search-consult Issue 31 by margaret jaouadi

2007 / ISSUE 31

The International Executive Search Magazine Published by Dillistone Systems

The Largest Retained Executive Search Firms in the World 2007 HR Interview: Harold Goldstein, Vice President for Human Resources for Lam Research Corporation AIMS International: Always Aiming to be Client-Driven Raising the Stakes for Board of Director Candidates

Join delegates and speakers from 12 countries at this unique event - see pages 14-15 for details

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Full speakers list announced - see pages 4-5 for details!

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BALANCING ON A TIGHT ROPE ? ENGAGE THE TAPLOW GROUP. By engaging The Taplow Group for your next international search assignment, you will be assured of finding the right match for your company. As one of the world’s largest global networks of executive search firms, The Taplow Group specializes in: • Hearing what the client needs • Advising about marketplace issues • Focusing on finding the right executive • Responding with integrity and accountability. The Taplow Group. Providing the balance your company requires to thrive in today’s competitive global market.

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The Taplow Group S.A. 46A, avenue J-F. Kennedy L-1855 Luxembourg Tel. +352 26 00 57 10 Fax +352 26 00 58 40

www.taplowgroup.com

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Joseph Daniel McCool is a writer, speaker and independent consultant on executive recruiting best practices, search firm strategy, and corporate management succession. He is the author of a forthcoming book exploring the influence of the global executive search consulting profession on corporate performance, culture and profits. Mr. McCool is a senior contributing editor with ExecuNet and the former editor of Kennedy’s Executive Recruiter News and its International Directory of Executive Recruiters. His views on management succession have been cited in BusinessWeek, The Economist, The Financial Times, The Wall Street Journal and other media around the world. MANAGING DIRECTOR Jason Starr jason@search-consult.com EDITORIAL Pilar Gumucio editorial@search-consult.com PRODUCTION Margaret Jaouadi margaret@search-consult.com

ADVERTISING/SUBSCRIPTIONS/REPRINTS UK and Europe North and South America South East Asia and Australia Yann Le Leyour enquiries@search-consult.com or log on to www.search-consult.com

search-consult.com Third Floor, 50-52 Paul Street, London, EC2A 4LB, United Kingdom Tel: +44 (0)20 7749 6102 Fax: +44 (0)20 7729 6108 www.search-consult.com

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

search-consult is published quarterly by Dillistone Systems Limited, Third Floor, 50-52 Paul Street, London EC2A 4LB for US$96 per year and printed by Mr. Bloom Ltd, Sopot, Poland, www.mrbloom. com.pl. Periodical Postage PAID at Jamaica, NY. POSTMASTER: Send change of address changes to Dillistone Systems Inc., 50 Harrison Street, Suite 201A, Hoboken, NJ 07030. 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.

Hang On To Your Hats “IS ‘OFF LIMITS’ DEAD?” That was the ‘subject’ line of an e-mail I received recently from a distinguished executive search consultant who has rightly questioned the sophistication (or lack thereof) of those involved, from the corporate side of the ledger, in search firm selection and engagement decisions. Surely, ‘Off Limits’ isn’t dead, I pondered. After all, one of the world’s best known and most widely respected executive search consultants cited ‘Off Limits’ as a major issue when he was interviewed for a July 2005 interview with Fortune that put it this way: “The single biggest operational issue we have is the off-limits issue, because it prevents us from going after a lot of the best and the brightest. The more business we get, the more talent is blocked for us.” And besides, Fortune wasn’t the first to assess how size really does matter when it comes to executive recruiting. Just consider how Forbes framed the issue of search firm size and how it relates to access to executive talent: “The largest recruitment firms are handicapped in doing the very job for which they are hired.” That’s a stark reality for the biggest executive search consulting firms, and surely a message that legions of smaller firms can cling to, until, of course, they reach a point when their success ranks them among the largest of firms and it becomes time to re-message. But if casual media observers of the executive search market like these understand how, as any search firm’s client roster grows it can offer new clients, only a more restricted search for leadership capital – then what about the corporate executives who pay their fees? Surely they must understand how issues like management diversity, for example, hinge on exactly where an executive recruiter can take their searches for new talent and where they cannot, right? Well, seemingly not. If the 27 years of experiences of my recruiter friend who sent the aforementioned e-mail and my own experience are any indication, it seems there are a lot of people leading businesses around the world who need a primer on how an “operational issue” so intimately the search profession’s own client blockage issue truly influences the sourcing and eventual recruitment of executive talent. Chief executives, the board directors to whom they’re supposed to be accountable, line executives and more than a few senior HR executives have failed to acknowledge the collective decisions that force their organizations to settle on a ‘restricted access’ approach to the external senior-management recruiting. They apparently prefer the cover of the brand names, regardless of where those firms can’t take their searches for leadership talent. Or maybe it’s precisely because of where that brand awareness resonates that they so often avoid or choose to overlook so important a search firm engagement criteria as ‘Off limits.’ Or maybe it’s something else still… Yes, it’s true, I responded to my inquiring search consultant friend: ‘Off limits’ really hasn’t surfaced as a major issue outside the search business…even among corporate clients. But he still asks, just as he concluded in the e-mail that prompted this column, “Who cares?”

Joseph Daniel McCool joemccool@comcast.net

Joe McCool is a speaker at the upcoming Executive Talent in Asia conference. In addition, he will be running a unique workshop on the management of search firms. See pages 14-15 for more details and to book.

ISSUE 31 2007 search-consult

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It’s a winning formula. Feedback from previous delegates has been excellent:

“The Executive Search Practitioner Conference is probably the 14th such event I have attended..... In terms of delegate quality and participation, relevance of speakers and speech content... this event was head and shoulders above the others.” Elizabeth Jacques Jones, Director, Prime Partnership, UK

“Exceptional speakers, interesting issues, a highly informative and enjoyable day among peers.” Harris Karaolides, Managing Director, Symvoli - InterSearch Greece

The inaugural “Executive Search Practitioner Conference” held in London on October 12, 2006 drew a truly international audience, with delegates from 13 countries. This year’s event, taking place in London on October 4, promises to be even more international, with a speaker list featuring thought leaders from the United Kingdom, the United States, Germany, Hungary and Italy and an “early bird” delegate list – some 3 months before the event is scheduled to take place – listing delegates from 12 countries and 3 continents.

