search-consult Issue 5

July 2001 / ISSUE 5

The International Magazine for Search Professionals

A Phoenix from the Flames Exclusive interview with Paul R. Ray Jr, Ray & Berndtson

Eric Vautour - Russell Reynolds & The AESC Relocating Candidates Overseas Executive Search in Germany - Legal Update

www.search-consult.com

The executive-search

bookshop The Board Book : Making Your Corporate Board a Strategic Force in Your Company's Success

by Susan F. Shultz.

Susan Shultz is principal of SSA Executive Search and a recognized speaker on corporate governance.The Board Book is designed as a practical guide to recruiting and managing corporate boards. It certainly achieves its objective; packed with case studies Motorola, Pepsi Bottling, Pinnacle West, Compaq and many other major US businesses are quoted and the author also makes good use of wisdom imparted by other search firms - research from firms such as Korn/Ferry and Spencer Stuart are quoted at appropriate moments.

Secrets of the Executive Search Experts

by Christian Schoyen and Nils Rasmussen

Billing Power! The Recruiter's Guide to Peak Performance

by Bill Radin, Betsy Smith

Headhunters have a knack for making "miracles." Out of seemingly thin air they locate star job candidates, folks who rarely materialize using the usual recruitment sources. How do they do it? This compelling book reveals the strategies used by top-ranking executive search professionals. It focuses on the crucially important research process, explaining how to maximize the power of both traditional and online resources.

Plus, readers get tips on working with outside search firms, steps for locating candidates abroad, and explanations of industry terms: a full arsenal of valuable information.

The classic best-seller just got better! Newly revised and expanded, Billing Power is a comprehensive, easy-to-read guide packed with innovative, money-making techniques, timesaving tips and proven methods for increasing your billings.

The industry standard!

Softcover, 224 pages, illustrated.

Bill Radin is a top-producing recruiter, manager and trainer whose innovative techniques have helped thousands of recruiting professionals achieve peak performance and career satisfaction.

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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

Headhunters Revealed!

Career Secrets for Choosing and Using Professional Recruiters

by Darrell W. Gurney Friendly and concise...a welcome resource. Gurney explains in upbeat, chummy prose all there is to know about the recruitment process."

Publishers Weekly, May 29, 2000 "Gurney offers Web-savvy tips throughout."

American Library Association's Booklist,April 15, 2000

The Global 200 Executive Recruiters :An Essential Guide to the Best Recruiters in the United States, Europe,Asia, and Latin America (Jossey Bass)

by Nancy Garrison Jenn "The Global 200 Executive Recruiters is another proof of Nancy Garrison Jenn's in-depth knowledge of the world's executive recruitment market.

Though interesting for recruiting companies to learn about their sector and their competitive position, the book is particularly of help to their clients and potential clients in assessing executive search firms and the recruiters with those firms.

Recruit & Retain The Best

by Ray Schreyer, John Lewis, Jr. McCarter

Winning the Talent Wars

by Bruce Tulgan "Every page will grab you and change your thinking....great solutions to the greatest business challenge in the new economy."

Douglas McCracken, Chief Executive Officer, Deloitte Consulting

The signs on the road to the new economy point to an allout war for talent.

Organizations increasingly encounter difficulties in recruiting and retaining top talent because they have yet to deal with today's most critical human resource issues.To remain competitive, you must create a talent powered company consisting of highly motivated, skilled, and loyal employees.That's the central message in Recruit and Retain the Best.

Tulgan artfully blends timely insights with innovative solutions from the world's best companies... a whole new perspective.

Terrence R. Ozan, Group Managing Director, Cap Gemini Ernst & Young

Executive Recruiters :A 5 Step Power Strategy for Using America's Top Headhunters to Advance Your Career

by Scott W.Walmsley Executive recruiters can be the key to your career advancement. Professional recruiting firms are hired by many of the world's top, most desirable companies to find professionals for what are often the highest compensated and most prestigious positions in business.

The search-consult.com bookshop, in association with Amazon.com, brings you a range of books about executive recruitment most below list price.

In addition to the titles listed here, a number of additional publications are available from the site.

Point your browser at: www.search-consult.com and click on search-bookshop to browse!

or log on to www.search-consult.com

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

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 10 times a year by Dillistone Systems Ltd, Calvert House, 5 Calvert Avenue, London, E2 7JP, United Kingdom and printed by Printhouse Corporation, London NW10 6ST, www.printhouse.co.uk. 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.

Front Cover: Paul R. Ray Jr., Chairman and CEO of Ray & Berndtson

© Copyright 2001 Dillistone Systems Ltd

Purchase online at www.search-consult.com

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Heidrick & Struggles sheds 13% of workforce www.search-consult.com

NEWS

IN RESPONSE TO A slowing search market, global Search firm Heidrick & Struggles announced that it was cutting 300 jobs. The cuts will affect 13% of the workforce and will lead to a one-time charge of between US$9 and US$10million as a result of severance pay, for example.

This translates into a charge of US$0.25 to US$0.28 per diluted share. The aim of these redundancies is to make annual savings of US$30 to US$35 million.

