The senior executive market has been experiencing a significant amount of movement. Since July 2022, there have been notable changes in ASX-listed companies, including more than:
- 110 moves in Chairs
- 550 moves in NEDs
- 130 moves in CEOs
- 160 moves in CFOs.
Senior executives are increasingly open to exploring opportunities outside of their current organisations. Loyalty is the casualty and, in many cases, it seems it is eroding and in decline. Corporate culture is arguably diluting and in need of examination.
There are many reasons for these trends. In some part, it is a result of the ongoing domino effect that began during the COVID-19 pandemic with an extensive number of changes at the Chair level, then as a natural consequence, a chain effect and high movement of CEOs and other senior executives followed after the pandemic. It may also be because some executives felt that they “fulfilled the job” and successfully navigated their organisation through the pandemic and are ready for new challenges elsewhere. Others have witnessed the “real” capabilities of their colleagues and leaders during trying times and have been unimpressed with what they witnessed, prompting them to move on. Additionally, some simply decided “it’s time for a change” wanting to pursue other opportunities outside of full-time employment, which aligns with their broader needs.
As a search consultant, I am surprised by how many people want to consider other roles. The level of interest remains exceptionally high. It is not solely driven by a desire for flexible working arrangements. In fact, we are seeing in some quarters a strong push against it by those who want to work at what they argue is a more cohesive and higher performing environment. We are receiving calls from senior executives tired of going to empty offices feeling that they are rowing upstream to achieve outcomes at decent pace. Their view is leadership is failing to move on those who are not returning and allowing performance criteria to slip with genuine concerns about their capabilities being underutilised and undervalued. Moreso, they are particularly worried about new starters being brought into organisations that are “failing to do the right thing by them” from a career development and mental health perspective. As a senior executive said, “If I have two new graduates starting on the same day with one attending five days a week and the other on two days a week, the former would be the latter’s boss in three years’ time. They would have built the relationships, been exposed to more and probably would have gotten ahead. So, where is the duty of organisations in their career development? Secondly, is it smart for young people’s mental wellbeing, personal development and social engagement to be at home away from others?”
Team dynamics have certainly changed since the pandemic. For many, flexibility has been welcomed and very much seen as a key attraction to those considering their next moves or as a powerful element for retention and role satisfaction. They feel that flexibility and the freedom to operate builds goodwill and generates over and above discretionary effort. The mix of days in and out of the office for many organisations has been beneficial and as one CEO noted “We recognised the world has changed and the organisation has had to adapt. I don’t think we will go back to five days, but we can’t remain at three days. The balance has to change. It was a great support during COVID but that’s over.”
A high percentage of ASX-listed CEOs and Chairs have highlighted that productivity is down, the cadence at work has slowed, the speed of decision making has dropped, and time to outcome has significantly increased. Whilst some have found this not to be the case, in our discussions across leadership of ASX-listed companies, CEOs and Chairs who have highlighted productivity as a key issue have been overwhelming in numbers. As an ASX 100 CEO noted, “We only have ourselves to blame. We have provided a working week that was designed to help executives through COVID, but now it has been taken for granted, being taken advantage of, and causing some frustration.” Another CEO commented, “The walk to the water cooler and the impromptu interactions, the exchange of ideas around the office table, and the intensity and momentum that physical presence brings have been lost. It is not being replaced by Zoom. Zoom has its place and is a fantastic outcome, but the spark is disappearing.”