Why do delegates come from far and wide to attend this event? Because it’s unique. Nowhere else, outside the US, is there an event targeting Search professionals only (we don’t invite corporate recruiters or ‘agencies’). Delegates – virtually all leaders of search firms – meet to learn, network and share ideas in a non-competitive environment. Key Content for the 2007 Event This event will attract a diverse audience from search firms small and large, regional and global in nature. Therefore, our content will be equally wide-rangingwide-ranging and will feature a number of themes: THE STATUS OF THE SEARCH INDUSTRY: Separate presentations from Chris Clarke, President of Boyden Global Executive Search (USA) and Peter Felix, President of the Association of Executive Search Consultants, (USA) will focus on the status of the global search industry, while Anthony Saxton, Chairman of Maloney Search (UK) will look back on a career in search and seek to identify lessons for the future. KEY TRENDS IN SEARCH Ulrich F. Ackermann, Member of the Board, TRANSEARCH (Germany) will review trends in the European Market, whilst a panel chaired by Pilar Gumucio and made up of Roger Cater, President, AIMS International (UK), Christopher Stokes, European Vice Chair, IIC Partners (Italy), David Winterburn, NED, European Confederation of Search and Selection Associations, Peter Szabo, Country Manager (Hungary) will provide a variety of perspectives. STRATEGIC ISSUES In a growing and global search market, Alberto Amaglio of Korn/Ferry (Italy) will discuss building a global search business, whilst Carl Thompson, Chief Financial Officer, Hexagon Human Capital Plc, will look at valuing and selling an executive search business.

This unique event takes place on board HMS President, moored on the River Thames, on October 4th, 2007. To book, visit www.search-consult.com/practitioner2007

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8:30 – 9:15am REGISTRATION AND MORNING COFFEE 9:15 am - WELCOMING REMARKS by Jason Starr, Managing Director, Dillistone Systems and publisher of search-consult magazine Chris Clarke

Anthony Saxton

9:20 – 10:05 am OVERCOMING THE FORCES OF DARKNESS: MOVING TOWARDS A PROFESSION Chris Clarke, President and CEO, Boyden Global Executive Search

A brief look at the history of some of the modern established professions shows a rather long and colorful road to the respectability and acceptance they enjoy today. The transformation from humble beginnings to worldwide respect and acceptance has taken a long time, with incremental steps forward and more than a few steps in a different direction altogether. However, each profession we recognize today followed the same four stages of evolution. The presentation will discuss the current position of retained executive search and relate it against this structure. Additionally, we will discuss the challenges facing the industry, including things we do wrong that are a barrier to full acceptance.

10:05 – 10:45 am HOW TO BE A BETTER SEARCH PROFESSIONAL Anthony Saxton, Chairman, Moloney Search

This prominent head-hunter will give concrete examples from his vast experiences that would help the delegates gain a better understanding of how they can improve their and their ﬁrms’ performance and search abilities.

10:45 – 11:15 am NETWORKING BREAK Ulrich F. Ackermann

11:15 – 12:00 pm EUROPEAN TRENDS & DEVELOPMENTS IN EXECUTIVE SEARCH Ulrich F. Ackermann, Member of the Board, TRANSEARCH International Partners Plc

Uli Ackermann will focus speciﬁcally on Europe and discuss multi-year trends that continue to unfold and a few new developments that are worthy of note. His presentation will highlight trends such as: growth sectors, a borderless Europe, and the impact of European law on search practices, amongst other trends while touching on the search for differentiation in search ﬁrms across Europe. Roger Cater

12:00 – 12:10 pm SPONSOR PRESENTATION 12:10 – 12:55 pm PANEL DISCUSSION – MASTERCLASS: SEARCHING FOR SOLUTIONS AS THE WAR FOR TALENT INTENSIFIES

Christopher Stokes

David Winterburn

- CHAIR: Pilar Gumucio, Contents Editor, search-consult magazine - Roger Cater, President, AIMS International - Christopher Stokes, European Regional Vice Chair on the IIC Partners Board of Directors - David Winterburn, Founder, Harrison Winterburn Associates Limited and Vice Chairman and Non Executive Director, Recruitment and Employment Confederation (REC) - Peter Szabo, Regional Country Manager for Hungary, SpenglerFox This Open Forum will address how the business of executive search consulting is developing, discussing the main challenges that are affecting this business and what they are doing to add value and provide concrete solutions to resolving the delegates’ concerns. Possible topics: shift in clients’ demands; expansion into other complementary services; globalization and how it is affecting the search process and off limits; how to better equip your ﬁrm for conducting international assignments successfully; how to improve your talent pipeline; how to keep a candidate engaged in your client; how to better assess the perfect match; and what factors to consider when discussing fee structures.

12:55 – 2:15 pm NETWORKING LUNCH 2:15 – 3:00 pm HOW TO VALUE AND SELL AN EXECUTIVE SEARCH BUSINESS Carl Thompson, Chief Financial Ofﬁcer, Hexagon Human Capital Plc Peter Szabo

3:00 – 3:45 pm HOW TO BUILD A GLOBAL SEARCH BUSINESS Alberto Amaglio, Managing Director, Korn / Ferry International (Italy)

This premier talent management professional and managing director of Korn/Ferry’s Italian offices will share insights on what it takes to build a successful brand in today’s marketplace and on how to prepare for the future, offering the perspective and the experience of one of the world’s largest search firm. He will share first-hand knowledge of the specific factors that have contributed to the Korn/Ferry’s success as well as thought-provoking insights on how to continue to add value for our clients amidst the changing global talent landscape. Carl Thompson

3:45 – 4:30 pm THE STATE OF THE INDUSTRY Peter Felix CBE, President, Association of Executive Search Professionals (AESC)

Peter Felix has been President of the worldwide industry association for executive search since 1998. He will present his perspective on the global talent wars and the opportunities and threats facing retained executive search in the coming years.

4:30 pm CLOSING REMARKS Alberto Amaglio

* The agenda and speakers are subject to change.

To check availability or make a booking please visit www.search-consult.com/practitioner2007, call +44 (0)20 7749 6102 or send an email to events@search-consult.com Peter Felix

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Largest The Retained

Search Firms in the World 2007 S

earch-consult is proud to announce “The Largest Retained Executive Search Firms in the World 2007,” our annual survey that ranks the top 20 largest search firms in the world. This is our 4th consecutive year as the results have helped HR Directors identify which providers have the strongest global presence, based on the number of offices that provide retained executive search. A drum-roll please as we congratulate IESF (International Executive Search Federation) for attaining the No. 1 ranking as the world’s largest retained search organization for 2007, with a grand total of 89 offices. IESF, founded in 2002, is a federation of prominent executive search firms that combine local knowledge with the ability to provide a comprehensive global search capability to meet the needs of its clients worldwide. “We are delighted with the news that the IESF is now in first place in your league table and truly now reflects our mission of global reach and local knowledge,” said Andrew Walker, Joint President. He described how IESF’s “overall plan is to deliver quality service to clients and candidates alike, and having the widest spread of countries and cities represented by IESF partners helps us deliver that. All our partners are independently owned and invited to join IESF rather than just applying. We now provide a global solution for our