The company attributed these cuts to the ‘cooling of demand for executive search and leadership consulting services […] in the United States and […] the rest of the world’. Heidrick & Struggles Chief Executive, Patrick Pittard, comments, “Unfortunately the US economy is not improving and […] we are now seeing some softening in Europe as well. While we had hoped to avoid making staff reductions, it is clear that we must now make some adjustments to our cost structure”.

Goldman Sachs downgraded its earnings per share estimates to $1.00

from $1.17 (for the fiscal year 2001) and to $1.50 from $1.70 (2002). A Goldman Sachs report stated, "While these workforce reductions are a bit late, it is probably deep enough to make a real impact."

Thatcher Thompson, analyst at Merrill Lynch said the share prices of Heidrick & Struggles as well as Korn/Ferry could drop another 30 percent before the end of the year. However he understood their predicament “You don't want to cut too much muscle because, ultimately, demand will return. But you don't want to let your earnings dwindle down to nothing. So it's tough."

The Merrill Lynch analyst cut both his forecasts and ratings on two of the largest executive recruitment firms, Heidrick & Struggles International and Korn/Ferry International. The effect was a heavy drop in share price for both firms. Heidrick & Struggles expects that revenue in the second quarter of 2001 will be in the lower bracket of the estimated US$125 million to US$135 million.

July 2001 search-consult

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Korn/Ferry data reveals mixed results

Korn/Ferry International Executive Demand Index First Quarter 2001 vs. 2000 Share of Total Hirings By Industry

www.search-consult.com Eu rope

La tin America

Asia

% 1st Q tr.

2000

% 1st Q tr.

2001

% 1st Q tr.

2000

% 1st Q tr.

2001

% 1st Q tr.

2000

% 1st Q tr.

2001

% 1st Q tr.

2000

% 1st Q tr.

2001

Agriculture/Mining/ Natural Res ources

2

1

5

2

2

3

1

1

Energy/ Utilities

3

3

1

5

3

5

4

3

Advanced Technology (E lectronics, Com puters, S oftware, Comm unications, Telecommunications)

17

18

27

15

24

20

30

22

Industrial (Manufacturing, Manufactured P roduc ts, Chemic als)

15

17

16

16

9

19

9

14

Cons umer P roduc ts

12

10

14

17

14

13

4

5

Aerospace/ Def ense

1

1

*

*

*

2

2

1

Fashion/Ret ail & Wholesale Dis tribution

4

4

4

5

7

3

7

6

F inancial Services (Bank ing, Brokerage, Insurance)

21

22

10

17

8

17

16

17

Real Es tate, Building, Cons truction

1

1

3

5

2

1

2

1

Healthcare and P harmaceuticals

7

8

4

7

12

4

12

16

Not -for-Profit, G overnment, Associations, Education

1

1

4

1

2

3

3

6

Entertainment/ Hospitality/Leis ure

5

3

5

6

7

4

4

3

P rofes sional Se rvices

11

11

7

4

10

6

6

5

Total

100

100

100

100

100

100

100

100

Industry

* Less than one percent Reproduction permitted with attribution to Korn/F erry International, the world’s leading executive search firm

Share of Total Hirings By F unction Eu rope

La tin America

% 1S T Qtr. 2000

% 1S T Qtr. 2001

Board Lev el

1

2

Chief E xecutive Officer

3

5

G eneral Management

25

26

F inance & C ontrol

18

24

Human Resources & Administration

11

Information Systems Manufacturing, Engineering, R&D, Technology

% 1S T Qtr. 2000

Asia

North America

% 1S T Qtr. 2001

% 1S T Qtr. 2000

*

*

2

5

2

5

4

3

8

10

13

13

21

32

26

21

25

25

18

15

14

12

16

17

10

10

10

12

8

6

7

8

4

12

4

11

13

9

6

8

8

8

9

6

7

6

7

Marketing & Sales/Advertising & P ublic R elations

26

21

27

27

21

24

23

20

Total

100

100

100

100

100

100

100

100

Fun ction

NEWS

North America

% 1S T Qtr. 2001

* Less than one percent Reproduction permitted with attribution to Korn/F erry International , the world’s leading executive se arch firm

% 1S T Qtr. 2000

% 1S T Qtr. 2001

THE LATEST DATA FROM KORN/FERRY, based on a quarterly survey of 4,900 client firms, suggests that growth in demand in Europe for executive talent has not been enough to cover the steep fall in demand in the US and in Latin America. Overall demand fell by 11% compared to the first quarter of 2000 - when the industry was booming.

In the North American region, "executive demand for CEOs, CFOs, board members and other top managers remains solid," says James Boone, President of the Americas for Korn/Ferry International.

"However, ebb of demand at the uppermiddle management levels has led to a decline in total number of searches. We expect this [...] to continue into the second quarter."

Demand for executives in the region fell significantly in the advanced technology sector and fell to a 22% share in the first quarter of 2001, compared to a 30% in the same period in 2000. The second strongest sector experienced a slight increase, the requirement for financial services executives rose from 16% to 17% in the first quarter of 2001. Part of the reason for this was that the weakness in mergers and acquisitions was offset by strengthing fixed income, asset management and private banking sectors.

The healthcare and pharmaceuticals industry has been exempt from a weakening economy, demand for executives in the sector jumped to 16% in quarter one of 2001 as opposed to 12% for the same three months last year.

