Executive Search Consultants Offer Predictions Based on Feedback from Sector Leaders in this ON Viewpoint Series
There’s no question the coronavirus has altered the global business landscape, and with it, the demand on executive leadership.
Based on conversations with executive leaders across multiple industry sectors, ON Partners’ consultants have analyzed their input and compiled predictions on expected changes in leadership demand post-pandemic.
In this ON Viewpoint series, executive recruiting specialists predict how COVID-19 will transform the demand for leadership in business sectors and functions including private equity, supply chain and manufacturing, telecommunications and infrastructure, telemedicine, life sciences, enterprise software and human resources.
“Many PE firms regret not moving quickly enough on undervalued companies after the 2008 crisis and are preparing to actively deploy capital, while other firms are waiting to see when we will hit the bottom,” notes Hocking. “This cat and mouse game should make it interesting: first mover advantage or waiting until the deals are extremely undervalued.”
PE firms are in a much better place to take advantage of the market changes post-pandemic for many reasons. PE firms are positioned very differently than VC firms that typically specialize in one or two industries and look at smaller opportunities, and corporate development teams of major companies that only invest in opportunities that benefit their individual companies.
Other reasons PE firms are in a unique position include:
- Many have raised very large funds that are dedicated to investing in undervalued assets.
- They have dedicated teams whose sole job is to identify investment opportunities.
- PE firms have the assets and teams to potentially buy multiple companies and combine them to compete with competitors that are much larger than typical mid-market companies.
- Some of the major PE firms have dedicated industry sectors and are not just tied to technology, industrial or other areas. This diversification will pay off tremendously in the near future.
Many PE firm resources are being deployed to position current portfolio companies to survive the present downturn. However, the larger firms in particular are quietly looking at companies that will need a PE firm to survive. There is no shortage of funds, but it appears that cautious planning is taking place now – but everyone fully agrees that once the pandemic is behind us, the PE sector will be as active as ever.
Notes Hocking, “Depending on how much of a downturn we actually end up seeing, some PE firms may be taking over companies that have cut dramatically and now need to be rebuilt. Hopefully we won’t see a drastic downturn and PE firms will continue to look for turnaround experience and previous experience working in PE environments, which will always be in demand.
Once we start seeing things get back to normal, PE firms will be very focused on growth experience at the CEO and CRO level, but to ensure their investments are focused on the right actions, the CFO will also be in demand, maybe even greater than in the past.
Next to the CEO, the most important role in a PE-backed company is the CFO. Post-COVID-19, PE firms will be investing in companies poised for growth, but every PE firm wants measured growth with profitability vs. the growth at all costs business models we have seen in the past. Traits PE firms will look for include a prior track record of working successfully in a PE-backed environment, extensive exposure to the board, strong leadership and decision-making skills, even if they are unpopular decisions. All PE firms want to maximize their investments and will rely on a CFO to do this, sometimes more so than the CEO.
Learn more about ON Partners’ executive search work in the private equity sector here.
Part 02: Leadership Demand in Supply Chain
Kevin Burns, vice president
All supply chains have some version of a “disaster decision making process,” and supply chain executives are not strangers to interruptions in supply or operations (e.g., hurricanes take out power or limit the ability to get certain materials on an annual basis), often having a multi-tiered solution in place to get back up and running quickly. In the not too distant past, this decision-making was decentralized, with each facility doing its own planning and disaster response.
Over the past ten years or so, however, the planning and risk mitigation function has become a more critical seat at the supply chain table. Planning and risk mitigation, done well and supported by the leadership team, allows a company to integrate different scenarios into its business operations, giving it the opportunity to dynamically react to changes in the market or economy. The supply chain executives able to react quickly to the COVID crisis took this one step further and had 24/7 resources focused on year-round preparedness for any variety of emergencies – weather, financial, health, you name it.
A great example of this is the H-E-B grocery store chain. H-E-B employs a director of emergency preparedness who focuses all of his time on setting up plans to quickly respond to emergencies and has been planning for a pandemic since the 2005 H5N1 “Bird flu” threat. This type of risk mitigation is a proactive action designed to enable H-E-B to quickly (nearly immediately) react to crisis in order to offset any impact. It is not just about when to react, but also how and in what way.
To enhance risk mitigation capabilities, we believe supply chain executives will be laser focused on their networks. For years, supply chain executives have been talking about how important it is to map their supply chain network — to know the pressure points, to know exactly where their product is coming from (mapping not only their suppliers, but the suppliers of their suppliers, and so on), and to know their options if a challenge hits.
The supply chain network map can serve as a path to a solution when disaster strikes. Mapping is expensive though, and must be constantly updated. As we continue through these disrupted supply chains, that cost is becoming more and more palatable.
