June 2011
Our last newsletter was entitled "Three Steps Forward, One Step Back". We believe that the "One Step Back" is upon us.
We are very pleased to report that our business more than doubled in the last half of 2010 as compared to the first half. We continued on that trajectory until the recent slowdown we've experienced in May and June.
Our revenue growth is a result of both higher volume of search engagements and increasing compensation levels.
We continue to be active in all market segments, but our most active sectors include all aspects of real estate, financial services, and industrial.
Regardless of industry and functional expertise, our engagements continue to be weighted heavily towards those in operating, investment or other roles focused on producing measurable results to the top and bottom lines
In our experience, search activity closely mirrors the financial markets. As the Globe and Mail wrote on June 17th, 2011, "The steady decline of Canadian stocks over the past several weeks crossed a significant threshold when the benchmark lurched into a full-on correction...bringing the total damage since early April to nearly 10.1%."
As we all know, the Canadian index is heavily exposed to commodities which have been hit hard as raw material prices were impacted due to growing fears about global economic health. Meanwhile, bank stocks have also released generally disappointing earnings, and financials have fallen more than 6%.
Publicly-traded global search firm Korn Ferry International (KFY) reported its fourth quarter (ended April 30th) earnings on June 15th. Pleased to report is eighth consecutive quarter of earnings growth, KFY noted that its global revenues were up 5.8% over the previous quarter; 3.3% on a constant currency basis.
Regionally, sequential quarterly revenues were up 2% in North America, 4.8% in Europe/Middle East, 20% in Asia, and 9% in South America. The constant currency figures were slightly lower.
Sectors experiencing the most positive growth were financial services, consumer goods and industrial. The technology sector was down slightly since last quarter, particularly in North America.
Describing the global economic environment as 'still tepid', Korn Ferry suggested that the 'global business environment remains choppy'.
It hedged its bets by providing guidance that its global revenues in the quarter ending July 31 would be +/- 4% relative to the previous quarter's revenues. KFY added that May confirmations were down slightly in North America as compared to April, but were up slightly in Asia and Europe.
Average fees are increasing.
Uncertainly abounds, and growth is slowing, for the time-being. Perhaps less so in Canada than in the United States, but the uncertainty remains.
Why then are compensation levels on the rise? Our sense is that the searches we undertake are those not easily conducted through an employer's own efforts - advertising, networking, or job postings. When our clients retain us, it is often because these efforts may have already failed, and/or our clients are seeking specific skill sets that are in high demand. This competition for talent drives up compensation.
Many employers are having difficulty reconciling the global economic uncertainty with rising compensation levels for specific roles.
Some organizations have launched employer-branding campaigns for the first time in several years, or indeed for the first time ever.
Focus on retention of professionals with key skills.
Continue to identify talent in the marketplace that may be attractive to your organization as the uncertainty wanes.
Build your employer brand.
We look forward to staying in touch, and providing our insights into this interesting employment market.
We wish you a safe and memorable summer.