Interim Sector | Market Update

Interim Sector | Market Update

Each quarter, we will summarise our current view of the market and the implications for interim executives, which we hope you find useful

Many thanks to my colleagues and sector Partners at Odgers Berndtson Australia - Sean Garvey (Technology), Mark Sloan (Infrastructure & Industrials), Jonathan Harper (Risk & Compliance), Toby Gardner, (Financial Services), Tom Mutch (Government & Boards), Jane Harlen, Paul Hill, Caroline Dever and Jenny Sutton (Higher Education) and Phil McCann (Finance).

Higher Education & Schools

  • Many universities have recruitment freezes and significant budget constraints. They are very conscious of the perception of hiring externally (interim or permanent), during a time of major restructuring and negotiation on cost reduction.
  • The search market, however, is still active to a degree with essential senior roles being recruited usually after consideration of whether they can be filled from existing bench strength and/or within Australia.
  • When restructuring is completed, we expect to see a reasonable level of activity due to nine or so months of no hiring.
  • There have been several new Vice-Chancellor appointments and this will generate movement in executive teams and in the next 12 months at the level below first reports to the Vice-Chancellor.
  • We expect recruitment activity to be more active for senior functional roles across finance, technology and HR as well as senior academic leaders.
  • The future skill set of Vice-Chancellors will be expected to change to a focus on consolidation and operational excellence rather than growth.
  • Generational change is likely with baby boomers retiring and an aging workforce.  There is an increasing void of available talent for senior roles, particularly academic roles.
  • Senior international hires have decreased and incumbents preferred for the time being until travel restrictions are lifted and mobility possible.
  • Whilst the search market for school senior leaders has been very active over the last six months it is somewhat seasonal and is expected to reduce somewhat for the remainder of the year.
  • Potential changes to government funding model to independent schools is generating uncertainty as is the real potential for economic distress to reduce enrollments.

Implications for the Interim Market

  • Functional roles within universities across HR, technology, finance and general management have significantly reduced.  However, there have been opportunities for very senior interim academic leaders to be placed in roles where the existing bench strength is not sufficiently strong to manage the upcoming structural and financial challenges across universities.
  • Some Vice-Chancellors are actively engaging their networks and Odgers for these critical interim appointments.
  • We expect that the functional interim market will be more positive from the fourth quarter of 20\21.  Opportunities for interim leaders in schools would be limited to those large, well-resourced entities.

 

Government & Board

  • Recruitment activity across State governments has been severely curtailed whilst agencies manage the current crisis.
  • There has been significant deployment of existing staff to manage and operate critical coronavirus activity (i.e. tracing), rather than recruiting externally.
  • The upcoming QLD election and current state of emergency in Victoria has resulted in minimum recruitment at mid to senior management levels.
  • Board activity across Government and not-for-profit remains robust however as will ASX Board recruitment in the first half of 2021.
  • The Federal Government and agencies are focusing heavily on digitisation of key services and risk management and cyber security.  The majority of the significant ERP implementations will be completed in the next 12 months.

Implications for the Interim Market

  • There has been some activity however with some government agencies and statutory bodies for key service delivery roles usually with a technology focus.  Whilst demand for front line service providers should increase, the interim executive market is likely to remain quiet for the next six months or so.

 

Infrastructure & Industrials

  • Mining services, technology focused businesses are generally performing strongly.
  • Regulated assets such a ports and utilities are also performing soundly.
  • Major construction and infrastructure projects are continuing and several key projects are currently re-tendering for the next construction project stages.
  • Services business are doing well however, there is considerable consolidation of divisions and executive teams increasing the pool of executive talent in the market.
  • Logistics business, critical to the supply chain are “booming”.

Implications for the Interim Market

  • There are opportunities for senior operational interims to assist regulated asset operators in Australia and for those who require senior talent to manage offshore assets. Project and program management demand has decreased, and demand is not likely to return until the second half of 2021.
  • Some major industrial and utilities businesses have remained relatively unaffected by the current crises and there is a continued demand for senior interim leaders across finance and technology.