By Pilar Gumucio

clients’ needs to find a shrinking pool of senior executive talent.” AIMS International with 85 offices and The Amrop Hever Group with 82 offices have been awarded 2nd and 3rd place respectively, consolidating themselves as leading international search providers having been placed among the major four spots for three consecutive years. InterSearch, with 80 offices, and EESN, with 74 offices, have taken 4th and 5th place. As a result, the top 5 places have all gone to search networks, demonstrating their strong global presence. Meanwhile, Korn/Ferry International and Heidrick & Struggles in revenue terms are usually contending for the top slot but for this survey have been awarded 6th and 8th place for the second year in a row. Korn/Ferry has 71 global offices while IIC Partners, Egon Zehnder and Heidrick each has 61offices and share 8th place. Boyden, with 68 offices, has taken 7th place. Meanwhile, Ray & Berndtson and Stanton Chase share 9th place with 57 offices. TRANSEARCH International is awarded 10th place, with 56 offices. Search-consult bases its results on the information each organization has provided us, supplying a breakdown of offices that work in retained search. For those companies that have not provided us with this data, we have done our best to source this information through our research and industry contacts. All responses have then been randomly checked by our marketing

team as a means of verifying the accuracy of the information this survey is centered upon. REVEALING THE REGIONAL WINNERS This survey also identifies the top 5 search providers per region, indicating which firms are likely to be the most effective since they are physically located there and, therefore, have been actively engaging with candidates, have first-hand knowledge of the local business customs and have a clear understanding of the social practices that are fundamental to be successful in this business. In North America (which entails Canada, Caribbean and the United States) DHR International once again has taken 1st place with 38 offices. This Chicagobased firm has won the No. 1 spot in North America in every survey we have published, clearly demonstrating its leadership in this massive market. For nearly 20 years DHR International has been a leading provider of executive search solutions with more than 40 wholly-owned offices spanning the globe. “We are committed to the best possible service for our clients and many times that means being a part of their local communities. DHR offices are strategically spread throughout the country in order to offer our clients both the local touch of a boutique and the global resources they expect of a top 5 firm,” stated David Hoffmann, Chairman and CEO of DHR International.

search-consult ISSUE 31 2007

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Top 20 worldwide Name

EMEA

Asia Pacific

Total

1. IESF

North America South/Latin America 8

2. AIMS International

3. the Amrop Hever Group

4. InterSearch

5. EESN

6. Korn/Ferry International

7. Boyden

8= IIC Partners

8= Egon Zehnder International

8= Heidrick & Struggles

9= Ray & Berndtson

9= Stanton Chase International

10. TRANSEARCH International

11. The Taplow Group

12. Spencer Stuart

13. DHR International

14. INAC

15. IRC Recruitment

16= AltoPartners

17= Russell Reynolds Associates

17. Horton International

18= IMD International

18= EMA Partners

19= CFR Consulting Group

19= Signium International

19= Glasford International

20. World Search Group

He noted that key factors that are continuing to generate demand in executive search in this region are: a strong robust US economy, an increase in US-headquartered clients demanding global services and a new front of the war for talent as baby boomers continue to inch closer to retirement. Within this region, Korn/Ferry and Heidrick & Struggles have retained 2nd and 3rd place with 23 and 21 offices respectively. This is the first time Spencer Stuart has made this regional list, being identified as the 4th largest search firm with 17 offices in North America. Stanton Chase International retains 5th place, with 15 offices in this region. The 1st place in South/Latin America is awarded to IESF, with 24 offices. IESF has partners in Brazil and Chile. Being awarded the top slot highlights their expertise in emerging markets, providing clients who are

focusing on these markets with a competitive edge. Andrew Walker, who has Europe and the Americas in his portfolio, was delighted that IESF has been awarded the leading spot. He remarked: “This is the 2nd consecutive year we have taken the lead in Latin America with a large geographical spread of partners. They provide a vital link to and from Europe, especially with the Iberian Pensinsula.” 2nd place is shared by AIMS International and The Amrop Hever Group, both having 11 offices. Korn/ Ferry moves up to take 3rd place, with 10 offices. Stanton Chase has retained 4th place with 9 offices and Boyden has taken the 5th spot with 7 offices in this region. In previous years, executive search in Europe focused exclusively on Western Europe. Then firms began to incorporate Eastern Europe. This region continues to

be redefined as EMEA now entails all of Europe, Middle East and Africa. The survey reveals that EESN (European Executive Search Network) has consecutively won the top spot for EMEA, boasting a total of 69 offices in this region. EESN may be considered a relatively new search association having been formally created three years ago. Nevertheless, the process began more than a decade ago when the original partners began to cooperate on European cross border assignments; sharing the same values, best practices and high ethical standards. Since then EESN has expanded in reach, but has maintained its original vision of intensifying its presence in the EMEA market. Sebastian Steinbach, Chairman of EESN, remarked:”Being No.1 in size in EMEA underlines our strategic efforts to be the leader in this market. We are concentrating here as we believe the in-depth understanding of the different markets in Europe, as well as their interaction, will give us a competitive advantage.” AIMS International takes 2nd place with 59 offices, InterSearch is 3rd with 53 offices, The Amrop Hever Group is 4th with 46 offices and INAC takes 5th position with 40 offices. IESF, once again is awarded 1st place with 27 offices in Asia Pacific. Mark Geary, Joint President of IESF and responsible for the Asia Pacific Region, commented: “We are very pleased to see that we have moved into the No.1 position globally and maintained our regional leadership in Asia Pacific for the 3rd year running.” He noted how the biggest requirement clients have is “to recruit high quality executives in the emerging markets, which is where we are strongly represented.” 2nd place has been awarded to Boyden, with 17 offices. Korn/Ferry and The Amrop Hever Group share 3rd place with 15 offices, as Alto Partners and Stanton Chase International share 4th with 14 offices. Heidrick & Struggles and IIC Partners also share 5th place, with 13 offices.

search-consult ISSUE 31 2007

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Talent Acquisition and Development Worldwide

www.aims-international.net

Identify the right talent

Motivate and develop talent

ith a global organization of over 80 offices focused on Search and Selection, we are able to target and approach the most appropriate talent.

ur 350+ consultants provide the most appropriate HR solutions to meet your companyâ&#x20AC;&#x2122;s business objectives; these include Assessment, Career Transition, Change Management, Climate Surveys, Coaching, Compensation & Benefits Surveys, Development Centres, HR Audit, Interim Management, Leadership Development, Performance Management, Remuneration Consulting, Succession Planning and Training.

Build strong relationships

e build strategic partnerships with our clients by delivering the best solution in a timely and responsive manner.

