Interesting notes on executive compensation from Deloitte’s 2024 India executive performance and rewards survey report. Noticed a related discussion on ET TV. According to Deloitte report site, their survey covers information from over 400 companies across all major sectors.
In general, executive compensation continues to grow, and evolve fast with the market. Senior leadership roles come with much higher complexity, risks, stress and decreasing tenure. All the more reason for CEOs to have sounding boards and coaching support.
According to a Mint analysis of data from the past decade (2020), a CEO or MD of an average BSE 500 company stayed in the role for 3.4 years. Fewer than half of Indian CEOs completed three years in office. The tenure varied with industry and women were underrepresented. The global average for the world’s largest 2500 companies during 2004-18 was 5 years (PwC study).
Regarding age, “in NSE-500 companies, a typical Indian CEO today is 57 years old (roughly similar to Fortune-500 firms, where the average age of the top executive is 57.7 years). For the mid and small sized companies, the average age of CEOs comes down to about 50-52 years.”
Notes from the Deloitte 2024 report: * About 45% of S&P BSE 200 companies (excluding PSUs) witnessed a change in their CEO incumbent over the past five years. Almost six of every 10 new CEOs have been internal promotions. Amongst homegrown CEOs, business heads or CEOs of other group/parent companies were chosen to be the successors. In case of external hires, 81% of the new external CEOs were sourced from the same sector. * About 3 of every 4 CEOs in India now earn more than INR 5 crore [approx. USD 596,000]. * Faster increase in promoter CEO compensation compared with professional CEOs. * Average CEO compensation in India stands at INR 13.8 crore [USD 1.6 million], up 40 percent compared with pre-COVID times. * Fixed pay for promoter CEOs now constitutes over half of the total pay. For professional CEOs, pay-at-risk (Short Term Incentives + Long Term Incentives) is much higher at 57 percent of the total pay. * Companies assess CEO performance holistically but largely link only financial performance to incentives. * The prevalence of stock options or ESOPs dropped from 68% to 49% over the past five years despite more companies using LTI. Larger companies with more mature compensation practices are adopting performance shares faster, in line with global best practices. * The wide gap between median and average CEO compensation [INR 9.3 crore versus INR 13.8 crore] indicates the wide range of compensation numbers and some outliers on the higher end. * After the CEO role, COO and CFO roles continue to command the highest compensation premiums (followed by CHRO role).
References: * Old is gold, but new-age cos…; Feb 6, 2024 * The average Indian CEO lasts less than 4 years…; Mint, Updated Oct 2020 * Deloitte 2024 Executive…Rewards Survey Report; Apr 2024
Recent data from BCG on corporate transformation and link with total shareholder return(TSR) hold valuable food for reflection. We see transformation initiatives in most companies nowadays, especially when leadership changes happen.
Selected Notes from the article:
* The empirical patterns of transformation are quite stable: At any point in the past 20 years, roughly 30% of companies significantly underperformed their sector for a period of multiple years, making transformation a necessity for performance reasons. * Successful transformations are the exception, rather than the norm, even when measured on very modest criteria. Only 26% of corporate transformations successfully created value in both the short and long terms. More than 70% of companies fail to outperform their industry peer group average in both the short (one year) and long term (five years), after a previous performance downturn period (numbers quite similar to the findings in 2018 report). Sustainable value creation through transformation remains so rare.
* Pre-emptive transformations create significantly more value in the medium and long run. * A leadership change during a transformation is associated with higher TSR performance over the five-year time horizon. The positive impact is even higher if the new leadership comes from outside of the company. However, a change in leadership is not a guaranteed success driver. * You cannot cut your way to greatness: differential growth is critical to sustained value creation. * Achieving sustainable growth and a future-proof operating model requires entering transformations with a long-term orientation, rather than merely focusing on addressing performance woes or catching up to peers in terms of technology stack or organizational best practices. Beyond mindset, culture, and metrics, a long-term orientation also means investing in the exploration of new ideas that could be the basis of future advantage. * Putting a formal transformation program in place, scale of the program and the willingness to invest in change matter. Formalizing the transformation entails defining a clear governance and process-or setting up a dedicated transformation office-for coordinating and tracking progress on change initiatives, as well as regularly communicating it to the executive leadership team so that roadblocks can be addressed promptly. Moreover, it may mean putting in place a chief transformation officer to helm an ambitious change effort, which our prior research shows can improve transformation odds significantly. The role must be designed appropriately and filled by someone who is persistent, vigilant, and flexible—and who is trained for the job.
