search-consult Issue 20 by margaret jaouadi

2004 / ISSUE 20

The International Executive Search Magazine

The Largest Search Firms in the World - 2004

Search in Canada Talent in the Oil & Gas Sector Horton International - Establishing the Right Relationship Executive Recruitment in Australia

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Editorial MANAGING DIRECTOR Jason Starr jason@search-consult.com EDITORIAL Pilar Gumucio editorial@search-consult.com PRODUCTION Margaret Jaouadi margaret@search-consult.com

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Welcome to Issue 20 of search-consult

Roberts Management International, Inc. Is

Every year search-consult compiles the ranking of The Largest Search Firms in the World and in this issue we are sharing our recent findings with you. Most analysis of the size and importance of search firms use revenues as the basis for the research. pleased to announce the appointment of At search-consult, we believe this approach is flawed; issues such as exchange rates and cross-charging mean that these numbers prove little. Therefore, we take the approach of measuring the largest firms on the basis of office locations. Criteria for inclusion are as follows: each office must provide a retained search service that is responsible for at least 51% of its revenue and must have at least one full time To the position employee and a “local” telephone number. Paul of McMahon, former COO of The Amrop consultant on Executive Search network Hever Group and former independent Chairman Chief Officer issues, in his article& on page 9 that Executive accompanies our research, is providing an in-depth of analysis of factors that helped search firms survive and even grow Christian & Timbers during the tough times, and a way forward to succeed in an increasingly competitive marketplace.

BRIAN SULLIVAN

search-consult.com Calvert House, 5 Calvert Avenue London, E2 7JP, United Kingdom Tel: +44 (0)20 7749 6102 Fax: +44 (0)20 7729 6108 www.search-consult.com

In every issue of search-consult we focus on the Executive Search industry in a differentwas regionpreviously – this time we focus on marketsof in two opposite&sides of the world. Brian Sullivan Vice Chairman Heidrick Struggles On page 4, Pilar Gumucio explores the nuances and cultural challenges of conducting and prior the founder and CEO of Sullivanin & Company, a financial services search searches various parts of Canada. On page 22, Peter Waite, firm Executive Chairman qualities of Executive Talent in Australia, while of Waite InterSearch, uncovers the Daniels Australia, in her article on page 24, Jennifer Grove, Associate in Gerard Corey Roberts, Donna Karnal and Georgina Tremayne of examines theManagement trends and movements in the Executive Search industry in Australia. Roberts International led the search

For manuscript/ photographic submissions, please e-mail our Editorial department or write to the address above to obtain author/ photographic guidelines.

As the global economy recovers, talent management and strategic partnerships RobertsareManagement International is an ofexecutive firm that becoming vital in the success or failure a company.search search-consult has been specializes in torecruiting senior level ofprofessionals for all areas the talking Gerard Dietrich, Chairman Horton International, about howof establishing Human Capital Industry in multiple geographic locations the right relationship is paramount for the continued success of his organization. You can read about it on page 20.

search-consult is published by Dillistone Systems Ltd, Calvert House, 5 Calvert Avenue, London, E2 7JP, United Kingdom and printed by Mr. Bloom Ltd, Sopot, Poland, www.mrbloom.com.pl. All statements, opinions, and expressions are the sole responsibility of the authors and the Publishers reserve the right to amend/alter articles as necessary. The Publishers cannot be held responsible for any loss or damage, however caused, of any materials supplied. Any materials supplied may not always be returned. No part of this publication may be reproduced in any format without prior written consent of the Publishers.

And finally, we start the series of articles focusing on specific industries with a closer look at the Oil & Gas Exploration and Production sector. On page 18, Stephen Sheal and Kevin Davidson of Maxwell Drummond International share the results of their recent study into the sector their company specializes in that found “Oil is Not the Only Scarce Resource”. The next issue of search-consult will focus on Life Sciences. As always, we hope you will enjoy this issue of search-consult. Your feedback is greatly appreciated, so please continue to email us at editorial@search-consult.com.

1 West Street, Suite 2000, New York, NY 10004 Tel 212-217-9964 www.rminternational.com

ISSUE 20 2004 search-consult

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Canada: Land of Opportunities By Pilar Gumucio

anada, ranked the eighth largest economy in the world, is reputable for its pioneer spirit as advances in technology and an increased globalisation of markets are changing the way business is conducted. Canada’s economic wellbeing is tied to many factors, most notably: the wealth of natural resources, a diversified industry base, a modern infrastructure and a welleducated workforce that boasts high living standards and an impressive quality of life. It is highly integrated with the US economy, which absorbs 85% of its

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exports. As a result, the United States are pivotal for Canada’s continued growth. Moreover, 85% of Canadians live within about 200 miles from the border with the United States, reinforcing many characteristics common with their Southern neighbour. For instance, almost 70% of Canadians share the same language, facilitating an easy and constant exchange of information. In fact, with the establishment of NAFTA (North American Free Trade Agreement), the perception of one huge North American market has increased the levels of trade and economic

integration between both countries. According to Carl Lovas, Chairman of Ray & Berndtson Canada, “Canada mirrors the US, but scaled down to 10%. The only exemption is that the public sector and non-profits play a larger role in Canada.” Canada is definitely moving toward a knowledge-based economy as the service sector accounts for 2/3rds of the country ’s output and provides employment for nearly 3/4th of the working population. The primary sector continues to play an important role in economic activity, as it is responsible for over 1/4th of the

country’s total exports and is the main source of income for several provinces. A COUNTRY WITH DIFFERENT SCENARIOS Retained executive search in Canada is an important part of the business community, being used by the large multinationals for more than 50 years. Now the concept is widely extended and used in metropolitan areas, such as Toronto, Montreal, Calgary and Vancouver as well as in more rural areas. It is used in all sectors as clients range from large multinationals to small start-ups. Steven Pezim, Founding Partner & Managing Director of The Bedford Group (which is the Toronto office of TRANSEARCH) explains that, “There are very different scenarios in executive search. There is a top tier, b a s e d i n To r o n t o t h a t i s v e r y competitive and has an international reach. In fact, Toronto is what drives Canada because there is a high concentration of companies as the headquarters of multinationals and mid-tier companies operate in this area.” According To Carl Lovas, “While in the Greater Toronto area, 40-50% of the population works here as 70% of all business operates from this highly diversified economic hub,

Canada has a regionally broad

based economy with key centres in Vancouver, Calgary, Ottawa, Montreal and Halifax.” As a result, virtually all sectors are important as all the large global search firms have offices in Toronto. Some prefer to operate nationwide from here. Meanwhile, others have opened additional offices in select cities to be able to offer their clients a better

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service. For instance, Ray & Berndtson has chosen to open 6 offices throughout Canada, and as such, aims to offer clients the necessary expertise, resources and reach to attain the best available talent. Then there are search firms such as Armstrong Day International, located in Manitoba. According to Search Practice Leader Paul Croteau, “There are only two national search firms with offices in Manitoba, as most of the national firms see Winnipeg as too small a market to warrant an office. Most of our clients, however, prefer to work with local consultants. Having a local presence provides clients with the options of working with consultants who really understand the Winnipeg marketplace and can successfully sell it to out of province candidates.” “What differs is the size and industry of the client,” states Carl Lovas. “For example, in the West clients are in natural resources and the energy sectors. Québec is strong in aerospace, pharmacy and technology. Maritime is also growing.” Michael Stern, President of Michael Stern Associates, reports that, “Currently there are some companies looking to expand their operations into Montreal. Therefore they are looking for French-speaking executives who can lead their companies’ expansions into Québec.” Some of the clients are multinationals looking to open an office in Québec. The majority are Canadian companies that previously were not interested in exploring their options in this province, but are now looking to gain a competitive edge. THE BILINGUAL FACTOR It is important to highlight that Québec is a unique marketplace and therefore, it is not just the language that differs. Companies venturing into Québec today should be well aware of the linguistic, social and cultural challenges that lay ahead. Carl Lovas, Steven Pezim and Michael Stern all describe that, when executing a search assignment in this

area, their firms take into account the bilingual and cultural factors required. Jean Gaudry, Partner of Québecbased GSL Executive Search, states that, “Many search firms that operate from Toronto or the US do not fully understand the business culture” nor have “the sufficient local knowledge to select outstanding talent for this province.” Moreover, there is the factor of bilingualism. Almost 70% of Canadians are purely English-speakers while15% speaks only French; but these form a majority in Québec, which is Canada’s second-largest and secondmost-populous province. Within this context, it is important that search consultants and clients understand that a French-speaking executive is imperative to enhance their businesses in Québec. Jean Gaudry reports, “It is extremely rare to find English-speaking Canadians that speak French properly to work in French. The majority of French-speaking executives speak very good English and can and do work in English out of necessity.” What prospects do French-speaking candidates have outside of this province? According to Jean Gaudry, “Bilingualism is for the most part a oneway affair in Canada”. Most Englishspeaking Canadians that speak French as a second language are perceived to add value, and therefore, their opportunities for placements within and outside of Canada are greatly e n h a n c e d . M e a n w h i l e , Fr e n c h speaking Canadians that speak English as a second language are not fully appreciated outside of Québec. Nevertheless, he admits that as a new generation of executives take over, they are giving these candidates more opportunities to prove their worth. Meanwhile, in some other provinces, such as Manitoba, bilingualism is not an obligatory requirement. Paul Croteau comments, “We are not often called upon to search specifically for bilingual candidates. When that is a requirement for a role, it can be a real challenge to find ISSUE 20 2004 search-consult

