search-consult Issue 4 by margaret jaouadi

June 2001 / ISSUE 4

The International Magazine for Search Professionals

Win Priem, CEO of Korn/Ferry International Exclusive interview on the future of the World's largest Search firm

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Chris Clarke - President, Boyden International Organizational Structure in the Search industry Kevin Kelly Heidrick & Struggles Executive Search in Japan

search-consult MANAGING DIRECTOR Jason Starr jason@search-consult.com EDITORIAL Barbara Kwateng Editorial Coordinator barbara@search-consult.com

ADVERTISING/ SUBSCRIPTIONS/REPRINTS UK and Europe North and South America South East Asia and Australia Carol Crawford Business Development Executive carol@search-consult.com or log on to www.search-consult.com

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Front Cover: Win Priem, Chief Executive and Chairman of Korn/Ferry International

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>>> STOP PRESS <<<

Paul C. Reilly named Chairman and Chief Executive Officer of Korn/Ferry 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.

NEWS

AS WE GO TO PRESS, KORN/FERRY has announced that Paul C. Reilly, 47, has been named Chairman and Chief Executive Officer, effective June 30, 2001. Mr. Reilly joins Korn/Ferry from KPMG International, where he was Chief Executive Officer. The appointment of Mr. Reilly concludes a five month search following the announcement by Korn/Ferry's President and Chief Executive Officer, Windle B. Priem, 63, of his decision to initiate a succession plan, including the orderly process of identifying his successor. The search was conducted by Korn/Ferry senior search consultants, guided by a search committee of the Korn/Ferry Board of Directors. Mr. Reilly was named CEO of KPMG International in 1998. KPMG International has more than 100,000 employees in 156 countries. KPMG International and its member firms

provide audit, tax, consulting and financial advisory services, generating annual revenues of more than $13 billion. Mr. Priem said, "We are delighted that Paul has accepted the position as our new Chairman and CEO. He has a proven track record running the global operations of a world-class professional service firm and we are confident that he has the judgment and professional experience to lead Korn/Ferry through its next stage of growth." Mr. Priem added, "I want to thank our Board of Directors and members of our Search Committee for an outstanding job. I truly believe our shareholders, clients and employees will be well served by this appointment. Paul has what it takes to maintain and build upon Korn/Ferry's role as the global leader in recruitment and to help us maximize the enormous opportunities ahead in the human capital industry."

June 2001 search-consult

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Heidrick & Struggles reports Q1 revenue growth www.search-consult.com

NEWS

CHICAGO (APRIL 25, 2001) - Heidrick & Struggles International, Inc. has announced record revenue figures for the 2001 first quarter. Consolidated revenue grew 6 percent to $139.3 million, up from $131.9 million in the comparable quarter of 2000. Executive search revenues grew 4% to $134 million. The underlying regional figures saw revenues in North America drop 6% to $70.1 million. In Latin America, revenues fell by 2%. The European business reported huge gaines; up 25% to $51.7 million, thanks in part to particularly strong performace in the Financial Services and Professional Services practice groups. Asia pacific revenues were down 3% year on year to

$7.9 million. LeadersOnline continues to lose money, but revenues are increasing - up 63% to $5.2 million. The Internet division is expected to break even in Q3 2001 although the state of the economy may have an impact on this goal. "Even as we navigated through a troubled U.S. economy, we were able to generate revenue and earnings growth," said Patrick S. Pittard, Chairman, President and Chief Executive Officer of Heidrick & Struggles International (HSI Group). "We knew that we faced difficult comparisons with last year's first quarter, but we benefited from our geographic diversification with particularly strong revenue performance in Europe." The firm also revealed that

it has recruited 135 staff over the past 12 months. Concern has been expressed (search-consult, issue 1) about the impact of the expiration of the share lock-up agreement on partner retention. The firm has announced that Robinson-Humphrey Company is offering employees and former employees of HSI Group, whose shares were subject to a two-year lock-up agreement in connection with the IPO, the opportunity to aggregate a portion of their shares with those of other employees and former employees for sale as a block to investors who want to accumulate an equity stake in Heidrick & Struggles International. "The block trade program will allow shareholders who have been subject to this

agreement to diversify their holdings in an organized, responsible fashion," said Pittard. "In the spirit of partnership, we have asked that internal shareholders voluntarily limit their selling to no more than 25 percent of their total holdings during any 12-month period." Of the company's 19.4 million shares outstanding, 10.3 million are subject to the lock-up agreement. Internal members of the Heidrick & Struggles International Board of Directors, as well as the company's Executive Officers, are not expected to sell any of their shares in the near future. Collectively, this group owns approximately 16 percent of the lock-up shares.

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NEWS

ODGERS RAY & BERNDTSON are the latest generalist search business to open a specialist office to serve the City of London. Earlier this year the company boosted its profile in the City with

the acquisition of financial sector specialist recruiters The Berwick Group and the firm now boasts a 40 strong financial services team. The office, in St Martin's le Grand, is the company's fifth in the UK and one of more than 50 internationally.

Roddy Gow, chair of the financial services practice at Odgers Ray & Berndtson, said: " Our acquisition of The Berwick Group has helped us to assemble one of the City's largest and most dynamic financial services practices. By bringing the whole

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NEWS

BOYDEN GLOBAL E x e c u t i v e Search today announced that its Board of Directors has elected Fred Greene Chairman of the Board. Greene, 58, a Managing Director of Boyden and Manager of Boyden's office in San Francisco, CA, begins a two-year term immediately, succeeding Karl Lange, Managing Partner with

Boyden in Frankfurt, who will remain on the Board. Greene entered the search industry in 1989. He has served on Boyden's Board of Directors since 1999. His areas of search concentration include Consumer Products and Services, Telecommunications and Financial Products and Services. Mr. Greene received his BA and MBA from the University of Pennsylvania.

Portugese merger www.search-consult.com

NEWS

GLASFORD PORTUGAL AND Roque de Pinho Consultores have merged to form one of the largest executive search firms in Portugal. The new firm, to be called Glasford International Portugal,

will boast three partners, one senior consultant, four researchers and two assistants. Managing Partner Dr. Carlos de Melo Heitor commented "I am very happy with this merger. It is a natural step in our growth strategy at national level."

New management at Horton www.search-consult.com

team under one roof we will be in a better position to exploit the natural synergies that exist within the group." search-consult carries an exclusive interview with Paul Ray Jr - CEO of Ray & Berndtson in issue 5.

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Boyden names Spencer Stuart new Chairman reveal new CEO www.search-consult.com

NEWS

HORTON INTERNATIONAL has elected Gerard Dietrich as Chairman and Joe Keiser as Vice Chairman. A new board of directors has also been voted into

place. This new governance structure replaces the previous regional coordination model and, the group hopes, will allow the the business to respond to the challenges of the accelerating globalisation.

NEWS

SPENCER STUART HAS named David S Daniel previously Managing Director, Americas - as the firms new CEO. He succeeds Joseph E. Griesedieck, who held the position for the past five years. Mr Griesedieck will remain with the firm. Joint chairmen, David Kimbell (London) and Dayton Ogden (New York), said "We enthusiastically welcome the appointment. David Daniel clearly has the support of our entire Firm and is exceptionally well qualified to meet the

challenges which lie ahead." Prior to joining Spencer Stuart in September 1994, Daniel was CEO and President of Simint USA, the American licensee for Armani Jeans. Previously, he was President of Louis Vuitton, N.A. and had an earlier background in marketing with Pepsi-Cola. Daniel began his career in the retail sector. Daniel was graduated from Wesleyan University with a Bachelor of Arts degree and from the Yale School of Organization and Management where he received a Masters in Public and Private Management.

Leading Spanish search firm opens subsidiary in Miami www.search-consult.com

Odgers Ray & Berndtson expands in the City

NEWS

SEELIGER Y CONDE the Spanish member of the Amrop Hever group, has entered the US search market through a new office in Miami. The new office will be headed up by Steve Barlley.

The firm aims to find Latin American directors for US multinationals operating from the region. The firm has also made a number of investments in South American search practices.