Source: Five Truths (and One Lie) About Corporate Transformation, April 12, 2024, BCG
Some of us have seen this happen few times during our lifetimes. A highly successful, global company with thousands of employees and the darling of the press and management books gets into trouble slowly and loses its shine eventually. Thousands of jobs are cut, announced in phases over years and the decline become more visible gradually. Issues become too big to ignore, other companies start taking over market share and breakdowns become more frequent with increasing number of unhappy customers. Few revered corporate names have been visible in the press for these reasons, even during the last week. This has happened to non-profit organisations as well.
The golden mindset to protect dearly during success is conscious humility.
A 2016 HBR Article (The Scary Truth About Corporate Survival) noted that 80% of the companies that existed before 1980 were no longer around. Professors Vijay Govindarajan and Anup Srivastava looked at all companies that listed on U.S. stock markets from 1960 to 2009 and confirmed that longevity is decreasing. Companies that listed before 1970 had a 92% chance of surviving the next five years, whereas companies that listed from 2000 to 2009 had only a 63% chance. They wrote that the bad news for the newer firms is that their days are numbered, unless they continually innovate. In short, even seemingly successful and rich companies can fall into a fight for survival sooner than expected.1
From a behavioural perspective, a consistent common pattern is noticeable. As companies become more successful, arrogance tends to creeps in. When this happens at the leadership levels and manifests in decisions, judgment calls and cultural elements, the damage can be enormous. Most times, the degradation is not evident quickly. This may show up in the form of increased ignorance of contradicting views and potential risks, lack of openness, increased feelings of invincibility, sometimes even translating to visible disrespect. For leaders, even listening to varying perspectives from internal stakeholders goes down. There is a rigid focus on “our approach, our process and we know what is right” thinking. Stakeholders outside the organisation most times see this degradation earlier than those inside. Even at this stage, the general feeling is that nothing could go wrong. Leaders can also become overly focused on themselves. While some leaders may seem to be humble at a personal level, it’s important to watch out for reduced humility at an intellectual level (eg. openness to discussing varying and contradicting perspectives, disregarding others quickly).
The mindset of conscious humility and curiosity are closely related. Genuine curiosity comes from being humble about one’s own views and openness to others. Conscious humility are also related to compassion and empathy. Behaviours are consistently leading indicators of organisational unhealthiness and degradation, while the slowing business results may show up much later. Once the negative impact on business results indicates a pattern, it becomes hard to turn around the ship quickly. The focus then shifts to cost cutting and prevailing phases of uncertainty, leading to complex environments. Does this sound familiar?
Professor Jim Collins (Good To Great) wrote about the Five Stages of Decline, in the book, How the Mighty Fall. He called Stage 1 the “Hubris Born of Success”. “Great enterprises can become insulated by success; accumulated momentum can carry an enterprise forward, for a while, even if its leaders make poor decisions or lose discipline. Stage 1 kicks in when people become arrogant, regarding success virtually as an entitlement, and they lose sight of the true underlying factors that created success in the first place. When the rhetoric of success (“We’re successful because we do these specific things”) replaces penetrating understanding and insight (“We’re successful because we understand why we do these specific things and under what conditions they would no longer work”), decline will very likely follow. Institutions can be sick on the inside and yet still look strong on the outside; decline can sneak up on you, and then-seemingly all of a sudden-you’re in big trouble. Stage 3 is Denial Of Risk And Peril. As companies move into Stage 3, internal warning signs begin to mount, yet external results remain strong enough to “explain away” disturbing data or to suggest that the difficulties are “temporary” or “cyclic” or “not that bad,” and “nothing is fundamentally wrong.” In Stage 3, leaders discount negative data, amplify positive data, and put a positive spin on ambiguous data. Those in power start to blame external factors for setbacks rather than accept responsibility.”2
While sometimes organisations may be truly unlucky in their journey to get hit with factors outside their control, most times, the start of organisational failures can be traced back to the hubris of success and lack of humility. Leaders play a very important role in protecting and ensuring humility in day to day operations. This starts with role modelling related behaviours and incorporating conscious humility mindset into the heart of thinking, decision making and organisation culture. Ignoring these elements can invite serious repercussions.