"Healthcare [tends] to be less affected by economic slowdowns," says Mr. Boone. "In the last two years, the healthcare industry has been buoyed by $30 billion in new investment into the biotechnology sector.

We expect significant executive demand through the year." Likewise, the industrial

sector experienced a significant rise in demand, finishing with a 14% share Q1 2001, compared to 9% last year.

As far as functions were concerned, chief executive officers represented 13% demand in North America, equal to its share in the same quarter in 2000. This obviously being welcome as this is the function where some of the biggest fees are paid. " There are simply not enough talented chief executives who can steward companies through challenging economic times," says Mr. Boone. Further growth is predicated.

General managers commanded the largest share of functional demand (25%) in the first quarter of 2001. The number of searches at the board level rose notably to 5% from 2% in the first quarter of 2000.

The outlook seemed a little more forlorn south of the Equator. Mr. Boone, however, remains positive. "Demand for top executives in Latin America remains steady in such large markets as Mexico and Brazil. In tougher economic periods, companies are more likely to replace executives versus hiring for business development purposes. If the U.S. economy pulls out of its slowdown, we expect to see executive demand to grow in Latin America."

Unsurprisingly, the advanced technology sector was hit hardest in Latin America falling from 27% to 15% in Q1 of this year. On an optimistic note, demand for consumer industry executives improved by 3% in Q1 of 2001, compared to 14% in 2000. This, believes James Bonne, is " to try to recover some of its losses in executive talent after cutting costs in the previous quarters."

Latin American financial services search rose significantly, finishing with a 17% market share. General management

executives led all functional categories, increasing significantly to 32% in Q1 2001, compared to 21%, Q1 2000. "The increase in demand for talented general managers is directly related to the economic cooling in Latin America," explains Mr. Boone.

On the other hand, the European market saw a strong, growing demand for senior executives in the first three months of 2001, rising by just under nine percent compared with the first quarter 2000.

“Despite global economic uncertainty, Europe's companies began the year by focusing on consolidating their leadership teams" tells Dick Buschman, the firm’s President of Europe.

The financial services sector continued to be the strongest sector for executive demand in Europe with a 22% share, a marginal rise of just 1%. Investment banks were the companies who were particularly trying to attract new talent where needed.

“After this period of consolidation we may start to see the results of any slowdown at senior levels" believes Buschmann.

The second highest sector for executive demand in Europe was the advanced technology sector, where demand stood at 18% in the last quarter as opposed to 17% in the first quarter 2000. According to Mr. Buschman, "This may seem surprising following the slump in ...the Internet sector“. However now “companies are currently more concerned with managing cost rather than business development, acquisitions or extensive marketing activities."

The industrial sector experienced the third strongest sector for executive demand. This reached 17% (2001figures) rising from 15% in the first three months of 2000. Demand for senior executives in the healthcare sector rose from 7% to 8%.

By contrast, the functional area of senior

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marketing & sales/advertising & PR executives experienced something of a downturn. A drop from 26% in Q1 2000 to 2001 to 21% over the same period, the lowest level for almost six years representing “less [capital spent] on positioning and image." Demand for chief executives and board-level executives rose from 4% in the first 3 months of 2000 to 7% in Q1 2001 and demand for general managers also rose slightly from 25% to 26% over the same timeframe.

Overall demand for senior executives in the Asia/Pacific region was down 14% in Q1 2001 compared to the same period in 2000. This was up 8.6%, however in comparison to the fourth quarter of 2000.

"There is still healthy demand for "A" list executives however, [despite] a more cautious approach to hiring new leadership," says Charles Tseng, President of Korn/Ferry’s Asia/Pacific region.

Overall, the technology sector continues to drive demand with a 20% share in first quarter 2001, down from 24 percent a year ago. A possible new economy-to-old economy shift is being witnessed. A trend that Tseng believes “we may continue to see into the next three quarters." The growing search industries included the industrial sector at 19% percent (up 10%), the energy branch at 5% (up 2%), and financial services industry at 17% (up 9%).

Searches for board directors in Asia/Pacific rose 3% on last year’s figures from a year ago and CEOs are up two percent. Commenting on the entire firm’s progress, Windle B. Priem, President and Chief Executive Officer said "While capital spending by businesses continues to decline, there are signs that the business climate is improving in a number of industries."

TO RECEIVE SEARCH-CONSULT ON A REGULAR BASIS SUBSCRIBE AT www.search-consult.com

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July 2001 search-consult

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TRANSEARCH Whitehead Mann announce year end results International merge with www.search-consult.com

NEWS

WHITEHEAD MANN announced a 109% increase in Group turnover in the year to March 31, 2001. The Group’s acquisitions over the year contributed to 74% of this growth. In the last 12 months the company has added UK competitor, GKR, American Pendleton James and executive development specialists, The Change Partnership, to its operations.

Despite slowdowns in the very markets where Whitehead Mann has made acquisitions, the firm’s turnover has grown from £27.7 million (US$39.1milloin) to £58.1 million (US$ 82. million). The Whitehead Mann Group, founded in 1976, now employees 360 workers and has footholds in the US, Europe and Asia Pacific. It reported

that the average salary of their placed executives has risen from 125,000 in 2000 to 145,000 today.