As we emerge from this pandemic, we will see an increase in planning and risk mitigation roles and a push for more investment in detailed supply network mapping and even blockchain technology.
Supply chain is always going to be in the hot seat when it comes to emergencies, as ensuring continuity of supply is critical. As we emerge from the COVID crisis, supply chain roles will continue to be critical, but skills in demand will be a bit different. So many relationships built over years in Asia are going to be strained, but new relationships will be formed. Sentiment and economic reality will likely cause supply chains to shift away from China and into India, Eastern Europe, Africa and other emerging countries, which will benefit from the shifting investment. Experience in developing countries outside of China will take on greater importance.
Having established supply relationships or channels to build them will be in high demand, and those already operating in these developing countries will have a head start. Skills in supply chain risk/risk mitigation will be required for all supply chain executives and “what if” concepts will be here to stay. This is not a new set of skills, but will be amplified going forward. Executives who can give examples of the role they played in “recovering from COVID quickly” and leading through a pandemic will be in high demand.
Notes Hoffman, “As they say, a rising tide carries all boats… well, the opposite is also true. Perhaps it goes without saying, but this pandemic has also exposed leaders who were not prepared to lead in a crisis. In the near future, we expect there will be a generational shift in supply chain leadership, with the executives who are more educated in scenario planning, risk mitigation and new technologies to predict, track, map and solve supply chain disruptions rising quickly to top roles.
Companies cannot afford to come out of this pandemic “hoping” such a disruption won’t happen again. The companies and executives who learn from this experience and expand these skill sets and capabilities will be the winners in the long term.”
Learn more about ON Partners’ executive search work in supply chain here.
According to Mooney, “No question that technology and communications infrastructure will be a winner from the ongoing global disruption. The shift to work from home and educate from home has put tremendous strain on both the wireless and broadband networks as well as highlighting challenges with the digital divide. Network equipment providers, fiber network operators, wireless providers and anyone building broadband or wireless networks will see ongoing demand during and after the initial crisis.
From a network perspective, the crisis also further illuminated the challenges of providing connectivity and technology to underprivileged students suddenly learning from home and the ongoing lack of connectivity in rural communities. Issues like these are now near the top of the list and will require immediate intervention.”
This current environment demands leaders who understand adversity and will not get rattled by the pace and scrutiny of this new world. The last decade lulled a number of companies and leaders into a false sense of security, and now need leaders who will likely be more experienced or have a more diverse set of experiences.
It’s likely major players in the technology and infrastructure segments will opportunistically hire talent from more progressive and disruptive industries that they couldn’t have attracted six months ago. This blend of experience and innovation will pay big dividends to companies that embrace this new world.
Notes Conti, “The pandemic has illuminated what will be a new style of work that will have long lasting effects. Going forward, employees will spend significantly more time working from home environments, patients will receive significantly more medical treatment remotely via video, and companies will build teams located in disparate locations.
All of these changes are made possible by the availability and effectiveness of video collaboration. But all of this video collaboration brings with it a surge of demand on the network that otherwise would not have been had these interactions continued to be done in person. These network demands have only exacerbated the need to quickly complete a 5G network build out, driving significant activity for communications infrastructure companies – fiber construction, wireless infrastructure, and data center expansion – even in the midst of the pandemic.”
Learn more about ON Partners’ executive search work in telecommunications and infrastructure here.
Part 04: Leadership Demand in Telemedicine
Telemedicine has always been seen as a “nice to have” and was the perennial “next big thing” for more than a decade. It was a solution in search of a problem that suddenly found its reason for being. For both patients and providers, telemedicine allows all parties to mitigate risk, assess and triage a variety of medical situations and time and location shift medical resources around a much larger geographic area.
The technology has been there for years, but that pace of innovation will only accelerate as a result of the virus. In the future, patients will be slower to show up to the ER or urgent care for minor maladies, and telemedicine will provide a viable and useful alternative to traditional care.
Notes Cornacchia, “Telemedicine has been gaining traction over the last few years by both payers and providers as a useful services platform enabling them to reach patients in both the primary care and specialty clinical settings. The view however is that telemedicine can help augment patient care, not replace traditional medical practice.”
Over the past few months, demand for these services has skyrocketed due to the obvious benefits to not only engage patients without fear of virus spread, but also as a quick way for providers to augment hospital staff battling heavy patient loads especially in the ER setting.
With the immediate global shift to social distancing the last few months and reliance on technologies to enable all industries to continue to work, any stigma that ‘virtual’ engagement is inferior to ‘in-person’ interaction seems to be disappearing. This bodes well for the telemedicine industry – that virtual health services will be as valued as face-to-face engagement with medical professionals.