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Heidrick & Struggles TMP Worldwide launches Global Private acquires Management Solutions, Inc. Equity Practice www.search-consult.com www.search-consult.com

NEWS

HEIDRICK & STRUGGLES International has formalized its Global Private Equity Practice under the leadership of Geoff Dunbar, a partner in the Los Angeles office. "Despite the fact that private equity firms raised a record $135 billion globally in 2000, their ability to finance and/or monetize their investments in the current marketplace has decreased significantly. As a result, private equity firms will be more dependent than ever on their management teams to create value", explained Dunbar. Heidrick & Struggles has completed more than 2,000 executive-level searches for equity-owned portfolio companies and more than 350 investment professional searches for the funds themselves. The practice also recruits executives in anticipation of deal closings

and provides other leadership services, such as senior management assessment and Board of Director and Advisory Board searches. Dunbar said, "Based on this market's complexity and global ramifications to our core business, we have created a Board of Advisors to support the Private Equity Practice's business strategy. Board members include: Tom Friel, President, Heidrick & Struggles' Ventures; Piers Marmion, Chief Operating Officer and PresidentInternational, Heidrick & Struggles Executive Search; John Gardner, President Global Practices; Jeff Hodge, Area Managing Partner, West Los Angeles, San Diego and San Francisco; Kevin McNerney, Managing Partner, International Technology Enterprise; and Brian Sullivan, Managing Partner, Global Financial Services Enterprise.

Leaders Trust announce new member www.search-consult.com

NEWS

DUTCH EXECUTIVE SEARCH firm Froom & Partners has officially joined the network Leaders Trust International. Founded in 1990, the Dutch arm of Leaders Trust

International is based in Zeist and headed by Ms. Gonne Klinkert - Ceulen and Mr. Albert Froom, the company's founder. The firm is expected to add other further European and international locations to its operations in the coming year.

NEWS

TMP WORLDWIDE HAS strengthened its eResourcing division with the acquisition of US west coast business, Management Solutions, Inc. MSI has eight offices. Meanwhile, TMP have also announced that, from May 8th, its shares will be traded on

Nasdaq Europe. Jim Treacy, COO of TMP, believes that by trading on Nasdaq Europe (which was formerly known as Easdaq), his firm will reach a larger investor population and that this will increase the liquidity and visibility of TMP shares.

German court case hits demand for search www.search-consult.com

NEWS

IN THE FIRST QUARTER OF 2001, the German Executive Search and Selection industry experienced slower growth rates according to the Bundesverband Deutscher Unternehmensberater (BDU or Association of German Management Consultants). This is in comparison to figures held by the Association for the same period in 1999 and 2000. The BDU's members, whom encompass 16,000 consultants, collected a turnover of 5.3 Billion DM in 2000. This year's figures are expected to be affected by the depression in the IT industry and the developments in E-business industry. The BDU's Director, Christoph Weyrather, spoke of

how the recent court judgements involving German Executive Search would serve to hinder competition. As retaliation, the Association has enlisted two professors of law to prove that these judgements may improperly discriminate and could contravene the German constitution. Meanwhile, Primus Online, the German Online Retailer have withdrawn the offer to pay employees reporting approaches from search firms. Earlier this year, Director Thomas Schulte-Hiemann stated that any ‘whistleblower’ could receive 25,000DM. However, following the BDU questioning the legality of this offer, it has been withdrawn.

KEEP US UP-TO-DATE WITH YOUR LATEST NEWS: editorial@search-consult.com

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Key moves in Executive Search this month Robert Heidrick has left Heidrick & Struggles to join Spencer Stuart in the role of Vice Chairman and Managing Director of the Industrial Practice of North America. Mr Heidrick, who has been in search since 1977, is the son of Heidrick & Struggles co-founder Gardner Heidrick. Prior to joining Heidrick & Struggles, he worked with his father at The Heidrick Parners. Graham Howells is the new country manager for TMP Worldwide Executive Search in Hungary. Previously, Mr Howells was with Nicholson International. He is joined by Ferenc Baracskai and Csaba Palicsko who are both Senior Consultants. Mr Baracskai practices in the Industrial, Energy and Natural Resources sectors, while Mr Palicsko specialises in Financial Services. Clare Wade joins TMP Worldwide Executive Search as a Partner in Auckland, New Zealand. Previously, Ms. Wade was with Korn/Ferry International. Korn/Ferry International has named Charles (Chuck) W.B. Wardell III Managing Director of the flagship New York office and head of the New York Region. The New York office is Korn/Ferry’s largest with a staff of 130. Mr Wardell was previous Senior Partner at Heidrick & Struggles International, and prior to that was President of Nordeman Grimm. Korn/Ferry has also named Cheryl Buxton President of the Global Healthcare Products practice. Ms Buxton is based in the Princeton office and has led the North American Healthcare Products Practice since 1997. Prior to joining Korn/Ferry International, Ms Buxton was Human Resources Director for Johnson & Johnson Pharmaceuticals in the UK. The practice group boasts 40 consultants Worldwide.

International in Chicago. He joins from American Express. Matthew Dowling has joined Aquila Consulting Group as a Senior Consultant. Previously, Mr Dowling has worked with Hewlett Packard, Motorola and 3Com. Christian and Timbers has announced the recruitment of Robert McGill to the Toronto office. Mr McGill joins the firm as a Managing Director in the Technology, Venture Capital and Financial Services practices. Christian and Timbers has also named Peter Santora as a consultant in the Irvine, California office. Richard Savior has joined the firm in New York from Directorship Search. CAROL A. MCCULLOUGH has joined Hunt & Howe in New York. Ms McCullough has more than 14 years of experience in executive recruitment during which time she has conducted searches in a wide variety of industries and functional areas. Prior to joining Hunt Howe Partners, she established her own recruiting firm where she specialised in senior level assignments in the Information, Health Care and Consumer Industries. The Whitney Group, the global financial services boutique, has hired Michio Kono from Robert Walters in Hong Kong. Korn/Ferry International has named Spencer Davis as Vice President of Investor Relations. Mr Davis was previously a VP at Litton Industries. W. Randall Lowry has rejoined Ray & Berndtson as a partner in the Houston office. Mr Lowry has worked with Korn/Ferry and, most recently, Russell Reynolds. Judi Webster joins TMP Worldwide Executive Search as a partner. Ms Webster joins from Dell Computer.

Susan Chadick has been appointed CEO of Gould, McCoy and Chadick. The firm has also announced the recruitment of Janice Reals Ellig as a Managing Director / Partner. Ms Ellig was previously a principal at Heidrick & Struggles. Peter Sweeney has joined Ray & Berndtson as a Partner in the Chicago office. Mr Sweeney joins from DHR International. Henriet & Associates, the Belgian member of the INESA network, has named two new partners. Arlette Vanlishout joins from Boyden International. Bruno D’Andrea will run the SUCCES selection division. The firm now has six consultants. D. Brian Harrison has stepped down as President of A.T. Kearney Executive Search. He will be replaced on a temporary basis by Steve Fisher and Joe Raudabaugh. Joseph J. Carideo joins Battalia Winston International to head the Retail practice. Mr Carideo joins from the recently closed Thorndike Deland Associates. Brigadier Harry Langstaff has joined Odgers Ray & Berndtson. Mr Langstaff was previously head of training at McKinsey and Company. Cook Associates (part of the IMD network) has recruited Gary Klein as VP and Managing Director. Mr Klein was previously with A.T. Kearney. Also joining from A.T. Kearney is Wendy Doulton as VP of the Media, Entertainment and Communications practice. Jack Scott has joined Heidrick & Struggles in Emeryville. Mr Scott, who was previously with Korn/Ferry International, joins the technology practice.