Chief Executive, Gerard Clery-Melin, stated, "We have delivered on our intention to develop and expand our services globally.

The integration of GKR has established Whitehead Mann as the UK's leading executive search firm. In Europe, the US and Asia Pacific, we now have the people and structures in place to drive the growth of our international business.

Through the acquisition of The Change Partnership Limited and the development of new assessment services, we now provide clients with the wherewithal to compete effectively in the "War for talent".

Norwegian Search firm sells to TMP worldwide www.search-consult.com

NEWS

SOLER THE LEADING Norwegian Executive Search firm, has been bought by TMP Worldwide. The 8 partners of Oslo-based search firm voted to sell their share in the company in a deal which strengthens TMP Worldwide’s presence in Scandinavia. In October 2000, TMP acquired two Danish Search firms and in February 2001 expanded its

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search-consult June 2001

operations in Sweden.

Soler’s Managing Director, Olaf Bergesem states “we are delighted about this deal. We expect to continue our strong growth under the umbrella of TMP”.

In response to a question of name, he says “Soler is a very well known and respected name in Norway.” The firm plans to phase in the TMP name over the coming year.

London property boutique www.search-consult.com

NEWS

THE BRITISH ARM OF THE firm TRANSEARCH International UK is to merge with the London based property specialist-Thomas Cole Kinder. Alain Tanugi, Chairman of TRANSEARCH International said: ‘Thomas Cole Kinder is the leading property search firm in the UK with a well-established reputation.

This merger

provides us with an excellent platform from which to develop as a major player in the UK central to strengthening our global presence.’

The tie up with Thomas Cole Kinder is the latest in a series of additional offices for TRANSEARCH. Earlier this year the firm announced new offices in Poland and Switzerland.

BOYDEN expands www.search-consult.com

NEWS

AS REVEALED IN search-consult (issue 4) Boyden is widening its geographical coverage. The firm has added operations in Jakarta to its integrated structure. In the US, David J. Carney will run the firm’s Cleveland office, opened in June 2001. Managing Director of Boyden’s Pittsburgh office, Thomas Flannery, elaborates on the strategy of this move. “Boyden is consolidating its geographical scope globally. The opening of the Cleveland office is central to this aim and is also part of a planned expansion of Boyden’s US presence”.

With an M.B.A. from Harvard Business School, Carney’s background is search and management consultancy. His search experience includes consulting at Christian & Timbers and at A.T. Kearney Executive

Search. David J. Carney will also be part of Boyden’s professional services practice.

Likewise in Germany, the company is expanding. From the 1st July, Ulrich Schumann will lead a new Düsseldorf operation. Mr. Schumann was previously with the search firm H. Neumann International and was elected Partner at Boyden at the start of July.

Accompanying this expansion is the news that R. Michael Kerber and Thomas Breitzmann have also been made partners. Like Mr. Schumann, Thomas Breitzmann comes from H. Neumann International where he specialised in healthcare and biotechnology. From July, he will work out of Boyden’s Berlin office.

Mr. Kerber has been with Boyden since September 1999, conducting searches in Telecommunications and Change Management. This raises the number of partners in Germany from 8 to 11.

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Key moves in Executive Search this month Heidrick & Struggles International has a new managing partner of the San Francisco office. As an ex-Bank of America human resources executive, Laurence O’Neil led the global corporate and investment banking human resources team. In his capacity as partner, he will also function as Western Region coordinator for the search firm’s financial service practices and is a member of the global financial services, e-business and industry practices.

Martin Hewett has joined TMP Worldwide Executive Search as partner in the global technology sector. Concentrating on placements of board directors, presidents, CEOs, COOs, and CTOs, Mr. Hewett will be based in the Encino office. Hewett’s background is as a partner at McCray, Hewett & Associates. This followed his presidency of Panorama Software Corporation.

D.E. Foster Partners has hired Tim Brown as a director of their executive search outfit in Dallas, an alliance firm of KPMG. Mr. Brown was previously at TMP Worldwide.

Christian & Timbers have recruited Craig Smith and Steve Finder as VPs based in San Francisco. Mr Smith was previously at Heidrick & Struggles where he was a principal consultant with the firm’s software and IT services practice. Finder has also worked with Heidrick & Struggles, but joined Christian & Timbers from a technology boutique.

Meanwhile, in London the firm have recruited Robert Wilder from SHP Associates. Mr Wilder also worked with Norman Broadbent International earlier in his career.

Laurence O’Neil has been named Managing Partner of Heidrick & Struggles San Francisco office.

Bennett Associates Ltd, the Hong Kong based consultancy has announced the appointment of Frank Moy as Director – Financial Services and IT Practice.

Mr Moy has considerable experience in banking and financial services having been one of the first US bank representatives to relocate to Beijing (1983).

More recently he worked with Internet firm ecmarket.com.

Gerry O’Keefe, London director for Boyden’s Global Technology Practice and Nick Robeson, Managing Director of the London Interim practice have both joined the board of Boyden London. Mr O’Keefe joined Boyden three years ago from Logica whilst Mr Robeson joined last July from Harvey Nash.