In the book, Trillion Dollar Coach, the traits of coachability Bill Campbell sought were honesty and humility, the willingness to preserve and work hard and a constant openness to learning. Honesty and humility, because a successful coaching relationship requires a high degree of vulnerability.3 Openness as well cannot exist without humility. Humility can be developed consciously.
References
The Scary Truth About Corporate Survival, December 2016
Five Stages of Decline, Jim Collins
Trillion Dollar Coach, Eric Schmidt, Jonathan Rosenberg, Alan Eagle
Dr. Edith Eger, a well-respected psychologist, has written two books, The Choice and The Gift, and has specialized in treating people with severe trauma.
These are some valuable notes for awareness and wisdom.
* Awful things happen to us and they hurt. These devastating experiences are also opportunities to regroup and decide what we want for our lives. * Healing comes from freeing ourselves from certain thoughts and feelings that keep us trapped in the trauma.
* Freeing yourself from victimhood – “Suffering is universal but victimhood is optional.” …instead of asking “Why me?” we can ask “What now?” * Freeing yourself from unresolved grief – It is important to let yourself grieve. Neither denying it nor being totally absorbed by it is healthy. Resolving grief means to release our sense of responsibility for all the things that weren’t up to us and to come to terms with the choices we have made that cannot be undone. * Freeing yourself from resentment – Often the anger and resentment we have toward another may have more to do with our own issues resulting from unresolved grief or unfinished business. * Freeing yourself from paralyzing fear – Many of us live a fear-based life. Our thoughts and behaviors are rooted in fear…living in constant fear keeps us from growing. Sometimes fear does not go away, but the best we can do is keep it from totally dominating our lives. * Freeing yourself from judgment – We should look inward and examine the judgments we hold for ourselves as well as others. If we are being judgmental, we are unable to be compassionate. * Freeing yourself from hopelessness – There is always hope. What we hope for may change with time, but hope is always there. It helps to remember that we have survived difficult situations before and that we can do it again. * Freeing yourself for not forgiving – Forgiveness is something that we do for ourselves, not for others. When we do so, it frees us from the past. Releasing our anger and the people who have harmed us in the past can help to set us free.
* The search to make meaning in my life by helping others to make meaning, to heal so that I could heal others, to heal others so that I could heal myself. * Suffering is inevitable and universal. But how we respond to suffering differs. * The truth is, we will have unpleasant experiences in our lives, we will make mistakes, we won’t always get what we want. This is part of being human. The problem—and the foundation of our persistent suffering—is the belief that discomfort, mistakes, disappointments signal something about our worth. * Self-acceptance was the hardest part of healing for me.
Sources: 1. Twelve Steps for Healing Trauma..from Dr. Edith Eger’s “The Gift”; Psychology Today, Nov 2020 2. How to cope with grief..; Business Insider, Nov 2020 3. The Choice, Dr. Edith Eger
These are selected notes from the book, “Building Conflict Competent Teams” (Craig Runde, Tim Flanagan; 2008).
Reappraising What’s Happening
“We often think that others’ motives are worse than they actually are, and this causes us to feel threatened and get upset. Looking at the situation to find less sinister motives can dampen your emotions. This process is referred to as reframing; that is, you consider the situation from new frames of reference. It is associated with a psychological concept called cognitive reappraisal, described by a quote from Marcus Aurelius: “If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.”
Cognitive reappraisal means reinterpreting the meaning of what you see or hear. You may initially construe another person’s actions as hostile to your interests. Perhaps you think they are moving in on your turf or trying to make you look bad in front of others. Although this is certainly possible, there may be innocent reasons for their actions. Research has shown that reappraising situations can lessen emotional tension. In particular, changes in brain activity are analogous to those that occur when a person uses reflection and mindfulness techniques. When this happens, negative emotions lessen and more positive emotions emerge….
