Whatever you call it, The Great…Resignation, Reshuffle, Reset, etc., people are leaving the “devil they know for the devil they don’t” more than I’ve seen in over twenty years of working in executive search. I’ve heard just about every scenario as to why an executive is willing to move on and why they choose to stay, but now more than ever, executives are taking that risk.
One thing is certain, the COVID pandemic has caused a Great Disruption within the workforce for many reasons, and we see the effects which don’t appear to be slowing down anytime soon. According to LinkedIn, the number of LinkedIn users who have changed jobs this year was 50% more than in 2020, up nearly 30% from pre-pandemic levels in 20191. Some are transitioning into opportunities in other fast-growing, more appealing verticals, but many are moving within their industry space to find a better opportunity. The ripple effect of movement has caused compensation to rise because for the first time in many decades, “companies need people more than people need them.”
Top Three Drivers of the Great Disruption
Compensation
#1 Compensation
Cause: As companies are “licking their wounds” from the pandemic, many are now bouncing back…and quickly. Over the past year and a half, organizations have had to re-evaluate how they do business. They have restructured, dissolved, and many more have grown substantially over the past five quarters. Robust M+A activity has continued to be the norm, so both organic and inorganic growth is what we have all witnessed as of late.
Effect: While the pandemic recession we experienced in mid-2020 was a short one for most, like all good recessions, it motivated senior leaders and their boards to evaluate every aspect of the business. Top grading talent and retaining existing high-performing talent are on everyone’s mind right now. Potential candidates understand the demand in the market, and more than ever, high-performing functional leaders have the leverage to negotiate aggressive compensation packages.
Work-Life Balance
#2 Work-Life Balance
Cause: The pandemic has given employees an opportunity to re-evaluate what’s most important. Surveys show that 55% of office workers want to stay remote at least part of the week, allowing them to spend less time and money commuting, creating more work productivity, and permitting more time to attend to family needs2.
Effect: A more hybrid work model has opened up a bigger pool of candidates which allows employers to find more qualified individuals without the cost of relocation.
Stagnant Industry or Career Path
#3 Stagnant Industry or Career Path
Cause: As an executive search professional, I see many executives willing to leave a stagnant career for an exciting new opportunity. More executives see this as a time to move from a public company to a PE-sponsored business or vice versa, a change in industry, or make that move to a competitor who will offer a greater career trajectory.
Effect: Even prior to the pandemic, job tenure has been on the decline. Where the average employee once stayed five years plus in a role, a 2021 report from the Bridge Group found tenure today to be as low as only 1.8 years3. Companies are exploring trends using metrics such as compensation, time between promotions, size of pay increases, tenure, performance, and training opportunities to take a more data-driven approach to retention.
Well-positioned on the front line, executive search firms are ahead of the curve on what’s being reported by our trusted compensation consulting firms. The dramatic changes in compensation increases we are witnessing border on historic. In 2021, our firm grew 65% in the number of executive search engagements compared to the year before. It’s a candidate market, so whether you’re looking to hold on to your invaluable internal talent, or you’re looking to test the market in hopes of upgrading your existing team, be prepared, it’s competitive out there.
About the Author
Chris Bull
Co-Founder + Managing Partner
bull@mbexec.com
Chris brings over 20 years of experience in retained executive search. He has a strong track record of success partnering with client organizations to deliver best-in-class talent with private and public companies, private equity firms, and their operating companies. As a trusted advisor to the clients in which they serve, McDermott + Bull has become one of the fastest-growing executive search firms in North America with offices located both domestically and internationally.
Citations
- Leonhardt, M. (2021, November 21). The Great Resignation is still happening—here are the underlying causes. Fortune. https://fortune.com/2021/11/19/great-resignation-causes-timing-burnout-wages/
- PricewaterhouseCoopers. (2021, January 12). Business needs a tighter strategy for remote work. PwC. https://www.pwc.com/us/en/library/covid-19/us-remote-work-survey.html
- Fellay, M. (2021, December 10). Why Your Employees Are Leaving En Masse And The Surprising Factor That Will Keep Them. Forbes. https://www.forbes.com/sites/forbestechcouncil/2021/07/28/why-your-employees-are-leaving-en-masse-and-the-surprising-factor-that-will-keep-them/?sh=2f83a06f40fb