Coronavirus Accelerating The End Of The Banking Career?

If you don't know me, then you might think this headline is click bait. It's not!

I've been predicting the death of the Banking Executive Career from 2015.

Since 2012, I have dedicated my time to researching the Future of Work, Gig Economy and the potential impacts on executive careers.

We see clear trends that executive tenure is shortening. According to the Australian Bureau of Statistics, the average tenure of C-Suite has dropped from 5 years in 2008 to 3 years in 2018.

In this post I will explain why and present a new way of framing your career. not in the Gig economy, but the PROJECT ECONOMY.

Careers As You Know Them Will No Longer Exist.

Today, approximately 150 executives per week are making contact about finding work. I cannot remember a time when I received so many requests. Many people have been on the market at least six months. And many have excellent credentials, yet still struggle to find work. 

Are you outsourcing career management to recruiters?

The recruitment industry is massively fragmented. In the past, you could meet two or three recruiters and within a month or two have several offers to choose from. Alas, no more. The global search firms are frantically trying to reinvent themselves as leadership consultancies. If you are actively looking for work, they are the last places you will find help.

What about the boutique recruiters? They will take care of you, right?

While you may receive a more personal service, boutique recruitment firms don’t have too many opportunities. As managing director of a boutique recruitment firm, I can share that the number of candidates for each executive search campaign we run stands at around 300.

The response from candidates is so overwhelming, we have actually stopped advertising on job boards.

Based on those odds, you have a 300-1 chance of being hired for any role you apply for through a recruiter. Many executives in are simply not prepared for the shift in hiring practices.

Does the hidden job market exist?

The process companies still embrace hiring people in 2020 has not changed much in 100 years. Digitising a century old process is not innovation.

In 1920 you would respond to an advert in the classifieds section. To apply, you would stand in a line, resume in hand, fill in an application form and hope you were the lucky one.

Today, you respond to a digital advert and your application gets lost in cyberspace. You are competing for the job with every suitable person on the planet, not just against those who have applied.

When it comes to executive positions, most appointments have already been made without the need to put the role on the market.

Recruiters are rarely your gateway to accessing the ‘hidden job market’. Usually head hunters are engaged when all possible leads from a client’s professional network are exhausted.

In many instances, the whole process can be a time consuming and expensive exercise in external bench-marking. Government organisations and large corporates are notorious for conducting external recruitment processes with no intent of making an external appointment.

The time to fill for Executive positions can be anywhere between 6-12 months. Keep that number in mind.

Does the hidden job market exist?

The biggest myth of all is that there is some ‘hidden market’ for jobs. Studies have shown that hiring via recruitment firms accounts for only 25% of the total jobs filled globally!

Approximately 75% of my professional network finds their next role through a direct contact, NO RECRUITERS involved.

For the 75% in my network who found something without a recruiter, it is not so much about accessing hidden opportunities, but creating their own opportunities.

How much can it cost you, being between jobs?

Okay so let’s do some crude calculations to illustrate the cost of being between jobs.

• If you earn $300,000 per year; Every month out of work costs you $25,000.
• At 40 years old, the rest of your career is worth at least $9m (retirement age of 70)
• It takes on average six to twelve months for an executive to find their next permanent position.
• Are you prepared for loss of income to the tune of $150,000 – $300,000?
• Average tenure in an executive role is reducing from 5 years to 3 years. In many instances executives are turning over roles every 12 - 18 months.
• You could spend up to 50% of the rest of your career in between roles.

Is now the time to change the way you think about your Career?

We are already seeing businesses no longer require a permanent workforce for task oriented or purely technical roles. The need for task-oriented roles continues to be addressed by off-shoring services, contract/project work and automation.

The use of Artificial Intelligence and Machine Learning presents an imminent threat to most professions. We all understand that lower level roles and task oriented roles are at risk.

Corporations are continually reducing headcount and cutting costs – despite record profits! The Project Economy is in full swing. I believe the trends I am seeing in my business are evidence that executive positions are at threat.

As we come out of the Corona Virus emergency and enforced working from home I anticipate two things will happen.

• Enforced job losses
• Enforced under employment (or working from home on reduced hours contracts)

In a country like Australia where most families depend on double incomes and are highly leveraged with household debt, there will likely be no option but to accept renewed employment contracts. I experienced this myself back in 2008/09 with a 20% reduction in salary.

Under-employment is a problem the Australian Government has been dismissing for at least 4 years. But it is significant for executives, especially those running large teams.

The real unemployment story.

Please note I originally wrote this piece of research in 2017 - If anything the situation has become worse since then.

Jobs are on the rise in Australia and unemployment has dropped. Sounds great, but it does not match with what I see from the trenches. So how does the Australian Bureau of Statistics classify if you are in work?

According to established international standards, everyone who works for at least one hour or more for pay or profit is considered to be employed. So if you are an Uber driver for a day, then you are not unemployed. If you want to have a laugh read the full explanation Australian Bureau of Statistics

Roy Morgan research estimates that the current unemployment figure in Australia is actually 9.3%. An additional 8.3% of the workforce are underemployed.

May 2017 - Almost 20% of the Australian workforce is under or unemployed. That is 2.1 million people.

The below graph shows the difference in their figures and those of the ABS.

The following; Source: Roy Morgan Single Source October 2005 – April 2017. Average monthly interviews 4,000.

