I recently read an article written by a young woman, explaining why she didn’t strive for a career. Why indeed she thought we should stop working altogether and enjoy some unemployment. Of course the article was probably meant to ruffle some feathers but it got me thinking: Do we actually still have something of a „generation contract“?
What contract do generations have?
The „generation contract“ is a concept that refers to the social and economic expectations and obligations that exist between different generations. It is a kind of unwritten agreement between different age groups, where each generation has certain responsibilities towards the others. However, in recent years, the generation contract has become less clear, and the expectations and obligations between generations have shifted. There are several reasons for this change, including demographic shifts, economic insecurity, and changes in social values.
Let’s have a closer look at the latter: Changes in social values have led to a shift in expectations between generations. Younger generations may prioritize individualism, personal fulfillment, and social activism over the traditional values of hard work and respect for authority. This can lead to conflicts with older generations who may not understand or appreciate these values. The validity of the generation contract is a matter of debate, and there is no clear consensus on whether it still holds true in today’s society.
On one hand, some argue that the generation contract is still relevant and necessary. They argue that each generation has a responsibility to support the others, both financially and socially, and that this is essential for the sustainability of society. On the other hand, there are those who argue that the generation contract has become less relevant in today’s society. They argue that economic, demographic, and cultural shifts have made it more difficult for different generations to connect and work together.
Ultimately, whether the generation contract is still valid or not depends on one’s perspective. While there may be some truth to both arguments, it is important to recognize that the relationships and expectations between different generations are complex and multifaceted. It is up to each individual and society as a whole to determine how they want to approach these relationships and obligations, and to work towards building a more inclusive and sustainable future for all generations. Despite these challenges, it is important for different generations to work together and find common ground. The generation contract is not a one-way street, and each generation has a responsibility to support and respect the others.
In the end, the generation contract is being renegotiated constantly. While older people might want to cash in on their contribution during their work lives and discover a younger generation that seems unwilling to do their part, there is a huge demographic problem, that no generation can ignore. What does it take to reinstall the balance? Is the contract even still there? What do you think?
As an executive search consultant, I look at salaries in from many different angles. Especially lately with the ever-tightening candidate market and increasing difficulties filling positions, it seems to be fair game in the salary expectations. But there’s more to it – and there’s economic realities – something that concerns us all! Such as these:
Salaries are on the rise – and drop
A recent economic outlook by OECD showed how much real wages are declining in relation to inflation in the different OECD countries. Between the beginning of July and the end of September, the increase in nominal wages in Germany was far from sufficient to compensate for inflation, partly due to drastically increased energy and consumer prices. Real wages in the third quarter of 2022 were around 4.3 percent below the level of the same period last year. The Federal Statistical Office even assumes a price-adjusted drop in real wages of 5.7 percent with consumer price inflation of 8.4 percent. According to estimates by the OECD, the need for wage increases to compensate for inflation and maintain purchasing power is unlikely to decrease significantly in the coming years either. According to data from the Federal Statistical Office, the current drop in real wages in Germany is the longest-lasting and strongest since 2008. And that is although employers feel high pressure to pay much higher wages as it is.
That’s the interesting part about perspective here. There’s a lot of discussion around that employees` need to be paid more (which they absolutely do!) and their perspective in their unlimited choices on the job market but I also hear a lot of voices from the employers saying, yes but we need to be able to pay that. Money needs to come in accordingly and that also is tightly linked to production and energy prices as well as incidental wage costs.
Pay is a societal question
I think the question of salary is a societal issue. It has a big context, and a lot of discussions are falling short of the big picture. It’s not just the candidate who should earn this and that, there’s also the reality of budgets within companies (that may also be “just” salaries that need to rise accordingly) and there is a chain of realities in production that result in higher prices, higher productivity, higher pay, etc. That’s not to argument against better pay and appropriate wages but more to argument for seeing what all goes into this discussion. There not only the candidate`s perspective, there`s not only the employer`s perspective, there`s also budget structures, there`s wage cost regulations, there`s even hinders to employ foreigners, we so desperately need. The reason for the situation the OECD put into numbers (above), and we all deal with every day is complex.