For further information, please contact AIMS Marketing and Sales at ms@aims-international.net

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Top 5 North America Name

EMEA

Asia Pacific

Total

1. DHR International

North America South/Latin America 38

2. Korn/Ferry International

3. Heidrick & Struggles

4. Spencer Stuart

5. Stanton Chase International

EMEA

Asia Pacific

Total

Top 5 South/Latin America Name

North America South/Latin America

1. IESF

2= AIMS International

2= The Amrop Hever Group

3. Korn/Ferry International

4. Stanton Chase International

5. Boyden

Top 5 EMEA Name

EMEA

Asia Pacific

Total

1. EESN

North America South/Latin America 0

2. AIMS International

3. InterSearch

4. The Amrop Hever Group

5. INAC

EMEA

Asia Pacific

Total

Top 5 Asia Pacific Name

North America South/Latin America

1. IESF

2. Boyden

3= Korn/Ferry International

3= The Amrop Hever Group

4= AltoPartners

4= Stanton Chase International

5= Heidrick & Struggles

5= IIC Partners

TRENDS: FUTURE AND PRESENT Demand continues to skyrocket as competition is extremely intense. These results suggest that the Big 5 Global Search Firms by revenue are not necessarily those with the largest spread of offices as the networks continue to demonstrate their truly global reach based on the number of worldwide offices. Compared to last year’s results, there were only a handful of new offices created. Another interesting point is that no search firm appeared on all four of the regional rankings, highlighting how diversified and competitive each region

really is. The Amrop Hever Group and Korn/Ferry came closest, appearing in three regional rankings. IESF appeared in two regional tables and, of course, topped the global survey as the world’s largest search firm for 2007. The latest AESC State of the Executive Search Industry report stated that there is a 25.8% increase in global revenues, indicating how intensive the battle for attaining and retaining top talent is becoming. As the demand for search spreads, more and more clients are looking to create strategic and global partnerships with their search providers.

According to IESF’s Andrew Walker, key factors that are fuelling this demand is “there is a shortage of executive talent due to demographic changes with the passing of the baby boomers into the retired sector, the increasing trend for senior managers to spend shorter periods in the office as shareholder demands increase for bigger and better results as well as the increasing need for executive talent, especially in the BRIC economies and Eastern Europe where lower cost of production is drawing more and more talent leaving gaps in the developed economies as executive search is the preferred option to deal with these challenges.” The heads of the global and regional winners are all extremely optimistic about the foreseeable future. DHR’s David Hoffmann does not see a slow-down in the short term “because there is an abundance of capital waiting for deployment to viable opportunities. This capital often creates new corporate investment and job opportunities for senior executives. Consumer spending and M&A activity will remain strong and flow into the job market throughout the US, Europe and Asia.” EESN’s Sebastian Steinbach also expects growth to continue, as he predicts management auditing and assessments will increase their importance in the selection process. Being close to the different markets, while keeping a global view, will be fundamental for search providers to continue to add value and maintain their edge. What will next year bring? We wait anxiously for next year’s results and see where this industry is heading. Can the top search providers consolidate their place for another year? Tune in to see. In the meantime, search-consult wholeheartedly congratulates this year’s winners for obtaining the top spots, affirming their leadership in this competitive industry. www.search-consult.com For more information visit: Web: www.search-consult.com

search-consult ISSUE 31 2007

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Anniversary Year 1997 – 2007 Flying high across the world of recruitment!

Ten reasons to choose CFR… • Year on year growth of international reach, office locations, professional consultants and assignments • Seamless cross-border management of international assignments • Local recruitment knowledge & international expertise in one individually tailored package

• Recognition of what value means for both clients and candidates • Dedication to professional recruitment methods to ensure total client satisfaction • Established local recruitment offices continue to become part of CFR in new international locations – 34 in 10 years

• Long term client portfolio with numerous references available • Clients provided consistently with high quality shortlists • Expertise across all industry sectors and all executive & management disciplines • Highly responsive strategically placed managing consultants

For more information about how CFR can help your business achieve more success with recruitment call +44 207 729 0929 or visit our website at www.cfr-group.com for full details of our office locations and contacts.

Austria • Belgium • Czech Republic • France • Germany • Hungary • Italy • Netherlands • Norway • Poland Portugal • Slovakia • Slovenia • Spain • Sweden • Switzerland • UK • China More than 100 professional consultants in 34 offices and additional links to India, Ireland, Russia, South Africa and the USA

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TheCasefor

a Holistic Approach to Executive Leadership Challenges

nspiration for developing a holistic approach to executive leadership challenges first came early in my career when I began to appreciate the variety and complexity of issues that were keeping my clients up at night. I started out as an executive search consultant in a boutique firm and later held successive leadership positions in the two largest search firms in the world, eventually running the North American CEO Practice, the West Coast Board Practice, as well as a big piece of the North American operations for Korn/Ferry International, where I also served on the firm’s Global Operating Committee. What I observed during the first 20 years of my career was that clients needed a broader range of support than traditional search firms could provide. To truly advance their executive human capital strategies, they needed assistance in thinking through issues extending far beyond the scope of traditional executive search, as well as a much higher level of thought leadership than a typical search consultant could provide. The philosophy behind Nosal Partners LLC – the Executive Leadership Solutions™ firm, is an approach that represents a break from the way in which traditional search firms have offered executive search and development support. While a number of the largest search firms have verticals that offer coaching and organizational development consulting, their executive verticals are, in fact, separate verticals from the core executive search business. By contrast, Nosal Partners has embraced executive development as an

by David Nosal

integral part of a unique delivery model geared towards helping client organizations resolve their most critical executive leadership challenges. Our executive development consultants work hand in hand with our executive search partners to ensure that newly-placed executives and hiring organizations have the best chances for success. For example, in addition to building bench strength for one particular client’s leadership team in key functional areas, we have consulted on an ongoing basis with its Executive Committee, Board of Directors and HR team to evaluate existing skills and competencies relative to current and future requirements at various stages of the organization’s life cycle. Using the results of our findings, we have delivered a combination of types of support: coaching for existing executives; initial assimilation services for newly-placed executives; executive team alignment services and organizational alignment services. Rather than merely address a few discrete requirements for the client by placing an executive or a set of executives, we evaluated the company’s challenges more holistically to provide a much broader spectrum of types of counsel and assistance, and thereby have a greater strategic impact. THE EXECUTIVE SUITE: THE BAR IS HIGHER AND THE ROAD MORE CIRCUITOUS To better understand Nosal Partners’ holistic offering, it is helpful to examine how the corporate environment is changing as client organizations are looking to executive

search firms for answers. In recent years, the business environment has become far more complex. In turn, the speed at which executives need to make decisions is increasing, as well as the number of decisions that must be made concurrently. As a result, the new generation of leaders need to operate across a much broader spectrum of functional areas, and must possess far more sophisticated leadership capabilities to be successful than ever before. Today’s leaders, nevertheless, are not necessarily receiving the same level of grooming and training that they did in years past because organizational structures are changing. The middle management layer – a key training ground for future leaders – has shrunk dramatically. “Sadly, even younger managers who are available and eager for more responsibility are not, in many cases, prepared to take on that responsibility. This is because downsizing has caused many companies to eliminate the middle managers who were the traditional source of executive talent.” (The Looming Leadership Crisis, by Shari Caudron, Workforce Magazine, September 1, 1999) As a result, today’s fast-track executives need to acquire the skills and experiences essential for effective leadership through different means than their predecessors did. WHY DO COMPANIES WORK WITH EXECUTIVE SEARCH FIRMS? Companies engage with an executive search firm when they face a set of internal issues that they are not equipped to resolve on their own. Although requirements for