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suitable candidates. Many of our candidates are not bilingual. The further East we search, the more bilingual candidates we find.” Canada is a huge country and even among the English-speaking provinces, there are significant cultural differences that affect the way business is conducted and must be taken into account when carrying out a search assignment. Carl Lovas describes, “these differences are similar to those that present themselves between New York and California in the US.” Fo r S t e v e n Pe z i m , “C u l t u r a l differences must be taken into account, but in the end, the execution of executive search is the same everywhere as being able to deliver results is what really counts.”

and perfecting a new executive search model.” Michael Stern describes how companies’ confidence levels are returning. “Companies that have been sitting on the fence for months are at last going into action, launching ambitious searches for new senior executives. They are not just replacing people who have left, but are beginning to create new positions to jump-start growth.” Steven Pezim believes that,

“There is a greater

impact in technology and this is trickling down in all industries, impacting every facet of business.” In fact, in Canada the most dynamic industries in executive search are currently in: technology and communications, pharmaceutical, healthcare, natural resources, consumer and retail. Carl Lovas would add the public sector as an important area since a high percentage of senior ranking officials are retiring and therefore, the demand for recruiting for those posts is increasing.

Michael Stern

A BRIGHT HORIZON Despite the recent economic recession, there is much optimism for Canada’s growth prospects. Carl Lovas explains, “The state of the market reflects the global trends as the industry is stabilizing and the demand for our services picks up.” According to Steven Pezim, “It has never been busier than now. We are hiring staff and we are continuing to take market share based on good work

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BEYOND THE FRONTIERS Although the exact amount of crossborder searches varies greatly from firm to firm, what is evident is that the amount of cross-border searches in Canada is increasing. Steven Pezim and Carl Lovas explain how their search firms conduct a high percentage of crossborder searches within different regions in Canada. Within this context, Carl Lovas differentiates between conducting national searches and regional searches, both evenly distributed.

When executing international crossborder searches, all the consultants interviewed informed search-consult that they source primarily from the US, then followed by Europe – mainly from the UK, Germany and France - and then Asia. Michael Stern explains that the amount of international cross-border searches is increasing as globalization intensifies. In fact, all the search firms boasted local knowledge with an international alliance as key elements that improve their resources and their capabilities to service their clients better. THE BRAIN DRAIN Steven Pezim explains that with globalization gaining ground, “Global experience is an important requisite to further an executive’s career. As a result, there are many Canadian executives going abroad, especially to the US since generally they are better paid.” Our research indicates that there is a flow to the South, a brain drain as top talent is lured by more opportunities, higher pay and lower taxes. Nevertheless, there is also evidence that the brain drain is also beginning to flow in the opposite direction as well. Steven Pezim reports how, “Many Canadian companies are attracting and recruiting US candidates that came to Canada as part of an assignment in a US multinational and have been persuaded to remain in Canada because there is more of a work-life balance here.” Moreover, Michael Stern describes how there is an increasing amount of Canadian expats that are returning because after September 11th many executives prioritized more of a work-life balance and believe that Canada offers executives a better choice. Although the tax level is higher in Canada, Jean Gaudry explains, “Companies are structuring the remuneration in such a way that this difference is minimized.”

THE WAR FOR TALENT: IGNITING THE FLAME All the consultants interviewed reported on how companies are, once again, prioritizing top talent as a means to gain a competitive edge. M i c h a e l S t e r n e x p l a i n s , “A s companies ramp up their investments to achieve higher levels of performance, they need to regain their competitive edge in terms of recruiting, retaining and developing high calibre employees. A global war for talent will re-emerge marking a return to the hiring mode as search firms compete aggressively to find the best talent.” Carl Lovas reports that as

”The economy recovers,

the war for talent issue will have a fuller impact.” S t e v e n Pe z i m r e v e a l s t h a t , “Companies are paying more attention to, and valuing, leadership. Clients are more enlightened and recognize this importance. Many companies are nurturing, investing in the individual as a precious resource and not a commodity.” Carl Lovas describes how clients are “evolving from occasional to full ser vice clients. They know how to discriminate better and have a better sense of value. Candidates are also growing and evolving in sophistication as it relates to managing their careers. They are increasing their expectations and demanding good service.” The stakes for recruiting the right leaders are high and going higher as organizations are demanding that senior executives add value immediately. In fact, the average tenure of an executive within an organization is becoming increasingly short. This coincides with the retirement of the baby boom as many companies

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are increasing the pressure to replace these executives. Michael Stern informs,

assessments, succession planning and other complementary services that help deliver superior leadership solutions to clients.

“A client previously would invest 6-12 months

in an executive before expecting tangible results, now it’s important that they show results immediately.” The competition is so intense that more companies are placing counteroffers. Within this context, S t e v e n Pe z i m r e p o r t s h o w he, as an experienced search consultant, makes sure the offer presented is “realistic to expectations. Our firm make sure that the client can place a great offer the first time.” As a result, executive search firms are pressed to reduce cycle times, be creative and innovative, show expertise, be accountable, better their services and deliver outstanding results. Steven Pezim comments, “We want to sell a quality service, we are reinventing the search process, perform better searches, minimize the risks of a wrong hire and deliver results.” Michael Stern is so confident in his firm’s work that they offer a free replacement guarantee in writing. “We have been asked to honour this guarantee on only three occasions over our 20-year history — this record attests to our ability to complete searches to our clients' lasting satisfaction.” As a result, executive search firms are offering cutting edge approaches to talent acquisition, providing assessment tools, individual and team

Carl Lovas

Carl Lovas explains how “It is vital to create the appropriate resource base to be able to service clients. As the largest search firm in Canada, we use all our collective resources and expertise to serve clients and gain market share and thus, enhance both our clients and our search firm’s abilities to become leaders in our respective industries.” THE NEXT GOLD RUSH Canada is a ver y diverse and dynamic market, creating numerous opportunities for headhunters. As the economy continues to improve and executive search further develops, the level of competition will intensify. Canada’s pioneer spirit will permit leading search firms to be creative and innovative, setting higher quality standards and identifying new opportunities for growth as they prepare for the next gold rush. www.search-consult.com For more information, contact: Web: www.search-consult.com

ISSUE 20 2004 search-consult

Boyden global executive search

Boyden...Industry Practice specialists since 1946 • Board Search

• Energy & Natural Resources

• Management Assessment

• Public Sector/Government

• Interim Management

• Not for Profit

• Financial Ser vices

• Automotive

• Global Risk Management & Security

• E-Business

• Technology

• Consumer Goods

• Human Resources

• Transpor tation & Hospitality

• Life Sciences

• Professional & Business Ser vices

62 Offices in over 40 countries and continuing to grow…visit a Boyden office nearest you via our website, www.boyden.com.

