Macroeconomic Challenges Force Companies to Rethink Hiring Practices
A global economy that is showing signs of slowing, rapidly changing consumer preferences and further tightening of the labor market is having a negative impact on staffing and executive recruitment — which is forcing companies to take a more proactive approach to filling the c-suite as well as rank and file positions.
But it is not easy. Industry staffing and executive recruitment experts say the demand for “ideal candidates” is higher than what’s available. Moreover, recruiting executives and managers who can meet the current leadership demands is akin to finding a unicorn.
Brent Magnuson, partner at Egon Zehnder, said the talent market “is very competitive right now and the requirements are more challenging. Everyone is looking for great general management or functional leaders and they need to be digitally savvy and ideally diverse.”
In response, Magnuson said companies are working hard to be more proactive “and developing talent pipelines to identify talent in advance of needs. In addition, companies are investing more in developing internal talent and taking calculated bets on people with potential.
Fueling these challenges is a macroeconomic environment that is shifting and entering a new cycle. Sue Lamoreaux, managing director in the fashion and beauty practice at Solomon Page, said the economy “has obviously been in the longest expansion on record and we are all enjoying this healthy run. The labor market is extremely tight, with unemployment below 4 percent, which means that staffing and executive recruiters have been repeatedly approaching the narrow existing talent pool of candidates, tempting them with new opportunities.”
Lamoreaux said most candidates, especially those in specialized sectors, “have come to believe these daily opportunities delivered to their inbox is the norm.”
“With that said, there are signs that the global economy is beginning to slow down, along with political uncertainty, consumer confidence may be waning,” she explained. “We are starting to receive resistance from candidates regarding career moves or new job opportunities based on this. There is always a risk factor involved in having to reestablish oneself at a new role or company, but candidates today are asking themselves if this risk is worth it, especially if the timing happens to coincide with a recession.”
Lamoreaux also noted that fashion and beauty’s “constant evolution” has transformed hiring trends – making it “unrecognizable from just a few years ago.”
“With the uptick in e-commerce, it’s imperative to find candidates who have experience in big data and analytics, most of which are not graduating from the conventional fashion schools or being sourced from a traditional retail background,” Lamoreaux said. “Dramatic shifts in consumer preferences and purchasing habits have forced companies to take notice of candidates encompassing new skills and specific backgrounds.”
The background requirements include experience in e-commerce, sustainability, emerging brands, social media and the experiential economy.
Simultaneously, the changes in the industry include acquisitions by “legacy retail” brands to bolster capabilities while also tapping the talent at the target company. “Examples would be Walmart buying Jet.com, Target investing in Casper, Unilever buying Dollar Shave Club, and so on.”
“Given the fact only a handful of companies have the ability to do this, most brands have had to adapt and hire smarter,” Lamoreaux said. “As a recruiting team, we have become laser-sharp in identifying candidates from aspirational brands our clients want the skills from and we vet accordingly with a new set of credentials each time.”
Annabel Norman, associate partner at DHR International, said for the beauty industry in particular, the evolution is ever-evolving — which creates constant pressure. “The wave of digital and direct-to-consumer competition in the beauty industry has sparked a struggle for brands of all shapes and sizes to drive innovation, transformation and disruption through the acquisition of leading, industry talent,” Norman said.
“Most recently, the industry witnessed the acquisitions of Drunk Elephant by Shiseido and that of Tatcha to Unilever Prestige,” Norman said. “There’s also the billion-dollar valuation of influencer inspired brands like Kylie Cosmetics and many private-equity firms that are backing celebrity brands like Lady Gaga’s Haus Beauty. This leaves heritage brands and organizations like Coty, Estee Lauder and L’Oréal in a place where they must rethink their highly matrixed organizational design to replicate that of more nimble organizations like the indie newcomers who are building digital-first brands.”
For executive placement firms, current h.r. practices creates its own set of challenges. “With the never-ending non-competes that cripple the movement of industry talent and the overall shortage of available and qualified talent, executive search consultants must be more agile and creative when it comes to solving a client’s ever-changing demands for talent,” Norman said.
To address the “war for talent” and prevalence of non-competes within the beauty and personal care segments, DHR International is tapping internal resources outside of North America, Norman said. “This pro-activity has enabled our team to bring leaders to brands in record time despite the obvious challenges.”
Recent successful placements include one at Kate Somerville, which is a Unilever Prestige brand. “We successfully brought a new chief executive officer to the brand within 60 days who was unbridled from a non-compete perspective and invigorated by the opportunity to work with such an iconic founder,” Norman explained. “This executive, Reuben Carranza, was not only known to us, he was top of mind given his incredible track record of success in building high performing and diverse brands with an incredible knack for building culture.”
Norman noted that the firm has also seen “tremendous success in bringing ‘out of the box’ talent to the table — i.e. talent from digitally native, disruptive or iconic brands that might not have been on the beauty industry’s radar two years ago. This broader reach has enabled us to bring top talent from both inside and outside of the beauty industry over the years to brands like NYX Cosmetics, Milk Makeup, PCA Skin, Kate Somerville, E.l.f. Cosmetics, Glow Recipe, Hourglass Cosmetics, Pixi Beauty and more.”
DHR International’s Tricia Logan, a managing partner at the firm who focuses on retail and fashion, said from a higher elevation, the most pressing issue in staffing and executive recruitment “is finding the leaders of tomorrow — today.”
“As business partners with our clients, we view their challenges as ours,” Logan said. “The pace of change and the continuing need for digital transformation, a singular focus on customers from both a product and experience standpoint and the ramp-up of analytics functions is driving many hiring decisions. The competition in these areas is intense, so speed in hiring candidates is definitely a challenge. The race for talent is incredible.”
To address these challenges, Logan says her team is constantly evaluating the market “on a broad scale, and encourage our clients to be proactive in identifying talent on an ongoing basis.”
“As a global company, we can leverage the expertise of our partners in other regions and functions to share knowledge and access to leadership talent in other industries,” Logan said. “The proliferation of startups and the growing beauty/wellness industry necessitates looking beyond more traditional retail candidates.”
Looking ahead to next year, a slowing global economy might not ease the pressure on the labor market. Also, there are demographic trends that are reshaping the overall workforce. Several recent studies reveal that Baby Boomers are expected to remain in the workforce well into their 70s and beyond – which will have an impact across organizations from the c-suite down to the store-level associate. And regarding non-competes, this practice is not expected to dissipate anytime soon.
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