Invenias is pleased to share the opinions, insights, and concerns of 600+ executive search professionals for the year ahead. What does 2022 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.
Executive Search Industry Trends Overview
Heading into 2021, exec search firms were cautiously optimistic on the heels of a challenging 2020. Winning clients superseded all other priorities, and firms started to invest in digital transformation.
A lot has changed in a year. Firms enjoyed a triumphant rebound in 2021, but an increased talent shortage and unprecedented demand have driven a candidate-dominated agenda. Winning new business, the overwhelming focus of last year, is not a top-three priority for the first time in a decade.
Firms expect big things in 2022, and many are investing in technology to meet their goals. Spend for 2022 represents a significant increase, and for the second straight year, digital transformation adoption has doubled.
Performance Outlook
The executive search outlook for 2022 suggest general optimism following a strong performance last year. Although the majority of firms reported strong YoY increases in 2021, few expect the momentum to reverse in 2022.
Compared to 2020, how has your business performed in 2021?
After a challenging 2020, executive search firms largely experienced a strong rebound in 2021. Sixty percent of firms reported year-over-year revenue gains in 2021, compared to just 19 percent in 2020. Likewise, only 16 percent of firms reported a YoY decline in 2021, compared to 44 percent in 2020.
- 60% reported revenue YoY revenue gains in 2021
- 32% reported that YoY revenue increased by more than 10%
- 16% reported that revenue decreased in 2021, compared to 2019
How do you expect revenue to change in 2022?
Firms are generally optimistic about the year ahead. The majority of respondents respect momentum to continue throughout 2022. A record-low five percent of respondents expect revenue growth to decrease.
- 63% expect revenue to increase
- 15% expect revenue to rise 25+%
- 5% expect revenue to decrease
Will firms ramp up their investments in 2022? Most leaders are reinvesting back into their firms to seize the opportunity in 2022. The number of firms increasing operating and technology budgets have risen 70 percent since last year.
|
Operating Budget |
44% will increase spending |
|
11% will decrease spending |
|
|
Technology Investments |
43% will increase spending |
|
15% will decrease spending |
Top Priorities
What are your top priorities for 2022? (Top 5)
Last year, nearly twice as many firms prioritized clients over candidates. This year, candidates have reclaimed the top priority spot, while the number of firms prioritizing clients has cratered.
Top Challenges
What are your top challenges for 2022?
COVID-19 and its impact continue to loom large for exec search firms in 2022, but the talent shortage has taken over as the top challenge for firms in the year ahead. Firms are significantly more confident in the economy than they were a year ago, with half as many citing economic uncertainty as a top challenge.
- 34% Tight talent pools (skills shortages and gaps)
- 33% COVID-19 related impacts on the labor market
- 20% Embracing digital transformation
Respondents are half as likely (14%) as last year (30%) to cite uncertainty over the economy as a top challenge
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
Exec search firms continue to cite the talent shortage as a prevalent challenge. Notably, the number of firms that do not observe a talent shortage has increased to 32 percent. Firms that have a digital transformation strategy in place and report candidate sourcing as a strength are 70 percent less likely to cite a shortage.
- 44% say there is still a talent shortage
- 23% say there is neither a talent shortage or abundance
- 32% say there is an abundance of talent
Digital Transformation
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 are all-on on digital transformation. Despite this full-hearted endorsement, room for progress remains.
Do you have a digital transformation strategy in place?
- 85% have a digital transformation strategy in place
- This is an 118% increase from last year
- But less than 40% automate any individual process
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