Team leaders can have a profound impact on the emotional climate of their teams. Leaders who demonstrate positive moods and effective emotional control can create a positive climate within their teams. When a leader conveys news, her tone and demeanor may have greater impact than the content of the message. The team leader plays a critical role, but all members of the team have to work together to address conflict effectively. They need to participate in developing and upholding team norms, which support and empower individual team members to step in when they see relationship conflict emerging that can harm the team. A team member who sees other teammates acting in ways that are breaching trust or contributing to destructive conflict can intercede and remind the others of the team norms for how to deal with conflict… “
According to a recent Korn Ferry Briefings podcast (The Frenzy To Find Work), around 77% of job seekers were ‘ghosted’ (abruptly cutting off contact/all communication) by companies last year. Studies from the platform Indeed also indicate similar percentages in recent years.
According to a report from the hiring platform Greenhouse, around 45% of job candidates have been ghosted after an initial conversation with a recruiter. Researchers also found that candidates from historically underrepresented backgrounds are 62% more likely to be ghosted after a job interview. These studies may be U.S. focused but I’m guessing this aspect of India market is not different.
During recent years, we saw companies complaining about candidates doing the same. When the job markets are strong, the pendulum tends to shift.
All parties seem to be overly focused on the short term. The reasons for ‘ghosting’ on either side could be many. This leads to classic “Lose-Lose” situations.
How can we think “Win-Win”?
Companies need to figure out at a bare minimum, to use technology (most tools nowadays support this) effectively to at least inform/update the candidates on where they stand (even if it’s a short message). Behaviors/habits of recruiters/recruitment teams need to be aligned. In many cases, these teams are short staffed and therefore, recruiters tend to focus/prioritise completely on closing open roles. Companies need to ensure that their brand value and trust do not erode by ignoring this important aspect.
Similarly, candidates also have a responsibility to inform companies on where they stand in terms of their decision making.
Think long term, win-win. This builds engagement and effectiveness both ways.
Have you observed greed in leadership? How has that impacted/influenced your feeling of trust and relationship with that leader, your organisation, yourself?
These are selected notes from the Manfred F. R. Kets de Vries, Distinguished Clinical Professor of Leadership Development and Organisational Change, INSEAD (from the article, ‘Is Greed Destroying Your Soul?’)
* Greed may have a purpose, according to evolutionary psychologists. They believe that, by pushing us to amass status-signalling possessions, greed can help us attract a mate and thus perpetuate our genetic code. * I prefer to look at greed as a coping mechanism. In my interactions with greedy people, I have observed that many are trying to fill an inner void or solve another emotional problem. * Many greedy people obsessively pursue wealth as a substitute for what they feel is lacking inside them. But they ignore the high price that comes with greediness… *…the greedier we become, the more we advance on the path of self-destruction. *…like the proverbial leaking bucket that can’t be filled, the personal costs can be high. Far too often, greed comes with stress, exhaustion, anxiety, depression and despair. In addition, it can lead to maladaptive behaviour patterns such as gambling, hoarding, trickery and even theft. In the corporate world, as John Grant wrote, “fraud is the daughter of greed.” * Some believe that without a dose of greed, a given person, community or society may lack the motivation to move forward. I believe that, as with most things in life, managing greed is about balance. Like all potentially destructive human drives, greed must be tempered by positive social norms, such as generosity. * Unchecked greed can destroy the soul of humanity like a great cancer, metastasising throughout society. The victory of greed over compassion may ultimately cause our civilisation’s downfall. * Society’s ambivalence about greed makes it difficult to “treat” greedy people. After all, many view greed and its related traits – such as ambition and material success – as desirable rather than a potential mental health problem. It is not always easy to explain the harm caused by excessive greed… There is still such a thing as free will. We all have a choice. * If you can’t be content with what you have, you’re unlikely to be happy with more. * One of the most difficult tasks for greedy people is learning to be selfish in a proper way. They need to pay attention to their inner self. It requires persistence, patience, humility, courage and commitment. But a long-term investment in the self can be a powerful antidote to greed and other forms of addiction.
Toxic work environments can be dangerous, result in physical and mental health issues, and impact sustainable business results (often missed in the short term). Are they more widespread that we assume?
Poor leadership could be one of the leading causes and indicators.
