Transition Management: What Trends in 2022? – by Rémy Longo

The transition management market recorded a rebound of 50% in the first half of 2022. After two years of health crisis, the conflict in Ukraine, sanctions against Russia, and the situation in China are all threats weighing on growth. At the same time, we are in a period where the company must reinvent itself to re-engage its employees and to respond to the challenges of innovation and climate. In this context, what trends are currently structuring the transition management market? What changes have been observed? And tomorrow, what changes should be anticipated?

2022: CONTINUING THE GOOD MOMENTUM OF 2021
We consider that the transition management market today represents 500 million euros. Although it experienced a decline of around 20% in 2020, it has since mid-2021 regained strong growth momentum (+50% activity year on year).
A figure to put into perspective compared to Germany and England, where transition management is much more widespread and used, with respectively 3 billion euros and 1.2 billion euros.
The French market, which has around 200 players, totals approximately 3,000 transition management missions each year.

ECONOMIC ACTORS FACING A MORE COMPLEX CONTEXT
According to the International Monetary Fund (IMF), global growth should be 3.2%, European growth 2.6%, and French growth 2.3% in 2022, thus confirming an economic slowdown and a rise in inflation. The conflict in Ukraine, sanctions against Russia, and the situation in China follow two years of health crisis: a return to relative normality that will have to accommodate lasting instability.
We observe daily that our clients face persistent supply difficulties, the component crisis, rising energy and raw material prices, and at the same time difficulties in recruiting talent.
The effects of this situation can also lead to a disorganization of the supply chain in certain sectors where activity is paced by “stop and go.” With order books well-oriented, the difficulty remains in delivering. This situation also affects the evolution of selling prices to preserve margins in response to pressures on raw materials.

AN INCREASE IN RESTRUCTURING OPERATIONS
Since 2020, the government had activated the PGE (state-guaranteed loans) and aid mechanisms that limited the repercussions of the health crisis on companies. Under life support, the level of corporate failures was at its lowest in 2021 with 28,371 procedures recorded. Between May 2021 and April 2022, corporate failures increased by 7.4%, mainly concerning SMEs. In addition, Deloitte published a study indicating that the number of amicable procedures triggered by financially distressed companies jumped by 48% in 2021. “The increasing level of uncertainty in French and international markets for companies will favor an increase in failures in France”[i]. We anticipate a rise in restructuring operations in the second half of 2022.

AGILITY CHALLENGES
This uncertain context, where long-term strategy projection has become very complicated, even impossible, requires great agility, permanent reorganization, and the transformation of existing models, combining pragmatism, managerial courage, transparency, and collaboration. All these factors will favor the development of transition management.
A managerial solution deployable very quickly, it is a powerful lever to help companies through these troubled periods and accelerate their transformation. Experienced operational leaders, transition managers are indeed capable of integrating quickly to provide a fresh perspective on a situation and accelerate change within the organization.

TRANSITION MANAGEMENT BECOMES GENERALIZED IN MANAGEMENT PRACTICES
Even though large French companies and mid-caps remain major users of transition management, this practice is increasingly favored by organizations of all sizes.
While industry remains a significant sector, all activity sectors without exception now use this type of intervention: industry, services, distribution, public services, non-profit organizations.
Similarly, transition management applies to all functions. Both historical ones (such as HR, Finance, IT, etc.) and more recent ones, notably Legal & Compliance, Marketing, Sales, Digital, Real Estate…
Transition management is therefore now an integral part of the executive toolbox to transform the company!

HIGHLY SOUGHT-AFTER PROFILES
Preparing an IPO for an innovative scale-up, a carve-out for an industrial group, piloting IT integration of a new acquisition, transforming a supply chain for electric mobility challenges… we observe that the profiles of CEO, CFO, HR Director, Supply Chain Manager, and CIO are highly demanded at present.

TRANSITION MANAGEMENT: A RESPONSE TO PRESSURE IN THE EXECUTIVE JOB MARKET
Even if there is no “Big Quit” in the French way, the executive job market is very tight and companies face recruitment difficulties. Managerial continuity, which allows skills to be provided urgently while waiting for a permanent recruitment, today represents 40% of missions.
In this context of tension, the permanent recruitment of a transition manager at the end of the mission can be seen as an interesting alternative for companies. However, it is often a “false” good idea.
Indeed, the profile of a transition manager, selected in urgency, is oversized… in order to guarantee the success of a mission with major challenges. This mobilized manager will therefore not necessarily be suitable for a long-term collaboration.
This is why the Grant Alexander Group has two activities: executive search for the selection of permanent profiles and executive interim for the selection of transition managers.

RENEWING THE CANDIDATE EXPERIENCE TO ATTRACT THE BEST PROFILES
Previously, the attractiveness of a transition management mission relied on the interest of the challenge to be met, which was sufficient to convince a transition manager to engage. Today, the market dynamism, generational renewal of profiles, and changes in employment modalities (hybrid work, mobility…) generate new expectations among candidates who are now more demanding.
Previously, the client selected the profile of a transition manager to carry out a mission. Today, more frequently, it is the transition manager who, selected to conduct 2 to 3 interesting missions, will choose the opportunity that he/she prefers. Their choice will be guided by several variables: the quality of the challenge, the modalities of the intervention, the daily rate, the meaning of the mission, and the quality of the relationship with the client and with the Transition Management Company (EMT) that supports them.
In summary: managers have the choice, and companies and EMTs must become more attractive to mobilize the best profiles and “engage” them!
This implies, for example, acting as we do at Grant Alexander, with ethics, respect, and transparency in a genuine relationship of proximity and partnership with our candidates and managers.

TO RECRUIT THE BEST TRANSITION MANAGER, AVOID OVER-SOLICITATION OF ACTORS
In a dynamic market with a large number of actors, some companies solicit up to 5 or 6 EMTs for a mission.
This practice is a “false” good idea, counterproductive, for several reasons.
First, in this type of situation, the EMTs in contention will have to position themselves urgently by proposing the first available candidates… but not necessarily the best. As the proverb says, one must not confuse speed with haste. Indeed, you will have a large number of managers, but again not necessarily the best.
Second, faced in record time with multiple candidates, the client will lengthen the selection process, risking not quickly identifying the suitable transition manager.
Third, when a quality transition manager is solicited by 4 or 5 different EMTs for the same mission, there is little chance that he/she will choose to position themselves on it. This does not give them a good image of the company and they will turn to another mission.
In practice, this over-solicitation does not add value. Limiting consultation to 2 or 3 quality EMTs maximum per mission is an approach we strongly recommend.

AND TOMORROW… TOWARDS AN EVOLUTION OF MARKET STRUCTURE?
The transition management market is fragmented among 200 actors: pure players, groups combining executive search and transition, and platforms. The future could result in a structuring and concentration of actors, potentially orchestrated by consulting firms, generalists, transition management companies, or investment funds.
Existing digital platforms currently seem well suited to meet middle management needs, but less so for top management. The EMT profession lies in its ability to advise, challenge, but also to evaluate, beyond technical skills, the human qualities and soft skills of executives. By analogy, recruitment platforms have existed for many years, and yet the headhunting activity has never been so successful.

Rémy Longo, Managing Partner, Grant Alexander – Executive Interim
[i] L’entreprise en difficulté en France en 2021 – Deloitte