Let’s take an example: You want to pay candidates what they want – good for you.
But what about the employees you already have? Do they all get a raise?
What about the budget structures on your client`s side that haven`t increased in 10 years? Where are you cutting that off for rising wages?
What`s at the end of the rising wages, more need for income/productivity/growth, burnt-out people, rising wages, more need… circle?
Is it fair to pay someone so much when the nurse / kindergarten teacher / caregiver earns so much less? What is the work worth really?
It feels like there`s a lot of questions to ask. Feel free to add in the comments!
If you ask me to characterize 2022 with just one word, I’ll go with “extreme”. And perhaps “uncertain”. Aftermath of the pandemic, rampant inflation, raging war – all of those are factors that are changing and influencing the business climate keeping the race for hiring senior talent remain extremely strong. Now, as another challenging year is coming to its end, let’s take a look at where current trends lay and what the important takeaways for the upcoming (hopefully less challenging or at least more certain) year are.
Retirement wave and post-pandemic supply shortage
Don’t want to sound cynical, but let’s face it: baby boomers are getting older. This, of course, has direct repercussions for the executive search, since the average age of pharma leaders is 58 (check out this study of CEOs at the Top 50 Biopharmaceutical Companies (2018), a quite interesting read). The retirement wave in MedTech, Pharma, and Biotech has heightened the demand for Director/VP level personnel to fill the gaps of senior retirees. So, keep your eyes open – new directors are needed, and they are coming!
Although the COVID pandemic has become rather history (well, at least in some places), its consequences are going to haunt us for years to come. The post-pandemic supply shortage is a real problem, and it should be dealt with respectfully. It is responsible for creating strong demand for transformation managers, whose value has grown significantly in the past year. You see, identifying an area of opportunity within a company and implementing processes to change its performance for the better – a very simple description of what a transformation manager does – is something of increased usefulness in turbulent times.
What else is in demand?
At this point, sales and marketing have taken the central stage. Together with more traditional business development and R&D sectors, they make the most demanded functions in MedTech, Pharma, and Biotech. But wait, it’s not that straight forward! It’s crucial that successful candidates demonstrate experience in transformation (see above). And keep in mind interim management – there is a higher demand for those positions currently, as executive search doesn’t always keep up with the changing trends and stormy business climate.
Sacrifice to be made…
Another interesting development is that HR teams are increasingly using Recruitment Process Outsourcing (RPO) for middle management positions (external providers rejoice!). Hiring specialists for the analysis of a particular position’s requirements, the process of alerting qualified individuals to the opening of the position, the screening and selecting of qualified applicants, can at times be more efficient than relying purely on the in-house HR team.
Also, good news: we can see a substantial increase in middle management salaries! On the other hand, increasing amount of job seekers are willing to sacrifice part of their salary for more freedom and work-life balance. Does it have to do with the post-COVID sentiment, or with the idea that millennials and Gen Zs are less inclined to think in “classic” capitalist terms of financial success and hard work? Or maybe a bit of both…? Time will show.
What the future holds
And finally, please allow me to present the elephant in the room! Geopolitical conflict (aka an outdated way of dealing with disagreements, aka war) is raging in Europe, which had significant repercussions on pretty much every aspect of business environment. If economic and geopolitical circumstances do not improve in 2023, very high demand for people who do the groundwork (blue collar) is expected together with a restrained market for Management and C-level positions. Let us stay hopeful, for good always prevails.
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Aus über 3.000 Personaldienstleistern wurden die empfehlenswerten Personalberater ermittelt. Auftraggeber und Kandidaten wurden dabei gleichermaßen in die Umfrage einbezogen. Abgefragt wurden u.a. Qualität und Auswahl der Kandidatenprofile, Servicequalität, Preis-Leistungs-Verhältnis, Kommunikation und Prozessgeschwindigkeit.
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This report calls on IIC Partners search consultants from five countries in Central Europe (Germany, Austria, Switzerland, Czech Republic, and Slovakia) to discuss the executive search industry outlook, along with other HR trends.
by Christine Hayward, Executive Director, IIC Partners
The executive search industry has been extremely strong over the last two years. After the initial shock of the pandemic, organizations looked to grow and recover, and they needed executive talent with new skills to lead the way. This led to a ‘war for talent’ and salaries increased dramatically.
