In January 2022, Melissa Reed, Managing Partner at H.I. Executive Consulting, shared an insightful article predicting a significant wave of C-Suite changes in the wake of the COVID-19 pandemic. As we approach the midpoint of 2023, it feels apt to revisit Melissa’s predictions and shed light on how the post-COVID CEO recruitment landscape has evolved.
Why Change?
The pandemic had a profound effect on many aspects of modern life, but none more so than how, where, and indeed if, we work. For businesses, it was a case of realising that aspects of their operations were not as strong as they once thought. But for individuals, it highlighted the fragility – and therefore the value – of life, which led to different perspectives, revised priorities, and a greater emphasis on work-life balance.
Melissa described how 2022 would see “a recognised need [for businesses] to augment certain key functions that were exposed during the pandemic and to move on leaders who did not sufficiently rescue business performance.” This need would inevitably lead to a significant level of CEO turnover over the next 12 months but would also be bolstered by a desire for change from CEOs, themselves.
“CEOs have to decide whether they are prepared to commit for many more years to see altered plans through, or use this as an opportunity for change”, Melissa wrote, “whether that’s a rebalancing of work and lifestyle, relocating back home, moving to a plural portfolio career, or just taking on a new executive role.”
Melissa Reed‘s CV//
2022-Present // Managing Partner – H.I. Executive Consulting
2018-2022 // Partner, Retail & Consumer – H.I. Executive Consulting
2015-2018 // Principal – Korn Ferry
2012-2015 // Director, Consumer & Retail – CTPartners
2000-2004 // Consultant – Alexander Hughes
1998-2000 // Head of HR EMEA – Episode Europe
With such a seismic shift in the priorities of both businesses and CEOs, Melissa forewarned of a ‘war for talent’, where the strongest candidates would be more in demand than ever. CEOs who excelled during the pandemic – and could point to tangible results and recovery – would be top of every board’s list. Given how rare those candidates would be, however, Melissa also claimed that first-time CEOs, who had demonstrated desirable capabilities in other senior roles, would be appointed.
The Predicted CEO Turnover: Did it Happen?
The first domino fell even before Melissa’s article was published. In June 2021, Burberry CEO, Marco Gobbetti, suddenly resigned, which left the company scrambling to find a new chief exec. Burberry observed a startling 8.7% drop in share price due to the absence of an obvious succession plan, but filled the vacancy at the top of their hierarchy five months later with Jonathan Akeroyd, who had been Versace CEO since 2016.
Melissa argued that this was only the beginning of a corporate game of musical chairs in which the “final piece in the talent jigsaw – the CEO – starts to move”, and she was right. Versace initially appointed Cedric Wilmotte as interim CEO, but finally settled on bringing Emmanuel Gintzburger to the table in May 22 to fill the position permanently.
Gintzburger departed Alexander McQueen to join Versace, and was himself succeeded by Gucci’s President of EMEA, Gianfilippo Testa, in the same month. However, this trend was not exclusive to the luxury clothing coterie; Proctor & Gamble, Home Depot, Walt Disney, and Adobe were among the many companies to also appoint new CEOs in 2022.
The Current State of Play
18 months after her article was published, we thought it prudent to catch up with Melissa for an up-to-date view of the CEO recruitment landscape. “The dominos haven’t stopped falling”, she began, “there is still a lot of CEO change and proven CEOs are still very much in demand.” So, CEOs with experience in leading successful transformations are still hot property for now, but there are rumblings that change is afoot.
“Boards are still hiring for wartime at the minute”, continued Melissa, “because you need experience to navigate difficult times, but these are often moment in time roles. You might be a great CEO for a particular organisation this year, for example, but next year you could be a bad fit because the business’ direction has changed.”
And this is already beginning to come to fruition, with a portion of the business community switching their focus in the last 6 months… “A lot of the changes happening at CEO level today are linked to the deals in the market”, Melissa revealed. “Private equity deals slowed down in 2022, but in anticipation of their return at the end of this year, a lot of businesses are trying to ready themselves, and that requires different leadership again.”
The Consequences for SMEs
So, what does this mean for SMEs? “I think what we’re seeing is quite a high level of instability in the market”, Melissa shared, “and that has potential to affect SMEs.” The most obvious concern with such a high level of turnover and a vacuum of talent is that larger companies may try to poach the CEOs of smaller companies. If that happens, it will set in motion a domino effect with the potential to filter down to SME level, where losing a talented CEO at short notice could be catastrophic.
But it isn’t all doom and gloom because Melissa insisted that instability can also create opportunities for SMEs. “Some highly experienced CEOs could move themselves into plural roles during this period and be more available for chair roles”, she explained. “So, SMEs can certainly take advantage of that. But with the high turnover and instability shaking the talent pool up so much, people are also more open to what opportunities they will consider. A few surprises could therefore be on the horizon, with some highly experienced CEOs moving to smaller companies that they find appealing and interesting – often for the growth opportunity they can offer, for instance.”
Three Things
Considering the current condition of the C-suite recruitment environment, we asked Melissa for Three Things – three pieces of actionable advice – you can implement in your business to make sure you protect against, and perhaps take advantage of, the instability.
Hire people with the potential to be the CEO of your business.
This comes down to the concept of internal succession, and the benefits of it are astronomical. “Internal succession is one of the best ways for any business to be proactive and give itself options in the wake of resignations”, Melissa explained. “But it’s particularly important for SMEs because it also helps to get the early culture – the culture you’re going to scale – right.” Surround yourself with people that fit your culture and have a complementary skillset. That way, you fortify your business against sudden departures and strengthen its ability to scale.
Focus on retention.
“Retention is incredibly important because it’s usually easier, cheaper, and better to keep hold of someone than it is to find someone new”, Melissa clarified. “Ask yourself if you have credible, achievable development plans in place; if your compensation structure is competitive; and if your culture is one people genuinely want to be part of. If not, you’re making it easy for people to pick up the phone when it rings.”
Take advantage of the market.
“Given all the current change that is likely to continue for the foreseeable future, be open to the opportunities this can give you in attracting new talent to the organisation”, Melissa advised. “Most often, it is better to plan changes to your leadership ahead of time and take a structured approach to this, but sometimes it pays to be opportunistic, taking advantage of talent that might otherwise not be available to you and your business if the market economics were different. Sometimes it does come down to luck and timing so be open to unexpected discussions and where they might take you.”
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We want to thank Melissa for providing such a fascinating insight into the current market of C-Suite recruitment. We’re certain that her expertise and advice on the subject will prove invaluable to our members, and if you would like to know more, please do get in touch so we can connect you with Melissa and the team at H.I. Executive Consulting.
If you could benefit from specialist advice bespoke to your business, apply to All Together today for up to five hours of pro bono mentoring from one of the UK’s leading CEOs, every year.