I am regularly asked by companies and senior executives what is happening in the market, and I have put together a short update on some of the current global trends in executive recruitment in shipping and maritime.
What are senior executives doing?
The storm is passing
Many executives found a safe port during the tough times, and while it did not always fulfil their career ambitions, it did provide shelter. In the sectors where there are signs of the market improving, executives are emerging into the sunlight, dusting off their CV's and considering their options.
Underloved, underpaid and underwater
With many shipping and maritime executives not having had a pay rise in some years, bonuses that have been underwhelming at best, long-term incentives that are underwater and organisations mostly still defensive in their remuneration strategy, it is no wonder that many executives are not feeling the love! "I can do better" is starting to become a theme.
Is the grass greener or is it AstroTurf?
Executive candidates are incredibly cautious, which is not surprising considering the fragility of the shipping and maritime sector. While organisations are still very careful about whom they hire, it is senior executives who are conducting unprecedented levels of due diligence on prospective employers, and some don't pass muster.
Making a comeback
The sector has seen some executives use the tough times (sometimes not through choice!) as an opportunity to take a well-earned break. In areas such as the dry bulk sector, we are starting to see some of these executives put away their golf clubs and make a return to the grindstone. Perhaps when offshore eventually recovers, we will see the same happen here too.
Something changed, or something didn’t change
This overused adage describes the only two reasons why people move jobs, and it applies just as much to executives as it does to the office junior. The difference is confidence. In a rising market, people will put up with less and vote with their feet more.
What are companies doing?
War and peace need different leaders
Companies, that have survived the downturn, are moving from defense to offense and with this return to a growth mindset, many companies are looking for a different skill set to capitalize on potential opportunities.
“A new broom sweeps clean”
With so many acquisitions still distressed purchases, businesses are looking for new leadership to re-invent the businesses they have bought. Perhaps dissatisfied with the current leadership team or having cashed them out, investors are increasingly looking to the wider market for new help. Executives with a proven track record in turning around struggling businesses are still very much in demand.
We see companies increasingly looking for new business areas to boost their bottom lines, and with this change from business as usual, organisations are hiring in expertise to lead these new initiatives.
The distressed purchase
A business has lost a senior executive and with it comes the associated pain of quickly finding someone new. With some sectors starting to experience renewed optimism, we are seeing increased candidate movement and change at the top.
“Help, someone resigned, we need to recruit an executive”, is still driving much of our search work.
What’s happening to executive reward?
Our clients are asking us more than ever for advice and data on executive salaries and bonuses. With so much change in shipping and maritime over the last few years, some companies feel out of touch with the market. Expensive Salary Benchmarking clubs and Compensation Consultants have their place, but what companies really want is a real-time confidential insight into the market and in particular against available talent.
Executives in commercial roles are the pinch point. Most of the discussions we are having around reward with both clients and candidates are for commercial functions. The perception of candidates is that they are underpaid, and the reality is that mostly they are not.
Pay rises are modest and mostly defensive. We do not see any significant uptick in executive pay and many companies are only making "cost of living" pay rises. Those who are paying more than the market are usually start-ups and new entrants to the sector.
Bonuses are pretty static, and while the promise of big bonuses still exists, the reality is that few are earning their full potential. Short-term incentives (STIP's) are still typically annually focused, and we continue to see some rather weird and wonderful plans. The STIP's that hit the spot with candidates are simple, achievable and realistic. Many senior executive long-term incentive plans (LTIP's) are still "underwater" and are failing to work as the intended golden handcuffs.
The move to total cash continues. Companies are steering away from expensive expatriate packages, which include housing and schooling and instead, are focusing on the total cash cost of hire. This is leading to candidates doing much more detailed homework on the actual cost of relocation and consequently, some tough negotiations over pay. We are seeing a trend of executives relocating independently and only moving their families and committing to schools and houses once settled in a new role.
What else is happening?
Singapore continues to pull in executives. We still experience the highest demand globally for senior executives in Singapore, and the Lion City's appetite for executive talent, across all areas of shipping and maritime, seems to continue unabated. Demand for executive opportunities in London and the other international shipping hubs continues, but Singapore still ranks top of the list of where candidates want to work.
Female executive talent
More often than not, when taking a search brief, we are asked about the availability of female executive talent. Addressing the industry-wide gender imbalance at the Board level is an increasingly hot topic and one that is not quickly solved.
We see more and more executive employment agreements with non-compete or non-competition provisions. Often, they are too broad, too restrictive and too unreasonable to be enforceable. We are finding that executives frequently do not understand them, have failed to take proper legal advice and this, unfortunately, is leading to legal disputes between employer and ex-employee.
The main impact of BREXIT so far on executive recruitment in the shipping and maritime sector has been companies and candidates taking a "wait and see" approach, while awaiting clarity on the right to work after March 2019. With the UK Governments' announcement on the 21st of June, on the long-awaited settlement scheme for EU citizens, the picture is starting to become clearer and hopefully the UK and European candidate mobility will once again resume.
We have seen a strong financial year with a significant uptick in executive search work in both shipping and the broader maritime sector. There continue to be winners and losers across all types of companies, and without a doubt, demand remains strong in all of our geographies for the best executives.
Companies and executives are equally careful in getting together and until recently the market has remained relatively balanced between vacancies and candidates. We are just starting to see a tightening of executive availability in some specific sub-sectors, and we believe this will broaden over the next year.
Not wishing to appear to “talk up the market”, I am going to refrain from predicting whether the current busy and competitive market is going to continue or is just a blip. However, it might!
If you would like to discuss any aspect of this update or any employment and executive search matters, please get in touch.