We are now approaching a period of increased economic uncertainty and rapid growth has begun to slow. However, as you will see in this report, the outlook is highly variable: some markets, industries, and roles are still on ascending paths of growth. We also see an increase in demand for interim management and coaching services.
Another key trend is the shift towards an ’employee market’ where high competition for talent has led to employers being more flexible and offering benefits such as 100% remote working and 4-day workweeks. If competition for talent slows, there could be a rebalancing of power. Yet, we are confident that many improvements to working life are here to stay.
Executive search firms are renowned for helping organizations navigate shifting market conditions by hiring and developing the right talent at the right time. We look forward to assisting our clients in the coming months and please contact our consultants to discuss any topics raised.
01. Current Demand for Executive Search Services 02. Industries and Functions in High Demand 03. How Executive Compensation is Changing 04. Additional HR Trends 05. 2023 Outlook for the Executive Search Market
How strong is the current demand for executive search services?
Marlière & Gerstlauer: The demand for search services is decreasing as employers prepare for a potential recession. However, there is still strong demand for smaller positions below an annual salary of 85K EUR. Large organizations are trying to complete searches first with in-house resources before engaging a search firm.
Ingeniam: In MedTech, Pharma, and Biotech there is high demand up to the Director/VP level to fill the retirement wave of baby boomers. There is also strong demand for transformation managers to help fill the post-pandemic supply shortage.
Eblinger & Partner: The demand for search services is high: not just for the senior level, where headhunters have always been requested, but also for mid-management and specialists. Even blue-collar positions and entry-level positions are hard to fill. Managers are desperate and ask us (by mistake) for help. As an executive search firm, we recommend contingency recruiting agencies for these lower-level positions.
Level Consulting: The demand for search services remains strong as Switzerland continues to be in a growth market: 2% according to the Swiss State Secretariat for Economic Affairs and the inflation rate of 3% is low compared to other European countries. The shortage of skilled workers has been observed for some time, especially in healthcare, IT, industrial, and finance, and is leading to high demand for executive search as well as interim management solutions.
Czech Republic and Slovakia
Teamconsult: There is an above-average demand for executive search services in Slovakia, especially at the top management level. In the Czech Republic, the demand is more on an average level, mostly focusing on senior specialist and mid-management positions.
Which industries and functions are most in demand?
Marlière & Gerstlauer: Branch managers, middle management, and plant managers in the industrial sector are currently in high demand.
Ingeniam: In MedTech, Pharma, and Biotech, the functions most in demand are marketing and sales, business development, and research and development. However, successful candidates must show experience in transformation.
Eblinger & Partner: Finance and IT positions are most in demand and very hard to fill.
Level Consulting: The industries and functions most in demand are Healthcare (Board, C-Suite, medical staff), IT (CIO, Head Digital Officer, IT project leaders), Finance, and Industrial (digitalization, quality management, and sales). Across industries, we are seeing more demand for Head of HR/Business Partner positions and for roles that manage compensation and benefits and digitalization in HR, which requires new skills. There is also an increasing demand for interim management.
Czech Republic and Slovakia
Teamconsult: There is strong demand from the professional services industry in the Czech Republic and Slovakia, especially for senior lawyers and tax advisors. Manufacturing companies are looking for supply chain and quality managers, as well as plant managers and CEOs.
How are salaries changing in our markets?
Marlière & Gerstlauer: Salaries have risen significantly across all sectors. But for some time now, we have seen this trend stagnating due to companies attempting to slow the continual rise. Despite this situation, candidates are demanding higher and higher salaries due to the current inflation. This naturally impacts passive candidates’ willingness to change roles if employers cannot meet their expectations.
Ingeniam: There is a substantial increase in middle management salaries. However, we are also hearing from many job seekers who would love to sacrifice part of their salary for more freedom and work-life balance.
