May 11 2016
In order to develop a deeper understanding of client relationships with executive search and leadership consulting firms, we surveyed 190 and interviewed a further 25 clients around the world.
We started by asking about top challenges now and how those challenges inform the use of external advisors. ‘Lack of diversity’ is the number one challenge clients are facing today (Chart 3.1), perhaps due in part to continued government pressure in many countries around the world. Importantly, it’s 2016 and businesses finally understand the value that diverse leadership plays in driving innovation and business results. The executive search and leadership consulting profession can have a profound and lasting impact on their clients’ business by helping clients create a culture of inclusion and innovation and finding the best talent worldwide without bias. In just five years, clients rank this challenge much lower – we can only assume that they finally, perhaps optimistically, see the light at the end of the tunnel in terms of benefiting from diversity – in the leadership ranks, on boards, and with their total workforce.
‘Lack of key leadership successors’ and ‘competition for top talent’ are also top challenges that clients are facing today – presenting more areas where executive search advisors can continue to provide value. Another answer that received significant responses was ‘mismatch of current talent and future strategies,’ which also ranked as the top area where clients would use external advisors today, showing that clients appreciate the strategic value that external consultants provide.
The number one issue forecasted in five years: aging demographics. Clients clearly look at their current senior talent and worry about what happens when so many retire. Coupled with future concerns about globalization and competition for top talent, it’s no wonder that succession is a critical issue today.
‘Competition for talent’ ranked in the top three both times – indicating the clear recognition that identifying and attracting the right top talent is critically important to business success. Clients value the use of outside advisors today and in the future to help them with their most critical executive talent strategies, including succession planning and the search for the right top talent.
In relation to the use of external advisors, only one of the top three responses changed: ‘globalization’ topped the list, while ‘mismatch of current talent and future strategies’ fell away in significance. These results show that clients are optimistic about the initiatives they are prioritizing (diversity, aligning business and talent strategies), and their concerns for the future are at least partly based around concerns for megatrends (globalization, demographic shifts) which will pose a new set of challenges.
While these questions speak to the trends and concerns that clients are facing, we also wanted to gain insight into the external services that they currently use and expect to use in the future. There is demand today from more than 68% of clients for seven out of the ten services listed, indicating that there is clearly value in the use of external consultants for executive talent solutions. All three of the service areas where there is less demand currently – succession planning, leadership effectiveness, internal talent assessment – increase in expected future demand. This is in line with the areas in which AESC members expect to see an increase in the future, demonstrating that executive search firms are broadening their service areas based on client demand.
Clients are already retaining outside advisors for every service listed in chart 3.3, overleaf with only three falling below 68% use. Interestingly, three of the four least-used services today have moved up to the top three positions forecasted for use in five years. Executive search dropped to the sixth position, indicating the client’s desire to do more work in-house in this area, however the percent is still strong and is forecasted by many to remain the same or increase (see additional analysis of the future use of executive search on page 34).
While there is demand for executive talent solutions from external advisors, are executive search and leadership consulting firms well-placed to provide the services? We asked clients which additional advisory services they would use executive search firms for today and in the future. The “maybe” category is the most telling – 30 – 46% of clients indicate they are open to using their current executive search firm for this broader range of advisory services in the future. We can only conclude that the value provided in terms of deep industry and functional knowledge combined with achieving the status of being “trusted advisor” on top of executive talent issues encourages clients to think, “how can we partner with our top executive search advisors more broadly on our top talent challenges?”
By combining the ‘yes’ and the ‘maybe’ responses, we can see that there is a real opportunity for clients and executive search firms to partner together on a broad range of leadership services that focus on executive talent strategies. In seven of the nine services, at least 66-79% of clients are open to working with executive search firms, and in all but one of these areas the future interest increases even more. This shows the natural chemistry between executive search and the leadership consulting services listed. Many executive search firms are already partnering with their clients in these areas, and we expect to see this grow in the future.
Read the full article on Executive Talent 2020, a special edition of AESC's quarterly e-magazine.
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