Since at least 2007, there has been a limited number of opportunities for candidates at this level and salaries have not risen anywhere near the levels of the VP/senior business partners – if at all. When I asked the group whether they felt senior HR professionals were becoming victims of the success of their own succession planning and talent management programmes, there were a number of thoughtful expressions among those present.
This theory was highlighted by a conversation a colleague had with a senior HR professional he had recently placed. When my colleague asked him how his current employer was planning to replace him, he replied that he had been working with one of his team for a couple of years to prepare him to step up into his role. The succession plan was an immediate solution, costing the organisation nothing to implement (aside from a relatively small increase in salary) and avoiding search fees for a potentially costly external hire. However, this effectively removed two senior HR roles from the recruitment market – the one my colleague filled and the gap left by the candidate he placed.
Another initiative driven by HRDs is that recruitment functions are becoming more closely aligned with talent functions. This has helped organisations save on cancellation fees to search firms by looking at internal talent first rather than identifying it at the end of the search process, as was more often the case in the past. Before changing their approach, larger companies had been paying millions of pounds in cancellation fees to search firms and promoting from within. This not only makes sense commercially at a time when HR budgets are increasingly restricted, but is also a strong retention tool at the SVP/senior business partner level, where there is a shortage of 'top talent'.
Effective succession planning has a major impact on the 'domino effect' in the market (ie when one senior person moves, it creates a vacancy for an external hire which, in turn, creates another vacancy in the organisation their replacement is hired from and so on). Relatively high attrition at the senior end of the HR market has not led to the corresponding increase in opportunities that it should have done and there are now considerably more senior HR candidates 'on the market' than we have seen for some time. As a result, the senior interim market is also oversubscribed with candidates and we have seen day rates at this level drop considerably over recent months.
Additionally, we have seen the 'volume' employers of senior HR professionals (particularly in financial services) significantly scale down their hiring at the top end of the HR market. In organisations where we would normally expect 10 or more vacancies at this level over a year, we have barely any. These organisations are going through significant cost-cutting exercises and HR is suffering more than most functions as a consequence. We have also seen the introduction of HR capability models in some companies, which will map succession to the group HRD role to at least four grades below; something that will also significantly impact on the 'domino effect' by taking more senior roles away from the external market.
There are, however, two factors that have affected the senior HR market that are definitely not linked to succession planning. One has been the retrenchment of many EMEA 'head of' roles back to the US, particularly in the technology sector. This has led to smaller 'country head' roles taking the place of bigger EMEA roles. The second factor is the M&A activity that has taken place over the past couple of years, which has reduced the number of 'head of'-level roles in the new business.
The upside of implementing strong succession planning and talent management programmes is that they have certainly helped organisations reduce hiring costs and retain key personnel as they come out of the downturn. This has to be seen as a positive intervention that HR has had on business and is an area where HR can continue to make a significant contribution in the future. Unfortunately, this will continue to inversely impact on the senior end of the market – and not just in HR – as organisations promote within rather than look to the external market. Until there is a significant improvement in economic conditions and the big EMEA 'head of' roles start returning to the UK, this trend looks set to continue.
Iain McAdam (pictured) is associate director at HR recruiter Digby Morgan