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external support can stem from many different kinds of sources, they most commonly involve a blend of strategic, financial, operational and human capital challenges that call for human capital augmentation of some kind. The nature of specific types of support required can range from replacing an existing executive, to benchmarking high-potential executives, to making a strategic hire with a view towards long-term succession planning. Regardless of the nature of support required, the stakes are extremely high. In the executive suite, the wrong solution or hire has a tremendous financial, managerial and emotional cost for all parties involved, often eroding shareholder value and damaging reputations along the way. WHERE TRADITIONAL EXECUTIVE SEARCH FALLS SHORT Traditional executive search is not equipped to address the full range of executive human capital challenges that today’s organizations face. In fact, a search assignment is not always the optimal solution to a client’s challenges. There are circumstances in which, rather than going to search for an external candidate, a client would be better off seeking support for assessing and potentially developing internal candidates. There will also be cases in which a client organization would be better off first looking for coaching support to help align an executive and his or her team, rather than simply looking to replace that executive. Moreover, traditional executive search has also proven to inadequately support newly-placed executives. Even the most talented executive will experience challenges when ramping up in a new organization because the skills and behaviors that made him or her successful in past environments may not apply to the new one. Research has demonstrated that talent management isn’t necessarily portable from company to company. “The more closely the new environment matches the old, the greater the likelihood for success in the new position. They should also remember that certain skills – most likely company-specific ones – won’t be

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relevant in the new job and will have to be unlearned” (Are Leaders Portable?, by Boris Groysberg, Andrew N. McLean, and Nitin Nohria, Harvard Business Review, May 1, 2006). Research by the Center for Creative Leadership also supports these observations, revealing that “a staggering 66% of senior managers hired from the outside usually fail within the first 18 months” (The Looming Leadership Crisis, by Shari Caudron, Workforce Magazine, September 1, 1999). Leaders are climbing the corporate ranks faster, and with less priming than in years past. They are also faced with a far more challenging environment than were their predecessors – and one fraught with more serious levels of responsibility to shareholders, employees, and in some cases, entire communities. All of these trends and forces have conspired to give birth to a new way of approaching executive leadership challenges. DETERMINING THE OPTIMAL APPROACH TO EXECUTIVE LEADERSHIP CHALLENGES Developing the right strategy requires a true partnership between the Executive Leadership Solutions firm and the client organization. The Executive Leadership Solutions firm must fully commit to understanding and filling the client’s true underlying need, as opposed to proposing a

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solution that is solely in its own best interest. The right solution may extend beyond executive search to include coaching or mentoring services for an individual or for an entire team. Alternatively, it might entail assimilation services to assist an executive during a transition to a new role. Once engaged, the consultant needs to probe, scrutinize and listen effectively to understand the organization’s challenges, goals and pain points. The consultant must provide insights into candidates, organizations, market trends and many other issues based upon his or her experience to add value. The consultant must not only communicate clearly and consistently, but also challenge the client’s thinking throughout the relationship. In short, the Executive Leadership Solutions consultant must be a true partner and trusted advisor to the client. Finally, I feel that the search firm size plays a role in the ability to provide an optimal experience for a client. Bigger is not necessarily better. After a certain point, consultants no longer have the proper incentives to collaborate or provide the client with the same level of quality service. Moreover, the larger a search firm becomes, and the more client relationships it maintains, the fewer candidates it can access due to off-limits restrictions. As a result, it becomes structurally problematic – if not impossible – for a large search firm to fulfill the promise of its value proposition. Yet at the same time, although known for more consistent quality of delivery, boutiques are challenged to offer clients the depth, breadth and global resources required to service the broader requirements of certain clients. Nosal Partners is committed to maintaining the right balance. As a midsized, global, privately-held firm, it is dedicated to a holistic approach, delivering a broader quality-driven service tailored to really solve clients’ most critical executive leadership challenges. www.search-consult.com For more information visit: Web: www.nosalpartners.com

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Success... ...is About People Who Lead. Boyden has been leading for over 60 years, founded with a vision to match top executives with exceptional companies, so each can be successful. Today we continue to lead through innovations that ensure our clients reach their goals now, and in the future. Allow us to introduce to you the enterprising people of Boyden, and show you how our global experience and personal commitment can help your organization achieve its potential. Visit us at www.boyden.com to ﬁnd the Boyden ofﬁce near you.

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Lam: Search

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By Pilar Gumucio

n today’s fast paced and competitive business environment, having the right talent on board is vital for a company’s long term success. Harold Goldstein, Vice President for Human Resources for Lam Research Corporation (Lam), met with search-consult to discuss how his company is dealing with selecting, retaining and developing their top executives in one of the world’s most challenging industries. Lam Research Corporation, one of Fortune’s “100 Fastest-Growing Companies”, is a world-class provider of innovative solutions to the semiconductor industry. In fact, Lam is the market share and technology leader for semiconductor processing equipment, and looking to expand into adjacent market areas. Headquartered in California, Lam employs 2,800 people worldwide, and in 2006 generated $2.6 billion in revenue. Lam’s success, nevertheless, is not solely based on its revenue figures. It has also been continuously listed as the top place to work in the Bay Area by a group of independent newspapers. This recognition exemplifies how Lam’s senior management works hard to “establish, maintain and upgrade their culture,” attributing their success to their “employees’ commitment to creating a workplace where certain Core Values such as teamwork, innovation, continuous improvement and - are the driving force that move the company forward.” Goldstein explained how these Core Values were identified a decade ago, and now are embedded throughout every planning and operational level. “Half of our performance reviews are based on how well each employee uses the company’s

Core Values” as promotions are rewarded on this very basis.

PREPARING YOUR ENERGY FLOW “When you are so successful a lot of companies come after our top talent on a regular basis, as one of our main challenges is to make sure we are continuously competitive,” stated Lam’s HR Vice President. This is carried out at various levels. Within this context, Lam’s senior management sets a very high bar for performance and is continuously raising the bar towards world class goals and accomplishments. Lam’s work pace is extremely fast, as the expectations for incoming talent is exceptionally high. Goldstein explained that in 2007, one of Lam’s strategic initiatives was to review how to get new employees assimilated and productive 20 % faster than they have in the past. As a result, the company has prepared an onboarding program that outlines exactly what the new executive will be doing the first 90 days as well as providing feedback on how to develop this individual even further. In fact, development is highly prioritized by Lam’s senior management as there are two performance management reviews held annually. One deals with performance while the other focuses exclusively on the employee’s development plans. Goldstein described how Lam has devised a “special retention plan for key contributors and high potential executives.” The end result is that this prominent firm has less than 5% turnover globally, and almost

99% retention levels of key contributors and high potential executives, demonstrating how effective their policies are. Lam has also devised a compensation program that is geared to attract and then retain top performers, paying them above the industry norm. All of these policies not only serve to retain talent, but also to attract top executives to this world-class company.

