Commentary: Leadership, are you paying attention? There's been a power shift

The COVID-19 pandemic has disrupted and permanently changed how employers recruit and the way top candidates consider their work environment. This is especially true in asset management. Just as businesses operations require agility to weather the storm and come out on top of their competitors, firms' talent strategy needs to evolve to address the new normal.

The new normal means many things. It includes a hybrid workplace, an engaged and inclusive culture, potential hires interviewing employers instead of the other way around, and accommodating and flexible recruitment and retention strategies. Yesterday's talent strategy of the tactical ''one-in-one-out and fill-the-seat'' must evolve with the changing dynamics of the industry in a more holistic way. And the job doesn't just fall on human resources; attracting and retaining the industry's top talent during this Great Resignation requires a multifaceted engine.

The firms where leading executives consider talent strategy as a top business concern and work with their business heads to address talent concerns from the top are the firms that win the best candidates. The firms where top executives see human resources as a functional expense for their company and where talent strategy is not integrated into their business strategy are losing out.

While this is true across any major global industry, there are three underlying shifts that asset-management business leaders must navigate to stay ahead of the game — in time, culture and power.

Just as there has been a flood of liquidity in the markets, there has been a flood of need to fill front-office roles and interest in team liftouts and spinouts. Firms do not have the luxury of waiting until the end of bonus season to add talent, but rather have been paying out well before year-end to ensure they are adding the right people in key roles. This is a huge shift in talent strategy for most firms and it is perplexing HR teams that have handled new-hire strategy for decades.

In the past several months, upper management who has stayed actively engaged in the hiring process is winning out. There has been great success in approaching potential fits, similar to how colleges recruit top students or sports teams entice elite athletes. Start early, be persistent and get to know what they want.

More and more we are seeing candidates include less routine factors in their decision process while evaluating an offer from several managers. Candidates are changing firms because they want to be more entrepreneurial in an organization with greater flexibility and the opportunity to make an impact. They want to feel personally attached to their workplace and have it provide a sense of purpose and reflect their ideals on issues like diversity, equity and inclusion, and sustainability. This is the case across levels of seniority and experiences.

For years we have been reading studies on how and why culture can influence the productivity and success of a firm. Now we are seeing this extend even further. Culture is a requirement in this competitive talent market, not just an added benefit. Therefore, it is crucial to develop a larger talent strategy that maps back to business objectives and principles. A culture and retention strategy needs to be top of mind to ensure the right people are hired and the body doesn't reject the organ.

Accept the market as it is. There is a frenzied war for talent out there, and the traditional tactics for attracting candidates no longer work with institutional positions that take at least six months to be filled. Candidates have stronger demands than ever, including guarantees, flexibility and salary sticking points.

If you want the best, expect to pay for their full value. This is especially true for the value of a top team on the street. High-performing teams are the engines that run firms, and the power has shifted from the corporation to the team. Get the best teams and you will have the best franchise. In today's market, there is an exceptional challenge to generate sustainable alpha, and you need to have a hiring strategy that is aimed at securing the right assets to enable the organization to be competitive. People are hunting for returns and will move their money to the teams that are finding it.

These three major shifts build to the idea that strategic business priorities and talent goals should be aligned, especially if they represent a departure from the normal way of doing business. Building the right teams with the right people creates revenue, new products and diversification. The hunt for hiring and retaining talent, in the end, is a financial decision, and one that can be the difference between staying competitive and moving forward or getting left behind.

Laura K. Pollock is the founding partner, and John Forsythe is an advisory partner at Third Street Partners LLC, an executive search firm for the asset and investment management industries. This content represents the views of the authors. It was submitted and edited under P&I guidelines but is not a product of P&I's editorial team.