Nick Van Hevelingen has joined Boyden

Keep us up to date with any corporate announcements! Email editorial@search-consult.com

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he transition in most organizations from frenzied recruiting to careful and crafted growth has put even more pressure on Executive Search Consultants to find and recruit top talent. Nowhere is this trend more prevalent than in Asia, specifically Japan. Since the first Executive Search firm opened its doors in Tokyo in the 1970s, finding top calibre Japanese executives has been a tremendous challenge. There are several reasons that contribute to making Japan a tough market for talent. Often, success hinges more on culture than capability. Not many consultants in the world have lost a candidate because his father-in-law told him that he would not approve if his daughter's husband went to work for an American firm. The actual process of approaching and interviewing a Japanese candidate is further complicated due to traditional beliefs about loyalty and discretion. Another factor unique to the Japanese market is lifetime employment, which has been the norm since World War II. With the fall of Yamaichi Securities in 1997 and unemployment at an all time high, this trend is finally starting to change. Japanese who were once cemented into their organizations are starting to take a look outside. This has been "music to the ears" of foreign capitalized firms who have had to rely on virtually immobile Japanese corporate staff for their recruiting. The "Holy Grail" of recruiting in Japan is still the "blond-haired, blue-eyed Japanese national", (i.e., a Western educated Japanese who thinks like a Westerner but can also network in Japanese circles.) While this community of internationally experienced Japanese is growing, demand is substantially greater than supply, which leads to the final problem we face in local Japanese markets. Japanese institutions have typically lagged behind their Western counterparts in introducing new management concepts and strategies. The recent emphasis on diversity in Western organizations is essentially irrelevant in Japan. Apart from some effort to improve opportunities for professional women, diversity does not

Search industry

Japan

By Kevin Kelly, Heidrick & Struggles

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search-consult June 2001

Kevin Kelly

Kevin Kelly is the Co-Managing Partner of Heidrick & Struggles International office in Tokyo, Japan. He is a member of the firm's Global Financial Services practice, the world's largest executive search practice focused exclusively on senior executives for the Financial Services industries. Kevin specializes in executive search in the Finance and Banking Sectors both locally and cross-border. Kevin was named "Headhunter of the Year" in 2000 by Finance Intelligence Asia magazine as well as "One of Asia's Top Recruiters" in AsiaMoney magazine in March of this year. Prior to joining Heidrick & Struggles International, Kevin was a Partner at another global search firm where he ran the Tokyo operation. During his nine years in search both in New York and Tokyo, Kevin has completed numerous senior-level assignments in the Financial Services area: specifically in Fixed Income, Equity, Investment Banking and Asset Management. Other career experiences include five years in Mortgage Banking. Kevin holds a B.S. degree from George Mason University in Fairfax, Virginia and an MBA from Duke University's Fuqua School of Business.

exist. Without fresh ideas and experiences, the talent pool can become stagnant. Until Japanese organizations include non-native Japanese in their senior management (or begin to recruit senior Japanese from outside their organizations - preferably from a western firm) the pattern of going to the same insular community will continue. That leaves many firms bidding aggressively for the select proven stars who have the ideal combination of capability and culture. If that is unsuccessful, many managers face a compromise choice - choosing a candidate who is less qualified but meets the immediate need for a Japanese national to work in the local market. Changes are already happening to reshape the staid and traditional aspects of Japanese culture. In the recent election, the Japanese people sent a decisive signal that the country is ready

for new ideas and to focus on innovation. Koizumi-san's election and appointment of a new leadership team in government is a very visible step away from the status quo. The selection of the best talent to run the country rather than a coalition of the same old names and faces is the model every Japanese company should follow. This commitment to the best and brightest, some of whom may not be Japanese, will hold the key to the economic recovery and foundation for future growth. It is early days for this movement, but a strong step forward that will have considerable impact in business as well as government.

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For more information on Heidrick & Struggles, visit: Web:

Profile

The

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Boyden International

Chris Clarke on organisational structure in the search industry By Barbara Kwateng, search-consult rganizational structure within the Executive Search industry is a topic regularly discussed. Big or small, independent or wholly owned, global or local. In deciding which course to take, a company defines itself. Some professionals would argue that there is one key to success and it is the path that they are following. But is this a fallacy? Chris Clarke, President of Boyden International, believes that "anyone who thinks that there is only one way to deliver client service is crazy. One size does not fit all. It's a jungle out there and in any ecological chain different animals can co-exist. Our growth rates are a perfect demonstration of this". Clarke defines Boyden as an integrated structure enabling it to serve clients all around the world. "However, bureaucracy is kept to a minimum". Each office is under local ownership and collectively they possess an equal slice of the central organisation. "Every member of the Boyden entity operates under the same brand name and subscribes to the same set of standards" he explains. "In this way, it is intended to combine the benefits of local management and the global outlook of a multi- national organisation" echoing the common belief in these times of "think global, act local!".

search-consult June 2001

"Through our structure, we achieve less bureaucracy, more decentralisation. We view the large integrated companies as our competitors…" rather than "…loosely affiliated companies who are somehow joined but do not have a global name". Those company relationships he would compare to "people living together without being married". This, says Clarke, confuses clients. The flurry of merger and acquisition activity has further complicated things to the point where the relationships between companies are barely comprehensible. One would think that because the top five firms dominate the preferred provider lists of the global clients, they would always get the top assignments. Clarke disputes this. "The HR departments of multinationals may have global agreements with Search firms in the interests of standards and lower costs. But the decision on how to hire people and which recruiter to use is often delegated to the profit centre heads" argues Clarke. They are based locally and choose a firm that has a very good understanding of the regional market, hence the value that Boyden put on local cultural sensitivity. The movement is not just to a recognised brand or even to a Search firm who plays the local field well

but also to working with different firms for different assignments. This is inevitably intensifying competition and a rush to sign preferred provider agreements. "It's one thing to sign a global agreement - which we do - but it's another thing to see it working effectively. At Boyden, we work with a lot of companies who theoretically have preferred provider arrangements with the other well-known names in the Search world". The competition for business is forcing the Search and Selection firms to find ways to remain attractive to the HR department. The bottom line is often price. "We see our competitors sign corporate agreements at levels which we would not accept. To remain a preferred supplier, they offer the multinationals fees of 20% - 22% of the candidate's salary, forgetting the realities of relationship building," he says. Increasingly, those large Search firms which have gone public and are listed on a stock exchange are finding themselves in this situation. To attract business and therefore keep stock price up, they are cutting down fees to a level which Boyden's President terms as "buying business". He believes that this is a "short- term policy and probably

destroys capability". Chris Clarke sees another problem intertwined with the large Executive Search corporations. Clarke has determined a correlation between search firms with revenues in excess of $250 million and conflicts of interest. "These companies run into problems in terms of off-limits. Working life becomes increasingly difficult for the Search professional; everything they try to touch is owned by somebody else". A heavy burden then weighs on a firm's ethics. In addition, conflicts can arise when people of the same company trample on the same turf as far as industry practice and geographical location is concerned. If you add to that "…an imposing bureaucratic structure, you end up with dissatisfied professional staff…" causing strains on retention. Once the situation becomes stifling, Search professionals are likely to leave and set up their own businesses taking intellectual capital and client lists with them. The industry is being dragged into its own "war for talent". If Clarke's theory holds true, then it is perhaps a blessing that Boyden International collected global revenues of $64 million last year. Yet it is growing. Figures for the North American offices in the first quarter in 2001 show a 13%

increase on last year's figures for the same period. Won't Boyden be subject to the same threats to ethics and dissatisfaction in the near future? "Our strategic intent is to build the firm up to an optimal size for the market. We intend to remain highly professional, maintaining trusted client relationships and delivering quality globally. We do not aim to get bigger than the natural size for a firm in the industry". So how does Boyden avoid these problems? "We take a long-term view that professional services is not at its best in public ownership". He feels that through Boyden's "…decentralisation and lack of bureaucracy…", it is able to create a more attractive atmosphere for the Search professional. New employees in Germany, Finland and in the USA have all come from the large public firms to Boyden whose structure, claims Clarke, "does not siphon off earnings of the professional staff to feed the bureaucracy at the top. Those who join us realise this". The firm also looks out for potential firms to integrate into its structure "…those in large firms with track records of making things happen, the rainmakers if you like. We can support mergers within the organisation at local level and still offer those entrepreneurs the level of

Profile

Chris Clarke

Chris Clarke took degrees in Economics and Management in Britain before becoming a Consultant at AT Kearney Management Consultants in 1978. Following a spell as Managing Director at an international boutique investment bank in the late '80s, he returned to the management consultants as Vice President of the UK strategy practice in 1991 and went on to become Managing Director in South East Asia. Since July 1999 he has been President of Boyden International based in New York. He is a visiting Professor at Henley Management College in the United Kingdom.

