When Leadership Talent Is Scarce: Key HR Strategies in a Tight Market
By Eric Walczykowski, CEO, Bespoke Partners
Talent is a market like any other, with buyers and sellers.
Buyers are companies; sellers are prospective employees.
The law of supply and demand applies: when willing sellers are scarce, the market tightens, competition among buyers increases, and price (compensation) rises. That determines how easily you can find the talent you need at a compensation level that fits your budget.
So what do you do when the talent market gets tight?
A case study is playing out right now in private equity (PE). It offers lessons for HR leaders on finding the right executives when competition is fierce.
PE firms buy companies, improve them over a few years, and sell for a profit if all goes well.
The sector is huge. In the US, PE-backed companies directly employ about 13.3 million workers and support roughly 31–33 million jobs when you include supplier and consumer-spending effects. Nearly one in five US workers gets a paycheck linked to PE’s investments in our economy.
Leadership talent is essential to a profitable exit, so PE firms focus heavily on finding leaders who can execute growth and value-creation plans. Increasing scarcity of qualified leadership makes this much harder.
A bottleneck has developed because exits have been extremely low for an extended period. When an exit happens, senior executives typically become available for new assignments.
But US PE exits fell 25% in Q2 this year, according to PitchBook, amid economic uncertainty and tariff concerns. PitchBook analysts estimate PE firms hold an all-time-high inventory of more than 12,000 unsold US portfolio companies—a logjam caused by poor exit opportunities.
The exit problem means leadership churn isn’t happening. The most experienced executives are staying put, pursuing elusive exits, and are not available to lead the many companies now crowding PE portfolios.
The PE Leadership Bottleneck
As supply tightens, HR teams recruiting for PE face scarcity of qualified leadership.
It’s harder to find candidates with PE portfolio experience. Searches are longer and harder to close. When leaders are willing to consider new roles, compensation demands are much higher. Our latest data shows C-suite salary and bonus for software and SaaS executives is now consistently in the mid-$500,000 range—up about 25% for some roles over just a couple of years. That’s exactly what supply-and-demand dynamics predict: the “price” for a scarce resource rises.
Competition is fierce. Experienced leaders often field multiple offers simultaneously, especially seasoned CEOs and go-to-market executives in sales and marketing.
Fortunately, the same market rules suggest ways to mitigate tightness. Many of our clients use six recruiting strategies to ease constraints and improve their odds of hiring the leaders they need.
These apply well beyond the PE sector, and can be used by any HR professional hiring senior executives when those executives are scarce.
Impact on Leadership Recruiting
1) Make succession continuous, not episodic
Waiting until an immediate need arises locks you into that moment’s market conditions. Like all markets, the leadership market changes frequently. The most effective HR leaders run year-round succession programs that map and track potential needs and potential availability.
2) Expand the funnel with “step-ups”—and de-risk them
Hunting for C-suite “unicorns” with the exact resume narrows the pool and elongates searches. Consider VP-level “step-ups” who are ready for the C-suite. This can double or triple the candidate pool and reduce tight-market pressure. Our data shows step-ups achieve exits in PE-backed companies as often as seasoned C-suite counterparts as long as the new C-suite executives are vetted and supported properly with onboarding and mentorship or other support. The step-ups are hungry to prove themselves and will put in outsized effort.
3) Elevate HR as a strategic function
Traditional HR handles operations like payroll, benefits, and onboarding. But the most effective HR leaders elevate the function to be a true strategic partner. Because talent is mission-critical, HR and leadership needs belong in enterprise-level planning and decision-making. In PE, firms are adding full-time talent in operational advisory roles who help portfolio companies find and maximize impact from talent.
4) Get creative on compensation
As “market price” rises, recruiting qualified executives gets expensive. But talent isn’t a commodity with a single price. Use multiple levers—equity and options, milestone payouts, incentives tied to strategic success, and even remote work flexibility—to attract top leaders, sometimes at lower cash levels.
5) Streamline decision-making
When competition is intense, slow movers lose—both because candidates field other offers and because a slow process signals bureaucracy and a less-than-nimble culture. Top companies treat recruiting as a priority. Before engaging candidates, they align internally on the scorecard, references, compensation, interview cadence, and interview focus.
6) Work with external specialists
There’s a temptation to run searches in-house. But external search firms usually deliver better outcomes. They continually network with prospective candidates, giving you wider visibility. They track careers, know which roles will appeal and how to pitch them, and have real-time compensation data to guide negotiations and benchmark offers.
Six Strategies for a Tight Talent Market
Even in tight markets, some companies still land the best executives and set themselves up for success. The six strategies above are the tools they use to beat the competition for PE executive talent. You can apply them in any sector. The overarching strategy: run an efficient process, get creative, and broaden your market visibility to counteract scarcity of qualified talent.
Winning in the Tight Market
About Eric Walczykowski
Eric is the Chief Executive Officer of Bespoke Partners, a leading executive search firm for private equity portfolio companies.
Bespoke Partners delivers a scientific approach to search by leveraging proprietary tools and methodologies that lead to high impact executive teams that stay through the investment thesis 99% of the time.
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