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

Whitney Group And O'Neill Associates Combine Operations in Asia Pacific www.search-consult.com

NEWS

WHITNEY GROUP AND O’Neill Associates have joined their Asia/ Pacific operations.

O’Neill Associates was established in 1994 in Hong Kong under the leadership of Harry O’Neill, labelled in Headhunter's Poll February 2001 as the "most admired individual headhunter for debt and global markets searches, Asia-wide." It expanded its coverage to Sydney under the management of Catherine Andersen. The firms Managing Directors-Mr O’Neill, Mr

Andersen and Hong Kongbased Charles Peat, will now be working under the banner of Whitney O’Neill with extensive presence in Tokyo, Hong Kong, Singapore and Sydney. Stephen Clasper will be the CEO of the new entity.

The firms’ specialities in financial servcies search differ somewhat. Whitney Group concentrates on investment banking, private banking and corporate finance. On the other hand, O'Neill deals with the debt, derivatives and treasury markets.

Research specialists announce business expansion www.search-consult.com

NEWS

THE ADVENT OF THE research specialist is apparent in Manchester based, Armstrong Craven announced is plans to expand by 18% over the next six months.

Established in 1990, the executive research and business information, company

today announces that it is set to recruit nine new jobs as a result of growth in its specialities. Its services for venture capitalists, such as company research prior to deals, industry sector information, referencing on company directors and psychometric profiling, have also witnessed strong growth.

To receive search-consult on a regular basis subscribe at www.search-consult.com July 2001 search-consult

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Ray & Berndtson

Phoenix from the

Paul R. Ray Jr is one of the most highly regarded individuals in search. The first (and so far only) person to hold both the Gardner W. Heidrick and Eleanor Raynolds Awards, he was also the first person to spend three years as Chairman of the Association of Executive Search Consultants.

His day job, however, is Chairman and CEO in the U.S. and co-chair globally, of Ray & Berndtson - a top 10 search firm.

Five years ago his firm undertook a restructuring which, at one point, looked as though it might damage the business.

For a while it was losing partners at a time when other firms where growing and Ray admits that some commentators had written the firm off. Today, however, the business is reporting metrics which suggest the restructuring has begun to pay off. Jason Starr spoke exclusively to Paul R. Ray Jr, Chairman and CEO, Ray & Berndtson.

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search-consult July 2001

Flames

he story begins in 1996.

Outwardly, at least, Ray & Berndtson in the US was doing well. The firm was profitable and, with revenues growing at 18% + per annum, the firm was growing faster than the market average.

However, Ray and others were concerned that the growth was not sustainable. They saw a business spread widely across many clients, too highly leveraged, and with less than satisfactory completion data.

A survey of 300 clients and prospective clients seemed to confirm this; "The result was a fairly damning commentary about our industry and, in fact, we saw a real need: no firm was giving clients what they required."

The survey defined the 'perfect' search business as one that would: ● Complete searches quickly ● Be proactive and not merely accept client assumptions

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Put time and effort into understanding the culture of the client The firm set about restructuring the business to achieve these ends. The product remained the same - senior level executive search - but every element of the process behind the product was updated.

"We set ourselves a BHAG - a big, hairy, audacious goal. This was our "6070-80" target. We planned to get all of our searches to the offer stage in 60 days; we would focus on key accounts - we planned to generate 70% of our business from these firms; and we wanted to be awarded 80% of the search business that they offered. If successful, it would be a virtuous circle - we would be providing a better service to our clients and so they would give us more business. We would know them better and so we would provide a better service".

"At the time it was taking us 180 days to get searches to the offer stage. To

achieve 60 days, we had to restructure our business fully. We moved from linear processing to forming teams in parallel whilst working with the client to make things happen. We invested heavily in technology - from having very little technology to being a virtually paperless firm."

The restructuring saw the 'research' element of the business split into two sections, a centralised knowledge development department (primarily responsible for name generation) and a consultant team whose responsibilities primarily include sourcing and making first contact with candidates. Today, there are 18 people in knowledge development and 40 consultants. The business was also restructured on an industry basis, rather than a geographical basis.

"Today, we are the only full service firm that is genuinely organised around industry based P&Ls. We do not have regional Profit and Loss reporting.

Everyone in our firm is in a practice, not an office. I do not know the revenues in New York, but can tell you the revenues in Healthcare or Financial Services.

Compensation within the business was also restructured away from rewarding the biggest billers and towards rewarding teams who achieved high customer satisfaction. Of course, this did not go down well with all of the firm's billers.

"Our goal was to have deeper and more committed relationships with a smaller number of clients. That meant that any of our people who were 'solo cowboys' did not like the changes we were making.

From 1997 onwards we began to lose partners. The market was growing and we were contracting."

Over four years, the firm lost 39% of its partners. Even today, the firm has fewer partners than it had in 1996. Ray admits that the changes led to a degree of upheaval that he had not foreseen.

"I was talking to a partner at Accenture (formerly Andersen Consulting) about what we did and he said 'I've got some good news and some bad news for you;

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the good news is that your strategy is right on target, the bad news is you have underestimated how long it will take to make that shift.

It is a totally comprehensive shift in the organisation and so it will take longer than three years for the process to be completed.'"