Many will experience, are or would already have experienced a challenging, toxic work environment or leader at some point in their career. That can be debilitating and intense. It may also change you. It is difficult to understand pain until you’ve experienced it yourself.
* Among the top Predictors of Employee Turnover During the Great Resignation, professors from MIT Sloan and NYU Stern found (2022) that a toxic culture is 10.4 times more likely to contribute to attrition than compensation. A toxic corporate culture is by far the strongest predictor of industry-adjusted attrition. * From a poll of 1,000 UK employees (2021), 7 in 10 Brits shared they’ve worked in a toxic environment at some stage of their career. According to Oak Engage’s Toxic Workplace Report (2023), 75% of UK employees admit they have experienced a toxic workplace culture. 87% agreed that a toxic workplace culture has had a negative impact on their mental health and 73% agreed that a toxic workplace culture has contributed to their burnout. * According to a poll (2023) of more than 1,300 U.S. adults conducted by online career platform Muse, nearly two-thirds of workers have faced so-called toxic work environments. * According to Talent Works (2022), the majority of women in technology have experienced toxic work environments, with 21% experiencing it frequently. * According to one survey in India, tech workers are willing to accept lower salaries and even take pay cuts, if it means being a part of a company with a non-toxic work culture. In another one (2023), 87 per cent felt work-life balance is top priority for combatting toxic work culture and 31 per cent attribute pressure at the workplace as one of the main concerns for mental health issues.
What approaches have worked for you, to effectively manage through a toxic work environment?
Artificial Intelligence (AI) can help usher in a new era of human resource management, where data analytics, machine learning and automation can work together to save time, and provide information, insights and recommendations in near real-time.1 According to Gartner, 81% of HR leaders have explored or implemented artificial intelligence (AI) solutions to improve process efficiency within their organizations. Gartner expects generative AI solutions to become embedded in current and new HR technology providers in the next one to three years. Generative AI could first begin to appear in the natural language processing (NLP) space (virtual assistants, chatbots, data processing etc.).2 The Oracle and Future Workplace AI at Work Global Study 2019 found that 50% of workers were already using some form of AI at work.3
Potential Shifts in HR Ways of Working
Artificial intelligence will have an effect on the work conducted by the HR function, across the employee life cycle. This includes HR operations from onboarding to exit, spanning across talent acquisition, employee engagement, learning and development, total rewards, talent management and service management.
In talent acquisition, an AI algorithm could predict which sourcing channels would most likely attract the right candidates for a specific skill set or role, optimise sourcing spend, and suggest employee profiles which may hold higher probability of success and fit for an organization.4 On the other side, it could alert the candidates with the right skill sets to available jobs. In learning and career development, employees could get curated development and personalized recommendations that maximize career potential. Instructional design could also be impacted, with increased accessibility, flexibility and convenience. In compensation, AI could help analyze a wealth of data points relative to the local market and competitor data. It could provide analytics and recommendations on relevant benefits. AI-powered HR chatbots or assistants could help empower employees with quick, efficient service support.5 Real time inputs on performance at the individual, team and organization level, engagement and culture, leading to indicators on organizational outcomes would be impactful. As the size of HR teams get smaller, AI assistants could guide managers and leaders on right approaches for managing performance and high performing teams. Available external environment data could be analysed for proactive decisions and actions. Applications that use generative AI capabilities (such as ChatGPT, Bard, DALL-E) could improve the efficiency of the HR team and function.
Talent Strategy
Since fewer people will be needed to complete the same amount of work, it would be realistic to anticipate lesser headcount needs over time. The nature and content of work itself would change. Jobs disrupted by AI may need to be redesigned to encompass broader, comprehensive competencies with a more compelling employee value proposition.6
To meet these quickly evolving needs, leaders may need to revisit the six kinds of investments (six ‘B’s) needed to upgrade talent – Buy, Build, Borrow, Bound, Bounce, Bind.7 For the Build/training approach, organizations may focus on upskilling, reskilling and new skilling initiatives. Reskilling involves training employees on an entirely new set of skills to prepare them to take on a different role. This typically occurs when workers’ previous tasks or responsibilities become irrelevant. As opposed to reskilling’s 180-degree pivot, upskilling occurs when workers improve upon existing skills and deepen their abilities and impact within their area of expertise. The term new skilling represents all types of continuous learning to help build high-demand skills. A new skilling mindset keeps both a workforce and a company agile by ensuring learning initiatives are relevant to future business objectives.8 Performance expectations could vary significantly in newly configured roles and environment.
