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We end 2022 with considerable uncertainty, but the competition to hire top talent remains fierce for most organizations. We break down some of the key economic, leadership and headhunting trends that will emerge over the next 6-12 months – and what this means for businesses.
In many ways, 2022 is a year of extremes. The war in Europe escalated dramatically. Inflation remains rampant in many regions and shows little sign of abating, even as central banks try to rein in rising consumer prices and the cost of living. Meanwhile, the unemployment rate in OECD countries stands at just 4.9%, the lowest level on record – a far cry from the peak of 8.8% at the start of the coronavirus-induced unemployment crisis.
While low unemployment has somewhat mitigated the impact of inflation on many aspects of the global economy, it also means that it is more challenging for organizations to attract and hire top talent. This is especially true at the executive level, where today’s leaders look for more than compensation as part of their compensation. In this case, those companies that are creative and engaging in their hiring pitches to leaders will continue to have opportunities.
We recently asked the wider network what they think will happen to the executive recruiting market in 2023. The results were evenly split, with 33% saying things would only get worse and become more competitive, 30% saying things would get better and calm down, and 37% saying things would stay the same.
Talent Demand
Hiring of executive talent remains strong despite economic headwinds and the threat of a prolonged global recession. Our partner group is seeing a slight slowdown in the business-to-consumer (B2C) market for senior leadership, but the business-to-business (B2B) market is as strong as ever. Most believe this will continue into next year.
Customers are and will continue to attack the future into 2023. Businesses need to stay competitive and stay ahead of the curve by being prepared to fight whatever lies ahead. With so many aspects of the macroeconomy currently uncertain, having the right executive leadership in place is arguably the most critical component of successfully positioning an organization for the future.
expectations of executives
At the same time, challenging operating and commercial conditions throughout 2023 mean that 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 cost — will be paramount next year. If a recession does hit, the emphasis on executive performance will also shift from sales-led growth to broader priorities including change management, prudent financial management, optimal use of resources and, of course, inspirational leadership force.
fast growing industry
Through 2023, customers will continue to grow during this period of uncertainty by taking market share from competitors and other areas where market forces offer growth opportunities, such as 5G, cybersecurity, IoT and fintech.
Demand for talent in the cleantech, sustainability, recycling and solar industries has increased significantly over the past two years, and NGS Global has provided executive search engagements for a number of companies in the sector, including a series of executive placements at a leading electric vehicle company .
Cleantech is an asset class that is maturing very quickly. The level of private equity and venture capital investment, government policy support and innovation will only increase, rendering the industry virtually recession-proof. More than a quarter of global venture capital investment now goes to climate technology start-ups, totaling $77 billion over the past 12 months (compared to less than half that level at $36 billion in 2018) .
This growth will lead to a surge in demand for executive leadership and talent over the next two to three years and beyond.
winners and losers
With a GDP of $16 trillion, China is the second largest economy in the world and will add $640 billion to GDP next year, the largest contributor to global growth of any nation-state. After the Lunar New Year in Q1-23, China will reopen to international travel in Q2. However, travel in and out of the country will be more controlled and will not return to pre-pandemic freedoms.
More broadly, foreign companies in China have undergone considerable layoffs. For example, Germany’s Volkswagen AG, which has a large presence in China, plans to lay off 30 percent of its expatriate Chinese workforce, down to about 1,000, over the next two to three years.
Singapore is a net winner from political changes in Hong Kong and China’s continued stringent coronavirus elimination policies. Over the past 12 to 24 months, many companies have relocated their Asia Pacific headquarters from these two markets to Singapore. Specifically, many Internet and media companies have relocated to Singapore, as has much of the asset management industry in the Asia-Pacific region to preserve wealth and maintain stability.
Europe is entering a period of uncertainty, with Ukraine, high inflation, soaring energy prices, inconsistent central bank policy and low consumer confidence. 2023 will be a challenging year for some companies across the region, especially B2C companies. Companies with the most flexible operating structures and fairly flat hierarchies will have the greatest chance of success, especially those led by executives with high emotional intelligence, cultural fit, digital literacy, and change management expertise.
Another geographic winner is the current influx of immigration and investment into the Middle East, especially the UAE and especially Dubai. We’ve previously reported on the UAE’s FDI boom and boost to the country’s reputation, a trend set to continue until 2023.
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