Eblinger & Partner: Salary expectations are increasing, and for positions in high demand, we are seeing increases of up to 40%. High competition for talent is providing candidates with multiple competing offers, and there seems to be no limit to requests for higher compensation. Secondly, there appears to be a generational shift where Gen Y and Z are very confident in asking for higher income or 4-day workweeks for the same salary.
Level Consulting: In general, salary increases due to inflation have become very common and a tight market for talent is boosting salary expectations. We expect this to peak in the first half of 2023. In healthcare, non-medical management positions have been on a continual upward trend due to backlog demand, which is now flattening.
Czech Republic and Slovakia
Teamconsult: Salaries in the second quarter of 2022 in the Czech Republic rose by 4.4%, but real wages dropped in the same period by 10% due to inflation. Inflation has continued to grow and reached 17% in September. Pressure on employers to further increase salaries is therefore very high.
What are some other HR trends we are seeing?
Marlière & Gerstlauer: Employees want more free time with the same salary and are increasingly demanding permanent 100% remote working, as is common in the IT sector.
Ingeniam: In MedTech, Pharma, and Biotech, HR teams are increasingly using Recruitment Process Outsourcing (RPO) for middle management positions, and there is a higher demand for interim management.
Eblinger & Partner: There is an increase in positions that offer 4-day workweeks for the same salary as 5 days, and there are more 100% remote roles.
Level Consulting: The development of an employee market continues, and companies must consider how they can remain attractive to applicants and stand out. That includes more flexible working models in less rigid structures, remote work, 4-day weeks, and working in project organizations.
Czech Republic and Slovakia
Teamconsult: There is more demand for coaching services, including for employees below the top management level. Companies are hiring for more project-related positions, offering only limited contracts, and interim management is in high demand. Remote working has become standard practice after the pandemic.
What is the search market outlook for 2023?
Marlière & Gerstlauer: We see continued demand for smaller positions while demand for c-suite and senior management will decline. And should a recession occur, we will see a decrease in vacant jobs. In addition, both candidates and clients are becoming more selective in their requirements, making it harder to complete searches.
Ingeniam: Very high demand for people who do the groundwork (blue collar) and a restrained market for Management and C-level positions if economic and geopolitical circumstances do not improve.
Eblinger & Partner: We expect the search market to continue to be in high demand as there is no solution on the horizon to increase the number of participants in the labor market. Only a recession could decrease the number of vacant jobs.
Level Consulting: We expect the demand for search services to remain high and the shortage of skilled workers to become more acute. Furthermore, digitization and other triggers for transformation lead to more complex skillsets and candidates are expected to have a large intersection of technological and people management skills. In addition, clients are seeking more diversity and gender equity at the executive level. As a result, they require a better representation of women in candidate pipelines. Demand for career coaching services and interim management solutions continues to increase.
Czech Republic and Slovakia
Teamconsult: For the last ten years, companies have searched for managers to handle growth and increased demand. For at least the next two years, we expect a different type of manager to be in demand: budget control, cost-cutting, and restructuring will be the new key qualifications on a manager’s CV.
IIC Partners is a top ten global executive search organization. All IIC Partners member firms are independently owned and managed and are leaders in local markets, developing solutions for their client’s organizational leadership and talent management requirements.
We are fortunate to navigate an industry of major growth! So far so good. Growth, innovation and disruption call for a great number of talented people and some fine leadership to be able to keep up. And you might have noticed, times are changing. The job market is not an easy beast to tame, nor is it a calm pond, where every swing of a fishing rod gets you the exact fish you need. The process involves sifting through multitudes of candidates in order to understand thoroughly where objectives and expectations of both – a client and a candidate – align. It means identifying, targeting, assessing, and approaching candidates in the market directly and individually, to fulfill the very mission a company sets for itself. It’s about answering individual needs of every client with surgical precision taking a holistic approach to their benefit.
Times where you put out a job ad, got hundreds of applications and people going above and beyond to get the job are over. I hate to break it to you.
CV engines and networking platforms?
Perhaps not the best way of finding candidates: there is far more beyond professional credentials and nicely arranged descriptions of oneself. It’s rather about establishing trustful human communication. There is no other way of getting to know your candidates if not through direct conversation. This adds up to learning about candidates’ soft skills and identifying whether they can become a good cultural fit to the company. It’s not about a new job opportunity per se, but rather about personal matters of psychological domain that can impact working behavior resulting in success or failure. At the end of the day, what counts most is the feeling of a purposeful discussion, whatever the outcome is.