The firm also undertook a rebranding exercise, changing the name of the business from Paul Ray & Company to Ray & Berndtson to reflect the US firms links with its international associates (see following page).

Ray believes that his business has risen like a "…phoenix from the flames".

"Several people wrote our obituaries, said we were dead. To paraphrase Mark Twain, however, 'reports of our demise are greatly exaggerated'".

"The fact is that we have come out of the other side as a far better business last year we grew by 20%; our average search size rose by 26% and our average billing per partner rose to over $1,000,000" Ray & Berndtson has released internal statistics to search-consult demonstrating the impact of the restructuring (see box). While a number of the metrics are certainly impressive, Ray acknowledges that there is more work to be done.

"We haven't hit 60 days yet and, to be frank, I think it will be difficult to ever achieve that goal. We are hitting 60 days with 20% of our searches - but it is

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only possible on some types of searches.

We are achieving 75% of business from targeted clients; and we are getting a meaningful amount of business from these firms. I doubt it reaches 80% as clients protect themselves by having more than one firm; however, when we achieve over 50% of a firm's business we feel great. We are one of the providers of choice for Fortune 500 clients, including IBM, Pepsico, Walmart, ConAgra, Textron and others."

Ray believes that the firm's business has come through the upheaval with a structure that leads the market.

"This evolution has strengthened us as a firm," said Paul. "We're just the right size, we've got a great environment for people who want to practice search, and we don't have the internal politics of larger companies. This allows us to focus on our clients - and provide high quality service that we believe is unmatched by our competitors."

"We weathered the storm and now every major competitor has come after people in our firm. We are leading edge - everyone is focusing on cycle times now - but we did it first."

www.search-consult.com

For further information on Ray & Berndtson, please visit: Web:

www.rayberndtson.com

Ray & Berndtson USA - key operating metrics 1997 2000 Revenues $36 million $40.3 million Average Search Size 216,318 275,000 Average Billings per Partner $857,000 $1.02 million Partners 43 40 Percent of Revenue from Targeted Clients 50% 75% Average Cycle Time 174 days 128 days 15% 90 days or less 38% 90 days or less 5% 60 days or less 20% 60 days or less Number of Partners Promoted from Within 22% 33% Number of Clients 650 400

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RAY & BERNDTSON - INTERNATIONAL OVERVIEW Today, Ray & Berndtson is a partnership with offices across the World. The majority of these offices are locally owned with the largest members being the US, Germany and the new UK business, Odgers Ray & Berndtson.

With a business structured domestically along industry lines, it could be argued that membership of a network is illogical, the argument being that any profit centres built around an industry practice in the US have to stop at the coast. Practice based P+Ls may not be produced internationally. If a search crosses borders, fees must be split by region.

Ray does not accept this view point, arguing that small international markets need generalist search practices.

"It works really well. If you think about it, in the big markets Frankfurt, for example - they are very much structured by industry. They are very strong in the financial services, technology and business and professional services sectors, for

example. They may not have as many sectors but those that they do have are very clear - they match up well.

London is moving fast in that direction. If you look at the smaller markets, it really doesn't matter. In Helsinki, for example, we have just two partners so, by definition, they have to be generalist. That is not in conflict with where we are - we rely on local market expertise. In small markets, they have to be broader based."

Ray believes that Ray & Berndtson in the US now boasts one of the premier cultures in the industry.

Internationally, he believes that the firm has been able to hold onto members during a turbulent few years in the industry by working hard on international integration.

"Truly, we operate more like a firm than any other global partnership.

We work hard at branding, at governance and at global practice groups. We look to build a sense of firm amongst our partners."

To help them achieve this, Ray &

Berndtson brought in Andersen Consulting (now Accenture) to help develop an international structure for the business. The board meets three times a year and the group has a meeting of all partners on an annual basis. All members own stock in the holding company "Executive Search International". Unlike a number of the search partnerships, ESI does not employ its own staff; rather it pays for the use of staff employed by the US and German businesses.

Ray estimates that this gives it the equivalent of three-to-four full time staff.

The group has been able to retain its members fairly successfully during a period of relative upheaval in the industry. To date, it has lost only its Swiss member (to Korn/Ferry) and its Calgary office (to Russell Reynolds).

"We are a partnership that has held together and grown at a time when an awful lot of our competitors have been dismantled. We have actually had very little attrition."

Paul R. Ray Jr

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executive search professionals from firms in 18 countries.”

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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

in millions

Assistant for R J Reynolds; he worked his way up to Marketing Director with the firm before leaving in 1978. He then joined Ray & Berndtson - the business set up by his father, Paul Ray Sr - as a Consultant in the Fort Worth office. In 1981 he was part of the 21-man team that lead a LBO of the business from NYSE listed firm American Appraisal Associates. He became EVP and Chief Operating Officer in 1984, President and CEO in 1985 and became Chairman and CEO in 1999.

“Our readers include

£100 / $160 / €160 is the cost for 10 copies per annum, delivered anywhere in the World.