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ownership and independence which they are looking for". Chris Clarke continues by saying, "Executive Search and Selection is bulging with big egos. Those successful boutiques who join the normal model of a large firm will make money quickly in the short term. But they will be nothing more than a small fish in a very big pond working under the strain of a heavy bureaucracy and subject to difficult off- limits issues". The firm is looking to expand to South East Asia to consolidate its geographical coverage. Having opened 6 offices in the last 12 months, Boyden will open another 6 in the next 12 months. The ideal fit is a company with a group of decisionmakers forming a strong leadership base. Entrepreneurial skills go without saying, and strong client relationships as well as strong ethics would be exactly what Boyden is looking for. When asked how the industry's landscape may change over the next few years, Chris Clarke claims the idea that 4 or 5 firms will reign with no-one else left standing, as "ridiculous". He explains that this theory comes from "a false analogy with the accounting industry and its mergers". Instead, Clarke likens the Search industry's structure to the legal industry where there are "some big international firms and some very rich and well respected people who run small outfits". As for e-recruiting, Clarke believes the Search firms who have entered this arena "…will be winding up their operations. Some of the large companies who subscribe to a normal model, will be split up and the Search elements will go private. If 98% of dotcoms fail, why should those in the Search industry be any different?". One prediction that he does make is that "…the world won't be turned upside down in 5 years", at least as far as Search is concerned.

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For further information on Boyden International, please visit: Web:

www.boyden.com

June 2001 search-consult

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Futurestep - Middle management recruitment ● Jobdirect.com - College recruitment ● Two management assessment businesses. However, Mr. Priem believes that the Internet will provide still further opportunities for his business. "There are four legs to the stool today, but in the next two to three years we need to double that. We will be moving into new areas that will be closely aligned to recruitment. There may be further acquisitions, but a couple of the businesses will be started from the ground up by building on Korn/Ferry's unique expertise and competencies - as we did with our assessment businesses and Futurestep." "In the long term, these separate brands may be integrated, as will the databases. Korn/Ferry could be a business that manages careers. We will begin working with you in your university and continue throughout your career". A key challenge for the business, therefore, is to ensure that all these services are delivered to clients on a global basis. Mr. Priem believes that this has been achieved with 'several' of Korn/Ferry's largest clients to date, but acknowledges that more work needs to be done here. The traditional thinking is that seniorlevel search services are sold to the Chair or CEO of the business, whereas other levels of recruitment services tend to be sold lower down the HR chain; and so this type of leverage is difficult to achieve. Mr. Priem believes this is overly simplistic. "If you look at the purchase of seniorlevel search, it really falls into two distinct categories. There is relationship driven search and commodity-driven search. The commodity-driven search or supply/demand model runs all the way up to $500,000 positions in the US - positions such as Foreign Exchange Managers, Marketing Managers and so on. These are strictly driven by market forces, not necessarily relationships. You don't need to know the CEO or even the head of human resources - you just need to offer the best solution. This is the side of the

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●

Korn/Ferry International

A Vision of

Tomorrow

Win Priem, CEO of Korn/Ferry International talks exclusively with Jason Starr of search-consult When Korn/Ferry went public in February 1999 it was with the goal of growing the business to $1 billion in revenues within 5 years. In an exclusive interview with search-consult, Win Priem - President and CEO of the world's largest search firm explains how he plans to achieve this, his vision for the industry, and plans for his succession. in Priem became CEO of Korn/Ferry two and a half years ago, following a 22 year career with the firm (see profile). His period of governorship has been amongst the most notable in the firm's history - the IPO, numerous acquisitions of both retained search firms and of recruitment related internet businesses and, most recently, the retaking of the number one spot from Heidrick & Struggles. Mr. Priem calls the period 'a great ride' but believes that the business and, indeed, the industry as a whole has much more change ahead of it. "The ability to control the flow of human capital is now critical. In this new century, human capital is going to be even more important than financial capital. The stakes are so great - I maintain that the real competitor isn't even on the playing field yet. You are going to see some big players entering the human capital business. They will bring strong balance

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sheets and they are going to take major stakes." Mr. Priem talks of the emergence of 'human capital portals' that will provide a range of employment related services to candidates from the time they join a university through to the time they retire. He sees a convergence between media firms, technology businesses and the human capital sector and believes that the 1999 IPO was vital to provide his firm with the ability to compete in this future. "We would never have taken Korn/Ferry public if all we were going to be was a pure high end search business. I was a great believer from day one that the 'plain vanilla' search firms do not have to be public. The reason we took the company public was that our clients were asking for additional, value-added services. In response, we developed a strategy that was different from our competition. We knew that the Internet was going to have an influence over global recruitment and that is what led us to develop Futurestep, which gave us first-mover advantage in the technology marketplace. Based on client receptivity, our strategy then evolved to generate multiple revenue streams from the graduate level right up to CEO. That's the reason we raised capital and took the firm public - to build a business that reflects this future."

Win Priem "Clearly the growth rates in our other businesses will exceed that of our core search business. Just look at the growth rate of Futurestep - we will have revenues in excess of $80,000,000 this year from a business that was non-existent three years ago. High-level search is a more mature business. It is a nice business and, run properly, it can grow 15% per year. However, it can't grow 30% per year on a sustained basis. These new services offer us greater growth potential." Currently the Korn/Ferry business covers 4 areas: ● Korn/Ferry Senior-level Search

The Korn/Ferry website shows the number of businesses which the firm is now involved in business that is under attack from electronic recruiting; Clients are demanding more service, faster with technology driven solutions in a cost effective way. That is half of what any search firm does today. We are looking to leverage that area through technology. The relationship side - knowing the CEO - is going to continue for now to be high maintenance, requiring a lot of human input." While much of the excitement at Korn/Ferry may relate to the potential of the Internet, the business is still very much funded by the senior level search business; even Futurestep, which has seen spectacular revenue growth, is not expected to achieve operating break-even until Q4 of fiscal year 2002. One of the major objectives for the executive search division of Korn/Ferry is to be number one in the twelve key geographic markets (New York, Chicago, Los Angeles, Mexico, Brazil, Tokyo, Hong Kong, Australia, Canada, Germany, France and the United Kingdom) and in key practice areas. Currently, internal

estimates place the firm at number one in eight of the markets, and number two in two more. All search firm acquisitions must support this objective. The task of achieving these long term objectives will fall on Mr. Priem's successor. Korn/Ferry announced in January that, while Mr. Priem would continue as Chairman for at least another year, the search for a successor to the position of CEO was underway. "When I agreed to become CEO in November 1998, it was for a three year period. We are 2.5 years into that and so, in January, I went to the board and told them that, because our business has changed quite dramatically over the last couple of years, we should look both inside and outside the company for my successor. This is what we advise our

“We would never have taken Korn/Ferry public

if all we were going to be was a pure high end search business” June 2001 search-consult

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clients and that is exactly what we are doing." The search team is being lead by Richard Ferry, Chairman, and all six of Korn/Ferry's outside directors are also involved. Mr. Priem refuses to be drawn into the identity of the candidates but, when it is suggested that the changing structure of the business means that an external candidate may be preferred, he comments "I learned on the job, didn't I! Anyway, we already have people who are able to think in this way." Mr. Priem has a vision for the future of Korn/Ferry and, indeed, executive search that is drastically different from the status quo. His successor as CEO will have quite a task ahead of him.

www.search-consult.com

Further information is available at: Web:

www.kornferry.com

search-consult June 2001

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Windle Priem founded the financial services division of Korn/Ferry International in 1976 and has placed more than 100 executives in banks and finance houses. He is particularly known for placing new CEO's in failing banks and has been called "the bank doctor" because of this. Mr. Priem spent some time in the Navy in the early 1960s before joining the Marine Midland Bank in New York. He left as a VP in 1972 to run the New York division of the Small Business Administration, a government funded organization that helps small businesses. Mr. Priem became CEO of Korn/Ferry International in 1999 having previously held the role of Chief Operating Officer. Korn/Ferry International is the World's largest search firm, retaking the title from Heidrick & Struggles. The firms boasts over 100 offices in 41 countries, and recently announced revenues of US$661,980,000

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A Year in the Life of Headlight International

Profile

Windle Priem

Diary of a start-up

part two

By Peter Gullstrรถm, Founder, Headlight International In the first issue of search-consult, readers were given the background story of the launch of Headlight International, headquartered in Stockholm. In this issue, founder Peter Gullstrรถm, gives us a brief report on his experience from the first 6 months on the market.

