The snow has melted. Spring is upon us. Davos has drawn to a close and there is a whiff of optimism in the air. Equity markets have pulled ahead since the beginning of 2013. It may well be that the current dislocation and restructuring we are seeing in the high street and the banking industry represent the beginning of the end for the downturn. If downturn is indeed an opportunity to gain market share dramatically over competitors, how long will this window remain open?
As part of the Leadership in the 21st Century Series held by the Harvard Business School Alumni Club in London in February 2012, Andy Street, the Managing Director of the John Lewis Partnership, partially attributed the success the Group enjoys today to the bold decision to invest in its online business in 2008. Classically downturns have represented an opportunity for companies to move boldly, gain a competitive edge and build market share. The decision by the Board of John Lewis to invest through the downturn is proving prescient today. In recent months the UK high street has seen major names such as HMV, Comet and Jessops enter administration. The undermining influence of online competition was a major contributor.
It’s not about internet at the expense of shops – the two are complementing each other.
– Andy Street, Managing Director, John Lewis Partnership, The Guardian, 2nd January 2013
With the tantalising promise of growth around the corner, Fidelio explores the practicalities of gaining competitive edge and market share through assertively attracting high calibre talent through this leg of the downturn. Indeed, we argue that downturn represents a rare opportunity for corporates to attract very high calibre talent that otherwise would not be on the market.
One visible and disturbing consequence of the restructuring, dislocation and downsizing across a number of sectors since 2008 is that a large number of people are looking for work. The depth and severity of this downturn has meant that some very talented professionals, including a cadre of high profile and well regarded C-suite executives, find themselves available and open to opportunities. For this group compensation is seldom their top concern. Finding an attractive opportunity that is motivating is paramount.
This distressing macro-economic reality undoubtedly represents an opportunity for companies with the mind-set and determination to grow. While this approach to building market share may smack of opportunism, successful execution requires clarity of thinking and determination of purpose.
Waiting for the “pick of the crop” to come knocking on the door may or may not happen. In reality most corporates that promise a growth story are probably flooded with CVs at present. This substantial shift in supply and demand has unsurprisingly contributed to indecision in the hiring process. Research in the May 2009 edition of the Harvard Business Review entitled The Definitive Guide to Recruiting in Good Times and Bad, indicates that heightened choice does not automatically contribute to better decision making.
Corporates with a clear understanding of the growth opportunity and which are consistently hiring against that growth agenda are typically better able to recognise a talented individual who comes across the radar screen. They are also more likely to act quickly and, if appropriate, to reach an agreement, thereby moving the company forward on its growth trajectory.
Of course the admitted weakness of this approach to hiring is that it does not target those in work. To achieve a step change increase in market share, it may well be necessary to attract high performers from the competition. This often becomes more difficult in a downturn. Those in roles become increasingly risk averse rightly intuiting that any move entails risk as well as opportunity. Indeed one problem currently facing many businesses is a low turnover of staff. Lack of movement and mobility reduces opportunity and innovation.
To prise away a top performer, clearly there has to be financial incentive but in this market it is the clarity and conviction around the growth plan that is most likely to persuade. Thus, time spent honing the strategy and then explicitly relating roles to the execution of that strategy creates a powerful tool in attracting talent.
This is clearly a buyers’ market but not all buyers are alert to the opportunity. While some corporates master the ability to observe, scout and react swiftly when a key individual becomes available, others are ponderous. An innovative and responsive approach to hiring is undoubtedly key to attracting the best and indeed gaining market share.
The need to avoid complacency is a regular theme at every Davos meeting – but this was the first in five years that there seemed a genuine risk of it breaking out.
– Stephanie Flanders, BBC Economics Editor, Davos 2013 ‘A Sigh of Relief’, 27th January 2013
So we return to our opening question, is the optimism of Davos well-founded? Is there still time to gain market share and competitive edge through qualitative and targeted hiring? Probably the equity markets have run ahead of themselves and other companies will fail before we are firmly on a growth trajectory. There remains significant opportunity in today’s market to attract extremely high calibre individuals but this door will not be open indefinitely. At the very least identifying essential skill sets for dramatically increasing market share creates a degree of readiness when that very “skill set” knocks on the door.
Coming Up…
Overture explores how talent drives valuation. Future editions of Overture will deal with
• The talent bottleneck in China
• Building leadership teams for new markets
• Unlearning CEO behaviours
• Articulating the value of the IR profession
Please contact us with comments or for more information on Fidelio Partners on info@fideliopartners.com