WHAT TYPE OF ENERGY IS REQUIRED? Selecting which executives have the right cultural fit, skill sets and experience can be very daunting. To deal with this challenge, Lam has a team of professional in-house and contract recruiters that first meet with the respective hiring managers to fully understand the required role, and then prepare a job spec. They will then have this spec evaluated with the company’s compensation group to make sure that what is offered is in line with the specified role. “When hiring for an executive role,” Goldstein described, “at least 2 of our top management executives would have to be part of that interview panel. We also have an Executive Leveling Committee, which consists of one executive from each area of the company that will make sure that we understand what the job entails and will agree that the job has the right grade. This committee will also review the shortlist, providing their feedback on each candidate. The hiring manager and their respective HR manager will determine who is going to be part of the interview process and ultimately decide who the best candidate for the job is.” ISSUE 31 2007 search-consult

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LOOKING FOR AN EFFICIENT ENERGY DISTRIBUTOR As the war for talent intensifies, identifying, selecting and attaining top talent is critical, especially in an industry that is very dynamic, highly competitive and extremely innovative. Within this context, search providers are expected to “get the right person, be able to minimize the time it will take them and follow through the entire process.” The term “follow through” Goldstein explained, meant that the search consultant is personally involved in the entire process, going beyond simply closing the deal and making sure that a year down the line both the client and executive are still content with the placement. Nevertheless, there is an enormous amount of search firms all offering similar services. How then, can you really differentiate between a good and a great search firm? According to Lam’s HR VP, a search firms’ track record is essential and is their number one criteria. “If we are looking for a new search provider, we would request references from people we trust who have used them in the past. This would provide us insight on the search firm’s level of professionalism, understanding of our industry, level of trust as well as demonstrate that they really do have the proper skill sets, knowledge and network of contacts to attain the type of candidates that we are looking to hire.” YOU HAVE TO KNOW THE CURRENT FLOW Goldstein advised search firms to really review their process of obtaining information. “When I meet for the first time with search consultants, the types of questions they ask me allows me to get an insight on their interviewing skills, evaluate how they interact with people and assess if they have the proper initiatives required to obtain all the critical information required to carry out an effective search assignment. For instance, will they dig deep when interacting with candidates? Will they gain the trust of the people that I am looking to attract?”

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He also advocated that search consultants should conduct an in-depth analysis of what their client is really looking for. Make sure to ask pertinent questions, such as: what are the characteristics of the person they are going to be working for, what is the team like, what has been successful in the past and what hasn’t been successful? This type of information will not only allow the search consultant to conduct a more effective search, but provides valuable information for future assignments. “By taking the time to really understand who we are, what we want and where we are going is an investment that in the long run saves both of us time and makes for a more productive partnership,” reported Lam’s HR Vice President. HAVING A CLEAR VISION Once Goldstein is positive that the search firm has fully understood the assignment, he expects the consultant to provide him with a short list of the top five candidates and the reasons for making that selection. Lam’s HR VP complained that many times search providers will shower him with resumes and interviews, without providing a clear analysis of the top 5 candidates. Other times he discovers that only one of those executives was really worthwhile, while the others did not have the skill sets or

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background his firm had required. “When this occurs, then you simply don’t work with that search consultant again.” According to Goldstein, being able to effectively communicate with each other is important, especially when you are calibrating the search. Many times, however, search consultants send him extremely detailed reports stating how many phone calls the consultant made or how many responses were received. This type of information is irrelevant, as he would prefer to spend more time discussing the candidates the search consultant had identified and understanding the reasoning behind it. When asked if he was interested in having his search provider conduct psychological tests to ensure that the right candidate was selected, Goldstein reported that being able to find candidates that fit the job spec was paramount. Nevertheless, he did not need to see a test score to determine this. Lam’s HR VP was clear that “this type of information should be available in the indepth analysis of the top five candidates, ranking them based on their skill sets, background, track record and cultural fit. The results would not only help us select the best candidate, but it would also help us during the onboarding process since the report would identify possible areas where the candidate might require further development.” As a result, Goldstein described how a great search provider adds value by the type and process of obtaining information. In the semiconductor industry the global talent pool is extremely limited. At the same time, the environment is extremely dynamic and demanding since the success of a company is determined on how fast you can provide innovative solutions to your customers. Within this context, the search provider that can identify, assess and attain the best candidate in the fastest possible time becomes an asset, allowing the company’s creative energy to continue to flow. www.search-consult.com For more information visit: Web: www. lamrc.com

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Unique “drag and drop” functionality allows users to create company and people records directly from websites without retyping! Powerful new “Search Engine Style” document search allows users quickly and easily to ﬁnd information hidden away in résumés, proﬁle reports, articles, company reports, etc

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AIMS International:

Aiming to be Client-Driven

s businesses continue to become more complex and competitive, talent is increasingly a key differentiating factor, as a company’s success is made and broken by the type of executive that it attracts, hires and retains. Within this context, search firms are playing a crucial role in partnering with their clients to be able to effectively identify, obtain and develop this top tier of professionals. Search-consult spoke to Roger Cater, the President of AIMS International, to see how this leading Executive Search consultancy was created, is developing and more importantly, how it is preparing for the future. AIMS International is among the largest Executive Search consultancies in the world with 85 offices in over 50 countries. For close to fifteen years, AIMS international has built and consolidated successful and strategic partnerships with clients, ensuring that they provide a results-based alternative to the traditional model of executive recruitment. Cater recalls how AIMS International was created in March 1993 when the owners of five successful independent executive search firms located in France, Germany, Spain, Switzerland and the UK established AIMS (Association for International Management) to be able to effectively source international talent and collaborate with highly regarded professionals that share the same core values and best practices. At first, this association focused its offerings in Continental Europe, but as their clients’ needs to source global