"Rome was not built in a day" Over the last six months, I have learned many things. Perhaps the most significance was the importance of a recognised brand. Although both clients and candidates knew who you were and what you did, they were not really sure about what kind of projects you really were going to work with. More than one Director pointed out that it was easier to tell the board that they hired the large International search firm, rather than an unknown, one-man consultancy with no formal track record. Although our concept - to focus on very few parallel searches - sounded very attractive, they preferred to let others try us out first. Nevertheless, all the positive feedback and interesting discussions I had during the first couple of months convinced me that that door would open sooner rather than later. The advantage of being small, with limited overhead costs, is that you can afford to wait. Whilst it was tempting to drop our standards and undertake lower level searches - just to get some money in - we preferred to stay cool and make sure that we kept to our positioning strategy - to do search at a senior level only. Sticking to the original plan is probably the best advice I could pass on to other entrepreneurs in this business. As long as you have done your homework and know your USP, then you should not change strategy purely to achieve short term goals.

The lack of projects at the initial stages also gave us the ability to market our company and our services in a more structured way than if we had been flooded with work. However, after a few months of slow activities, business really started to pick up. The immediate effect was that we suddenly faced the opposite problem - lack of resources! With a limited number of employees, it would be suicidal to accept all new projects once they start coming in. The effect would be an exhausted team and decreased quality. The strategy of Headlight International is to be exclusive in the way we work, each consultant is only allowed to handle two parallel active projects. I can assure you that it has been very hard to decline new business, having struggled so hard for the first months to get any business. However, once again, it is very important to stick to the original strategy, and not become as "volume-driven" as the large firms that we want to be different from. The only way to increase volume is, therefore, to recruit more consultants, which has also proved to be difficult. It is clear that the large consultancies provide not only a good brand name, but also a more secure employment than an uncertain start-up in the executive search sector could hope to provide. In retrospect, I realise that next time I launch a search firm (!) I will make sure that I have at least one partner on board from day 1. The first question that potential clients ask you is the size of your team. The flexibility and freedom of running a one-man consultancy certainly has its advantages, but if you have higher ambitions than that, it will also be easier to grow from a platform of two than of one.

An international trend? When launching Headlight International, I said that we would go against the grain by staying small and not prioritise growth and size. During these first months, we have realised that there are an increasing number of similar startups - either boutiques, or generalists like ourselves - all over Europe. Being local so far, without any representation outside of Sweden, we have had the pleasure of referring our clients to other search colleagues around Europe on a number of occasions. We do not have a formal network, we simply recommend consultants that we have heard about as serious professionals in the specific field where the client needs help. Although I am convinced that the larger and more established firms, will continue to have a dominating role in the European market, it seems that they have lost a lot of people who prefer to create a smaller and more dynamic structure "outside of the box". These firms may or may not end up merging into new, large formal entities in the future - perhaps they will remain independent members of an informal network, or maybe they will work cross-border in their own name. Considering the uncertainty regarding the economic downturn, there might be advantages in being small and flexible, without the larger overheads of the bigger players. On the other hand, perhaps clients will prefer to use the "big names" and the small players will be forced out of the market. No matter what, it seems as if our industry is moving into an interesting future. Moving into the second half of our first year, I can say that the advantages of bringing a new search firm to the market widely exceeds the disadvantages. The "blood, sweat and tears" of the solitary, unpaid, entrepreneurial work are slowly being traded into "fun, wage and peers".

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TheAESC meets in

Florida

eeting at the Turnberry Isle resort in Southern Florida the Association of Executive Search Consultants conducted their Annual General Meeting and Conference against the backcloth of an uncertain US economy and indications of tightening within the retained executive search industry. AESC President, Peter Felix, said: "Inevitably the slowing down of the economy in the US is having its impact on the retained search business because assignments tend to be placed on hold or even cancelled if client management has an unclear picture of the future. It is the uncertainty rather than recession that hurts our business. However, during recession corporations will often take the time and effort to upgrade their senior executive team. That is good for executive search. Elsewhere around the world, particularly in Europe, the threat of recession is less marked and we continue to see the executive search industry grow - in 2000 reaching a global total of almost $10 billion." Reporting on the health of the AESC in his report to the Annual General Meeting Felix noted how the AESC was

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“Rick Goings, CEO of Tupperware.... gave

insights into who will run today's global businesses and the skills and experience that will be required” successfully turning itself into a global organization and rapidly developing a

Peter Felix

range of services of value to its member firms. Overall results were very encouraging with membership growth being particularly strong in Europe. Having recently completed member office tours in the Asia/Pacific region and Latin America, the AESC President indicated that regional initiatives were under way to provide the AESC with a representative presence in these emerging markets. He reported that the AESC is now acting as the primary voice for retained executive search worldwide. As the industry grows so does the need for executive search to be recognized as a profession with a code of ethics and professional practice guidelines that can be applied around the world. The AESC has developed a highly effective web-site www.aesc.org which acts as a source of professional practice guidance and offers advice to clients and candidates on how to work successfully with retained executive search firms. Felix reported that BlueSteps, the AESC's new on-line service for senior executives and clients to make contact with its member search firms around the globe, is proving a great success. BlueSteps.com has already attracted almost one

thousand senior executive resumes and is expected to grow rapidly in the coming months. A major member firm had already received a new search assignment via the interactive member directory offered by BlueSteps and another firm had successfully placed a senior candidate found through the BlueSteps global executive database. Other initiatives by the AESC during the past twelve months have included enhanced professional development courses in both the United States and Europe, the launch and development of Executive Talent Journal and the introduction of strategic partnerships with key organizations which service the

executive search profession and the senior executive population. AESC Chair Eric Vautour of Russell Reynolds Associates presided over the Annual General Meeting and highlighted service to the AESC Board by retiring Director, Dale Winston, CEO of Battalia Winston. New Directors elected to the Board were Jenny Crow-Innes of CroweInnes Associates, Terrence Gallagher of Battalia Winston International, Ted Martin of Martin Partners and William Schmidt of Christian & Timbers. The AESC Conference was attended by around 150 people, including member firms and consultants from around the world. It is the key forum for retained

AESC award recipients Two major search industry awards were presented at the Conference.

Abram Claude

The 2001 Eleanor H. Raynolds Award, which recognizes the individual who best combines excellence in executive search with a strong commitment to volunteerism, was presented to Abram Claude Jr. of Ray & Berndtson.

The Gardner W. Heidrick Award for outstanding contribution to the profession of executive search went to Roger Kenny of Boardroom Consultants.

