Executive Outlook: Executive Job Market Update April/May 2023

Executive Outlook: Executive Job Market Update April/May 2023

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The first few months of a new calendar year mark the end of most businesses’ financial year and offer an opportunity to reflect on the previous year’s fiscal performance, while making predictions for what lies ahead. As most organisations develop their plans, we are provided with a much more accurate glimpse into the market that is based on real performance and financial data rather than speculation or gut instinct.

Many of these insights will help to paint a picture of the people challenges businesses face in Q2 and Q3 of the calendar year and the start of the new financial year, but also highlight some of the trends and opportunities.

Here is our experts’ assessment of the current state of the executive jobs market and the macro business landscape, the top trends that will shape FY23, and our advice for navigating these conditions successfully.

Job Market Snapshot

The latest ONS Labour Market Overview for April 2023 serves the dual purpose of wrapping up Q1 2023 as well as the final stretch of FY22. The report found that between January and March 2023, the estimated number of UK vacancies fell for the ninth consecutive period to 1,105,000, a 47,000 drop on the quarter. While less vacancies often indicates more individuals in employment, that is not always true and does not appear to be the case here. The ONS posits that the drop in opportunity is less about an influx of hiring and more about overly cautious businesses pausing their recruitment amid ongoing economic uncertainty. Availability of jobs fell in 13 of the 18 industry sectors the ONS tracks, with real estate, mining, and quarrying experiencing the largest dips.

Businesses looking to recruit face no shortage of candidates, with the ONS data finding that there were 1.2 unemployed people per vacancy, a slight increase from the previous quarter.

Even so, there remains a talent and skills shortage with businesses struggling to secure candidates with the in-demand capabilities that businesses require to futureproof themselves.

However, the talent crisis spreads beyond recruitment as those in employment find themselves increasingly dissatisfied. The ONS figures for example also showed that there were 348,000 working days lost because of industrial action in February 2023, up from 210,000 in January. Over three-fifths of these strikes were in the education sector. The catalyst for these disputes includes pay, flexibility, work-life balance, and excessive workloads, which are also factors impacting a number of employees across other sectors.

Despite seeing growth in the headline pay figures (5.9% including bonuses and 6.6% without bonuses), average weekly pay including bonuses in December 2022 to February 2023 fell 3% when adjusted for inflation compared with the same period a year ago, while pay excluding bonuses fell 2.3%. These constitute some of the largest falls in pay since ONS records began in 2001. In the private sector, the average pay without bonuses grew 6.9% while the average public sector pay packet grew 5.3%. The narrowing of the gap between the two could potentially be attributed to ongoing pressure from unions in the public sector.

Key Trends

All things considered, we did not end FY22 or begin Q2 2023 in the strongest or most exciting conditions. These are the key labour trends our experts predict will drive activity throughout the remainder of Q2 as we gear up for the summer:

• Economically Driven Decision Making: The falling pay growth is simply a side effect of a bigger ailment, which is inflation itself. Despite expectations that figures would drop to 9.8%, the UK inflation rate came in high once again at 10.1% according to the latest Consumer Price Index (CPI) figures. This is considerably higher than both the rates of inflation in the Eurozone (6.9%) and the USA (5%). The largest upward contributions to the annual inflation rate came from housing, utilities (electricity, gas, and other fuels), food, and non-alcoholic beverages. Simply put, it is expensive to live in the UK and that will continue to be the case.

It is expected by experts that the inflation rate will fall sometime this year, but when and by how much are yet to be determined. And despite the incendiary recent comments by the Bank of England’s chief economist, Britons are unlikely to just accept that they are worse off now and get on with it. From an organisational standpoint, you should expect that if you are not able to supplement the cost of living with employee’s pay or other benefits such as flexible work, you stand to lose some of your talent. From an individual perspective, it remains true that moving company is the best way to secure a pay rise. If cost of living is of concern to you or your people, it is not unreasonable to expect that this could motivate a career change or job move.

• Erring on the Side of Caution: This economic hardship will also continue to bleed over into businesses’ decisions regarding their staffing levels. Over the past quarter, we have seen hiring freezes and mass redundancies across tech, retail, banking, financial services, professional services, manufacturing, and media/entertainment. Unfortunately, this looks set to continue. Even businesses that posted better-than-expected Q1 results have made cuts or plan to soon. A recent global survey that included 500 UK-based HR directors found that 43% of UK businesses have recently completed or plan to make redundancies in 2023. A further 29% admitted that they are unsure at this point if they will be making redundancies, 18% said they are on a hiring freeze but have no plans to make redundancies, and only 8% confirmed that they will definitely not make any redundancies this year and are not on a hiring freeze. Among those who are letting people go, most (44%) cite cost cutting as the reason, closely followed by having over-hired in the years prior (43%).

If cost is serving as the primary motivator, this can proceed a few different ways. It might be that the worst of the cuts happened in preparation for the new financial year, and now that we are settling into it, things will calm down. Alternatively, further uncertainty in the marketplace may cause further quells later. In any case, both organisations and individuals should be prepared for any scenario. From an organisational standpoint, businesses considering cutbacks should also consider implementing support for those they let go. Investing in executive outplacement services helps preserve against reputational blowback and signals to both those you release and those you retain that the organisation cares about its people. For individuals, do not panic about potentially being made redundant, but instead prepare for that possibility. Take some time to think about the next step in your career and treat this as an opportunity rather than a setback. Additionally, you can work on your skills to increase your value and contribution potential in the eyes of your employer.