Profile Paul R. Ray Jr graduated from the University of Arkansas with a degree in business. He then went to law school at the University of Texas, and passed the bar. His first job was as a Marketing

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1996 1997

1998 1999 2000

Ray & Berndtson Global Revenues by Year

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The Executive Search Debates:

TALENT AD

Paris

By Paul Cowap and Bruno Grunberg

aris was the recent setting of the 4th in a series of Executive Search debates organised by searchconsult. Following the success of the previous events in New York, London and Frankfurt, leading representatives of the French Executive Search Industry assembled in Paris' chic 8th Arrondissement. Together, they discussed the new issues faced by the French search industry in today's fast moving economic environment.

The speakers, leading exponents of French Executive Search, were: Patrick James Bruneteau (B et Associés), Marc Lamy (Boyden Global Executive Search), Lilian Poilpot (Morgan Howard) and Alain Tanugi (TRANSEARCH International).

Paul Cowap opened the event by introducing Dillistone Systems and search-consult. He then introduced Patrick James Bruneteau - also the moderator for the day - the speakers and the agenda.

Patrick James Bruneteau, of B et Associés, launched the debate with a very interesting survey on "Que pensent et que disent aujourd'hui les Dirigeants d'entreprises françaises sur l'Executive Search ou le Conseil en Recherche de Dirigeants ?" (What do CEOs and Presidents of French firms think about Executive Search?). The purpose of this

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survey was to ascertain how the Executive Search world is perceived, appreciated or criticised by its clients, candidates and all others involved in the recuitment process.

This new study reveals the following information and/or trends: What are the most essential qualities expected from a firm? Please rank them from 1 (most) to 9 (least)?

Companies require above all else that the firms be able to answer their needs quickly, closely followed by a need for a true and detailed understanding of the company's culture. In third position, a flexible and fast-reacting operation, followed by in-depth knowledge of the market or of the client's business sector.

Then come competitive fees, total and permanent secrecy, high consultant availability, follow-up of the candidate's integration in the company, and finally, bringing up the rear (9th position), an operational presence on the Internet!

Managers (89%), Computer Systems Managers (97%), Marketing Managers (79.80%), HRM's (89%), Research & Development Managers (70%), Purchasing Managers (66.50%) and Sales Managers (62.50%). Quality and Export managers brought up the rear, with 43% and 49%, respectively.

Is the size of the firm a major factor in your choice?

The answer is NO with 91.80% as opposed to 78% in 1998.

In your opinion, should a Search firm use the Internet?

63% of the Managers thought this was necessary.

In which cases do you use a Direct Approach firm?

91% of the time, managers say they use head-hunting firms to recruit CEO's (a higher proportion than the 83% in 1998), Financial Managers (91.20%), Commercial The Debate Panel

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Can your relationship with your "Hunter" be described as a relationship with a provider or as a form of partnership, or as a friendly relationship, maybe even like the one you would have with an associate?

The majority (91%) consider the relationship with a Head-hunting firm as strictly professional and choose the options that describe two partners; friendship is mentioned in 27% of cases and 75% of the Managers say they do not consider the relation with their firm to be merely like the one they have with a provider.

In your opinion, which elements or criteria should be improved in your relationship with your "Hunter"?

The leading answer, with 75.60%, is a "better match between the candidate and the job", closely followed 73% who requested more flexibility in the fees.

Naturally, Managers expect fast reaction times from the firms and 57% would like even more. 61% would also like to have a single main contact for each mission.

The full study is available from B et Associés.

The next Panelist, Marc Lamy, Managing Partner of Boyden Global Executive Search, set out to explain codes of good practice. He pointed out that much of what he was about to say might appear obvious on a first hearing.

Nevertheless, it appears that more and more Executive Search companies, especially during these last two euphoric years, have given a bad name to "the industry" by adopting unacceptable practices.

His approach started with a clearly defined overview of the Clients' rights (what he called the Bill of Rights). He then went on to discuss at length what the candidates' rights should be under any circumstances.

The Clients' Bill Of Rights should include 10 commitments. The first key commitment is Confidentiality (both internal and external). The client must be

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assured that he is entitled to have somebody in front of him who will understand perfectly his needs and expectations. All these commitments should appear very clearly in a concise contractual written document. Of course, this will give more work to corporate lawyers, but guarantees both parties a clearly defined framework within which to operate efficiently.

The search firm must force itself to communicate faithfully and regularly with its clients. The client is always entitled to be kept informed at all stages of the assignment if the assignment process is to be made more transparent.

Nowadays, quality control is a buzzword in all industries, so why should it be neglected in Executive Search? The client, again, has a right to receive from his supplier only the best candidates – those who really are a close match with the assignment profile.

The client must be able to cancel the assignment at any time without any kind of penalty whatsoever.

In recent years, a very unacceptable practice known as ”parallel processing” has come into existence (even if it has always existed at an endemic level). This practise consists of getting a candidate “involved” in multiple assignments.

If a candidate is hired and ultimately turns out to be unsuitable, the search firm should then be able to reopen the assignment without any delay and at a reasonable price instead of artificially recreating a new assignment in order to resubmit a new full assignment invoice to the client.

If an Executive Search firm wants a client to be loyal, it also must be faithful to the client! Although this statement may sound obvious, experience suggests that it has not always been the case for everybody.