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“As the industry grows so does the need for executive search to be recognized as a

profession with a code of ethics and professional practice guidelines that can be applied around the World” search firms to meet and review their industry, and to meet suppliers of software and other products suited to their business. Key speakers included Rick Goings, CEO of Tupperware, who spoke on accelerated globalization and the strategic response to the major forces changing the global corporate architecture and operations. He gave insights into who will run today's global businesses and the skills and experience that will be required. Leonard Pitts, Syndicated Columnist of the Miami Herald, spoke movingly about diversity issues. Dr. Robert Carr and Sharon Wilkie of GlaxoSmithKline discussed leadership "resilience". They demonstrated that resilient leaders have the ability to adapt to change; meet difficult challenges and resolve stress and in turn achieve greater efficiency, productivity and enjoyment in all areas of their lives. The Conference included panel/discussion sessions on alternative business models, E-Recruiting, and venture capital. Discussions were very interactive with a professional facilitator, Ginny Corsi leading the discussions. Attendees enjoyed the lighter aspects to the conference such as golf, tennis and a catamaran tour.

www.search-consult.com

Roger Kenny

Next year's conference will be held at the Boca Raton Resort and Club in Boca Raton, Florida. For details go to: Web:

www.aesc.org

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The impact of the economy on the

search industry By the search-consult editorial team t seems that one cannot pick up a newspaper without reading a story of major layoffs. Nortel Networks, 3Com and Ericsson are just three of a myriad of firms who have announced large-scale redundancies all over the World. In our own industry, both Korn/Ferry International and TMP Worldwide have made painful cutbacks. And yet; every day, the search-consult fax machine receives press releases from search firms with good news - be it a new office, a new recruit, a new infrastructure investment or a successful placement As we will see, whilst the worst of any slow down appears to be over, the impact on the structure of the search industry may linger somewhat longer. The first point that should be emphasised is that the impact on certain markets has been much more severe than the impact on others. This is true when the market is considered on industry, functional or geographic lines. Susan Chadick of Gould, McCoy & Chadick explains "In my 15 years in the business, I've been through many market cycles, but this is the most paradoxical one I've ever seen -- on one hand, there are layoffs, with entire sectors disappearing before our eyes, yet, in other areas, the

search-consult June 2001

Susan Chadick market is as competitive as I have ever seen it." For evidence, compare executive demand in the media sector with that in the healthcare business. According to data produced by Execunet - demand for executive talent in the US media, creative and publishing businesses is down by 27% from the same period last year. On the other hand, demand in the Pharmaceutical and Healthcare sector is up by 17% (see table 1). Looking at geographical differences, it

is widely acknowledged that the US and Asian markets have had the worst of the slow down. Paul Ray Jr, CEO of Ray & Berndtson explains, "We are experiencing the slow down in the US more than in Europe. At this point, they are fine. Asia has been sick for a long time, although our office in Tokyo is doing very well but I don't think that that is characteristic of the market." Arlette Vanlishout, a Partner with INESA in Brussels, reiterates the healthy outlook for Europe, "We do not experience outspoken signs of a general economic slowdown in Belgium yetâ&#x20AC;Ś. At present, there are still numerous openings and a scarcity of candidates" Cecile Unholz of Swiss Pro International points out that in Switzerland demand for search services is still high due to a shortage of candidates. "In today's tougher competitive environment where continuous downsizing, regrouping and reengineering are constant needs, highly qualified, adaptable Managers will always be needed. In Switzerland we are experiencing a substantial loss of "the best brains" to foreign countries such as the US, which subsequently presents a big challenge for the domestic executive search industry to meet local demands. " So, if the US is the poorly child of global

Cecile Unholz executive search, exactly how sick is it? Surprisingly, despite the morbid tales, the statistics actually suggest the market is improving. Execunet data shows that demand for executive talent in the first quarter is actually 1% up on the same quarter in 2000. Further evidence that demand for search firm services is picking up is provided by statistics from the Association of Executive Search Consultants. According to these figures, demand is significantly down from 12 months ago - but a turnaround has occurred in the last quarter, with the Association's members reporting a 6% increase in searches. Peter Felix, President of the AESC comments "The statistics for the first quarter of 2001in the

US suggest that the slowdown in search in the USA may have already come to an end. Obviously figures are well down against a year ago but against the 4th quarter of 2000 there is a slight increase" Ask any economist about the importance of expectations and he or she will tell you that they are key. Eighteen months ago the search industry was booming. Many search firms resourced to reflect this ongoing growth. Whilst the slowdown may be over, the industry is a long way away from seeing such growth again. Susan Chadick argues "I think there was a huge ramp-up in hiring that occurred in the past couple of years, and I'm not sure that we're going to see a ramp-up like that for a long time. In

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terms of a return to a normal level, I'm hopeful we're on our way." For those firms who expected a slow down, the apparent turn around means that they are returning better than expected figures. Brian Clarke, of Chicago based firm Kensington International reveals "We planned for being flat this year so we are fine. In fact, we are 17% ahead of plan as of April 30." If this argument is accepted, then the layoffs are merely a one off adjustment to a new search reality. Peter Felix concurs "most of the slowdown was in the fourth quarter of last year and the reaction that you have seen from some firms in cutting back is the reaction to that overall reduction in volume versus the increase in overheads that they had incurred in response to the boom." Whilst demands for search may be on the up, there is little doubt that the events of late last year will have an impact on the ways in which executives are recruited. Not least of these will be client expectations. The slow down caused many firms to reassess the huge amounts spent on executive recruiting. Take Hewlett Packard, for example. Last year the IT giant set up what they called the "Americas Talent Acquisition Program". Program manager Michael Matteucci, talking to Business Week, revealed that search firms are now used on a reduced number of positions (10%, down from 30% before the launch of the program) and, by implementing pan US preferred provider lists, they have been able to reduce search commissions down to 20% even on retained business. "We expect (search firms) to offer discounts on commissions because we are a national company, (and) if they do business with us they can do 20 searches as opposed to just one." Clearly, any move to preferred provider lists is going to tend to benefit the larger, generalist firms. Korn/Ferry are the largest search firm in the US and CEO Win Priem believes that this has helped his firm avoid the worst of the slow down.

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"Korn/Ferry have not experienced that (the worst of the slow down) because we are a market leader. We have picked up market share; we are seeing large companies narrowing down the number of firms they are using and we tend to get on the preferred provider lists." Candidate availability can also be affected by a slow down. Susannah Chapple of London Search firm Chapple Executive points out that the last recession still has an impact on the executive market today. "Highly talented people are in short supply generally and certainly in our practice areas - corporate communications, human resources, investment banking and law. The redundancies of the last recession are partly to blame for the current dearth of senior people." Susan Chadick believes that the recent slow down is making candidates think more seriously about the risk associated

Operations Management Sales & Markting BIG DECLINE IN DEMAND FOR SALES & MARKETING, MIS/IT TALENT

Human Resources MIS / I.T. Consulting

Subscribe !

Other -20

-10

% Growth by Industry - 1st Qtr 2001 vs. 1st Qtr 2000

“Our readers include Credit: Execunet Natural Res Mat'l

executive search professionals from firms

Manufacturing High Technology

in 18 countries.”

Pharm/Healthcare Financial Services DEMAND FOR HIGH TECH EXECS PLUMMETS

Retail/Distrib

Other Business -30 -25 -20 -15 -10 -5

10 15 20 25

% Growth by Industry - 1st Qtr 2001 vs. 1st Qtr 2000

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Finance General Management

Business Services

Credit: Execunet

Media/Creative/Pub

Paul Ray Jr

with opportunities. "I am working on a number of searches for what we might term 'traditional companies. One is Philip Morris, and one is McGraw Hill. And it is not difficult to persuade candidates to consider those opportunities. In this economy, such opportunities seem to present less risk than others in the technology, Internet, or new media sector. Candidates are thoughtful; they are listening very carefully to what the proposition is - would it provide career growth? Is the company stable? Are its finances strong? But other than that, they're looking at the whole picture a particular opportunity presents. If what they find matches their career goals, is attractive financially and is a good cultural fit, then they will pursue the opportunity. " The 'glory years' of the dot.com boom are clearly behind us. The market may

never be quite the same again; however, whilst no one can predict the economic future the consensus does seem to be that retained search has missed the type of pain seen by lower level recruiters and that the future - even in the short term is bright. Eric Vautour is a Partner with Russell Reynolds and is also the current chairman of the AESC. He concludes that, whilst the market may have been rocky over the last few months, the longterm demand for search services will always be there. "With any business cycle you will have small ups and downs, but the fundamentals for search are absolutely superb."

£100 / $160 / €160 is the cost for 10 copies per annum, delivered anywhere in the World. Subscribe online at: www.search-consult.com or contact: Carol Crawford (carol@search-consult.com) to discuss discounts for multiple copies.

