the only problem; a third of respondents say the requests  they do receive are more challenging than in the past. Making matters worse, respondents report more communication issues from clients, likely as employers deal with other COVID-related priorities.

The Remote World of Executive Search

Before COVID-19, a number of firms operated remotely, but remote adoption wasn’t widespread throughout the industry. Now that most firms have introduced or expedited remote strategies into their business model, what changes do respondents expect to be permanent?

Respondents generally believe that the impacts of remote work are here to stay. From office operations (39%) to onboarding (29%) to placing candidates entirely remotely (72%), many aspects of the industry may see long-term shifts as a result of “the great remote experiment.” However, respondents predict that the largest consequence will be one that their clients make: hiring for more remote roles.


How will remote work change post-COVID-19?
  Contactless (remote) placement will be more prevalent   72%
  Remote jobs will be more common   56%
  We will use less office space due to permanent increase in remote work   38%
  Remote onboarding will be more common   29%

Technology-based  Solutions to New and Old Problems

Firms are responding to the new landscape by investing in and utilizing technology, both in predictable and less obvious ways.

Unsurprisingly, video interviewing and video conferencing solutions have seen the largest spike in activity, with a near-universal (96 percent) adoption uptick by executive search businesses. Video conferencing also falls into a larger trend: firms are increasingly leveraging tools that facilitate communication and relationship-building with candidates, clients, and internal teams. VoIP (21percent) and SMS (15 percent) reflect this new emphasis on flexible modes of communication.


Technology solutions that firms are using more since the start of COVID-19
  Video Interviewing/Conferencing   96%
  VoIP   21%
  Analytics/Reporting   17%
  SMS   15%
  Automation/AI   8%

The other technology solutions to see a rise in adoption may reflect a reignited need to make better use of limited resources. Nearly one-fifth of firms have ramped up their use of analytics since the rise of COVID-19, presumably to better understand their performance and make smart decisions about where to invest future resources. Respondents also reported an increase in the use of automation and AI. With a thinner margin for error than in the past, automating time-consuming manual tasks and freeing up time and resources has never been more important.

Key Takeaways:

The impact of COVID-19 on exec search companies has been profound and often severe, but optimism remains within the industry. While firms have struggled on the whole (81 percent have seen a drop in business performance compared to this time last year), the majority (57 percent) of respondents expect the economy to pick up this year. 30 percent have laid off employees, which is lower than the global average, not factoring in industry.

Since the start of COVID-19, firms are prioritizing remote work and managing cash spend, but client relationships remain the top priority.  The transition to remote work has been largely successful for exec search professionals, though there’s still room for improvement to leverage tools that allow firms to make better use of their resources. Most respondents believe the influx of remote work will have a permanent impact on the industry, with an uptick of remote jobs being the most significant long-term consequence.

What does the future hold? We’re cautiously optimistic that we are observing a gradual incline toward normalcy. As businesses reopen and look forward, we’re keeping an eye on key factors that impact industry performance and key indicators of the economy and business performance. We’ll be paying close attention and sharing the results with you.