 

Financial Services

  • Significant change continues to occur at the Board and C-Suite due to the impact of regulatory, economic and cultural considerations.
  • Permanent hiring across mid to senior management has been significantly lower than pre-C19 levels due to a propensity by larger organisations to retain staff through the pandemic and source from within. Big4 and other consulting firms impacted by lower utilisation have also created significant supply in the market by offering interim secondment solutions to permanent hires at highly attractive rates.
  • Our clients are reviewing processing models and delivery recognising that off-shoring of some critical processes is no longer as desirable from a risk, security and service delivery perspective. Business critical tasks are being brought back “on-shore” or being automated.
  • Project spend is moving from compliance activity to digitalisation of customer processes with a pause on “big tech” implementation. The demand for digital skills and experience is creating opportunities for lateral hires from customer centric industries into financial services.
  • Cost reduction continues to be a core focus as margins are impacted and consolidation is accelerating across the several subsectors such as superannuation where economies of scale are expected to deliver better outcomes.
  • Despite the pandemic M&A activity is also increasing as the banks continue to divest non-core assets and private capital seeks out opportunistic acquisitions in the market.

Implications for the Interim Market

  • Whilst recruitment across the tier one financial institutions has been significantly curtailed, opportunities exist across funds management, regulatory agencies and credit unions, smaller banks and payment providers.
  • There is currently a large available pool of project and program managers and candidates need to think carefully and granularly in relation to their value proposition with potential opportunities.

 

CFO & Finance

  • Many companies have been holding off hiring due to coronavirus, for almost too long, and need to make some senior hiring decisions in the next three months.
  • There is some upcoming activity for CFO’s in the ASX top twenty yet to be announced to market.
  • The current reporting season has been poor and this will translate to the acceleration of key hires that may have occurred earlier this year if not for coronavirus.
  • There is increased M&A activity as some business are operating in a position of strength compared to their competitors.

Implications for the Interim Market

There appear to be limited opportunities for senior finance executives across government agencies as a result of significant consolidation of operations and reduction in senior executive positions.  There is also limited activity across higher education however greater opportunity in service delivery agencies (particularly Health).  As the turnover of ASX CFO’s accelerates towards the end of the calendar year more opportunities will arise with those direct reports of finance leaders.  There is continued opportunity with utilities and those businesses driving supply chain operations and with major asset operators.

 

Technology

  • Senior opportunities in Australia for global technology venders have decreased, however some Australian software venders are on major growth paths and opportunities exist domestically and offshore for leaders across sales and senior account management and in product development.

Implications for the Interim Market

  • Venders historically have had low utilized interim market, however there is increasing activity in Australian tech, some PE backed others listed.
  • CTO, product and corporate overhead functions increasingly based here may need an Interim for transactional purposes.
  • As the path to growth is usually offshore, some businesses may benefit from strategic advice from those who can help them scale.
  • The CIO market and first reports, whilst still active is benefiting from an increasingly large candidate pool and are able to be highly specific in their candidate requirements regarding sector and technical expertise.

 

Risk & Compliance

  • Currently the large financial services institutions are doing “more with less”, utilizing spare capacity internal resources rather than hiring in
  • However, insurance and the super funds will be under increasing regulatory attention.  A regulatory focus will be on investment risk, (both on and off-shore) and level of investment risk.  Infrastructure investments in-particular, may be carefully reviewed
  • The major financial institutions who have been under significant regulatory scrutiny  have largely operationalized their key compliance processes, but these will be continually refined

Implications for the Interim Market

  • As a result of the above trends, regulatory affairs professionals and corporate relations professionals should be in increasing demand particularly servicing insurers and funds managers.
  • There is a talent shortage of risk and compliance expertise.  As there is reduced scope to acquire talent from the regulators and public sector and high performing incumbents are being appropriately remunerated this shortfall is likely to continue.
  • Some of the large professional services firms are facilitating secondment of their consulting teams to major clients to deliver key projects.
  • Business continuity and business resilience is a continuing focus and potential for interim resources.
  • There is a surfeit of project and program managers. Some major financial institutions have significantly reduced their programs of work (particularly relating to major technology investment\projects).

We welcome your feedback on the current market.  If there is anything you would like to highlight for our next update please feel free to let me know.

Best wishes

Martin Searle
Partner
ODGERS INTERIM - ODGERS BERNDTSON

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