Investment for the future
It’s important to keep in mind that by approaching candidates directly you ultimately invest, nurture, and strengthen your network. No doubt, having a few hundreds of great CVs (that you got sent over to, because of an “We’re hiring” ad you’d posted yesterday) is terrific. But does it actually mean anything, if you haven’t had a direct conversation with any of them even once? Spoiler alert! Not really. The right way is to approach candidates directly to get to know them beyond their credentials and technical expertise – exactly what company like ours does. You want your candidates to be full-fledged profiles instead of mere lists of names and CVs.
So, what does it leave us with? You only benefit from direct approach when hunting for talent. Every company has their individual goals and visions, so do candidates. Finding where those interlink and how both can benefit from each other can only be uncovered through direct discussion. Not only does it allow you to complete a candidate’s profile with all its diverse aspects, but it also allows it include this profile to your network in case the initial company doesn’t find them fit for a position – something job ads fall short at.
Sorry job ads, maybe some other time or in a different setting.
Whoever has been dealing with storytelling in the context of strategic communication, has probably been introduced to the customer avatar. The ideal customer, the one person that represents the mass of people you want and need to talk to. Whatever need it is you’re addressing, it can be the ideal candidate, the perfect visitor to your store, the one person that really needs your product, the avatar is that in one person.
It may seem a bit odd to assimilate a vast number of people in one Steven, Christian or Beth to the address, but it also has something of a calming notion that so many people have the exact same problem, need, feeling and desire.
The problems we share
In the executive search industry, the problems of potential customers can differ a lot in detail, but they also have a lot in common when it comes to the root of the problems. The customer avatar has difficulties with demands and reality of today’s candidate market. Difficulties finding the right executive candidates, a fear of leaving positions unfilled, excessive pressure on the existing team, products not entering the market, quality management not living up, global distribution being stalled, etc.
The customer avatar has a lot of difficult conversations with colleagues and superiors, why it’s not working, why the candidates don’t fit. There is a lack of understanding why the tools don’t work, why the salary expectations differ so much from what the company can offer. The generation “Work Life Balance” meets the demographic decline of the baby boomers. There you go.
We get each other
That’s not a specific problem of the industry, it’s a problem literally EVERYBODY has. While that may be a bit comforting, that we essentially are not alone with our problems, it still doesn’t solve them. Building up recruiting inhouse often lacks specialized and experiences approached that are even more necessary in a touch market. Candidates don’t work or look the same anymore. The dream job might no longer be engineer at Porsche but influencer at You Tube. And: yeah, job ads, forget it!
I feel for my customer avatar. These are no easy issues. Important people quit or go into retirement, on top the company needs to “transform” towards new products and services to meet current needs. It becomes overbearing. No people anywhere in sight. And also: no quick fix.
Stay strong and stick it out
But there is hope for the customer avatar. It goes through vision, ideas and long-term solutions. Approaches need to be re-evaluated and an external eye is almost always helpful. Letting go of the problem and handing it over can be very rewarding. There are people with more experience, more knowledge and know-how and the tools to find the missing pieces. Long-lasting relationships with experts can be just what the customer avatar needs. To focus on the company and the ability to innovate and develop for the future.
I’m sure you’ve heard some talk about the severe talent shortage and its consequences in basically all industries. Just recently you could easily observe it compressed in the situations at the airports. Not enough staff anywhere to remotely conquer the task of having as many travelers on their way into summer vacation as there were. How are you supposed to handle all the bags, when there are not enough people to pick them up, carry them around, deliver them. How are you supposed to have planes on time or take off at all when there are not enough pilots to fly them, ground personnel to guide them, flight attendants to work on board?
This is how a lot of business owners feel these days. The assignments are there, the Covid-crisis is basically over on that front but what to do when there are not enough people to do the work? Plus: the existing staff is constantly overworked and even more people quit! Looking around, this is an overwhelmingly big problem.
