We make money when there are more jobs open than people searching. Such moments produce talent wars, making our services indispensable. But now the reverse was about to happen. Unemployment was rising quickly – up almost 33 percent in 2008 and going up another 18 percent before it would level out at a very unhealthy 9 percent.
Our financials followed the same curve – only down, not up. In a declining economy, the CEO’s role in a business of our size – at the time with 80 employees and now, thanks to the economy, 50 – hovers between generating revenue when it is needed and aligning shareholders with a long-term view to blend and leverage diverse values, interests, commitments, lifestyles, ages, energy, and time horizons.
When business is good in a partnership-based service business, the CEO is the chief among equals. Even when the partners disagree with each other, they align for the greater good. Conversely, when business is bad, and personal income plummets, the disagreements threaten to take center stage and trump the firm’s goals.
In the former scenario, business scale had allowed me to lead with the help of my partners while evolving what we offered the marketplace toward a shared vision. Now, in the latter scenario, survival instincts were overtaking the judgment of many. Given that all of the partners were commission-based agents, I had little leverage to do anything more than maintain a short-term course.
It was a real crisis. The company had gone from thriving to surviving in a few short months, and now I was embroiled in internal conversations about business direction with a group of bright and dissatisfied partners. The logical response to a downturn in the marketplace? Return to the fundamentals and focus on revenue creation and day-to-day client services, the type of activities I had last concentrated on 20 years previously. The emotional response to both market and squabbling partners? Well, as many responses as partners. Personally, I had no desire to take a back-to-basics approach. Haven’t I outgrown this? I asked myself.
We did what we had to do. We got out the “shrinking business playbook” and somehow made the appropriate internal decisions, putting all long-range planning on hold while we focused on one new objective: survival.
Summer rolled in, and business worsened. Was business ever going to come back? How many people would we have to terminate?
Anxiety was now interfering with my sleep and had started to affect my day-to-day decision-making at the office.
Our business is segmented by sectors and functions, and I had embarked on running a desk earlier in the year focused on my two specialty areas of recruitment: finance was one of them and the media and marketing services industry the other. Both were now among the most dramatically affected areas of the economy.
When the markets turn this quickly, our industry’s services can go from urgent to irrelevant in a New York stock exchange moment. At one point we’re high on a CEO’s value chain; we’re on their speed dial as they seek updates on key executive hiring, hungry to locate that special executive who will help them achieve their objectives. Then, a very short time later, the markets tank, and we’re lucky to get our calls returned.
While talent management is always essential, talent acquisition rapidly drops off the agenda of a short-sighted CEO who is focused on cutting jobs to save money and meet profit expectations.
Within the span of one negative quarter, a downward spiral forms: revenue is soft; new hiring is put on hold, then quickly cancelled; salaries are frozen, sometimes even rolled back; and finally layoffs are announced to resize the business to its revenue reality.
The executive search CEO job becomes worrisomely simple. We had fewer projects than we had the capacity to handle. We needed to fill the pipeline, but that was mired with conflicting issues in terms of our stated price positioning. Clients looking to engage a firm wanted different terms; given the shift in supply and demand they felt empowered to insist on a deal. Meanwhile, as search executives, we were torn between maintaining our terms for future dealings with a client and taking an assignment under different, discounted terms to generate revenue – which would set a new precedent with regard to brand, pricing, and future income.
Professionally, I had to revise our go-to-market tactics to drive short-term revenue, saying no, out of necessity, to engaging in longer-term projects. I had to stop being exclusively a CEO and run a desk like everyone else to drive overall sales. Personally, I had to earn enough to keep ahead of my own expenses, which I would ultimately fail to do.
Third Time Unlucky
The situation looked eerily familiar. This is my third time, I mused, shaking my head. This was insanity. I had been in the same role within the same organization during the market downturns of 1991 and 2001. I was 27 and 37 then, in a twoincome, one-home, no-kids set-up. Life was simpler then. I was able to change course more nimbly.
Now, I had more wisdom, but I also had a more challenging set-up: one income, two homes, a wife, two young daughters, and an aging mother. And I was tired and out of new, transformative ideas, having been in the same role basically for more than 20 years.
The storm was severe and precipitous, and I started to second-guess myself for the first time ever.
By early fall, I was reaching outside my company to speak to economists, futurologists, and other resources who could point to the light at the end of the tunnel.
“They have turned the tunnel lights off,” my banking friends said.
Other CEOs confessed to their inability to hold it together; they were stressed at work and at home.
“I keep my chin up and try to pretend we have a plan and we will work our way out of this,” a CEO friend said. “But I have to wind myself up every morning to go to work; I am depressed and don’t have a plan.”
I was experiencing financial hypothermia: I knew I was freezing but lacked the will and energy to do anything about it. I had no control over the rate of decline, couldn’t alter its trend, and had no way to keep our clients close.
It didn’t matter what I did. “Atta boys” or stepped-up efforts to circle the wagons seemed to produce negative results. Our business continued to decline every month. Negativity was now the order of the day. Some partners were checking out for the summer to work on activities they enjoyed. After all, their financial opportunity cost was non-existent. “Why be at work when there is no work?” or “I make hay when the sun shines” were the comments I received. They wanted to stay home when the going got tough. Some were taking time to re-evaluate whether they wanted to be in our business at all. A handful were working 25 percent harder and earning 33 percent less.
All of our revenue producers work on commission. This was a good thing in that our expense line quickly mirrored the amount of revenue we were earning, limiting our financial exposure. On the flip side, group apathy and helplessness were spreading virally.
As it would turn out, while the Canadian economy allegedly got better a year later, employment figures got worse. As a result, in January 2009, the Association of Executive Search Consultants projected a worldwide decline of 44 percent in 2009 compared with 2008, a $5 billion drop for the recruitment industry.
Just to complicate matters, as job losses increased, so did the requests I was receiving from executives in transition to meet with me, their sole purpose being to hand me their résumés and sell themselves. I was soon overtaken with 200 inbound emails a day, requests to connect on LinkedIn, and calls from job seekers.
The tables had turned; now we were the searched ones. I knew the ritual well: Talented executives come in for 45 to 60 minutes to ask for counsel and help, and ultimately, to be considered for current (unlikely) or future positions that we may be seeking