Africa Asia/Pacific

Europe

Nor th America

South America

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Largest

The

Search Firms in the World - 2004 By Paul McMahon

t one time it was easy to categorize Executive Search firms as either an integrated firm or a network. Then two of the integrated firms, Korn/Ferr y and Heidrick & Struggles, became public companies and commenced acquiring smaller private search firms. TMP also a public company - appeared, made substantial acquisitions, and then disappeared. Although much attention has been focused on this, the final chapter is yet to be written. Quietly the networks were themselves changing. Raided of their larger members by the publicly traded search firms, buffeted by the worst recession in the industry, one would expect many Executive Search networks would disappear. None have, and these tables illustrate their resiliency as they can adapt and change quickly. Change continues, but more is necessary if networks are to become a major force in the Executive Search profession. RECENT CHANGES Smaller networks have changed the most. Three years ago, IIC adopted a growth strategy in the midst of the industry downturn. “Jim Conroy was

Paul McMahon

a good leader", said Urs Wüthrich, Chairman of IIC. “Jim established a systematic process to identify quality firms which would fit our culture", Wüthrich continued. Increasing the membership by 50% was the visible change, but other changes occurred as well. During the industry downturn, IIC outsourced the development of a website and an intranet to a firm in Calgary which had no experience in search, but did have a thorough

understanding how appropriate technology could support internal communications in widely dispersed operations. “This has become a virtual home for our members. I ask them to contribute at least one article per year on developments in their country or practice groups, and our members can use this when talking to potential clients", said Wüthrich. Brian Burke, who developed this for IIC, said: “This secure intranet is designed to look and feel like a newspaper. When new information is posted, a broadcast e-mail goes to all employees of all member firms. Especially attractive are two features, new and active transborder assignments...(so that everyone can see the scope and detail of network activity)...and a continuously updated regional client list which allows members to check their own search assignments against those of IIC partner firms.” IIC was not alone in growing their network in troubling times. EMA added three new firms in Canada during 2003 to bring their total to five and recently admitted a new member in India. Chairman George Madden of Vancouver-based Pinton Forrest &

ISSUE 20 2004 search-consult

Madden is in discussion with several US search firms to complement the existing seven US members. Stanton Chase substantially increased its global footprint, adding 16 offices with the admission of Bó L¯ Associates in Hong Kong and Ward Howell Euroselect in Vienna. Thirteen firms met outside London in May 2002 to form a new network, The Taplow Group. Several firms had withdrawn from another consortium and knew what they did not want. Terry Hannock, Chief Operation Officer of Taplow and a founder of Flynn, Hannock in Hartford, Connecticut spent a great deal of time constructing a constitution that would encourage collegiality, allow each firm to maintain its independence, keep overheads to a minimum and offer a full range of human capital services. “We must have the formula right as we have attracted 40 high quality firms, including a dozen in the US. George Griffith and his team have done an outstanding job of membership development.” That is no mean accomplishment in a down market. But adding up revenues of member firms, putting more flags on the map, and holding annual conferences in exotic locations matters little to multinational companies and is an unconvincing proposition to many in the US search community. COMPETING FOR US CLIENTS

“I am not aware that any of my clients

have retained a search network as a preferred provider", said David Lord, founder of Executive Search Information Services, a specialized consultancy designed to assist major multinationals in engaging the right executive search consultant. “ To b e s u c c e s s f u l w i t h m a j o r

multinationals a search network must: • Empower an account manager with the authority to make things happen in a network environment; • Demonstrate a consistency of processes and procedures worldwide, and; • Possess a brand that will attract a talented candidate pool.” You should not dismiss this as one man’s opinion and point to work your firm or network has obtained from multinational clients. David is the facilitator for Executive Search Information Exchange (ESIX), “…a network (of over 60) corporate talent officers advancing best practices in executive recruiting worldwide.” This group meets 11 times a year and David has the best vantage point to comment on the Executive Search profession. On the agenda at every search network meeting I have attended has been business development with major multinationals. David has offered clear advice on what is necessar y to penetrate this large, primarily US market. But only those networks willing to cede sovereignty to an account manager, take their own names off the door in order to create a brand, and willing to adopt a common way to conduct searches and interact with clients can hope to crack this market. Not surprisingly, the view is different outside the US. Networks have had more success penetrating major multinationals headquartered outside the US. Stanton Chase recently announced a preferred provider agreement with Novartis and invited them to address all members at their recent meeting in Vienna. Ted Muendel, Stanton Chase Chairman, said, “We are very proud to be selected by Novartis as one of four preferred providers. This will be a challenge to perform to their demanding standards, but it will be good for our network.” Several search networks report having

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performed multiple repeat engagements for European-based multinationals. “Three years ago we started with two key accounts", said Dan Parker, Chairman of the 2004 Amrop Hever annual conference. “Today we have 20 key accounts worldwide with significant crossborder activity and that is a major benefit of Amrop Hever membership.” Granted, these are not preferred provider agreements, but they are a way to leverage the multiple locations of a network to make the whole greater than the sum of the parts. COMPETING FOR US MEMBERS The US search market represents approximately one half of the worldwide market, yet, except for Accord Group, not a single network derives half their revenues from the US. Why have networks not been successful attracting US search consultants? • “I am looking for a network which will help me improve my business. I want to see metrics on how my operations compare with search firms of a similar size", an experienced Florida search professional told me. “I haven’t found that yet.” • A Chicago based consultant said, “In Russell Reynolds I knew the values and the culture in each office was ver y similar. I could be confident that when I referred a client to another office, they would receive exactly the same treatment they received in my office. I cannot be sure of that in a network.” A Boston-based consultant managing a multi-location US firm echoed this sentiment. • A Bay area consultant who has been member of two search networks said, “I left the last network because they were imposing bureaucracy from the secretariat and I could not see how that was going to help me serve my clients better” ISSUE 20 2004 search-consult

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The Largest Executive Search Firms in the World - 2004. NO 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

NAME N AMERICA OTHER AMERICA EUROPE SE ASIA OTHER TOTAL THE AMROP HEVER GROUP 5 12 44 15 3 79 (79) KORN / FERRY INT 23 10 24 15 1 73 (69) BOYDEN 16 6 32 16 1 71 (68) INTERSEARCH 1 6 43 12 2 64 (74) AIMS 8 2 40 10 60 (65) EGON ZEHNDER 11 6 28 11 2 58 (59) HEIDRICK & STRUGGLES 17 7 22 11 1 58 (57) STANTON CHASE INT 14 8 16 18 56 (54) IIC PARTNERS 12 4 25 10 51 (55) TRANSEARCH INT 8 6 28 7 2 51 (41) EMA PARTNERS 12 7 26 5 50 (45) SPENCER STUART 18 5 19 7 1 50 (52) THE TAPLOW GROUP 15 6 19 6 46 n/a RAY & BERNDSTON 7 4 25 5 41 (41) ACCORD GROUP 6 1 21 11 1 40 (32) DHR INT 37 37 (38) AEA INT SEARCH 5 1 23 6 35 n/a IMD 4 24 7 35 (28) WORLD SEARCH GROUP 13 1 14 6 1 35 (34) RUSSELL REYNOLDS 12 2 12 6 32 (31) HORTON INT 2 3 20 6 31 (29) AT KEARNEY 12 1 12 4 29 (28) CFR Consulting 24 2 26 n/a SIGNIUM 4 1 15 6 26 (27) NEUMANN INT 23 23 (27) ITP WORLWIDE 6 7 7 1 21 (20) GLOBE SEARCH GROUP 5 14 1 20 n/a HIGHLAND Partners 11 1 3 3 18 (36) PENRHYN INT 2 1 10 3 16 (15) TOTAL 286 101 613 216 16 1232 (1104)

TABLE 1: Leading firms by number of offices

search-consult profiled three emerging search firms in Issue 18. None mentioned an international affiliation, though all three firms were founded by individuals who had worked in international search organizations.

“Look at all the boutiques

recently formed by those leaving the major integrated search firms. None found it necessary to join a search network", said David Lord.

search-consult ISSUE 20 2004

THIS IS NOT JUST A US PHENOMENON. • Two young search consultants who established a new firm in London in 2002 told me they had both attended many international network meetings because their former firm founded one of the large networks. “We are focused on serving our clients, and until a network can demonstrate how they will help us do a better job, we will go it alone.” • An experienced Brussels consultant said, “ The network model of geographic sovereignty is not the way my clients think, nor how I have organized my business.” Fellowship, collegiality and a weak brand are not enough to attract these and many other search consultants. There has to be a value proposition that helps them run their businesses better and serve their clients more effectively. This may be especially important now as Janet Jones-Parker of Jones-Parker/Starr, points out. “Only

in the past few days I have been contacted by four US search firms enquiring about networks. As the economy improves and the search market rebounds, smaller firms are exploring ways they can scale up a bit without losing their identity, revenue stream or independence. Most are looking for a high quality global boutique.” A WAY FORWARD Should Executive Search networks turn their back on the lucrative US search markets and the interesting boutique firms popping up all over? No! McKinsey recently studied 16 US-based federations. They define a federation as “…a network of local affiliates that share a mission, a brand … but are legally independent of one another and the national office.” (This sounds very similar to Executive Search Networks.) McKinsey argues a federated structure works well in a fragmented market and in certain circumstances is an effective “…response to the classic management tension between centralization and decentralization.” But only if the federation provides value in four key areas: brand management, performance improvement, shared services, and revenue generation. Can any network accomplish this? Several can and a few will. But it will take leadership, determination and focus. Here are some examples and a few suggestions. Chris Clarke, President of Boyden said “…we hate being called a network. Our ownership structure is a similar to that of Pricewaterhouse Coopers and other large accounting and law firms. Would you call them networks?” Clarke continued, “Our firm is effective because we have a powerful and democratically elected Board, to which I am responsible. This reflects the collective views and needs of the whole worldwide firm and gives us the legitimacy and authority to ensure integration.”

