|January is always a time of change, but this year, with many businesses needing to overhaul their direction and pivot their strategy, we are seeing motivation from many private equity and financial firms to hire innovative and strong new leadership. Despite the initial fears of a slowdown in executive hiring at the onset of COVID, at Lancor our search assignments actually increased by 50% from 2019 to 2020. We expect this to continue in 2021, along with an increase in our executive-led, deal generation model. This model, the Lancor Advisory Business (“LAB”), helped PE firms close several transactions in 2020, while helping many others avoid broken deal fees and pivot to other, related assets. For C-Suite and Executives looking for opportunities, and P.E. backed companies looking to hire, here’s what to expect in 2021: |
LOCATION NO LONGER MATTERS Executive placements in 2021 have two major differences from previous years: flexibility on location and a sharper focus on an executive’s operational tool kit. A year ago, most firms would almost always require an executive to move to their headquarters to build the personal relationships that help drive success at their firm. Certainly, the need to build rapport has not diminished, but companies are finding alternative ways for employees to connect virtually. The increase in broadband speed, and professional acceptance to keep connected over Zoom and other platforms, have allowed search committees to relax the need to have an executive relocate.
VIRTUAL INTERVIEWING MEANS SMARTER HIRES: Our clients have historically gained a lot of confidence around meeting a prospective hire in person. Since March of 2020, those in-person evaluations are far less frequent. Firms have had to quickly learn how to engage, connect, and assess a client remotely. The good news is that it has forced a more forensic discussion on the personal and professional characteristics needed in a role at the beginning of a search or pre-deal diligence exercise in the end. Likability or gut instincts alone are not really factors now, and the upside is that most clients have noticed that their recent virtual hires are ultimately better fits.
DIVERSE HIRING IS A CRUCIAL FOCUS: Diversity is the key to thoughtful decision making, better company culture, and greater returns. Currently, almost all of our candidate slates have a focus on creating more diversity as we see firms wanting a broader mix of backgrounds, voices, experiences, and perspectives for their companies.
FINDING THE BEST LEADERSHIP IS A PRIORITY: Obviously, no one has a crystal ball but most of our clients expect taxes to increase and debt to become a bit more expensive. So the key lever to drive business value will continue to be human capital. Search committees have placed a greater emphasis on strategic thinking and operational insights. Few could have predicted the COVID-19 pandemic and the pivoting needed to stay afloat, let alone prosper in this challenging environment. Executives who know how to thrive in a downturn are who firms want right now.
FIRMS ARE HIRING AGAIN: The pandemic has lasted approximately a year so no one can afford to wait on key hiring decisions. We are anticipating an increase in hiring for 2021. Historically, PE firms made the mistake of keeping “B” and even “C” executives when they were selling to new owners in 6 to 18 months. However, the pandemic has often delayed this timetable so firms have been more aggressive about making sure their current leadership is a strong one rather than waiting.
CEOs, CFOs, AND OPERATING PARTNERS ARE IN DEMAND: We have seen an increase in all three large categories of focus for Lancor placement. Operating Partner roles are evolving the fastest as the goal continues to be to find executives with exceptional operational talent and act as another important resource to the C-Suite. CEOs and CFOs remain very active with the CFO role being our largest by volume.