Executive recruiting slowed last year, firm says, citing market turbulence

Although billions of dollars were invested in the high-end recruiting sector in 2023, the pace slowed compared to previous years, dropping by 12.2%, according to a March 26 report from Hunt Scanlon Media.

The firm cited “market turbulence and a soft economy.” Recruiters who served the tech stack, VC and high-growth companies were hit the hardest, while M&A became more prevalent.

“Strong tailwinds in the human capital management (HCM) sector stand to benefit the search industry and will drive growth moving forward,” Scott Scanlon, CEO of Hunt Scanlon Media, said in a statement. 

At the same time, the market continues to be highly cyclical and fragmented, he said, adding that “M&A is a crucial lever for industry leaders seeking sustained levels of outperformance over the next decade.”

In Hunt Scanlon’s Top 50 ranking, 70% of U.S. recruiting firms reported negative growth. A few notable exceptions reported positive growth, including ZRG Partners, which was up 31% due to programmatic M&A.

In a recent poll, 51% of search firms said they planned to explore M&A solutions during the next 24 months, according to the report. Consolidation and diversification in aligned HCM markets will fuel M&A activity in 2024 and extend into 2029. In addition, acquiring new HCM platform verticals appears to be growing, Scanlon said, including interim and on-demand talent solutions, leadership assessment, coaching and culture consulting.

Although the recruiting pace has slowed, HR remains focused on hiring, according to an Indeed report. As the labor market stabilizes with a more sustainable balance, recruiters are attracting candidates through signing bonuses, particularly for in-person roles and in-demand industries such as healthcare.

Throughout 2023, hiring slowed as job requisitions dropped, more applications came in for fewer jobs and voluntary turnover declined, according to a Workday report. To meet goals, companies must recruit the right people and upskill their current employees, the report authors wrote.

In addition, labor force attrition has declined in 2024 and will likely continue to remain slow through the first half of the year, according to a Robert Half report. Fewer workers plan to change jobs due to adequate compensation, flexibility and fulfillment.