Leading Executive Search Firms in Respective Regions. NO 1 2 3 4 5 6 7

NAME DHR INT KORN / FERRY INT SPENCER STUART HEIDRICK & STRUGGLES BOYDEN THE TAPLOW GROUP STANTON CHASE INT

N AMERICA OTHER AMERICA EUROPE SE ASIA OTHER 37 37 23 10 24 15 1 18 5 19 7 1 17 7 22 11 1 16 6 32 16 1 15 6 19 6 14 8 16 18

TOTAL 73 50 58 71 46 56

Table 2: DHR International leads in North America

NO 1 2 3 4 5

NAME N AMERICA OTHER AMERICA EUROPE SE ASIA OTHER THE AMROP HEVER GROUP 5 12 44 15 3 KORN / FERRY INT 23 10 24 15 1 STANTON CHASE INT 14 8 16 18 EMA PARTNERS 12 7 26 5 HEIDRICK & STRUGGLES 17 7 22 11 1 BOYDEN 16 6 32 16 1 EGON ZEHNDER 11 6 28 11 2 INTERSEARCH 1 6 43 12 2 THE TAPLOW GROUP 15 6 19 6 TRANSEARCH INT 8 6 28 7 2

TOTAL 79 73 56 50 58 71 58 64 46 51

Table 3: The Amrop Hever Group leads in South America

NO 1 2 3 4 5

NAME N AMERICA OTHER AMERICA EUROPE SE ASIA OTHER THE AMROP HEVER GROUP 5 12 44 15 3 INTERSEARCH 1 6 43 12 2 AIMS 8 2 40 10 BOYDEN 16 6 32 16 1 EGON ZEHNDER 11 6 28 11 2 TRANSEARCH INT 8 6 28 7 2

TOTAL 79 64 60 71 58 51

Table 4: The Amrop Hever Group leads in Europe

NO 1 2 3 4 5

NAME N AMERICA OTHER AMERICA EUROPE SE ASIA OTHER STANTON CHASE INT 14 8 16 18 BOYDEN 16 6 32 16 1 THE AMROP HEVER GROUP 5 12 44 15 3 KORN / FERRY INT 23 10 24 15 1 INTERSEARCH 1 6 43 12 2 ACCORD GROUP 6 1 21 11 1 EGON ZEHNDER 11 6 28 11 2 HEIDRICK & STRUGGLES 17 7 22 11 1

TOTAL 56 71 79 73 64 40 58 58

Table 5: Stanton Chase leads in Asia Pacific Region

Boyden has many of the elements for success: • Common brand used consistently worldwide • Standardized procedures • Standards of performance • Account management role defined, and a Quality assurance program. This organizational model is different from other groupings of Executive Search firms. Richard Boggis-Rolfe, Odgers Ray & Berndtson’s CEO also has a different model. He owns both the Odgers and the Ray & Berndtson brands, and is

quietly re-establishing Ray & Berndtson in the US market while scouting the Asian market. Many will challenge the value of the Ray & Berndtson brand in the US having slipped from the 10th largest US search practice in 2000 to virtually non existent today. Don’t be so quick to dismiss this move. Richard’s accomplishments in London since acquiring the tired Odgers brand a few years ago are to be admired. Today Odgers rightfully boasts major completed searches for BBC, FTSE and the Welcome Trust and many other coveted clients. If he can repeat this in the US market, his purchase of the Ray & Berndtson brand could be seen in retrospect as a very canny move. Watch especially if Richard re-builds and re-brands the US operation, Odgers

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Ray & Berndtson; then convinces other Ray & Berndtson entities to follow. Neither of these organizational models is necessarily the answer for larger firms. More than one multi-office firm complained privately that their interests do not align with those of smaller, single office firms in their networks. Many are seeking a new way to compete internationally with the larger integrated firms and some are forming new networks. John Kins of Cook Associates in Chicago is one who did just that. He explained, “Our first search network was composed of very nice individuals, fine professionals actually, but as a multi-office firm we needed to know our clients would be served consistently when we referred them to another firm. We found that in forming AEA in 2001. Alexander Hughes headquartered in Paris with 21 offices, Michael Stern in Canada and Executive Access with five offices in Asia.” Recently, Christian & Timbers, the 10th largest US search firm with 14 offices announced a strategic alliance with Renoir Partners, a London-based boutique firm focused exclusively on fast-growth technology companies. Renoir rebrands as Renoir Christian & Timbers. This appears to mark the end of Christian & Timbers international expansion as Renoir absorbs their London office and both firms commit to working through the Christian & Timbers Alliance. But what it also marks is the formation of a group focused on one industry, technology. NEXT STEPS First, decide what you want. If it is collegiality, friendship and the ability to assist the occasional client with their need for talent in another area, continue your present course and keep your central costs low. If on the other hand, your vision is to create a formidable competitor then I suggest you: • Adopt a single brand • Synchronize processes and procedures ISSUE 20 2004 search-consult

Working in partnership with the leaders of today and tomorrow

Stanton Chase International provides executive search, organisational planning and recruitment consulting services. Our seasoned consultants combine local insight with specific industry expertise in eight dynamic sectors of the global economy: • Board and Corporate Governance • Consumer Products &Services • Financial Services • Healthcare &Pharmaceuticals • Manufacturing &Engineering • Professional Services • Natural Resources &Energy • Technology

Established in 1990, Stanton Chase International has grown consistently to be ranked among the top 1% of global executive search firms.Our growth has been built on solid performance, consistent delivery and quality service, with longstanding clients. Our forward thinking and long-term dedication to our clients set us apart. No matter where you are and whatever the need, we can work with you to provide executive search and leadership capital solutions to foster the success of your organisation. To speak with an industry practice search specialist or find a location near you, go to www.stantonchase.com

www.stantonchase.com

North America

56 offices in 36 countries Latin America Europe/Middle East/Africa

Asia /Pacific

• Choose and implement a common technology platform • Share operating information freely and copy other members’ good ideas • Form a group of your most valued clients, ask their advice, listen to it, implement what makes sense and explain what you have done and why. Branding will be the most emotional issue, especially if the founders, whose names are on the door, are at the table. Once a firm adopts the worldwide brand, and only uses that name, it is much more difficult for them to leave a network and re-establish their business. Amrop Hever and Signium are both addressing branding. At their annual conference Amrop invited Dick Heller of the Tom Peters Group to discuss how to build a global brand. There is movement to adopt a global brand. Ulrich Dade, former Chairman of Amrop Hever and a senior partner in Delta Management Consultants, their large German member reported, “We have told our clients that we will soon operate as Amrop Hever in Germany. We think it is the right thing for our partners and our clients to adopt the global brand at this time.” Former members of Ward Howell created a new brand, Signium, in 1999. Members were slow to adopt the new name and even today many members identify themselves as former Ward Howell. Signium Chairman Berndt Prasuhn intends to change that. “We are tracking brand awareness in targeted sectors and countries. Today we are known primarily as generalists and we are working on specific market positioning as experts.” US members have frequently been the most reluctant to adopt a global brand. Alain Tanugi, Chairman of TRANSEARCH reports a unique solution. “We created a different category of members and called them

affiliates. We have been able to attract six US members, two in Canada, a Korean and an Australian member.” It is not surprising branding is a major focus for Amrop Hever, Signium and TRANSEARCH. Chris Clarke explained in this magazine (issue 10) why branding was a key factor in Boyden’s renaissance. Chris cautions that branding alone will not suffice without standardized processes, agreed standards of performance, account management protocols and recurring quality assurance to ensure compliance with the infrastructure. A number of companies interviewed for this article are involved in IT projects. Most Executive Search clients are addressing how technology will change their business.

