EXECUTIVE RECRUITMENT Finding Top Talent – Just how tough is it?

There’s sea change under way in the recruitment and retention of senior executives – but not all the drivers are those influencing the general skills shortage. In recent column in The New Zealand Herald, political columnist Colin James listed lower wages than Australia, the unpopularity of manual labour and the “hit-and-miss” training of the 1990s as key factors in the “desperate shortage of skilled labour”, along with now rapidly falling immigration rate.
James, along with finance minister Michael Cullen, identified labour shortages as the biggest single constraint on economic growth. But does this shortage reach the chief executive and other senior management ranks? There’s been plenty written recently about the marketplace battle for executive talent (see Talent Attack in Management, May 2004 and The Best Execs, Management, October 2003) but is the battle driven by paucity of talent or by changes in what high quality candidates want from their employment?
And here’s where some of the top recruiters and remuneration experts differ. Maurice Ellett, managing director of executive search consultancy Signium International, believes the talent squeeze in the New Zealand executive market has increased over the past five years, “as companies strive to reduce costs, increase productivity and performance from executives, and compete for shrinking pool of top-class executives”.
“As commercially and technically talented executives move to establish their own businesses, larger companies are dipping into pool that is shrinking rather than expanding, particularly for experienced people with very successful track record.”
And what of the future? Ellett says that from his almost 35 years’ experience in the New Zealand executive recruitment market, he believes (the tight market) will last for the foreseeable future, “as New Zealand faces increasing pressure from Australia, and from the wider international market for talented executives, as well as the requirement to deliver higher and higher standards of corporate performance”.But Helene Higbee, director of management and remuneration consultancy Higbee-Schäffler says she has noticed the consistent growth in market movements of jobs at the senior level of the past seven to 10 years has flattened out over the past year – indicating supply exceeding demand.
“There’s lack of desperation to fill roles. number of factors could be contributing to this: more supply than in the past; mid-senior level executives coming back from offshore; lot of mergers [reducing duplicate roles].”
There aren’t, she says, many good opportunities at the top end. Talent for key jobs like corporate CEO and CFO positions is snapped up. “The corporates look offshore for top level jobs. In the small New Zealand market they can struggle to get the right talent – and they value offshore experience.”
Higbee also believes that some New Zealand industries are struggling and this has contributed to tight market for job seekers at the mid-senior level.
Emergent director Carmen Bailey agrees that there is no shortage of talent in the “GM $100-$150k, 45-plus age bracket”. There’s “tons of talent left from corporate restructuring and voluntary departures where maybe they’ve had one restructure too many”.
The squeeze, says Bailey, is on available jobs rather than candidates. “The squeeze in the permanent [placement] market has made that market very difficult. It is very aggressive – you have to work harder to get placement. If companies aren’t convinced they won’t put substandard person in.”
To get continuity, employers are turning to contracting. “There’s such uncertainty in the permanent market, executives are taking up contracting: there’s no less certainty in contracting than in permanent placement,” says Bailey.
“We are in transition from permanent to contracting [work] that could be long-term trend. If so the ramifications are that companies pull back to just their core activity, outsourcing HR and everything that is outside their core.”
The high cost of getting rid of people is contributing to the trend, she adds.
And Bailey agrees with Higbee that filling senior executive role, with salary of $200,000 plus, is especially difficult, sometimes taking up to six months. But there are always exceptions: “I’ve just filled very senior role in five weeks.”
Generally, executive roles take 12-14 weeks to fill. That compares with an average of nine weeks across all vacancies in the UK, according to survey conducted there late last year.
Ellett thinks time scales have extended for the recruitment process “as successful New Zealand companies increase their commitment to appointing only the best executive talent”. “A vacancy can be filled within eight weeks. If, however, candidate is bought back by the present employer and the search re-run, the time to fill the vacancy can extend out to between 12 and 15 weeks.”
Organisations are simultaneously searching for top talent and working to retain top talent already on board.
James Brooke, principal of sales and marketing appointments specialists Gaulter Russell, says appointments are taking less than nine weeks although the time taken increased by up to 25 percent over the past 12 months. “We feel the issue has receded recently. It’s turned corner.”
Awareness of the talent squeeze may have precipitated its early demise, suggests Brooke. “Candidates are aware of the shortage.” He draws an analogy with the property market: The trend is for the supply to increase to take advantage of the conditions brought about by the shortage.
“Talking up the shortage leads to more going on the market. There’s perception that labour costs are high – it’s catalyst for people to think about changing jobs or stepping up,” he adds.
“We don’t believe there’s been any impact from offshore – this hasn’t changed in five years. There was bit of blip around September 11, but other than that it’s been business as usual. Many of those returning do so for lifestyle reasons.”
And, he says, there’s no need to go offshore for top talent. “The available talent here at the senior level is really good. We usually find candidates to fill roles here in New Zealand.
“Senior marketing professionals here are high calibre and,” he says, “demand is as strong as always for really good candidates.”
Headhunters agree that top people are always in demand and that New Zealand competes in global market to fill senior management roles in our biggest corporates.
The greatest changes are taking place in the mid-to-upper managerial ranks. The growth in contracting; trend toward job changing for reasons other than remuneration and returning home for ‘lifestyle reasons’ are evidence of sea change in employment attitudes in the next generation of senior executives.
Corporate restructuring/cost cutting/downsizing is one driver, but there’s more to it than that. What has triggered the change in people preferences?
“A lot of it started with the adoption of the mutual employment contract. People began to realise that organisations could not promise them job for life and the development that would best suit their aspirations,” explains the head of Sheffield’s national executive search practice, Ian Taylor.
“As that relationship broke down, younger generations learned to distrust all the structures around them and began to understand that this was world in which they needed to trust themselves and in which they had to invest in themselves to make them robust commodity wherever fate might take them.
“Building strategies and skills and expertise to survive in this new world has spawned very different relationship between employer and employee and developed different attitude amongst employees about what is important and what the nature of the relationship is.”
There is, says Taylor, battle for top talent in the marketplace and employers need to consider creative ways of rewarding people both to attract and retain talent. “What creative w