Enjoying this issue? Want to make sure you receive the next one? The ONLY way to receive the next copy is to subscribe! Recent and upcoming interviews include: • Win Priem CEO Korn/Ferry International • Dr Jürgen Mülder Chairman - Heidrick & Struggles Executive Search • Paul Ray Jr CEO - Ray & Berndtson USA • Werner Schwab & Dr Gernot Müller Managing Partners, Ray & Berndtson Germany • Jeff Christian CEO - Christian and Timbers • Jean-Michel Beigbeder Whitehead Mann France • Gerard Clery-Melin Whitehead Mann • Anthony Saxton Co-Chairman - Amrop / Hever Group • Steve Potter CEO - TMP Worldwide Executive Search • Daniel Grennon President - H. Neumann International

Firms currently subscribing include: • A.T. Kearney • Heidrick & Struggles • Accord Group • Korn/Ferry International • Alexander Hughes • KPMG • Amrop / Hever Group • Ray & Berndtson • Boyden International • Spencer Stuart • Eric Salmon & Partners • TRANSEARCH International • Futurestep • Whitehead Mann Group

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For further information on search consult, please visit: Web:

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June 2001 search-consult

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The Executive Search Debates:

Frankfurt By Barbara Kwateng, search-consult rankfurt am Main was the setting for the 3rd in a line of Executive Search Debates. Following the success of similar events in New York and London, Germany's "Who's who?" of Executive Search converged at the Städel Art Gallery on the 5th April. The speakers represented global firms. Heinz Bischof, Partner, TRANSEARCH Cetra; Peter Nowack, Managing Partner, Boyden International; Dr. Dagmar KaiserHess, Vice President, Futurestep Germany and Dr. Christoph Rummel, Managing Director, TMP Baumgartner presented topics which they believed to be of particular interest. Julia Harms, Dillistone Systems' Regional Operations Manager in Germany, opened the event by introducing Dillistone Systems and search-consult.com. She then introduced the speakers and the agenda. TRANSEARCH Cetra's Partner, Heinz Bischof, started the debate with a discussion about the development of Executive Search. Highlighting this through generations he discussed how Search has changed into the more sophisticated industry it is today. "It all

search-consult June 2001

started off with the Old Boys Network. The typical Search Consultant could be compared to a lonely wolf hunting for its prey, operating in an industry with little transparency". This of course had its reasons "German Executive Search was quite hindered by the legal framework". Needless to say, this concerned the fact that the Arbeitsamt, Germany's employment bureau, was the only institution legally entitled to broker employment. "In the first generation, consultants could be successful by solely relying on their own knowledge". It was all about who you knew. Bischof continued by looking at the second generation in Executive Search. "This was the time when databases came into the equation. Information was collated via a research strategy. It was an era when a highly volume-based approach was taken towards finding candidates. A boutique character developed with some notable one-manshows and the market became somewhat localised". "Systematic research using a structured approach was typical of the third

generation. The image of the consultant improved somewhat and a more interactive client relationship evolved". "Technology symbolises the fourth generation in Executive Search" he went on to discuss. "The network economy is firing into place and is driving the way Executive search firms are run. The different strands of the network economy need to work together. For example the client's needs and the Executive Search firm culture or market conditions and the legal framework". Bischof mentioned the case that saw a court in Stuttgart ruling against a German Executive Search firm

Heinz Bischof

for trying to headhunt employees of the firm Bechtle. The court deemed the headhunters guilty of disrupting Bechtle's employees work through telephone conversations. "Headhunting has developed to cover the interests of all parties. For example greater transparency to attract investors because of a stock market listing and greater personalisation for the client and candidate. Information is becoming a commodity which means the headhunter needs to have even more productive communication with clients and candidates". Bischof then talked of solutions. "Recruitment habits can be changed and certainly eased with the use of technology. Systematic calling is no longer the only thing which is required". He questioned, however, whether technology could replace face-to-face communication. "Technology is nothing more than a tool which cannot replace personal contact but rather works together with it. Executive Search is still highly reliant on relationships and competition". The edge over the competitors may be found through technology. He concluded by saying, "Change is not an optional extra. There needs to be readiness to change too". The next panelist, Peter Nowack, Managing Partner at Boyden

Peter Nowack and Dr Christoph Rummel

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The Audience International talked of Executive Search in the future. "We all need to be careful about predictions for the future. Things are changing unpredictably at unprecedented speed". Nowack underlined Bischof's point about technology by stating "IT Systems may be wonderful but they need strategic direction and that is what makes them a success. An office without paper is just as realistic as a toilet without paper". Controversially, he said "Top level people aren't willing to prostitute themselves. The reason why Electronic Recruitment does not work for executives is that they do not want to apply for positions, they want to be approached about them. E-Recruitment does not rise to this challenge". An issue which he also raised is that "…those who are not seeking work are not prepared to input their CV's on the web". He continued by discussing a change in the employment market. "Younger people are no longer looking to find just a job. They are looking for professional positions which will provide a good base for a successful career". Nowack ended his presentation with the statement "…most companies hire on

skills and fire on human characteristics. Interviews concentrate too much on skills". Dr. Dagmar Kaiser-Hess, Vice President at Futurestep Germany was the next speaker at the podium. The topic of her presentation was product-orientated headhunting which is the way forward in "…providing better quality. The market is now candidate-controlled, they are the ones who can select where they want to go". Her advice would be to "…collect candidates for when an assignment comes along." Dr. Kaiser-Hess' observation of today's consultant is that "…their role is changing from the hunter to the farmer. The internet is a useful tool to achieve these ends, increasingly used in the employment market. The advantage is that it allows businesses to globalise. It allows us to reach candidates no matter where they might be." She distinguished between four different types of candidates. "…those who are actively seeking a new position, those who are semi-passively seeking new employment, the passive opportunists and those who are not looking at all". Although E- Recruitment can reach the first three groups "…those who are not seeking new employment at

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assignment process and also chiefmonster.com, a site developed especially for executive employees. "Online applications, hard copy CVs and faxed or emailed resumes all go towards strengthening a database. With integrated solutions the Executive Search firm can provide a solid and successful search process which complements the more traditional methods of Search". In response to arguments that Executives are not willing to use the Internet as a recruitment medium, he asserted, "In the US, positions offering a salary of 600,000 - 700,000 DM (US$320,000) have already been filled using monster.com. Those who doubt that it will happen in Germany are wrong. It may take time but it will happen".

The Panel listens to Heinz Bischof all are the ones who will still need to be headhunted." Dr. Kaiser-Hess continued by discussing how the service culture will look in the future. "Corporate clients need to be looked after all the more…" through schemes like Customer Relationship Management in order to keep them as long- term clients. "Candidates need to be selected with a much greater speed, technology needs to be utilised and it is the Recruiting Service Provider that needs to be able to hold everything together". She also outlined how headhunters assignments are changing. "Let's take Daimler Chrysler for example. Whereas previously they would have approached us to find them a CEO, today they are offering us projects to place whole teams at all levels, from analysts to CEO's. The Executive market needs to adapt to captalise on these opportunities". Another challenge facing the industry is the "…over-cited 'war for talent' that is truly a reality. For instance finding, attracting and retaining qualified candidates is a necessity for any company and therefore a vital part of our work. We need to reduce the complexity of the applicant tracking process, maximise our productivity and efficiency and position ourselves as a service

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provider. Most important is to portray ourselves as a contributor to a company's success." To conclude, Dr. Kaiser-Hess told of Futurestep's partnership with SAP to produce "…the Recruitment Factory, which is an e-business solution supporting the quick and efficient identification, placement and long-term care of qualified candidates". The final speaker on the stage was TMP Baumgartner's Managing Director, Dr. Christoph Rummel whose theme was the use of technology in Executive Search. In talking about the development of technology's application in the industry he said "Quantitive is what counts right now. That is to say, how many CV's are on the database, collected via the Internet. In the future, it will be the quality of the candidates which will measure the success of recruitment websites". "The Internet is developing from a mere advertisement medium to a method of transaction. An example would be the development of assessment centres on the Web." Dr. Rummel then showed the audience how monster.com works. Its facilities for ranking candidates, how clients can access reports on the Internet during the

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There then followed a question and answer session; highlights included: Q: Is headhunting dead? Nowack:- The trend over the years has been for the large Search firms to get larger; through mergers and acquisitions for example. The more success boutiques have, the bigger they will get. Kaiser-Hess:- This is not exactly news. We know headhunting needs to adapt its strategies to fit with the client. But we should remember that despite the flurry of merger and acquisition activity, company culture still provides a hurdle. If companies are going to consolidate, then they should bear in mind the problem of fitting cultures together. Q: How is E-Recruiting going to look in the future, after all it is an instrument of direct search and most of those candidates are actively seeking new employment?