AI would influence employee expectations about how employees interact with HR teams and tools. Over time, this shift will lead to rethinking the purpose, objectives, skillset and structure of HR roles and the overall function. Along with the increased requirements, leading/managing with the updated knowledge of psychology, neuroscience, culture, change, leadership, organization behaviour, business acumen and technology will give influential HR leaders and teams a distinct advantage. Change management could become a critical competency requirement for the whole team.
Workforce Planning
Since AI investments will lead to the obsolescence of many tasks, while creating the need for new skills and roles, this shift involves proactive planning, change management and updating the capabilities of the overall workforce. Proactive workforce planning based on a deep analysis of phases of change becomes critical for the success of any organization. New, specialized, complex jobs may emerge where generative AI and related technologies are used, resulting in competitive advantage.
Culture Intersection
A major change like this cannot be possible without shift in mindsets and behaviours. This inevitably intersects with organizational culture elements. HR teams that proactively assess, plan and facilitate the culture and mindset shift for the organization would play a fundamental role in facilitating this transformation successfully.
Concerns
While AI is creating excitement, there are concerns about aspects like accuracy, privacy, bias and reliability. Any information posted may be used to further train the model, raising concerns about confidentiality. Generative AI learns based on historical data, and historical patterns of data may reflect biases. Instances of bias in AI tools have come to light, offering case studies in the limitations of machine learning (eg. talent acquisition tool bias).9 Recent guidance from The Equal Opportunity Employment Commission (EEOC) in the U.S. clarified that bias in AI tools may violate discrimination protections, and employers who use them could be held accountable.10
Therefore, it becomes critical to involve all points of view while planning and implementing AI adoption. While the value and transformation potential of GenAI are real, so too are the technical, implementation, and change management challenges. The time-saving potential can vary significantly based on industry-specific contexts. Consulting firm BCG recently found that support functions such as technology, operations, and customer support showed the highest potential productivity gains from GenAI deployment. Looking at GenAI activities across the company will help to ensure that the sum of efforts is greater than its parts, leading to transformative change rather than incremental refinement.11 The true potential of mature AI solutions may take time. Initial rollouts might result in less-than-desired experiences. Organizations must also acknowledge and guide about potential risks of generative AI and using sensitive or confidential data. A recent incident of sensitive data leak from a large corporation accidentally to ChatGPT, led to the company crack down on usage of the generative AI services.12 AI is also susceptible to hacking. The ethical and fairness elements have to be thoroughly assessed and analysed. Government regulation, policy, and international standards also play a fundamental role in our society.13. Labor relations and unions could also play a key role in this transformation.
While this is an exciting time for HR leaders and teams to be part of this evolution, prioritising change agility, curiosity, experimentation, growth mindset, risk awareness and development for self, team and the organization will increase chances of success. Modernizing talent capabilities within the function will become non-negotiable. When unique human capability, diversity and potential are augmented (not replaced) by AI, the stage for immense creativity and innovation is established. It looks clear that this is the beginning of a long, transformational journey and any future HR strategy without incorporating AI would seem incomplete.
ChatGPT – Inputs about AI Applications in HR
Since this is an article on AI, I gathered consolidated inputs below from ChatGPT regarding AI applications in HR. Readers may assess the similarities and differences between the above and below sections. I see the value in augmenting insights, while maintaining the creativity, unique connections, thought process and wisdom of an expert. Even here, the ability to ask the right questions or prompts through specific inputs seems important. If you want good outputs, you may need to provide good inputs, apply experimentation and thinking.14
AI applications in HR are designed to streamline processes, enhance decision-making, and improve overall efficiency. Here are some common AI applications in HR:
Recruitment and Talent Acquisition
Resume Screening: AI algorithms can analyze resumes quickly and efficiently, identifying relevant qualifications, skills, and experience.
Chatbots for Initial Interaction: AI-powered chatbots can engage with job candidates, answer basic questions, and even conduct preliminary interviews, saving time for both candidates and HR professionals.
