Executive Search Market Update

June 2012

We are pleased to share our most recent insights on what’s happening in the world of executive search and our thoughts regarding employment at senior levels in general.

We’ve been busy during the first half of 2012 helping our clients in a wide range of industries.  We have been actively assisting clients in the  biotech/pharma, manufacturing, financial services, real estate, consumer and public/not-for profit sectorsattract a varied list of ‘ideal candidates’ to help them grow.   While our work has been broad in terms of the industries in which we've been working, there has been common theme among each of our assignments - while there have been many candidates who  have expressed interest in each of our assignments, we have had to diligently search far and wide to find those candidates that meet our clients' criteria.

The Global Executive Search Perspective

Our search practice, along with that of most search firms, grew in 2011.  However, in order to better understand trends, we prefer to track quarter-to-quarter changes, and that’s where the similarity among many of our competitors ends. 

While their quarter-end dates differ, publicly-traded global search firms Korn Ferry International (KFY) and Heidrick & Struggles (HSII) experienced declines in the last half of 2011 which offset earlier revenue growth in the first half of the year.

After reporting eight consecutive quarters of earnings growth, Korn Ferry experienced two periods of declines in the last months of 2011.  Revenue fell 3% and 8% respectively over the last quarters, and 5% and 10% in its Futurestep (mid-market) line of business, which had outpaced the growth of its traditional search business in prior quarters.  These results were offset by moderate growth in the most recent quarter in 2012.   Executive search revenues were up 5% while its mid-market business grew 14%.  Optimistically, headcount in both divisions is up.

Since the third quarter of 2011, Heidrick & Struggles has experienced sequential quarterly revenue drops of 10% and 16%. Geographies hardest hit were Europe and Asia (- 17%), though the Americas’ revenues were also down significantly (-15%). In its most recent quarterly update, Heidrick indicated that sequential quarterly growth in the Consumer, Life Sciences (+6%) and Not-for-Profit (+13%) sectors have partially offset declines in the Financial Services (-27%), Technology (-11%) and Industrial (-7%) sectors. Looking forward, Heidrick & Struggles forecasts quarterly revenue growth of 17% to 27% for the next quarter, while annual revenues are forecast to be -3.5% to +2.5% of 2011 revenue. Given the exodus of partners from Heidrick, we question whether these forecasts are achievable.

Hudson Global, which operates a significant temporary staffing business in addition to its mid-market search practice, saw its revenue decline 9% in its first quarter of 2012 from the fourth quarter of 2011.

And yet, other firms are growing. One example is CT Partners which increased its global headcount seven-fold and saw its overall earnings rise 13% in the first quarter of 2012 over the fourth quarter of 2011.

Recruiting for Executive Search Consultants is up

As evidenced above, search firms who have acquired top talent continue to grow.  And if the number of recruiting calls we’ve personally received over the past year is any indication, every firm on the planet is seeking to boost its talent roster.

To minimize costs to acquire talent, there are increased needs for internal recruiting resources within hiring organizations.  Career professional recruiters may have many more opportunities to consider if they decide to explore these options.

What functions are in demand?

From our vantage point, mid to senior-management roles whose titles incorporate any of the following terms are in high demand – Risk, Compliance, Regulatory, Sales/Marketing, Operations, Finance, and Infrastructure.

Generation Y (or as we heard it referred to recently, 'Generation Y Bother?')

We’re often asked to meet with our clients' recently-graduated children to provide job search and employment advice. Keep an eye out for our next communique in which we’re going to share our thoughts on Gen Y from two perspectives – what employers can do to recruit them and harness their energy, and what those Generation Y job seekers can do to get their career started on the right track.

We wish you a safe, happy and healthy summer.