For the first time since 1950, the world’s advanced economies reached a tipping point. The combined working age populations began to decline and by 2050 the workforce will shrink another 5%. Baby Boomers are retiring in massive numbers, and being replaced by millennials. Not only is the candidate population decreasing, but the talent pool is undergoing an unprecedented change. Increasingly specialized, digitally native and always on. These descriptors are just the tip of the iceberg. How will the era of the digitally native executive impact our industry? Once again we are entering a new war for talent where the battlegrounds have changed dramatically, and the candidate is “King”.
The Candidate is King
In 2003, a group of former colleagues from Social Net and PayPal launched a small social network known as LinkedIn. Sign-ups were slow at first, but today LinkedIn has over 400 million users. When it comes to the millennial audience, there are over 87 million global millennials on LinkedIn. More than 11 million of these users are considered global decision makers and influencers. LinkedIn’s focus is not just to catalogue candidates, but to build connections and establish trusted networks. We can expect to see this vision accelerated by LinkedIn’s recent acquisition by Microsoft this year for $26.2 billion dollars. Microsoft’s CEO Satya Nadella noted, “It’s really the coming together of the professional cloud and the professional network.” The impact of the deal remains to be seen, but we can be certain that the convergence of world class professional cloud computing and a global professional network will once again reshape the candidate identification space.
LinkedIn isn’t the only such site in the news lately. There has been a significant consolidation of companies in the digital career and candidate identification landscape.
In the US nearly 40% of all new hires are attributed to referrals from employees, and in Germany employee referral is the primary hiring method. Many companies incentivize this strategy internally by offering a bonus upon hiring. XING, a German site similar to LinkedIn, was acquired by Buddy Broker, a program that automates the employee referral process by analyzing an employee’s social networks and searching for suitable candidates to match with vacant positions. Buddy Broker’s acquisition of Xing came just after XING acquired the largest job search engine in German speaking countries.
There are also new players diversifying into the candidate identification marketplace. eHarmony, the online dating website, just launched “Elevated” earlier this year. The site claims that their dating algorithm will be able to match people with jobs that they love. We are also seeing a proliferation of sites that are focused on the passive candidate talent market such as ‘Not Actively Looking’ and ‘Anthology’. These services aim to ensure that executives are always on the market for new opportunities at the right price.
We are tempted to dismiss a lot of these products and view them as disruptors to the lower levels of the recruitment spectrum. However, these services empower the candidate and change the dynamic of recruiting, assessment and evaluation. They provide new ways for talent to engage, think and act differently. This is true of all ages and levels in the workforce, but in particular millennials who are becoming the new majority and will outstrip the retiring executives of today.
It has never been more important to ensure that a candidate’s experience is world class. Recently Virgin, a company that has consistently appealed to a youthful segment, identified a major problem within their candidate experience. Candidates were extremely unhappy with the handling of their application for a position. Virgin quantified the impact of the poor candidate experience as a loss of about 7,500 customers or roughly 4.4 million pounds in revenue.
Virgin recognized the impact of its candidate experience on its wider brand and saw an opportunity. The company set out to make its candidate application experience so compelling that it converted candidates into customers. This challenge is a highly relevant analogy to senior level search. In an era where digital rules and the language of trust and credibility are changing, we have an obligation to reconsider the candidate experience.
We need to engage with sources, prospects and job seekers as if they were our clients, because, they in fact are. Imagine the experience of an individual who reaches out to you regarding an opportunity you are handling. From the moment that connection is established via an email or resume submission from the individual, a relationship is forged. Your firm is being evaluated on the basis of how you handle the initial contact. Executive search is a consumer-facing role. We serve as ambassadors of our clients and have a responsibility to design a candidate centric experience that leaves potential talent with a positive impression of our client’s brand, and therefore of our own brands.
The Right To Data Protection and Privacy
With so many data sources and a rich vein of information to access, why has it become harder than ever to identify and build trusted relationships with truly great executive talent? We are entering a new and uncharted era of data privacy regulation and protection. Regulation and legislation are springing up across the globe to protect candidates. The days of the Internet “Wild West” are over, and various laws in the US and EU are being established to provide candidates with greater security and protection. These laws restrict the methods in which data is collected, shared, stored and used by those in the recruitment space. These laws and regulations will impact the executive search industry in a very real way.
The Right to Be Forgotten Law provides people in the European Union the right to request that companies remove data about them that is either no longer relevant or out of date. Could this empower individuals to hide sensitive and incriminating information that may have once appeared on a news site? A quick Google search once uncovered key information about a candidate early in the search process. Now, disqualifying evidence may not be discovered until after conducting a formal background check.
In the US, States are beginning to implement their own protective practices. Recently, New York State legislation was passed that prohibits you to ask about a candidate’s criminal history as part of the hiring process. In addition, the State of Massachusetts signed a law banning companies from asking prospective employees how much they currently earn. The new law ensures that the historically lower wages and salaries assigned to women and minorities do not follow them throughout their entire careers.
The Emergence of New Industries and Specialist Roles.
It’s not just that candidates are in high demand and a protected class. As always, our profession has sought out the unicorn, the purple squirrel, the executive perfectly specialized to suit a role. With the digitization of business, roles such as logistics have become increasingly important, and entirely new sectors have burgeoned including Big Data and Artificial Intelligence. These trends have led to a frenzy of poaching the executive elite, sought for their highly specialized knowledge. Recently, Amazon sued a logistics employee for jumping ship to Target, and then poached a senior level executive in Artificial Intelligence from ecommerce rival eBay. XPO logistics launched a lawsuit against two of its rivals for stealing talent, while simultaneously defending itself against a poaching suit filed by C.H. Robinson Worldwide.
These expensive and time consuming lawsuits are intended to dissuade individuals from leaving corporations, limit the movement of executives, and defend their competitive advantage. In California, restricting executive mobility was the goal of top tech firms. Apple, Google, Intel and Adobe established a “hands-off” agreement to not recruit one another’s top talent. The deal was made in part because California does not allow for non-compete clauses in executive contracts. California courts found the poaching agreement violated anti-trust laws, kept employee wages artificially low, restricted free labor movement and reduced innovation.
So how do we effectively position ourselves to take advantage of these trends and navigate this new war for talent?
First, ensure a genuine and trusted engagement with the talent pool. We should consider how we communicate and connect with candidates and prospects. By building a strong Twitter profile, posting on LinkedIn, or providing content on your website, you provide valuable touch points for executive talent. Executives matter more than ever and have the power to share their experiences and influence colleagues through robust professional networks. We must leverage candidates by turning them into advocates for our firms and clients.
Second, we must ensure that we follow best practices in our management of candidate information. We must ask permission and stay up-to-date on the latest legislation, but more importantly we must behave ethically.
Finally, we must remember that our industry is critical and more important than ever. Companies are vying for executive talent to drive innovation and competitive advantage and we are the experts to identify these highly specialized individuals.
While these trends impact the way we do business, they all present very positive indicators for executive search. With a newly honed focus on the changing environment, we have more opportunity than ever to deliver value to both clients and candidates.