Predictive Analytics: AI can analyze historical data to predict which candidates are more likely to succeed in a particular role, improving the quality of hiring decisions.
Employee Onboarding
Virtual Assistants: AI-powered virtual assistants can guide new employees through the onboarding process, providing information on company policies, procedures, and answering common questions.
Employee Engagement
Pulse Surveys:AI can analyze employee feedback and sentiment from surveys and other sources to gauge overall engagement levels and identify areas for improvement.
Personalized Learning:AI can recommend personalized training and development programs based on an employee’s skills, performance, and career goals.
Performance Management:
Feedback and Recognition: AI can facilitate real-time feedback and recognition, helping managers provide timely acknowledgment of employee achievements.
Performance Predictions:Predictive analytics can help identify patterns in employee performance data, allowing HR to anticipate potential issues and take proactive measures.
HR Analytics:
Predictive Analytics for Turnover: AI can analyze various factors to predict which employees are at a higher risk of leaving the company, allowing HR to take preventive measures.
Workforce Planning: AI can assist in forecasting future workforce needs based on historical data and market trends.
Employee Assistance and Support:
Chatbots for HR Queries: AI-powered chatbots can handle routine HR queries, providing quick and accurate information to employees.
Wellness Programs: AI can support employee well-being by providing insights into stress levels, workload, and suggesting personalized wellness programs.
Diversity and Inclusion:
Bias Detection: AI algorithms can help identify and minimize unconscious biases in job descriptions, recruitment processes, and performance evaluations, promoting diversity and inclusion.
Compliance and Risk Management:
Monitoring Compliance: AI can assist in monitoring and ensuring compliance with HR policies and legal regulations, reducing the risk of non-compliance.
Implementing AI in HR requires careful consideration of ethical concerns, data privacy, and the potential impact on the employee experience. However, when used responsibly, AI can significantly enhance HR processes, allowing professionals to focus on strategic initiatives and creating a more engaging and efficient workplace.15
During many discussions with leaders and connections including those seeking leadership roles, the thought of sharing my notes from executive search experiences came to mind. This was really interesting experience coming from the outside, as a practitioner with some experience in consulting. For most people outside, the executive search world tends to be inaccessible and bit mysterious. Therefore, for the benefit of many who wonder, I thought of sharing my following observations and perspectives. There may of course be other varying views and opinions.
The executive search area also seems to be an expanded arena nowadays with varying degrees of search agency brands, quality and approaches. The top players continue to focus on retained search. In retained search, consultants are paid a portion of the search fees by the customer in advance for their focused efforts to hire for the role, with a high degree of certainty to closure. This would be structured in different stages.
On the other side, the contingent search approach tends to focus on fees payment by the customer after closing a role. Many players in contingent search space over the years have progressed up the value chain by asking for a nominal advance fees to close senior roles and provide minimum timeframe guarantees as the higher end search agencies would do. They have slowly expanded their own business pie through existing customer relationships.
During recent times, due to the breadth of players/experienced independent consultants, price sensitivity and risk management from a talent acquisition perspective, contingent search players seem to have gained a larger pie of the leadership search business. For some organizations, this also becomes a lower risk alternative to explore a leadership role search with an existing partner who may be already working with them on other roles.
The leading executive search brands still try to differentiate by staying focused on the top roles, retained search approach and developing strong relationships with customers and senior leaders. At the same time, they also work to expand their leadership networks to offer additional leadership services like coaching, consulting or organization development related elements, mostly through trusted partners with core competencies in respective areas.
General structure within executive search firms
A typical executive search firm team tends to be small and highly focused. A normal high-level structure consists of a research team, consultants of varying experiences who focus on the ground work for successful delivery of search assignments and senior consultants or partners who mainly focus on developing the business, while also leading the relationships and engagements. There would also be a small marketing or editorial team, to help build visibility and collaboration in the market. For those who consider moving from the corporate side to consulting or search organizations at senior levels, sales and customer relationships become core part of the responsibilities and often the big challenges.
