Demand for Executives Is Slowing
As the economy cools, so too does growth in the number of open positions for executives, according to the results of a new survey from ExecuNet. Consequently, executives seeking new positions will need to change their job search tactics.
Mon, February 11, 2008
CIO — Executive-level job-seekers beware: Companies are putting the brakes on hiring—so much so that perpetually sunny executive recruiters' confidence in the market for executive employment is waning, according to the latest Recruiter Confidence Index published by ExecuNet.
"Over the last three to four years, we've seen double digit growth in executive hiring," says Mark Anderson, president of ExecuNet. "Last year, we saw 18 percent growth. This year we're projecting executive hiring is going to be half that. That's a significant change. It's still growth, but it's much slower. "
Less than 50 percent of executive recruiters surveyed by ExecuNet during the month of January reported being optimistic about the executive hiring market. When asked if they thought that the executive employment market will improve in the next six months, 47 percent of executive recruiters said they were confident or very confident. That was down 12 percent, from 59 percent in December 2007. Simultaneously, there was a spike in pessimism; 14 percent of executive recruiters said they were not confident in January 2008, up from two percent in January 2007. Respondents were asked to evaluate their level of confidence on a scale: very confident, confident, somewhat confident or not confident.
"That's a significant drop" says Anderson. "People are not moving to feeling somewhat confident, they're moving to not confident."
Anderson says executive hiring is driven by two factors: turnover and companies adding new positions. Executive turnover, which was high in 2007 and is expected to remain high into 2008, according to Liberum Research, is driving demand for executive hiring and contributing to the growth of the executive employment market. What's putting a damper on that growth, however, is the economic slowdown. Companies aren't growing as quickly, and that's reducing demand for new executives, says Anderson.
Chuck Pappalardo, managing director of Trilogy Search Non+Profit, thinks 2008 will be a tougher year for executive search firms, but he doesn't think it will be nearly as bad as 2002 and 2003—the worst years the executive search industry faced in decades.
"We're getting a slower start during the first couple of months of the year than we normally would," Pappalardo says of the executive search industry. "Companies are waiting to see what happens with the economy before starting searches...We'll work harder for business this year."
Pappalardo adds that demand for executive search services tends slow when the economy cools because companies think it's easier to recruit employees who may be more desperate for a new job during a down economy. Therefore, companies feel less urgency to retain search firms. He anticipates that companies will begin searches in the March timeframe and increase from there on. And at a minimum, he expects 2008 to be as good for his firm as 2007.
The slowdown in executive hiring means that candidates will have to "execute better" on their searches, according to Anderson. Because fewer jobs are available and therefore posted online, job-seekers will have to rely even more on networking to uncover opportunities, he says. They'll also have to better target their search efforts around growth industries, such as healthcare, and less on formerly lucrative industries that are contracting, such as banking, capital markets, real estate and construction.
Says Anderson, "Look for where the opportunity is."
ExecuNet's monthly Recruiter Confidence Index survey is conducted online and circulated to executive recruiters via e-mail at both small and large retained and contingency search firms. A total of 238 search professionals responded to the survey in January 2008.