Always

By Pilar Gumucio

talent grew, AIMS quickly responded and expanded, appointing new partners worldwide. It also structured itself into three business regions: Europe, Middle East, Africa (EMEA); Americas (North and South) and Asia Pacific, which allow partners to work independently, cooperate regionally or collaborate globally as required. As a consequence, this leading organisation changed its name to reflect this consultancy’s global reach to AIMS International. THE DRIVING FORCE Although AIMS International is large and has an impressive geographic spread, what has - and will continue - to drive this organisation forward is its core values. Cater explained how this prominent consultancy was founded, and continues to operate, on the basis that clients’ needs must come first as their approach is “client centred, consultative and flexible.” There is no prescribed way of working with clients since each one is unique. As a result, AIMS International is “openly receptive to conforming to the clients’ requirements rather than being too rigid” and coercing them to follow their standards, especially when cultural issues and different mindsets are taken into account. This Executive Search consultancy has also set up an international account management structure to provide each client with a personalised customer service, providing innovative solutions in a timely, responsive and trusted manner. In today’s fast-paced business world Cater stressed the importance of not only understanding and being able to

conduct a thorough analysis of their clients’ organisational needs, but equally important is to “constantly strive to anticipate the rapidly changing needs” of their clients. In order to do so effectively, AIMS International “always invites clients of the partner who is hosting a regional or global meeting to speak to all the other partners. We also invite clients with whom we have a preferred supplier agreement to talk about their views on how AIMS are addressing their requirements and what they would like to see the organisation do in the future.” This type of information has been vital, allowing the partners that make up AIMS International to see how clients perceive them, what additional services clients are demanding, where clients are expanding their businesses as well as how else they can further improve their client relationships. HOW TO WIN THE RACE The President of AIMS International explained how its core values play a key role in defining and motivating this organisation to be effective and successful. Nevertheless, he also stressed the importance the partners themselves are in this process. “The fact that the partners own their own business,” Cater remarked, “means that the partners’ mindset is more conducive to going the extra mile to either obtain business or provide an innovative solution that a more conventional search firm may not necessarily be willing, or be able, to do.” Cater described how the calibre of the partners, the fact that they have an international focus in their business, while

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simultaneously knowing their own local country and region, is essential for AIMS International to be a valuable executive search partner. “It is easier and more effective to deal with professionals that speak the language and know the culture as well as the key issues regarding their own particular country rather than dealing with a consultant that is based in one country and is trying to fill a role that is located in a completely different country or region.” Another key factor is the collaborative way the partners work together. He stated: “Focusing on profitable long-term relationships with clients - rather than quarterly profits - is one of the main reasons partners are able to be more flexible and innovative.” As a result, being able to effectively communicate among partners and with clients is critical. As globalisation intensifies, the amount of cross-border business between partners has grown exponentially. AIMS International has recently established a sophisticated intranet site that complements the periodic teleconferences and e-mails, allowing partners and clients around the world to see what is going on with their assignments in a clear and concise manner and more importantly, in real time. Cater admitted that it is a real challenge to be able to effectively manage AIMS International in today’s competitive and complex environment. “Partners are entrepreneurial and are, therefore, naturally creative in the way they do business; however, certain procedures and processes have been agreed upon by all the partners worldwide. A great deal of time and patience is required as compromises have to be made between all partners, and this is more difficult when what applies in one partner country is unacceptable in another’s. Yet, paradoxically, it is this type of challenge that makes the management of AIMS International more stimulating and rewarding.” PREPARING FOR THE FUTURE Looking to the future is another challenge as AIMS International must anticipate what additional services and

Roger Cater

where else clients are looking to expand so that this leading global HR consultancy can continue to respond accordingly. The President of AIMS International insisted that for this, the ability to deliver organisation assessment must be offered as an integral part of executive search. “I see AIMS International providing services in coaching and mentoring as a natural extension of the services that we already provide clients.” Cater stated that some clients are also asking AIMS International to assist them in compensation and benefit surveys, interim management, performance management, benchmarking and succession planning as an integral part of the clients’ Talent Management process. Currently, these complementary services are not provided throughout the entire organisation. They are determined by location, and more specifically whether the partner is willing and able to do so. According to the head of AIMS International, this executive search consultancy is currently looking to further expand in North America and Asia Pacific. The selection of high quality partners in these countries is proving to be difficult. “Trying to diversify and expand simultaneously is difficult,” described Cater, “because we have to bring professionals on board that are willing and able to step out of their safety zone,

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and provide innovative solutions to clients on a global basis.” He reported that in the emerging markets - where search has not provided sufficient revenue for a business to be solely sustainable - partners have been willing to be more innovative and creative in terms of providing additional HR services . In more mature and developed markets, however, these types of services haven’t been provided because search was sufficient to provide a profitable business. Now as clients globalise, they are looking for search providers to assist them worldwide. They are no longer just searching for partners in executive search, but are looking for allround Human Resources expertise. As a result, when selecting new partners AIMS International makes sure that the current and potential partners are willing, and able, to explore new ways of adding value to their clients’ businesses. It is evident that businesses are today becoming more complex as search providers must learn to adapt. Within this context, AIMS International has proven to be effective in creating strategic partnerships, among its partners as well as with its clients. This prominent HR consultancy must aim to maintain its creative edge, uphold best practices, deliver outstanding results and above all, listen to what their clients are demanding of them. This delicate balance is what has, and continues to empower AIMS International to be considered among the top global executive search providers, driving the organisation and its clients forward. Roger Cater is President of AIMS International. He holds UK/USA dual nationality. He has a degree in HRM and is a Fellow of the Chartered Institute of Personnel and Development. Roger was appointed to his first HR Management role at age 26 with responsibility for creating, developing and managing the HR function for Rubery Owen – Rockwell (a joint venture between two leading UK & US automobile companies, respectively Rubery Owen and Rockwell International). In 1982 he joined Mitel, the Canadian based telecoms company, initially as HR Director UK and subsequently as Senior Vice President HR EMEA and Asia Pacific. Roger was also on the board of Mitel UK’s business. He then joined Smith and Nephew as European HR Director and subsequently Amersham International (now G E Healthcare) as Group HRD. Roger acquired Nexus Resources Ltd in 1997 where he is currently Group Managing Director.

www.search-consult.com For more information visit: Web: www.aims-international.net

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Corporate Governance:

Raising Stakes for Board Director Candidates

solid Board of Directors (BOD) can be instrumental in developing policies and promoting corporate culture in line with ethical management. In direct response to poor corporate governance, the Sarbanes-Oxley Act (ìSOXî) in 2002 was passed as a means for boards of directors to fulfill their fiduciary responsibilities to shareholders. Independent audit committees and outside directors were expected to scrutinize managerial activity, and therefore, their level of responsibilities has increased. The way the BODs had previously been selected was also questioned. As a result, identifying and recruiting BOD-qualified candidates has never been more difficult. For decades, a seat on a corporate board was synonymous with position and prestige requiring little in the way of commitment or work. Yesterday’s criteria for acceptable candidates were no longer desirable. For years, the principal qualification for BOD service was a friendly relationship with the CEO or the ability to direct significant business to the firm. The notion of serving the interests of shareholders is a relatively contemporary concept. In 2007, BOD candidates are being screened on the basis of functional and /or industry expertise in conjunction with a real commitment to putting time and effort into the duties of a director. The increasing body of research demonstrates how good corporate governance is directly correlated to positive performance in four areas: shareholder returns, profitability, risk (measured by stock price volatility) and dividend payout and yields (Jay W. Eisenhofer and Gregg S. Levin, “Does Corporate Governance Matter