1. As a customer, how could I know the quality of a search firm?
An easy bet and approach for an assessing customer is to look for the top search firms that have a global brand and have been around for a while. In practice though, irrespective of the brand, it would be important to understand the quality, experiences of the consultant who would directly work on the assignment, strength of the research team, overall approaches, expectations alignment on both sides regarding the actual process, culture fit with the firm and consultant, and details on deliverables.
At the senior levels, the more well-known firms tend to get better responses and perceived more positively from experienced leaders in established organizations who are potential candidates. They also tend to adopt a proactive, focused sourcing approach for strong passive candidates and don’t post the roles. The networks do matter on all sides. There may also be differences in approaches for firms.
2. If someone from a headhunting firm reached out to me, what does that mean?
Not everyone who tries to connect results in an immediate role. Sometimes, it may be for networking, marketing, business opportunities, initiatives that are trying to be cultivated while at other times, as part of early pipeline for potential talent pool at the start of a search. These connections can be two-way bridges and provide opportunities to build relationships over the longer term, even if the conversation would not be about a specific job. Many times, being part of initiatives can also be a win-win in terms of visibility and branding for the larger market. Just being curious about varying perspectives may also result in valuable learning.
Consultants tend to speak with many leaders and may hold interesting points of view, intelligence about the market dynamics. We also live in a highly connected and symbiotic world, with multiple overlapping connections. How one responds or behaves, tends to leave lasting impressions. Personal leadership brands do matter. If the opportunity to connect feels uninteresting or sense of low value, it would also be okay to politely communicate and retreat. Many times, unprofessional behaviours lead to uncomfortable scenarios on both sides.
3. I am looking for a change. How do I go about it with an executive search firm? How much does it help?
In my observation, the possibility of finding a role through one’s own connections and networks would be much higher than through a search firm. Search firms tend to have few senior roles with very specific client requirements in terms of competencies and experiences. While this may work out at times, the probability of everything matching at the right time require a high degree of coincidences. If one ends up getting into a search process, it also becomes really important to manage oneself professionally.
There is no harm in networking with consultants proactively through shared connections, events or assignments beforehand. It may be a better strategy to be visible in the market before the need arises. Many leaders tend to become internally focused with little time to connect outside and only think about the outside world. Many candidates also won’t receive a response while trying to connect with head hunters for a job.
Candidate responses tend to fall low on the list, especially for senior members. This may mostly happen because there is no immediate, relevant role in pipeline, focus on new assignments/business development and ensuring successful delivery of existing assignments. With the smaller teams and limited bandwidth, responding to candidates tends to take a back seat. For candidates, it is also worth noting that the professional search firms or employers don’t charge fees from the candidates during any search assignments. Professional search firms only bill the companies or their customers they support.
4. I am looking to move internationally. Could a leadership search firm help?
From my observation in India, the majority of leadership searches seem to be local or country specific in nature. For the bigger firms, even within a country, there may be multiple offices with regional or local focus. There may be very small number of searches where candidates may be sourced from other countries or through collaborative search projects involving more than one country offices.
In selected cases, companies may be open to look at returning citizens and support relocation (e.g., from the US to India). In few other cases, companies in certain regions like the Middle East may be open to high quality talent from larger markets like India. These roles tend to be very few and highly specialised.
The probability of moving internationally seems to be higher for employees who explore internally within multinational organizations. Most other international movements in my known networks seem to have happened through either first or second degree connections, personal networks or country residency options. The probability of moving internationally through a search firm seems comparatively low.
As general disclaimer, it would be helpful to note that firms work in different ways and my experiences have been influenced by related environments.
Leadership Coach, Consultant, HR Leader with diverse, global experiences (U.S.A, Europe, APAC).
Master of Human Resource Management from Rutgers University, New Jersey, U.S.A. Recipient of the U.S. Garden State Council SHRM HR Leadership Scholarship.
Bachelor of Technology in Civil Engineering from College of Engineering, Trivandrum, India.
Certifications: MBTI, Hogan, RBL Leadership Code, SHL 360, Team Management Profile, NeuroLeadership Results & Team Coaching.
Facilitated coaching sessions, workshops and programs with multicultural teams in Helsinki, London, Berlin, New Delhi, Bangalore, Kerala, in addition to multiple Global/Virtual sessions.
Mission: Enable healthy, purposeful, and impactful organizations, through leadership knowledge and wisdom.
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