Yes, to quickly stuff some holes, you can try and quickly hire new people. But, as previously mentioned, that is a much harder task than it used to be due to a severe lack of people. Not only qualified people but people in general. What also happens a lot is that less people take on more work to cover the workload. So, C-Suite people end up helping out with excel lists and standard tasks, or – to use the airport example above – the CEO of Lufthansa (who’s a trained pilot) would go down and fly planes and actually, in the air, use the autopilot and hand out some blankets and afterwards unload the baggage and drive it to the belt.
Another short-term solution is to drop clients or cancel assignments. Yes, that hurts. Especially after the Covid-crisis it seems somewhat risky to not “work in” some of the losses during that period. But again: no people, no work being done. But this question of how to conduct business further on brings us to the next chapter: What needs to change long-term?
When you look at the long-term effects, there is surely a change due in terms of how we work. Because the talent shortage isn’t going to significantly improve, there are just too many (shitty) jobs for too little people. And the candidates have all the choice in the world. What used to be a sentence from employers – “you’re in the closer selection” – is now a sentence from candidates. This may be frustrating for employers but it’s the reality. We need to deal with it.
The quality and structure of work needs to change, the relationship between management and staff needs to change and there is a big need for work to fit the individual better. And ideally everyone profits from this. Change is hard but it needs to happen. Working conditions that have existed for centuries are changing dramatically for all participants. Existing jobs are disappearing. But does that need to be bad?
Yes, it’s hard to be hopeful when work mounts, people quit and burn-out becomes an epidemic that is hard to handle. But – in the spirit of “it needs to get worse before it can get better” – the fundamental shift might be necessary to prepare for better times. What are your hopes for what to get out of it. Do you think it’s going to be a service-free-zone? Or more an oasis of individual fulfillment?
Social media are fun! All those innumerous interesting articles from all sorts of know-it-all gurus, endless stunning photos of last night meals from breakthrough influencers, tons of memes that will make your belly hurt for how hard you laugh. Just pure joy in your stress-free life!
Let’s dial back the sarcasm and get to the point: you shouldn’t forget that social media have become one of the most powerful brand-building tools in the current day and age. Why? Because social media essentially offer dialogue directly with your audience. But not only that. Thanks to the LinkedIn (also a social media platform btw) research, we know that stunning 66% of professionals would be more likely to recommend a company or brand if they followed a company’s executive on social media.
Exactly! It’s time to set up an account… But first, let’s take a deep breath and look at what we need to consider to bring your social media game to the next level.
Social media offer a great opportunity to interact directly with your audience, position yourself as an expert and, as a result, drive business value. This is one of the best ways to gain industry exposure, build engagement and establish trust with your target audience. According to the LinkedIn study I referenced before, 56% of professionals say a business executive’s presence on social media positively influences their purchase decision. In other words, the more recognizable you are on social media, the more likely you are to get new clients.
A company without a strategy is like a ship without a map – no one knows where you’re steering. Same goes for social media. It requires a strategy to make it clear what your priorities and goals are, and how you are going to get there. Some of the key questions you should ask yourself are:
“Who do I want/need to talk to?”
“What do I want to say?”
“Where do I need to be in order to talk to these people about these things?”
“What do I want people to do?”
“How much recourses am I ready to invest in it?”
Now, incorporate the topics you want to address in your profile bio to let your existing and potential followers know what to expect; follow relevant accounts and hashtags; get involved in trending conversations and leave comments based on your expertise and experience. That’s a good start and you can see what works for you.
Finally, and perhaps most importantly, you MUST take your social media presence seriously. Since it has a direct impact on your company’s recognizability and, eventually, performance (more reach = more potential clients, remember?), avoid falling into a trap of “I’ve posted like 5 pictures, but no one is following me! Social media don’t work!”. For social media to work in your favor you must stay consistent and plan your campaign a few months in advance. Moreover, you must prioritize authenticity to build trust with your audiences.
If you’re not confident in your social media skills or your ability to devote the time required to do it right, consider enlisting some help. Assigning an executive social media strategy to a trusted expert, like a social media marketing or a PR team, can help you with that in a much better way, than a freshly recruited intern.