Learn more about ON Partners’ executive search work in telemedicine here.
Part 05: Leadership Demand in Life Sciences
Researchers at biotech companies continue to work in their labs, with rotational scheduling and social distancing allowing them to continue on a reduced schedule. Meanwhile, clinical trials are experiencing a major impact for two reasons:
- Trials are conducted from multiple sites, usually around the world. Lilly announced it has put new trials on hold – a major blow to the studies of new medicines that in a few years will likely play out to a gap in new products being approved. Trials are difficult to oversee if operations staff cannot travel or visit sites to set them up. As a result, the demand for leadership over clinical trials may slow.
- Hospitals and doctors are prioritizing infected patients and are asking others – including those involved in trials – not to come in and place unnecessary burden on the hospital. As a result, ongoing clinical trials with data gathering may be impacted.
Notes Zebedee, “Many clients have shared that they have initiated new programs or pivoted from other non-infectious disease programs to help with the current virus detection, therapeutics or vaccines. This brings a few advantages during the current situation – one is to do their part to help in whatever way that they can and the second is to raise awareness of the company or platform or science.
Biotech companies are able to operate under essential business in the San Francisco Bay Area with rotating shifts and with distance measures during shelter in place mandates and with those restrictions implemented, biotech clients have been able to get work done to advance the science to further understand this virus.”
Learn more about ON Partners’ executive search work in life sciences here.
While productivity is throttled by the logistics of the sudden shift toward working from home, mature enterprise software companies are continuing to operate as usual compared to their smaller, younger peers.
Notes Morrow, “Those organizations with a heavy reliance on traditional enterprise sales motions will face a commercial headwind as account executives are unable to physically meet and pitch new customers, and those with a more modern, digital marketing-driven sales motion are at an advantage in terms of maintaining momentum. Pricing pressure will begin to take hold as potential customers weigh their capital outlays for expensive new software systems, favoring cloud-based platform products with a la carte features.
From a leadership profile perspective, given that executives do not have the luxury of in-person meetings at the moment, those with strong skill sets around organizational management and administrative effectiveness will shine.”
Learn more about ON Partners’ executive search work in enterprise software here.
An organization with strong leadership, particularly an alignment with the senior leadership team around taking care of employees, (from the Employee Assistance Program to comprehensive benefits) in good times and in times of difficulty, is one that also will be well-equipped to take care of its customers, vendors, the environment and ultimately, its shareholders.
Serving as the voice of the employee experience and culture, the CHRO will need to continue to bring an emphasis on building and sustaining culture through listening, communicating and employee connections, which naturally means that those companies with an ongoing appreciation for the business value of diversity and inclusion will also thrive amid the market changes.
In addition to focusing on the well being of a company’s employees, the CHRO role during and post-pandemic requires a strategic leader who partners with the CEO and CFO to focus on data analytics and scenario planning.
The CHRO role has always been key to focusing on the well being of a company’s employees. This is particularly true in times of crisis. Strong HR organizations focus on employee wellness and support in times of personal difficulty and also focus on developing leadership who are equipped to lead at all times, especially in a crisis.
“The COVID 19 crisis has brought this front and center to organizations that maybe weren’t quite as enlightened as others that had truly valued the CHRO function in the past,” notes Harris.
Certainly, there will be leadership shifts as a result of this pandemic and how we plan for changes in how business is done in so many ways. I think there will be a rethinking of business strategy and changes that will occur, particularly in business to consumer organizations. I hope we become more enlightened for how we do work and measure productivity, how we manage our logistics and distribution channels and how we manage and manufacture critical materials domestically. I think this will lead to more board oversight and input as businesses evolve, as well as an emphasis on more collaborative leadership in general.”
This time has required decisive and timely decision making, while at the same time taking in account a variety of complex variables. This will be necessary as executive leaders move forward not only post-pandemic but to the world lived in post this experience. There will likely be more collaboration in the private sector to help solve big problems that occur (such as the work of Google and Apple). The hope is that this crisis will bring innovation, new and different jobs/industries in the US and, hopefully, an appreciation for how positively the environment can be impacted by human change.
Learn more about ON Partners’ executive search work in human resources here.
About ON Partners
ON Partners propels an organization’s mission by building C-level and board leadership teams. Founded in 2006 by like-minded consultants as a values-driven alternative to the multi-service global firms they were leaving behind, ON delivers a better executive search experience. The firm has been named to the Inc. 500/5000 Lists six times, was named to the Inc. 5000 Hall of Fame in 2018 and is consistently ranked among the top 20 retained executive search firms in the U.S. See more COVID-19 related resources for the ON community here.