And if there is a desire to work with multinational clients on a consistent basis,

they will demand access to search status on a real-time basis. No search network can afford to be without that if they choose to compete in the multinational market. The publishers of this magazine and their competitors offer proven software to manage the search process suitable to both large and small firms. David Maister consistently urges professional firms to listen to their clients. Few search firms do in a formal way. R o g e r Ke n n y o f B o a r d r o o m Consultants does. Their advisory board is a virtual Who’s Who of corporate America.

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Other members of the Governance Consulting Network he launched are developing similar advisory boards in Europe. Any search network can develop an international advisory board which will bring insight and challenges for a very small investment of time and money. FINAL THOUGHT For those who argue change is not necessary, benefits will not justify the effort, this will never work in this fragmented industry, or we are not like accountants or lawyers, I suggest you look at a modern day guild, Tatum CFO Partners. In 8 years they have grown their firm from a single location, Atlanta, to 29 locations, and their partner complement has grown from 10 to almost 500. They may be the largest US provider of temporary management in their sector. Their secrets to success: consistent brand, client focus, information freely shared, leads shared while maintaining collegiality. Few search firms can demonstrate that track record in the past decade! Data Source: The majority of information in this survey has been provided by the search firms, and a sample of this has been validated. In some cases, firms have been unwilling/unable to provide the information we solicited, in which case search-consult staff has undertaken research directly. Therefore, while every effort has been made to ensure that all the information is accurate, no guarantee can be made. The tables contain data valid on August 31, 2004. These tables only contain firms exclusively involved in Executive Search. Other organizations like KPMG, Cornerstone etc, which may do Search along other services, are not included. www.search-consult.com For more information, contact: Web: www.search-consult.com

ISSUE 20 2004 search-consult

Helping you develop your Search Business

"Your Next Fee!" As the Search industry returns to growth, do you need to grow your team? search-consult/talent offers you a unique advertising opportunity to target the search professionals that your business needs to grow.

Advertise your Executive Search positions at www.search-consult.com/talent for as little as US$120 / £80 / C120 per week and be exposed to over 18,000 Search Professionals across the world. There are a number of different advertising options available to suit your needs and budget - from magazine advertising to our monthly email newswire. To learn more, simply email Yann Le Leyour at Yann@search-consult.com or call him TODAY on +44 (0)20 7749 6102.

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The Search

fora Supplier

How to ensure your search firm is not tied to a sinking ship…. By Jason Starr ver recent issues of searchconsult, I have looked at how IT can have a positive impact on the performance of a search firm. In this issue, however, I’d like to take a slight tangent and talk about the importance of selecting the correct supplier. Initially, however, it is important that I admit to a degree of bias. searchconsult magazine is published by Dillistone Systems and your author is President of that firm. Having said that, I’ll endeavor to focus on general pointers and will try to avoid mentioning that more search firms use our FILEFINDER system than any other product. Well, not too often, anyway. Your software system will be a business critical application. If you have problems – whether during, or after implementation – you need to know that your supplier will be both willing and able to resolve those issues before they impact on your business. Here are some questions you may wish to ask potential suppliers: Does the supplier understand my business? Are you prepared to be trained by a software trainer who spends most of his or her time training in a business process that is completely different to yours? Post-implementation, do you want to spend an excessive amount of time talking to support staff who need

to have your business processes explained to them? OK, so they understand my business. Will they be around to support me in 2 years’ time? The software industry is transient. Firms come and go. At Dillistone Systems, we regularly hear from clients with applications that are no longer supported – and who find themselves having to switch systems and suppliers at short notice. Check your supplier has a client base. Ask how long they’ve been in business. Check that it is profitable and has a decent balance sheet. OK, they will be around in 2 years’ time. What about 2 hours’ time? This may seem like an odd question, but it is vitally important. How is the supplier able to support the hours that you work? If the client boasts “out-ofhours” service, test it – ask your sales representative for an “out-of-hours” support number/e-mail address and call it, unannounced. If you don’t get a call back for 24 hours, you should probably ask yourself how you would handle 24 hours of system downtime! Keep in mind that, whatever the presales spiel, if you are a “typical” 7-user search firm, the supplier is not likely to start a night shift “just for you!” Is my system “future-proof”? Your software system is a long-term

investment. You need to be sure that the system will continue to be upgraded on a regular basis, and that your business will be able to both influence and take advantage of these upgrades. Be war y of firms with one very large client – you may find that development is overly biased in favor of that firm. On what basis are upgrades provided? How much do they cost? Are they mandatory? Don’t allow your business to be signed up to a bottomless pit of investment! In summary, the evaluation of the software supplier is just as important as the selection of the software product itself. I would strongly suggest that you take the time to do your “due diligence” but, if you can’t, I have one more suggestion….. take refuge with the crowd and go with the market leaders (and we can be contacted via sales@dillistone.com!). Dillistone Systems is the leading global supplier of software to the search industry. Offices in the USA, UK, Germany and Australia provide support to search firms in 42 countries. Full contact information may be found at www.dillistone.com. www.search-consult.com For more information, contact: Web: www.dillistone.com

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Oil & Gas: Oil is Not the Only Scarce Resource axwell Drummond International is one of the fastest growing specialist Oil and Gas sector Search and Selection firms in Europe and North America. The firm has an international presence with offices in Houston (US), Aberdeen (Scotland) and London (England). Recently the firm conducted an international study into the Oil and Gas Exploration and Production (E&P) sector. search-consult caught up with Maxwell Drummond’s Houston boss, Kevin Davidson, and UK Business Development Manager, Stephen Sheal, to discuss the implications of their findings for their own business strategy and the prospects for their business. search-consult - Your study found that major E&P companies are beginning to compete aggressively to find and retain highly qualified and experienced professionals. Why is this trend significant? K evin Davidson – “ This is a seemingly innocuous finding but the trend is significant because historically E&P companies have had a larger pool of talent from which to draw. Now they must work harder to attract and retain the best people and we believe that this will ultimately create a tremendous bottom line performance differential within the industry. One area in which E&P firms will have to work harder is in devising more imaginative hiring practices and retention strategies.

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Those companies that continue to be reactionary in their recruitment and retention practises will find themselves increasingly under threat.” search-consult - There is an acknowledged structural labour market threat within the E&P sector, a so called ‘demographic timebomb’. The oil and gas industry workforce is ageing and many other surveys point to an average age of E&P staff in their late forties. Do your findings support this general perception? Stephen Sheal – “Absolutely. Our survey shows that amongst drilling and completion professionals, from graduate trainees to drilling managers, average industr y experience is approximately 20 years. The reality is that the E&P labour market is structurally weak in the 25-40 age group, with shortages across all disciplines. Our conclusions are only reinforced by the age profile statistics produced by the Society of Petroleum Engineers (SPE) in 2001, which confirmed that only 25% of SPE membership is less than 40 years of age.” Kevin Davidson – “Furthermore, if you work on the basis of an average retirement age in the industry of 55, it’s been estimated that 13% of the current workforce will have retired by 2007 and 33% by 2012. The intake of engineers into US and Western European universities is also down and

individuals on average now remain with employers for a much shorter period of time.” search-consult - What are the immediate implications of these trends? Stephen Sheal – ”Well, the longterm trends are well known but the short-term effect we have identified is the emergence of a highly fluid international labour market with the most mobile people in the sector typically between the ages of 30 and 40. This group is not only the most mobile but also the most entrepreneurial and as such the most vulnerable to ‘poaching’ from all geographical locations, across all disciplines and from all other corporate bodies.” Kevin Davidson – “True, the E&P sector has always been an international business, but the last 20 years has seen the rise of the sophisticated, globally aware and highly mobile E&P professional. E&P Majors are currently operating in some forty-six countries around the globe and they require highly mobile E&P professionals to move to new oil provinces, often at short notice. Within the 30 to 40 age range, E&P professionals who are keen to move internationally are increasingly b e c o m i n g t a rg e t s f o r p r e d a t o r companies. E&P professionals displaying internationally attractive attributes such as technical skills, international mobility, linguistic

capabilities, cultural awareness, local knowledge and experience are highly valuable and must be considered in any retention strategy.” search-consult - Are there any particular skills that are currently in global demand? Stephen Sheal – “Yes, there are. Oil and gas fields that once were considered out of reach because of prohibitive development costs or excessive water depth can now be developed, thanks mainly to significant technological advances in the field of drilling and deepwater production techniques. Deepwater, m a t u r e a n d m a rg i n a l f i e l d s i n extremely remote locations require extremely well qualified and experienced E&P professionals to make them successful. There is also a premium for individuals with mixed skills, most notably where there is a combination of technical and commercial or management competence. As a result, any E&P professional with skills in the new and emerging technologies associated with deepwater E&P or any of the ‘new frontiers’ will be vulnerable to poaching by competitors.” Kevin Davidson – ”All this has been exacerbated by the rise of the Independent E&P Companies operating internationally. Although not yet full global players, these companies have moved into attractive mature and frontier oil and gas provinces around the world and are now driving change in the E&P labour market. This is mainly because they c a n o f t e n o f f e r f l e x i b i l i t y, a n entrepreneurial culture and superior terms, conditions (either in remuneration or equity participation) and career progression prospects.” Stephen Sheal – ”…And the entry of Independent E&P companies into the market is significant, as apart from improved remuneration, we have found that E&P professionals want the