Peter Nowack

Rummel:- E- Recruiting will become less generalized and much more specific with special websites for various industries (almost like boutiques).

Dr Dagmar Kaiser-Hess and Peter Nowack

Bischof:- Talent retention is the way of the future. We must advise on how to retain employees as well as how to find them.

a result of the case; they try to keep telephone conversations as short as possible and call prospective candidates at home.

Kaiser-Hess:- There is a group for whom the Internet is certainly made for. There are plenty of qualified people around, it's just a question of how you find them and certain methods shouldn't be ruled out. Q: What are the implications of the court ruling on Executive Search

Nowack:- We simply avoid calling people at the office now. But perhaps this ruling would be subject to European competition laws. Why should German headhunters abide by a ruling which benefits headhunters in other countries unfairly? We could see this go all the way to Brussels.

Rummel:- As a member of the Bundesverband Deutscher Unternehmensberater (Association of German Management Consultants), I don't believe that this ruling will hold up and the BDU are working to ensure this. How researchers behave has had to change as

Kaiser-Hess:- We at Futurestep are not as exposed to this ruling as other Executive Search and Selection firms may be. This is for the simple reason that the majority of candidates enter themselves into the database. However contacting these candidates has to be done in the evening,

where possible. This raises the number of working hours which is, unfortunately, unavoidable. Bischof:- The VDESB and AESC are also moving to overturn this ruling. I'm sure that Mario Monti will also be discussing this with his colleagues. For us, it's business as usual. The Executive Search consultant needs to be on the offensive otherwise his/her business will die. There are ways around this ruling in any case, for example, constructing an internal list of companies which should be avoided. The best way to do this is via a database. Further Information

Subsequent debates will be held in Paris and Brussels. Please visit our website for full details: Web: www.search-consult.com

June 2001 search-consult

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Letters I must first say how worthwhile I found your Executive Search Debate on 29 March. It certainly justified making the effort to attend, despite the tube strike on that day. Those who were unfortunate enough to miss the event were denied the chance to listen to some excellent speakers, with widely contrasting views of our profession, and also to talk with other delegates and so extend their network of contacts. I digress. One of the very interesting topics raised during the debate - and one which I and several delegates discussed at some length afterwards - was the continuing problem of managing "off-limits" companies and people. My particular dilemma - and it has arisen on more than one occasion - is when I have

approached a source who is working within an off-limits company and he/she identifies him/herself as a candidate for the position in question. The source is obviously less than happy in the present job (indeed, on one occasion, confided in me that they were actively seeking to move, had responded to advertisements in the Sunday broadsheets and was at first interview stage with 2 organisations) and will not be staying, come what may. On the one hand I have identified - albeit inadvertently - a highly suitable potential candidate for the current assignment and client: on the other, I have an off-limits agreement with another client which would(?)/might(?) be breached. The person in question is going to leave anyway, butâ&#x20AC;Ś? Perhaps my off-limits agreements need to be re-worded!

I would very much appreciate the views of other search professionals who have dealt with this problem - preferably to the complete satisfaction of all the parties involved. NAME AND ADDRESS PROVIDED.

Competition Many thanks for your excellent publication. I read with interest the article on search firms moving into the management consultancy business. I have always believed, as a consultant operating on a retainer only basis, that I already provide a management consultancy service to my clients. However, I do acknowledge that the service which I provide is a very specific one - I use my knowledge of my client to identify and recruit executive talent from other firms. However, are the firms

looking at expanding into areas such as staff retention and management appraisal not risking losing sight of their raison d'etre? And, perhaps more importantly, coming into competition with some very large management consultancy businesses? I for one will not be setting myself up in competition with McKinsey, Booz Allen et al! Eric Pulyan Pulyan Associates

Write to: Letters, search-consult.com Calvert House, 5 Calvert Avenue London, E2 7JP United Kingdom Fax: +44 (0) 20 7729 6108 E-mail: letters@search-consult.com

NEWS EXTRA Korn/Ferry launches Board Services Practice in China NEWS

Korn/Ferry has announced the extension of their Board Services Practice to Greater China. Under the leadership of Robin Sears, the practice group will focus on providing independent board of directors searchers to firms in the regions. Charles Tseng, President of Korn/Ferry International in Asia/Pacific believes that demand exists for the service

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QUESTIONNAIRE

Off-limits ?

www.search-consult.com

search-consult June 2001

on the basis of growing interest in corporate governance within the region. ""For 28 years, Korn/Ferry has been the leader in providing search and advisory services to the boards of global corporations in Europe and the Americas. With increasing attention devoted to corporate governance issues along with growing investor interest in Asia, we believe the time is right to develop our Asian services," he explained.

Commenting on the launch of the Board Services Practice, Mr. Sears said, "With China's imminent entry into the WTO (World Trade Organisation), and the increasing role of international institutional investors in Asian companies, requests for assistance with independent director searches and corporate governance counsel are increasing rapidly. We have a large global network of experienced director candidates and 28

years of corporate governance expertise that we would like to share with our Asian client base." Mr. Sears began his career with the firm in Tokyo in 1994 and has since worked at the CEO- and board-level for global clients in the telecommunications, private banking, insurance and professional services areas, and additionally led Korn/Ferry's Advanced Technology Practice in Asia.

We at search-consult are very keen to give the search industry a publication of real value. To help us do this, we would like to ask our readers to complete the survey on this page and return it to us by fax on +44 207 729 6108. Alternatively, the questionnaire may be completed online at www.search-consult.com. 1. YOUR COUNTRY: ...................................................................................................................................................................

2. JOB ROLE: DIRECTOR / PARTNER ..................... CONSULTANT ................................... RESEARCHER .................................. INFORMATION TECHNOLOGY ....... ADMINISTRATION ........................... OTHER ...............................................

3. FIRM TYPE: INTERNATIONAL, INTEGRATED BUSINESS......................................................................................... LOCALLY OWNED BUSINESS, PART OF AN INTERNATIONAL NETWORK OF AFFILIATES ........... LOCALLY OWNED BUSINESS, NO INTERNATIONAL AFFILIATIONS ................................................. 4. MAGAZINE CONTENT Please indicate how important each of the following areas of the magazine are to you. Indicate 1 to show very little interest, 5 to indicate that this is a key part of the magazine. LETTERS PAGE PEOPLE PAGE NEWS PAGE COMMENT PAGE FEATURE PAGE STRATEGY STARTUP DIARY IT USE IN SEARCH THE INTERNET REVIEW

1 1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5 5

(The comment page is the article from Kevin Kelly on Search in Japan) (In this issue, the feature is the article about the economy) (In this issue, the Strategy page is the Korn/Ferry article)

(Reviews of debates and conferences)

5. WHAT TYPES OF FEATURES WOULD YOU LIKE TO SEE IN THE MAGAZINE?

6. IN FUTURE ISSUES WE PLAN TO RUN A SERIES OF INDEPTH REVIEWS OF DIFFERENT SEARCH MARKETS. THESE WILL INCLUDE DATA ON THE TOP SEARCH FIRMS IN EACH MARKET. CRITERIA LISTED MAY INCLUDE REVENUES, STAFFING NUMBERS ETC; WHICH ADDITIONAL METRICS OR CRITERIA WOULD YOU LIKE TO SEE LISTED?

7. HOW MANY PEOPLE WILL SEE THIS COPY OF SEARCH-CONSULT?

June 2001 search-consult