By Rick Walker

to Investment Returns?”, Corporate Accountability Report, Copyright 2005 by The Bureau of National Affairs). The same data also suggests that the most important factor driving strong corporate governance is board composition. “Board composition” is simply the academic term used to mean “independence” - which refers to being independent from management’s interest so as to primarily serve the shareholder’s interests. WHY IS THE CANDIDATE POOL SHRINKING? As the demand for qualified BOD candidates continues to rise, the traditional pools of independent candidates with specific expertise and commitment to the demanding requirements of today’s board service are a somewhat finite. Recruiting proven BODs is becoming more difficult as qualified candidates are becoming reticent as the current supply is shrinking. The BOD role is no longer perceived to be as attractive as before since there is an increasing fear of being held personally liable. Moreover, instead of just meeting four times a year, board members are expected to be well prepared regarding the strategic issues of the their company and industry. Additionally, members serving on key committees, such as audit and compensation, must now commit even more time to the governance process given that their committees oversee a substantial portion of public disclosure. Another factor that has reduced the proven BOD candidates has been the limits placed on how many boards a BOD can sit. In fact, the Institutional Shareholders Services (ISS), a well-respected corporate watchdog, has a standing guideline that sitting CEOs should limit their board

commitments to no more than three boards inclusive of their own board. The ISS guideline for non-CEOs is a limitation of six boards. Corporations are also now encouraging their board members to limit their board commitments. These limitations are sometimes more stringent for important committee chairs. In some cases, audit committee chairs are being limited on their participation in additional audit committees, both in terms of the numbers of audit committee appointments and no additional chairmanships. Another critical factor is the elimination of staggered boards, which historically were promoted as a mild form of defense against a hostile takeover. While the “declassification” of boards does not in itself reduce the supply of qualified BOD candidates, the declassification trend may be seen as a precursor to the introduction of term limits - a requirement that corporate governance activists strongly favor. ENHANCING CORPORATE GOVERNANCE Much in the same way that “Term Limits” on audit engagement partners are viewed as enhancing corporate governance, we can expect to see some gradual introduction of term limits on BOD service that could further shrink the supply of directors. However, such a practice will certainly introduce an added degree of succession planning at board level, which should lead to a greater demand and focus on the search for qualified BOD candidates. Far too often the nominating committees of corporate boards are fixated on sitting and retired CEOs as BOD candidates. In order to keep the supply / demand equation

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in balance, due consideration should be given to “mere mortals” (CFOs), divisional executives, etc.) that can also provide wise counsel to management. Focus should be given to functional knowledge (finance, operations etc) and deep knowledge in the company’s industry. In some industries, such as the commercial banking industry, the ability of directors to deliver relationships that translate into revenue opportunity is a key factor in director selection. Beyond the prototypical CEO candidate, due consideration should be given to business leaders that manage large subsidiary organizations since they are often provide good analogies to smaller public companies in need of good board level counsel. Almost weekly, the headlines announce the latest record-breaking “go private” transactions. Even though elephant deals like TXU and First Data grab the majority of the press, remember that private equity investments are more often made in privately held companies or in subsidiary divisions of publicly held firms. Although “privatized” firms are no longer duty-bound to comply with regulatory requirements for independent boards, savvy private equity houses would be wise to utilize independent directors in order to distinguish themselves in front of broadbased institutional investors that hold vast amounts of debt securities, which are often publicly traded securities. There is no reason to think that investor demand for strong governance principals at private firms should be less than the demands placed on public firms. Perhaps the best anecdotal evidence that the private equity factor is increasing rather than shrinking the demand for BOD candidates is the fact the private equity firms (such as Blackstone Group, KKR and others) themselves are going public! Between 1998 and 2000, there was an average of 380 new IPOs per year. However, the party didn’t last. Between 2001 and 2003 - the the period during which today’s corporate governance standards were developed - there were fewer than 100 issues per year. During the most recent cycle (2004 to 2006), the Renaissance

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Capitalís 2006 Annual IPO Review has reported that IPO volumes have recovered to about 200 issues per year - and this does not include new public entities resulting from spin offs and carve-outs. As a result, the market continues to heat up. In fact, there were 53 issues during the first quarter of 2007, depicting a 43 % increase from the previous cycle. This rising “birth rate” in the public sector adds to the existing pressure demands placed on BODs. In fact, the pressure is even more acute in the strongest sectors of energy, financials, healthcare and technology. Companies operating in these sectors are striving to follow “best practices” of corporate governance - including strong, independent board leadership. No sector wants to be tagged as the dot-com of the new millennium. SEARCHING FOR ANSWERS What are concerned corporate organizations doing in the face of tightening supply/demand fundamentals for BOD candidates driven by over boarding limits, term limits, the private equity factor and the IPO boom in certain sectors? At least one answer is establishing a strategic relationship with your search firm so that they can help plan and execute board-of-director formation and succession. The process of identifying and qualifying BOD candidates is time

consuming and takes valuable time away from important management duties. At the same time, an effective search firm has the expertise, know-how, and most importantly, has the established network to increase the talent pool and get the right candidates into these boards of directors. Top tier retained search firms are committed to a quality board services practice predicated on a thorough understanding of company-specific and sector drivers, as well as expert knowledge of the functional expertise that matches boardroom requirements. Professional search consultants can also be helpful in providing input with respect to committee composition and board member compensation. Furthermore, the utilization of a professional search organization contributes to the transparency and complete independence of a director search, which can only enhance the level of an organization’s corporate governance best practice principals. Much has been written and said about the evolution of corporate governance during the last five years. A qualified and independent board is one of the best ways to create and promote an ethical culture within an organization. At the same time, research is demonstrating that recruiting qualified board of directors and investing resources into planning the composition of boards is increasing good corporate governance, which translates into good business. Rick Walker is Executive Vice President and Managing Director of DHR International’s office in Houston, Texas. Rick is a senior consultant working in the areas of energy and finance. Prior to Rick’s search career he spent over twenty years in the banking business principally as an investment banker with JPMorgan during which time he provided advice to energy companies and their boards regarding critical matters of strategic alternatives and capital raising. Rick’s perspective on board matters is enhanced by his own board service with Venoco, Inc., an NYSE-listed exploration and production company. For nearly 20 years, DHR International has been one of the leading, privately held provider of executive search solutions with more than 40 wholly-owned offices spanning the globe.

www.search-consult.com For more information visit: Web: www.dhrinternational.com

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PROPELLING HIGH-FLYERS INTO LEADERSHIP TEAMS ACROSS ASIA

54 Office in 34 Countries www.wrightcompany.com/www.transearch.com

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