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chance to be more directly connected to the top of the company. They want to play a key role and make a difference to the whole firm - all at an earlier age.” Kevin Davidson – “Plus, over the past decade, having super talented staff has become as important as having sufficient capital, a clear strategy, or access to proven reserves. Under today ’s market conditions, nothing is more strategic than recruiting and retaining talented E&P professionals. When you think about traditionally recognised sources of competitive advantage that companies have, capital is accessible today for viable projects, strategies can be copied and technology is available on the open market. So for many companies, that means that people are now the only true source of competitive advantage.” search-consult – So, given all this, what advice are you giving to your clients? Kevin Davidson – “We are advising all our clients not to be complacent about retaining their key 30 to 40 year old technical and managerial talent because if they are, they risk losing their competitive advantage.”

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S t e p h e n S h e a l – “ We a l s o encourage clients to spend a lot of energy attracting, developing and retaining super talented staff within the specific groups we have identified.” search-consult – What trends can you see emerging in your own business sector? Kevin Davidson – ”These demographic changes and skills shortage trends will have an increasingly negative impact on the more parochial search and selection firms. Those search firms that are predominately single market specialists will find themselves unable to meet the needs of clients that operate globally. Maxwell Drummond has responded to the challenge by growing internationally and now operates on a global scale. Today, the firm is arguably one of the largest international search and selection consultancies operating in the oil and gas sector.” Stephen Sheal is UK Business Development Manager and holds a BA in Communication Studies and a Masters Degree in International Marketing. He has 15 years experience of implementing innovative marketing strategies in the oil and gas pipeline engineering, software marketing and business-tobusiness consultancy sectors. Kevin Davidson is Vice President (North America) and holds a BA (Honours) in Business Studies and a Masters in Economics. He has 10 years experience in international oil and gas research and consulting and previously managed Maxwell Drummond International's Eastern Hemisphere Operations.

www.search-consult.com For more information, contact: Web: www.maxwell-drummond.com

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Horton International Establishing the Right Relationship By Pilar Gumucio s the global economy recovers, talent management and strategic partnerships are becoming vital in the success or failure of a company. Gerard Dietrich, the current Chairman of Horton International, explains to searchconsult how “establishing the right relationship is paramount” for the continued success of his organization, clients as well as candidates. A LEADING GLOBAL FIRM From the moment that Horton International was created in the early 1990's this firm has effectively built its reputation around sourcing long-term strategic relationships. In fact, with more than 15 years in business, Horton International has developed from 7 founding member firms to currently comprising 30 offices in Europe, the Americas and Asia Pacific. He describes how Horton International was modelled on the global accounting firms with separate partners in each country owning their local operation and reporting through regional management committees to a global executive. “Each partner knows and trusts each other. Horton International holds regional meetings twice a year and global meetings annually. Thus mutual knowledge and respect underpins everything we do,” said Dietrich. In fact, the Chairman of Horton International strongly believes that this firm’s “Partners and Consultants (many of whom come from the Big 5 search firms), combined with a truly effective global

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Gérard Dietrich

capability, provide the right platform for delivering consistent quality across borders for our clients.” “A distinguishing feature is that in all the countries in which we have offices, clients and candidates recognise the Horton International name. The firm operates as a single, flexible organisation, not as a network of affiliated independents,” states Dietrich. Moreover, Horton has established a strategic alliance with Neumann Partners as a means to extend this organisation’s global offering into Central & Eastern Europe and the former Soviet Union. Dietrich reports, “This alliance obviously helps us serve our clients better and provides more job opportunities for candidates.”

GREATER COMMITMENT WITH THE CLIENT Horton International is very careful in selecting its clients, and through the years, has acquired many meaningful and longstanding client relationships. Dietrich explains that “within those relationships we can be more flexible than the very large firms and offer our clients greater commitment and an exceptionally high completion rate.” Through the ongoing research conducted in support of its core executive search function, Horton International has developed a wealth of intelligence about numerous industries and markets. According to Dietrich, for example, “Our clients can leverage this knowledge base to identify merger and acquisition targets, find strategic partners, select distributors, and acquire agents. We also provide background information on key executives, furnish competitive data, perform benchmarking, and offer market-specific compensation advice. We help assess individuals' suitability for particular assignments - for example, a transition from a state-owned enterprise to the private sector.” Horton International can also help organisations develop optimal structures and processes for capitalising on emerging opportunities and challenges. “We evaluate the composition of boards and management teams, and recommend individual and group development plans for achieving long-term business objectives,” states Dietrich. He explains how this global search firm also assists organizations with managing

talent, both on a corporate and individual basis. Consultants provide strategic human resources and organizational consulting services, and can help clients select appropriate psychometric tools for assessing candidates and evaluating them. Dietrich describes how Horton International understands the challenges of managing an enterprise across borders because they deal with this on a daily basis. Some of the key questions Horton International partners ask themselves, as well as advice clients include: • How do we communicate our aims and resolve business issues in an organisation that encompasses thirty different nationalities and for most of whom English is a second language? • What is the best form of leadership? • How do we leverage our local strengths into global solutions for our clients? • How do we improve our processes and make them work better for us? Dietrich reports, “A great advantage that we have is that we are privileged to see how our clients respond to similar challenges. Sometimes we learn from them and at other times we consult with them to help them move outside their own areas of comfort.” This client-focused strategy significantly broadens access to executive talent, accelerates the search progress and provides clients with superior leadership solutions. According to Dietrich, “Clients who know us seem to like working with us and respond positively to the quality and the value of what we do. We see it as important to nurture and enhance existing client relationships while also working to develop new business.” CANDIDATES ARE MORE THAN NUMBERS Horton International also works hard to select top talent, regardless of the industry or geographic location. “With respect to candidates, we have long recognised that this is the Achilles heel of the executive search industry, “explains Dietrich. “Often candidates are treated as numbers in a process – little understanding of their needs and a lack of feedback. Horton International values its candidates as individuals with their own careers, personal lives, interests and concerns. We know that we initiate situations that often cause major disruption in people’s

normal lives so these need to be handled as quickly and as well as possible. A candidate today, and not always the one who landed the job, is often a future client.” Moreover, Dietrich informs that increasingly, Horton International is finding that senior executives are approaching their partners individually or as members of teams. They are asking this leading global search firm to represent them to specific organisations. “We believe that this type of executive, who in their day-to-day lives have powerful leadership roles, are no longer content to wait for the headhunter's call, “reports Dietrich. “ Increasingly, they are trying to manage their own careers and see firms like Horton International as partners who can help them achieve this objective. In fact, Richard Landolt, who heads Horton International’s London office, has developed a talent management practice to deal with this growing demand. Horton International’s global reach is a key element that attracts both clients and candidates, permitting information to be shared among various offices worldwide. This serves to widen the pool of candidates. He states, “If a good candidate with experience in China for example approaches us, we will evaluate that against our knowledge of the market in that country and advise him or her accordingly.” Horton International is striving to improve this process as Dietrich reveals how “Horton International is currently working together with Dillistone Systems – the specialist software supplier to Executive Recruitment companies - to roll out a pilot programme to offer our candidates direct access to our candidate database.” Horton International also purposely maintains Horton International as a mid-sized firm in order to have fewer clients in each industry segment, and therefore fewer off-limits restrictions. “This means we can give our clients access to much more of the candidate universe than the large firms. This is how we differentiate ourselves and is the real benefit we offer,” explains Dietrich.

