by Ted Stiles & David Portney
Stiles Associates
The last couple of years have been the most challenging for hiring since the start of the 2010s. This is because post pandemic, hiring companies in several industries – especially manufacturing – have faced challenges at nearly every level of the organization. One of the most prevalent aspects has been the market conditions favoring candidates. Increased competition for top executive talent while hiring demand was spiking forced employers to flex on compensation, relocation packages, signing bonuses, quality of life factors including remote / hybrid work arrangements and more.
Even though firms like Stiles Associates typically pursue passive candidates, most of our recent hires were being pursued simultaneously by other suitors. In order to win, hiring organizations have needed to adapt, streamline interview processes and make offers more rapidly than they had pre-pandemic. Even when they did everything right, clients were still losing out to other competing hiring companies, surprise retention bonuses, or eleventh-hour renegotiation efforts from candidates sensing they had leverage.
In the big picture, however, this is nothing new. The talent market is dynamic, and there are periods when the pendulum swings in favor of candidates followed by shifts back toward companies. And as we settle into the second half of 2023, it appears the pendulum’s swing toward candidates may have slowed or even reached its end.
For example, the average Plant Manager role has increased its base salary by 15 to 20 percent since 2020, but hasn’t moved much since the start of the calendar year. There were many factors that drew the initial surge – the increased demand for goods, supply chain crunches, consumer behavior and inflation to name a few – but the compensation levels won’t likely change until the next significant event or market shift occurs. Additionally, incidents of retention bonuses at the point of resignation have significantly decreased.
Of course, select top-tier executives in highly competitive niche markets are excluded from the above. In these markets we’re not seeing the same level of plateau, so there continues to be strong demand and fewer restrictions on compensation for certain individuals. The most competent and visionary executives drive growth, innovation and strategic decision-making – and companies will continue to pay a premium for those leaders as they always have.
Strategies for the current state
While we’re definitely seeing signs of candidate market plateau, it’s important to note we’re not yet seeing a client’s market. We’re currently somewhere between the two, presenting new opportunities and risks for hiring companies.
Now is a great time to revisit critical hire efforts that were perhaps abandoned during the height of the frenzy. Market conditions have calmed, so now can be a great time to re-approach those A-players that were out of reach two years ago.
This is also a great time to hardwire some of the more competitive hiring behaviors developed over the last couple of years. All the winning tactics that worked for the last few years will serve companies well in the future. Streamlining the interview process, approaching candidates with a compelling selling story and having absolute clarity on the vision for the role all remain best-in-class practices. Most organizations will backslide on these things to some degree., but the amount to which they can preserve them, the more benefits it will provide when the market finds its next up cycle.
Smart organizations will also recognize this is not the time to reclaim ground. The new levels that were set on base compensation and benefits are unlikely to reverse from here. Executives seek fair remuneration for their skills and experience, so failing to provide competitive compensation can lead to a talent exodus, ultimately impacting the organization's performance, reputation and ability to attract future talent. Aligning compensation with the value of the candidate fosters a mutually beneficial relationship, contributing to enhanced performance and job satisfaction.
The executive recruiting team at Stiles Associates has over 30 years of experience working with clients to craft competitive compensation packages that attract the A-players. If you have a hiring need – whether now or in the near future – contact us right away to get the process started.