A long-serving CEO commented, “We have a responsibility to our shareholders and we all know productivity is off. I don’t think one can say it’s fatigue anymore. I have never seen so many people walking their dogs or having coffees. It’s a lack of leadership. If you can get productivity up with your team at home, then great, but if you can’t, you are only bringing on a major train wreck. You are being paid to deliver.” An ASX 200 CEO said, “We happily provide flexible working arrangements. In certain areas, we are getting far better productivity but in others, it has dropped considerably.” An ASX 300 CEO stated, “I recognise our speed has slowed in some areas and it is causing some challenges; however, I am mindful that my competitors are offering and providing flexibility and it will mean departures for us if we call people in.” Another CEO offered, “We have a great working culture and we are playing it smart. We have our senior people back three days a week and will gradually get them to four. All the leadership team are in five days a week. They set the example. We have a plan that we are working through and it is softly, softly. We believe we will get back to five days a week in the next six months.” An ASX 50 CEO stated, “The new way of working has been challenging. In my opinion, it has been encouraged by those two levels down who know everyone and use that as their lever not to come to the office. We have dealt with it. I recognise the advantages of work flexibility like we did before COVID, but I have witnessed it taken to a new level with too much focus on the individual and not enough on the team. I’ve made changes and we’ve lost a few. If I lose a few more, so be it. I have responsibility for the many, not the few. One only has to look at the technology houses out of the US and how they propagated the narrative. Now, they are dramatically cutting. We are now more efficient, and going against the grain attracting people who want to come back to the office. Working from home is pretty solitary. In competing on a global stage, it begs the bigger question of the ramifications of sliding productivity in the long term.” Another CEO shared, “In the new year, we are making changes. For those not coming back, it’s over. Leaders need to lead. From early July, they will be provided a choice: return or depart.” Finally, a CEO remarked, “We let go of our Chief People and Culture Officer as I felt they did not have a grasp of the full extent of the reality. There are young men and women working at home who would benefit from social discourse and engagement. The flexibility became work from home. Suicide levels of young people is high. The level of domestic violence is higher when people remain at home. We made a call, for the welfare of our employees in the short and longer term, and addressed the issue. We have brought them back and maintained a level of common sense and workable flexibility.”
There was some discussion around leaders presenting their thoughts on social matters and whether it is appropriate. Executives were questioning if leadership has gone about their consultation appropriately and thoroughly. If not, then how are they representing the organisation? Questions were raised on whose interests were being represented and if they had engaged their shareholders, total workforce or membership? If they have not engaged the full workforce or membership, are they imposing a view and if so, how does this manifest itself to members or workers who have a differing view. Some argued this is close to harassment and coercion and that leadership has not factored in the silent majority. It was seen by most as expressing one’s personal view, which would be fine if stated as a personal view but expressing a view on behalf of an organisation without full consultation overall was not well received. It is having an effect on key executives wanting to remain, depart or join with the departing being the most prominent. Conversely, there were other senior executives who felt very comfortable knowing where the CEO stood on social issues and argued it was a reason why they joined and have remained.
Inflation is a concern. The Federal and State Governments are spending in high numbers and pumping the economy, fuelling wage increases and leaving the Reserve Bank to continue to raise interest rates. Government and the Reserve Bank seem to be at odds with each other. Banks are raising rates with mortgages rising and this is having an effect on the consumer. The consumer and retail sectors are starting to tighten as expenditure falls and the building and home construction sector has been hit. Discretionary corporate spending is dropping and technology organisations have seen their advertising revenues fall. Restructures are happening with a significant amount more coming in consumer, construction, technology and financial services. With this also comes opportunity, particularly around M&A activities.
We are effectively seeing a two-speed economy with natural resources up and the rest of the economy slowing. The cost of living is hurting. The anomaly is the 3.6% unemployment figure. Organisations are being held back because they simply cannot acquire executives. The market is tight and price wars are being waged in numerous sectors. Many companies are raiding within their own sectors and not considering enough relevant adjacent industries. Unfortunately, few organisations have the platforms and support to help candidates from adjacent sectors succeed and are therefore forced into a remuneration battle. Here lies an opportunity to exhaust this potential of talent and provide a framework to attract capability outside of the traditional hunting grounds.
With persistent inflation, the prevalence of restructures will increase. Going forward and for the next 18 months, there will be economic headwinds. We anticipate the turnover of executives to be solid with another cull coming after the end of financial year. Australia, compared to other nations, has done reasonably well but there have been some enormous missed opportunities along the way, especially over the last 12 months. We fall back again on our natural resources industry to carry a significant load and must ask, is that good enough? There is opportunity for business and government to better engage, which requires a vision for the country beyond short-term rhetoric from all sides.
Blenheim Partners is a board and executive search firm established in 2012 with a goal to challenge the established players and provide a level of thinking, engagement and service unheard of to the senior executive market. The firm has delivered on that goal and is one of the leading advisors to Australian leadership and has set an unswerving commitment to become the top firm in the country.
Gregory Robinson
Managing Partner