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fundamental in having Horton International develop strategic partnerships with clients and candidates. This vision has helped Horton International overcome the difficulties the search industry has encountered during the past two years. “We came through this without having to close a single office – unlike many of our competitors, a fact of which we are justifiably proud, “affirms Dietrich. “Now we are back on the growth track.” In fact, revenues for this year are expected to reach close to US$25 million. Horton International’s most significant area of growth for this year is cross-border business - both within each of the three regions as well as globally. Dietrich describes “in the first six months of the year we have experienced almost 100% increase in cross-border assignments, which represents 1 in 7 searches awarded to us. This underlines the fact that as international companies continue to evolve their own views of what is happening in the world, there will be an ongoing need both for those who can grow the top line, and for those who can enhance performance and effectiveness at regional and global levels.” Rather than add new countries so as to have more flags on the ground, Horton International plans to strengthen the organisation’s existing offices by adding qualified and professional consultants. Moreover, Dietrich explains, “We have also just initiated a study group to see how we can improve and integrate our worldwide structure and organisation better. The objective as always is to improve the quality and consistency of our service for our clients.” In sum, Horton International’s long-term success has, and continues to be, based on the premise that establishing strategic relationships are vital for both clients and candidates. This strategic partnership allows Horton International to be able to provide a consistent personalized approach, while at the same time, using its global reach, resources, expertise and experience to achieve superior leadership solutions. www.search-consult.com For more information, contact:

BEYOND THE BORDERS All of these initiatives have been

Web: www.horton-intl.com

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Executive Talent

inAustralia By Peter Waite

ustralia has a global reputation as one of the most highly-skilled and well-educated labour forces in the world. Accordingly, organisations continue to favour recruiting such talent from Australia. The ongoing interest can be attributed to three main reasons including: availability (i.e. Australia ranks 2nd in the world in the availability of skilled labour - IMD World Competitiveness Yearbook 2001); affordability (i.e. salaries in Australia are much lower than in Hong Kong, Japan, Singapore, Germany, USA or UK); and education (i.e. 50% of the Australian workforce holds a tertiary qualification while 90% of Australia’s highly skilled professionals participate in further professional developments each year). In addition to the above-mentioned reasons, most Australians have a good work ethic. Australians take pride in working hard and getting the job done, even in adverse conditions. Australia in particular is a multicultural country, therefore most Australians have already experienced working with other nationalities and have fewer problems with cultural differences. Many professionals and executives have travelled extensively and have good international experience. Australian Financial Ser vices Workforce - More specifically, according to Axiss Australia’s publication, ‘Executive Briefing’ (January 2003) Australia’s financial services workforce is considered unique especially when compared to other countries in the Asia Pacific region.

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Peter Waite

The publication reports that Australia’s financial services workforce is regarded as one of the World’s best in terms of skill and talent as shown by the number of Australian executives posted to top positions within global finance firms, and the high level of educational attainment amongst industry personnel. Australia’s financial services workforce is large and has a good supply of talented personnel, with around 350,000 people employed in the finance and insurance sectors. A comprehensive training system and a large number of expatriates returning to Australia each year ensures that the supply of highly skilled labour is maintained. Within the Australian financial services workforce, personnel can be employed at some of the most competitive rates in

the Asia Pacific region. The plentiful supply of skilled labour also reduces the need for firms to relocate large number of staff. Australian Employment Market - The Australian employment market is currently in good shape. Recent media has reported Australia’s unemployment rate falling to a 23-year low in May. The May jobless rate of 5.5% was down from 5.6% in April. Nevertheless the decline is reported to be due to lower participation in the labour force rather than in new jobs. In the past ten years only four out of ten major industry groups have accounted for contributing towards the 1.9 million jobs created. These industries include: construction and property services; community and health services; business and innovation; and tourism, retail and recreational services. It is understood that these same four industries are projected to do likewise for the next decade. Along with the general trend towards slowing overall job growth, some industries are more exposed to the business cycle than others. That means job growth will remain variable over time, especially in some sectors and can have important implications for planning future training needs. For example, construction is highly cyclical, so the current activity is often not a good guide of what we need to do now to cater for future training needs. Looking ahead, Australia’s demographic destiny also implies slowing overall job growth – population growth is slowing, the baby boomers are aging, and the unemployment rate is already

relatively low. Future employment demand by industry depends on factors such as exposure to the Australian Dollar and interest rates, sources of competition and technological change. Despite the above, Australian economists have indicated that Australia’s employment market reflects continued strength in the overall labour market despite the economy incurring a modest slowdown when compared to the previous period. Some are confident there are more employment gains to come. Attraction to Australia - There is still a strong willingness to import talent in Australia and Australia’s employment market continues to attract overseas workers, especially UK expatriates, to its shores. The desire for career development in Australia’s warm and friendly climate is still a major draw card for overseas blue and white-collar workers. Australia is a great place to live and to raise a family. Australia’s popularity with expatriates and low cost of living means that salary compensation in terms of a location premium is generally not required, further reducing the business costs for firms located in Australia. Australia’s Comparative Advantage in World Markets – In summary, according to Australian National Training Authority’s: National Industry Skills Report (15 April 2004) a key Australian comparative advantage is that we are the World’s best practice in supplying industrial inputs to developing Asia. And we can maintain that by fostering a skilled workforce to apply new technologies to our ‘old’ industries. Today ’s rapid industrialization in China and India may suggest Australian businesses can expect much more of the same ahead. The opening up of the Asian market provides enormous opportunities for Australian industry and requires the Australian workforce to have leading-edge skills and knowledge in order to compete. Recr uitment Trends - Recent developments within the Australian executive search industry include tighter controls on candidate screening. In this era of increased litigation, escalating levels of white-collar crime and enhanced regulation of the Australian financial

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services industry through the new Financial Services Reform Act, employers are becoming more cautious about whom they recruit. Finance industry licensing requirements now almost always insist on probity, including police checks. Most roles in the financial services industry carry an enormous duty of care and the recruitment industry has joined with their clients and taken steps to reassure employers that the candidates put forward for roles are honest and will perform their jobs with integrity. Pr o b i t y c h e c k i n g e n t a i l s a n investigation into the candidate’s background, usually by the Recruitment Consultancy on behalf of the client. Typically, the investigation will cover the candidate’s work history, education and professional qualifications, criminal history, eligibility to work in Australia, credit history and personal details such as current address. Probity checking may also include a search of the ASIC Register of banned and disqualified persons and bankruptcy checks. Probity checking, of course, includes the usual reference checking that is carried out by the Recruitment Consultant as part of the recruitment process. All information collected is kept in the strictest confidence in line with the Australian National Privacy Principles. In addition to adopting an executive search approach for recruitment needs, advertising for positions in print media and on the Internet still remains strong. Typically, the more senior/executive positions are advertised in state and national media publications such as the Sydney Morning Herald, The Age, The Australian and The Australian Financial Review, while most other roles are placed on Internet job boards such as seek.com. These days, in addition to the business acumen of consultants, ‘state of the art’ technology should be a key component of any executive search business. The integrity of information to be stored and safely retrieved is essential – it can never be underestimated. In January 2003 Waite InterSearch implemented FILEFINDER*. By upgrading to this particular search system, not only is it more user-friendly, but we now have real-time access to

information. It has proved itself to be sophisticated and powerful - allowing us to not only accurately register the details of candidates but also accommodating for efficient and immediate identification of suitable candidates against specific criteria provided - not to mention its extensive and broader marketing applications. Diversity: Balance of the Workforce – Australian organisations continue not only to be aware, but many are employing stringent business practices to embrace diversity in relation to race, gender, age, religion, marital status, education, sexual orientation, and cultural background. Entities in both the public and private sectors (i.e. government departments, financial institutions, ‘blue chip’ corporates etc) are introducing policies to ensure a greater balance is addressed. More than just ‘filling a quota’, Australian employers are keen to create the ‘right’ culture being the fabric of an organisation. Accordingly consultants and others involved in the recruitment process are becoming increasingly accountable for the issues. Diversity is becoming an important part of Australian corporate life. Visas - To work in Australia a visa is required. Australia has entry options designed to meet the specific needs of business. There are a number of programs designed to make entry as smooth as possible including bulk visa processing for businesses needing to relocate a large number of staff quickly. Visas for entry into Australia are issued by the Australian Department of Immigration & Multicultural & Indigenous Affairs (DIMIA). DIMIA offices are located all over the world and detailed information is available from the website www.immi.gov.au. * Specialist software for executive search from Dillistone Systems, publisher of search-consult. Peter Waite is the Executive Chairman of Waite InterSearch (Australian partner of InterSearch Worldwide). Headquartered in Melbourne, Waite InterSearch also has an office in Sydney and Dubai.

www.search-consult.com For more information, contact: Web: www.waite.com.au

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Executive Search in Australia: – Trends and Movements By Jennifer Grove xecutive search firms in Australia reflect global trends– it’s all about relationships, with both clients and candidates.