• High CEO Turnover: Typically, those at the very top of the organisation are relatively safe from any quells unless the organisation is undergoing a massive restructure that requires a major change in leadership. C-suite and Board-level positions are often long-held ‘legacy’ positions for several reasons. To start, the foundation of these roles is trust and respect, and tenure and experience can go a long way for securing both. Not only that, but these positions are also often the highest one can climb in their respective organisation or job function and once achieved, individuals tend to remain there. For a combination of these and other reasons, senior executives in C-Suite or Board positions have historically been less likely to leave their roles than their colleagues in other roles of the business. Until now, that is.

A recently published US-based report found that March 2023’s CEO turnover is up 18% year-on-year. This is the highest total for that month since tracking began in 2002. In Q1 2023, 418 CEOs left their posts. This is a 57% rise from the 266 CEOs who left in Q4 2022. These turnovers are largely occurring in the public sector, healthcare, technology, and financial services. Most companies are remaining tight lipped about the reasons behind their CEO exits, with 127 leaving in Q1 2023 without a specified reason. A further 106 retired (up 15% from the same period last year), and 25 moved into new positions heading another department or division within the company. While CEO turnover can create disruption for the business during the transition period, movement at the top has created more opportunities than ever for others to ascend into the CEO role and for businesses to inject fresh perspectives into their leadership team. This has created more opportunity for female senior executives to take the helm. The number of women CEOs is at an all-time high, with 32% of new CEOs being women through the first quarter. If this turnover continues, expect to see more diverse voices at the top of organisations and more opportunity for others to move into positions that may not have been available for many years.

• The Meteoric Rise of Generative AI: Generative AI has dominated the conversation so far this year. ChatGPT has been the centre of most of this, and following its public release it very quickly became the fastest growing app in history. The hype surrounding ChatGPT and Generative AI in general has sparked fear, curiosity, and excitement about this technology’s potential use in business moving forward. Goldman Sachs predicts that Generative AI could be responsible for the replacement of 300 million jobs, and many top minds in tech including Elon Musk and Apple co-founder Steve Wozniak recently signed an open letter calling for a pause on AI development.

Whether we like it or not, this technology is here to stay. We have let the horse out of the stable and it is too late to rein it back in. Generative AI will continue to develop, and its use cases will continue to expand. Rather than resisting, businesses and individuals need to learn how to work alongside technology. We shared a blog with our suggestions for navigating this at the organisational and C-suite level, offering advice for navigating this next era of business successfully, which you can read here. At the end of the day, AI will be an ally and assistant rather than a boss, and it is critical to understand its impacts on your job function, organisation, and industry as soon as possible to avoid being left behind.

Executive Transition Advice

These trends are sure to create an interesting and challenging business landscape in the near future. Rialto Executive Career Coaches advise the following for navigating these conditions successfully:

• Double Down on Skills: The latest employment figures indicate that despite the level of redundancies, it is still a candidate’s job market. Those with the in-demand skills employers need will be highly sought after. This includes technological savvy as well as the types of capabilities technology cannot yet replicate including creativity, strategy, empathy, and business contextualisation. AI can do the legwork of generating insights, but businesses need people to apply that knowledge in a way that benefits the organisation and creates real impact. For those who find their roles at risk of replacement by AI—though this is unlikely at the senior level—it is important to find a niche you can continue to satisfy for the business, whether this be something specialised or something complimentary to technology.

For businesses, skills remain important as well. If you are restructuring the business or making cuts, you do not want to put yourself into a position wherein you lack the necessary capabilities on your side to bring your new objectives and plans to life. If recruitment is not an option for your organisation at this time, you need to focus on upskilling your current team to ensure they can continue making an impact and driving the business forward.

• Assess Your Priorities: The reality of the situation is that the business landscape is going to continue to be volatile with elements of uncertainty and ambiguity. In the wake of so much disruption, now is a good time to take stock of what matters to you most from your career. Is it security? Is it financial renumeration or growth opportunities? Or is it flexibility, work life balance, and other benefits? Once you determine what is driving you at this point in your career, you will need to assess whether your current role or organisation can provide that. If not, it may be time to consider executive career coaching for help with taking your career to the next level or navigate a senior-level job search.
• Remodel Your Personal Digital Brand: If you do decide to head down the route of making a career move, you will need to be willing to put in the work on your personal digital brand. So much of today’s job search and recruitment happens digitally, so positioning yourself well online can be a major asset to your efforts to secure a new role, be viewed as a thought leader, or attracting other outside opportunities. Our Rialto Executive Career Coaches have worked closely with thousands of senior-level clients over the past decade to help them reach such goals.

Branding matters for employers as well. How you handle the challenging conditions ahead will send a clear message to all your internal and external stakeholders. If you do make cutbacks and handle them poorly, you risk losing the employees you retain and facing reputational damage in the marketplace. Having a bad reputation as an employer may make it more difficult to attract the right talent. It may also leave a poor impression of your business amongst your customers and partners. Offering executive outplacement support services such as those offered by The Rialto Consultancy can help the team members you let go of leave on better terms and demonstrate that your organisation is empathetic and concerned about its people’s wellbeing and ongoing career success.

Having an understanding of the current business and job market enables you to begin preparing for what lies ahead. We will share our next market update in summer 2023. In the meantime, you can keep up to date with business-relevant insights via our blogs and events.