In April the total Australian workforce was 13,133,000 (up 323,000 in a year) and employment grew strongly to 11,916,000 (up 440,000).

However the increase in employment was entirely driven by a large increase in part-time employment which rose 471,000 to 4,300,000 while full-time employment fell 31,000 to 7,616,000;

So while real unemployment at 9.3% is down 1.1% from a year ago, under-employment is up 0.6% to 8.3% over the same period. The rise in under-employment is a direct consequence of the increasing proportion of part-time employment at the expense of full-time jobs;

These are general figures, but what does that mean for executives?

I researched further information at Australia’s joblook.gov.au

Here I found specific data on Chief Executives and General Management.

Managing Director/Chief Executive is a very large occupation employing 53,300 workers.

Little change in the number of workers is expected over the next 5 years (to May 2022). There are likely to be between 15,001 and 30,000 job openings over this time from workers leaving and new jobs being created.

The number of Chief Executives and Managing Directors has fallen over the past 5 years.

Look at this data on the number of Chief executive positions in Australia.

Not much growth predicted in the next five years and there has been a big decline in jobs since 2012.

Now look at the age demographic.

The vast majority of executives are nowhere near retirement age, yet the survey expects to see 30,000 job openings through people retiring and new jobs being created.

Who misses out in the new Economy?

This following passage comes from an article in the Harvard Business Review ‘Who wins in the Gig Economy, and who loses’ by Diane Mulcahy.

As the jobs-based economy gives way to the gig economy, winners and losers are determined by the type of worker you are — or can become.

Workers with specialised skills, deep expertise, or in-demand experience win in the gig economy. They can command attractive compensation, garner challenging and interesting work, and secure the ability to structure their own working lives.

Workers who possess strong technical, management, leadership or creative abilities are best positioned to take advantage of the opportunity to create a working life that incorporates flexibility, autonomy, and meaning.

Entrepreneurial workers also win. The gig economy rewards hustle. Workers entrenched in a passive, complacent employee mindset that relies on their employer to provide a sense of stability, career progression, and financial security will struggle.

Independent workers who are comfortable with and excited about developing their own income streams, marketing themselves, and connecting with others are best positioned to take advantage of the many opportunities the gig economy offers.

What will your executive career look like?

Most executive roles today have a life span of 18 months to 3 years. Far removed from the last century when you had a job for life and spent 20 years with the same company.

There is massive disruption occurring in our careers, yet our approach to job searching and hiring has remained the same for almost a century (have you fallen into the digital black hole looking for your next role?)

In the very near future, it is likely you will find yourself looking for a new role every 12-18 months. Why so?

The pace at which companies grow has turbo charged this century.

Look at this diagram showing the rapid rise in company valuations.

In the last five years, the above companies have achieved growth that took 50 years last century.

Last century it made sense to hire executives for a five year term.

Last century, did it ever make sense to hire an executive for a fifty year term?

Of course not.

Business growth is no longer linear but a series of events or stages. And each of those stages requires specialist expertise. Look at the life cycle of business today, many of the businesses on the graph are less than 5 years old.

Is it feasible to expect a leader to take a business on this journey and do everything to the high expectations of shareholders and investors?

This could be the greatest opportunity of our lives.

The data doesn’t look good. But the reality is, the world is changing fast. If we don’t change, then we will be left behind.

Australia currently has 2 million startups and small businesses. We have a growing Fintech scene. And we have serious under utilisation of local talent.

• Can a startup or small business afford to pay an executive $300,000 per year? NO.
• Does a startup or small business need the expertise of an executive if they want to grow. YES.
• Does a startup or small business need the expertise of an executive full time for five years? NO.
• Can a startup or small business afford to pay for an executive on a part-time, short term basis? YES.

So what will the executive career look like in the Project Economy?

Think of an investment portfolio compromising of the following:

• Outcome/performance based (with significant incentives) employment contracts on a fixed term as short as 3 months.
• Project based, high impact, event driven assignments
• Building your own business
• Advisory roles unpaid but with equity
• Several consulting engagements working 1 to 5 days per week based on demand
• Board advisory roles
• IP rights and content creation (books, speaking gigs, podcasts)

If you want a real life example to follow, I can't think of anyone better than Brett King - Take a listen to his interview on the FinTech Australia Podcast

What does following the traditional career path mean for you?

• The forecasts indicate that most executives will need to look for a new role every 12 – 18 months
• Currently, it takes executives 6 -12 months on average to find the next gig;
• For the rest of your career, you could lose up to 40% of your total earning capacity!

The time for change is now.

The facts are clear, Executives are going to have to take greater control of their career and earning potential. Put simply, executives need to master the skills required to find work and get hired.

Your ability to thrive in the Project Economy will depend on:

• Your career capital, a portfolio of skills and experience relevant to a startup - Capital raising, scaling a business from seed to series B, IPO, international growth etc.
• Networks – Your network and networth will have a direct correlation
• Your brand and reputation
• Writing/Speaking/Presenting capability
• Sales and Marketing skills
• Negotiation skills
• Digital skills - Coding is great, but with no-code you can build apps and websites in a weekend
• Design Thinking and Creativity

Dexter Cousins is Co-Founder and Managing Director of Tier One People, leading Fintech Executive Search Partners and trusted by the world’s fastest growing Fintech to find the best leadership talent.

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