Invenias is pleased to share the opinions, insights, and concerns of 200+ executive search professionals for the year ahead. What does 2021 look like for executive search professionals? Respondents are excited about the possibilities provided by technology, anxious about the economy, and (still) struggling with the talent shortage. Read on to discover how your peers feel about digital transformation, diversity and inclusion, candidate engagement, and more.
The executive search outlook for 2021 is cautiously optimistic. While respondents faced a challenging 2020, many finished the year on a strong note, and most are expecting a rebound in the year ahead.
Compared to 2019, how has your business performed in 2020?
It’s no understatement to say that 2020 was a challenging year for executive search firms. Only 19 percent of respondents said revenue increased in 2020 over 2019. The silver lining? Firms finished the year on a strong note. When we surveyed firms in June of 2020, a whopping 72 percent of respondents reported that revenue declined compared to the first half of 2019. By the end of year only (!) 44% of respondents reported a year-over-year decline. This strong finish may account for the generally optimistic outlook for 2021.
- 19% reported that revenue increased in 2020, compared to 2019
- 44% reported that revenue decreased in 2020, compared to 2019
How do you expect revenue to change in 2021?
Nearly a quarter of respondents expect revenue to rise 25 percent or more year-over-year. Just six percent expect business to slow down in the year ahead. These expectations are nearly identical to the outlook going into 2020, despite different circumstances.
- 72% expect revenue to increase
- 26% expect revenue to rise 25+%
- 7% expect revenue to decrease
Will agencies ramp up their investments in 2021? While the operating budget for 2021 should look similar to 2020, respondents are 26% more likely to invest in technology in 2021 than they were at the beginning of last year and are 19% more likely to invest in reskilling efforts.
Last year, respondents couldn’t decide if candidates or clients should be a bigger focus, with both priorities sharing the top spot. This year; there is a clear winner: winning new clients is easily the top priority for executive search firms in 2021.
What are your top priorities for 2021? (Top 5)
Relationships will reign supreme in 2021, with candidates and clients dominating the top priorities. Perhaps as a result of a challenging 2020, the urgency of winning new clients has surged. Respondents are 54 percent more likely to cite it as a top priority in 2021.
|Winning new clients
|Employment brand development and marketing
|Improving management of client relationships
|Engaging candidates/improving the candidate experience
What are the top challenges for firms in 2021? Read on for a deep dive of the many challenges firms anticipate for the year ahead.
What are your top challenges for 2021?
Unsurprisingly, COVID-19 and its impact loom large for exec search firms in 2021. Interestingly, despite high unemployment rates, respondents still report a shortage of qualified candidates as a major challenge.
- 48% COVID-19 related impacts on the labor market
- 30% Uncertainty over economy and future growth
- 28% Tight talent pools (skills shortages and gaps)
For years, the talent shortage has been a defining challenge in the industry. How has COVID-19, it’s impact on the labor market, and the unemployment rate impacted skills shortages?
Skill shortage woes continue
The majority of respondents say there is still a talent shortage. Exec search firms that specialize in IT are hit the hardest by a lack of qualified talent, with 76 percent of those respondents reporting a shortage.
- 54% say there is still a talent shortage
- 34% say there is neither a talent shortage or abundance
Historically, the executive search industry hasn’t always been known for embracing technology, but that no longer appears to be the case. How do respondents feel about digital transformation—leveraging innovative technology to transform your business for the purposes of improving operations and delivering more value to clients and candidates? The results are clear: firms have ramped up their digital transformation efforts, largely due to COVID-19.
Do you have a digital transformation strategy in place?
- 38% have a digital transformation strategy in place
- 57% say COVID-19 has caused them to adopt a digital transformation strategy or ramp up existing efforts
- 39% most associate digital transformation with automation
Diversity, Equity and Inclusion
The executive search industry is uniquely positioned to contribute to the conversation on diversity, equity, and inclusion (DEI) in the workforce. Executive search professionals face questions surrounding DEI internally in their own businesses and through the needs of their candidates and clients. We asked our respondents a variety of questions about representation and inclusion within the industry as well as the D&I demands of their client base.
Do your clients require diverse shortlists?
The majority of executive search professionals have at least some clients that require diverse shortlists of candidates. Surprisingly, despite the increase in cultural conversations around DEI in the workplace, the number of clients requesting diverse shortlists has gone down compared to last year. Sixty-seven percent reported requests for diverse shortlists of candidates this year, compared to 72 percent last year.
- 18% say the majority of clients require diverse shortlists of candidates
- 49% say some clients require diverse shortlists
- 33% say no clients require diverse shortlists
Is there a diversity shortage in the talent pools from which you find candidates for your clients?
Respondents are split if there’s a diversity shortage in their candidate talent pools. This represents a substantial change from last year, when 60 percent of respondents cited a shortage of diverse candidates.
- 44% say there is a shortage of diverse candidates
- 43% say there is not a shortage of diverse candidates
Executive Search Technology Adoption
Technology is a substantial investment, but the majority of businesses express adoption woes. While many of the obstacles that prevent adoption are internal (lack of time and high turnover), the most common explanation falls on the vendor: limited training. Look for a provider with robust learning resources to ensure you get the most out of your investment.
How would you evaluate your team's adoption of your technology?
There are more respondents who report no adoption of their technology (10%) than those who report full adoption (9%). Software can only help an exec search firm reach its goals if it’s used by its team, underscoring the importance of training, implementation, and buy-in.
What is the top obstacle preventing internal adoption of your technology?
Why aren’t businesses making better use of their technology? More than half of respondents cited reasons related to training. This represents a fifty percent increase in respondents citing training issues, suggesting that the rise of remote work or other impacts of the pandemic may have impacted employee onboarding for software.
Top reasons preventing adoption
- 34% limited training resource
- 22% team doesn’t see the value
- 17% cost of training
- 11% no time
- 10% too hard to use
- 4% staff turnover
What Executive Search Trends Will You Be Following in 2021?
Respondents cited diversity, remote work, and digital transformation as three trends they’re most interested in following in 2021. We’ll be paying close attention to these trends and sharing research, advice, and updates with you. Subscribe to Invenias to make sure you don’t miss a beat!