We are ending 2022 amidst considerable uncertainty, yet for most organizations, the race for hiring senior talent remains extremely strong. We unpack some of the key economic, leadership and executive search trends that will unfold across the next 6-12 months – and what that means for businesses.
In many ways, 2022 was a year of extremes. War dramatically escalated in Europe. Inflation is still rampant in many geographies, and is showing near to no signs of abating, despite central banks trying to rein in escalating consumer prices and living costs. At the same time, the unemployment rate for OECD countries is just 4.9 per cent, which is the lowest since records began - and a far cry from the 8.8 per cent peak at the start of the Covid-induced unemployment crisis.
Whilst low jobless numbers have gone some way to abating the impacts of inflation across many aspects of the global economy, this also means it is much more challenging for organizations to attract and employ top talent. This is particularly the case at the executive level, where today’s leaders are looking for much more than just a pay packet as part of their compensation. Within this context, opportunities continue to be available to companies who are creative and compelling in their employment pitches to leaders.
We recently asked our broader network what they thought would happen in 2023 with regards to the executive hiring market. The results were very evenly split, with 33 per cent saying it is only going to get worse and even more competitive, 30 per cent saying that it will get better and calm down, and 37 per cent saying that it will stay about the same.
Talent demand
Despite economic headwinds and the threat of a prolonged global recession, hiring for executive talent remains very strong. Our partners group have detected a small demand slowdown in the business-to-consumer (B2C) market for senior leaders, but the business-to-business (B2B) market is as strong as ever. The majority see this as continuing throughout next year.
Clients are and will continue to be offensive for the future in 2023. Businesses need to stay competitive by being ready to combat whatever is ahead of them, and stay at the top of their game. With so many aspects of the macroeconomy currently uncertain, having the right executive leadership in place is arguably the most critical component of positioning an organization for success in the future.
Expectations on executives
At the same time, challenging operating and commercial conditions throughout 2023 mean that both the expectations and performance demands on senior leadership will increase.
The need for executives who can do more with less - in other words, deliver better results per unit of cost - will be paramount next year. If recessions do hit, the emphasis on executive performance will also shift from sales-led growth to a wider range of priorities, including change management, prudent financial management, best use of resources and, of course, inspirational leadership.
Rapid growth industries
2023 will see clients who are determined to continue growth during this uncertain period by taking market share off their competitors, and others where market forces are providing growth opportunities (such as 5G, Ccybersecurity, the Internet of Things, and fintech).
The past two years has seen a significant uplift in the demand for talent in the cleantech, sustainability, recycling, and solar sectors, with NGS Global delivering executive search projects for a wide variety of companies in this area, including placing a range of executive roles at a leading electric vehicle automotive company.
Cleantech is a very rapidly maturing asset class. The level of private equity and venture capital investment, governmental policy support, and innovation will only increase, making the sector almost recession-proof. Currently, more than one quarter of all global venture capital is going to climate-tech start-ups, totaling $77 billion for the last 12 months (by comparison, 2018 saw less than half this level of investment, at $36 billion).
This growth will see a subsequent surge of increased demand for executive leadership and talent in the next two to three years and beyond.
Winners and losers
At $16 trillion in GDP, China is the second largest economy in the world, and will add $640 billion in GDP next year, the largest contribution to global growth by any nation-state. After Chinese New Year in Q1-23, the country will reopen to international travel in Q2. However, travel into and out of the country will be more controlled and not return to pre-pandemic freedoms.
More broadly, there has been a considerable degree of downsizing by foreign companies in China. For example, German company Volkswagen AG, which has a large presence in China, plans to shed 30 per cent of its expatriates in China over the next two to three years, down to about 1,000 people.
Singapore is the net winner of political changes in Hong Kong, as well as China’s ongoing strict Covid elimination policies. In the last 12-24 months, many firms have moved their Asia-Pacific headquarters from these two markets into Singapore. Specifically, many internet and media companies have moved to Singapore, whilst much of the APAC asset management industry has also moved there to preserve wealth and shore-up stability.
Europe is entering into a period of considerable uncertainty, with Ukraine, high-inflation, skyrocketing energy prices, inconsistent central bank policies, and low consumer confidence. 2023 will be a challenging year for some firms throughout the region, particularly B2C companies. The companies that have the most agile operating structures and are fairly flat hierarchically will have the best chance of success, particularly those that are led by executives who have high levels of emotional intelligence, cultural fit, digital nous and change management expertise.
Another geographical winner is the current migratory and investment influx to the Middle East, particularly to the UAE, and especially Dubai. We have previously reported on the UAE’s foreign direct investment boom and national reputation uplift, and this trend is set to continue throughout 2023.
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