However, there are issues emerging – a shortage of highly skilled executives and a difficulty attracting and securing international candidates, reports Jennifer Grove, an Associate with Gerard Daniels Australia. After surviving the battering of the early 1990s and the more recent downturn in the first part of the new century, Executive Search in Australia is buzzing. After slow years in 2002 and 2003, 2004 is proving to be far more

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fruitful – and the future is looking brighter than it has done for some time. According to Debbie Cozart, General Manager of Gerard Daniels Australia and Alan Wilson, Principal of Alan Wilson Consulting, there is a demand for high-level executives in a number of sectors and disciplines including engineering, accounting, finance and IT – which are recovering from the 2000 slump.

“Our first few months in 2004

– and the outlook continues to be very bright,”

were record months

Ms. Cozart said, "This is a sentiment that has been expressed across the Executive Search industry in Australia – after a quiet couple of years following September 11 2001, the tech wreck and some high-profile corporate collapses, such as HIH and OneTel – things are definitely looking up. As 2003 ground to a close, there was a noticeable shift upwards – and 2004 has been busy fulfilling expectations. Views are mixed in regards to the reasons for the slowness in 2002/2003 as well as for the more recent upward swing." Dennis McDonald, Managing Principal of McDonald Monahan Associates, stated that part of the

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reason for the positive move in 2004 was the lack of activity in the prior years. “Some of it is a reaction to companies sitting on their hands – it’s a natural response to filling the needs they now have,” he said. Others put the move down to general economic growth and a recovery after the September 11 attacks. According to Ms. Cozart, demand for some positions was definitely on the up - she had particularly noticed this in regards to clients looking for high level, strategic Chief Financial Officers (CFOs). “We have been experiencing a big jump in demand for Chief Financial Officers, two or three jobs continually on the go,” she said. Ms. Cozart said she believes this was an indication that – in line with global trends – companies in Australia were moving away from the “traditional” concept that the CFO was merely a well-remunerated accountant. “CFOs are now hired as much for strategic and business abilities as for actually accounting,” she said.

another opportunity.” Ms. Cozart and Mr. Wilson also noted that with economic growth comes the confidence to recruit externally – although succession planning and internal development of staff plays an important role in Australia.

“Becoming a CFO

INTERNATIONAL CANDIDATES Australia is a net exporter in a number of industries and many Australian resource companies are continuing to look for highly technically specialised individuals to take up positions as Project Directors for very large billion dollar projects in very remote sites. Conducting searches for these candidates often takes consultants to, literally, “the end of the earth.” Advances in technology help track down suitable candidates – via emails and mobile phones – but that has not always made it easy to attract people to Australia, and this situation exists in industries across the board. While a somewhat clichéd view about the world being full of people seeing Australia as the place they would most like to live exists – this does not mean that Executive Search firms on global searches find it easy to place international candidates in Australia.

is also now seen as a way to get to CEO level

– and many executives are taking that route to the top.” Mr. Wilson said it was clear that a number of companies were focused on growth – hence the increase in newly created positions. There were also a number of people looking to move on and having the confidence to do so, compared to their more cautious behaviour during the past two years. “The interest in opportunities means people are actively looking for new jobs – and are not afraid to take a chance as the risk aversion that existed last year is no longer there,” explained Mr. Wilson. “One person goes, it opens

Jennifer Grove

Michael McAnearney, Director of Gerard Daniels Australia, believes there are a number of reasons for this. “One issue is the cost of relocation to Australia, which can be substantial due the distances from places like the United Kingdom, United States and others,” he said. Executive Search Firms in Australia rely heavily on the desire of expatriates – aware of the recent turbulence in the United States and Europe after 9/11 – as a reason to return home. Mr. Wilson said that this was particularly evident in the financial services market where wordof-mouth was enough for companies to fill positions. “One Sydney-based international bank filled more than 1 0 s e n i o r p o s i t i o n s t h i s w a y, ” he remarked. “The ready availability of returnees actively looking for work in a generally slow market meant that firms had little need to resort to Search.” International candidates – with no ties to Australia – sometimes represented a particularly expensive option for Australian companies. “ These candidates expect costs met that go beyond relocation, such as schools for children and other expenses,” said Ms. Cozart. “There is also the issue of the so-called 'trailing' spouse – who may also have a high powered career of their own.” Executive Search companies in Australia offer services to spouses if they need assistance in locating a job opportunity for themselves, but it can be difficult. Both Ms. Cozart and Mr. Wilson agreed that the difference in pay scales – particularly in financial services – plus the high level of personal income tax in Australia, made it difficult to attract the top international candidates. This is an issue the International Monetar y Fund has warned Australia about. In a report published in 2002, the IMF recommended Australia adopt a top personal rate of 30 cents in the dollar - versus the current 48 cents - in order to boost productivity and reduce tax avoidance.

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It also suggested the level at which the top rate cuts in ($60,000 a year) should be "substantially raised". As well as paying a higher level of personal income tax, salary levels are also a concern for international candidates, with Australian salaries lagging behind the rest of the first world in many areas. Adding to the issue – for a high profile listed company – bringing in an expensive international CEO can have a devastating impact if it doesn’t work. “There can be a very strong backlash against the company if an international appointment doesn’t go to plan – along the lines of why didn’t you bring in an Australian – or someone already living here?” said Ms. Cozart. FIRMS IN AUSTRALIA Firms in Australia are very diverse, ranging from the Big 5 global executive search firms to large Australian companies to smaller boutiques concentrating on one industry, such as mining. While multinational corporations based in Australia have used Executive Search firms –particularly the global recruitment companies - for making crucial appointments it is still a slightly new science to some of the emerging firms in Australia. Ms. Cozart pointed out that, leaving aside the multinational corporations, many Australian firms are still learning about the Executive Search process, what it is and how that process can help their company grow and prosper. Ms. Cozart said many sizeable Australian companies are “trying and buying” the Executive Search experience and are coming back f o r m o r e . “ We a r e f i n d i n g t h a t companies, from both Boards and Management perspectives, are being pleasantly surprised at just how much easier it is to make these key appointments when the process is managed by a competent and thorough Executive Search firm,” Ms. Cozart said.

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“These companies are really beginning

the value such a process can bring to the successful operations of their business.”

to understand

THE FUTURE OF EXECUTIVE SEARCH IN AUSTRALIA Lloyd Smith, Director of Gerard Daniels Australia, said that, like most executive search firms, has seen particular growth in recent years in the recruitment of non-executive directors and, along with that, Board reviews, corporate governance issues and executive remuneration reviews. “Companies, where publicly listed or not, are now looking beyond the, ’who do you know to fill that spot?’ thinking into treating the opportunity to find an individual who can value and balance the skills of a Board,” explained Mr. Smith. “Part of that thinking is linked to the need for Boards to truly assess the skills and abilities of its Board members and make sure they are aligned to the needs of the client.” Ms. Cozart stated that Executive Search firms in Australia are also growing beyond the traditional clientservice provider relationship and evolving into one in which the Executive Search firm is a trusted adviser to their client on a number of levels. Ms. Cozart said that, in fact, the relationship with a client deepens the services able to be offered, covering a range of organisational development issues. She explained, “This can include succession planning, management development and governance evaluation- which are just as important as the ability to find one individual.”

GERARD DANIELS AUSTRALIA (GDA) is one of Australia’s leading Executive Search and Recruitment companies based in Perth, Western Australia. GDA opened its doors in 1986 and offers clients executive search, executive recruitment and performance consulting across all industries and professions. GDA is a “high touch”, heavily clientfocused company that works in partnership with its clients to achieve the best results for them. Its enviable track record is testimony to GDA’s experience, skills, processes and commitment. It takes the time to understand each business and its particular requirements in order to find the best candidates for each position. JENNIFER GROVE - ASSOCIATE Jennifer Grove joined Gerard Daniels in 2003 from the Office of t h e C o m m o n w e a l t h A t t o r n e yGeneral where she was an adviser. During more than three years with the Attorney-General Jennifer was responsible for providing strategic political policy and media advice across the 29 areas of the AttorneyGeneral’s portfolio. One of Jennifer’s crucial roles was the coordination of the judicial and tribunal appointments made by the Attorney-General. Prior to that, Jennifer spent several years as a journalist with The West Australian newspaper.

www.search-consult.com For more information, contact: Web: www.gda.com.au

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