The rights of the candidates are just as important; people within industry are starting to get tired of being considered as traders in a massive “meat market”.

A candidate should always be approached only if the firm really has a suitable position to offer him. He should

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be fully informed of what the position is and of what it actually involves. He is entitled to have his private life protected (i.e. respected); never forget that a candidate is first a human being and not a piece of merchandise.

Lilian Poilpot, Morgan Howard Group Director, then presented to the audience what he described as the “Head-hunter of the future”.

To justify the title of his speech, Mr Poilpot based his presentation on the advent of the current technological revolution. As a consequence of the changing economic environment, the requirements of clients have in turn evolved.

His suggestion is that the ideas of space and time have been totally changed and partially abolished with the dawn of the digital revolution (Internet, telecoms, etc…). Projects are becoming more and more global. The world has become one market, a ‘global village’. Simultaneously, new markets have appeared, most of them linked with the new information technologies.

Companies therefore need a global understanding of the global market. At the same time, they must be more and more specialised. They must fit this new paradigm in order to avoid being the next victims of the “Darwinisme economique”.

Adapt or disappear is their only choice.

The Clients, to adapt to this New Economic Deal, need their suppliers to adapt accordingly. They will demand a greater understanding of this new economic climate and of their specific new requirements.

This new environment will require the headhunter of tomorrow to be more specialized in order to have the best possible understanding of his clients’ demands. He will need to be a wellinformed industry expert. He has to turn into a fully integrated consultant, each time getting closer to his client (as any good strategy consultant should).

The final speaker was Alain Tanugi, Chairman and Chief Executive Officer of TRANSEARCH International. After a brief but very rich and animated presentation

on how the perception of the work force has changed for companies, he gave the audience the results of a very relevant survey called “Le palmarès des entreprises préférées des dirigeants de demain” (Future senior executives’ most sought after companies).

The work force, considered at the beginning of the century as a product incorporated in production (a cost - like capital), became a resource and eventually an asset. Any good manager therefore, has to monitor his assets efficiently and maximise their gain.

Proficient HR Management is not only about hiring the best people, but about being able to optimise their abilities and retain them.

As a result the work force has become human capital and needs to be managed similarly to all the company’s assets.

When the floor was opened to questions, the entire debate soon

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became very focused on a very old and typical French question about stateregulation (laws putting boundaries against the scavengers of the industry) vs. self-regulation (the search firms creating their own "Cartel"). The debate proved to be very animated and controversial, giving a good idea of what the future of the industry could be. search-consult.com would like to thank all those who attended this debate, especially the speakers. The floor actively participated during the debate, in the unique and passionate French way - ensuring a memorable and interesting morning.

www.search-consult.com

For more information please visit: Web:

www.search-consult.com

Future senior executives' most sought after companies TRANSEARCH International (a synopsis of the most important results) This survey was answered by future senior executives who graduated from the most prestigious French Business and Engineering schools.

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Profile:

Eric

Vautour

Chairman of the AESC and Head of the Association and Government Affairs Practice for Russell Reynolds

By Jason Starr, search-consult Eric Vautour is Chairman of the Board of Directors of the Association of Executive Search Consultants and also leads the Association and Government Affairs practice of Russell Reynolds Associates.

In this interview with Jason Starr, he discusses links between government and search, the role of the AESC and his opinions on the industry. rior to joining the search industry, Mr Vautour held a number of governmental positions, including a spell at the White House under Ronald Reagan. His final position in government was Deputy Associate Director of Presidential Personnel, a post he held until he joined Russell Reynolds in 1987.

"I always wanted to get in to business, but wanted to stay in touch with government - and I didn't want to lobby.

I was given the opportunity by Russell Reynolds to run our public policy practice.

All I recruit are heads of big national and international associations; heads of government affairs for big corporations

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and board directors with public sector experience for major corporations."

Mr Vautour is one of a number of search professionals who have worked in politics or Government. Steve Potter of TMP, Virginia Bottomley of Odgers Ray &

“....I have yet to come across a client in a board room that feels that people... (who register online)... would be the

kind of person that they would want within their ranks.�

Berndtson and John Redwood of Norman Broadbent are just three of a long list.

"If you look through the ranks of search professionals in the US - particularly those of 15-20 years experience - a lot of them have come out of politics. I think there are lots of reasons for that -

primarily, interpersonal and communication skills which are fundamental to both roles."

During his period with Russell Reynolds, Mr Vautour has been responsible for a number of headline placements, filling CEO positions for groups such as the American Medical Association, the American Trucking Association and the The International Cotton Association.

He was elected Chair of the AESC in 1999 and is currently in the second year of a three year tenure. He describes his time with the industry association as a "tremendous experience" and believes that the Association plays a vital role within the industry.

"The organization has done a tremendous amount on behalf of the profession. It will continue to. We have grown internationally - we now have a European council and we are forming in Asia Pacific and Latin America.

It does a number of things on behalf of our members; it advocates to

government; it lobbies and has had some significant successes over recent years both in the US and the EU; it provides member services such as professional development and professional training."

One of the key roles of the AESC is to promote standards within Search.

Contrary to the opinion of many in the industry, Mr Vautour believes that ethical standards have improved and that clients get a better deal today than they have done previously.

"I think ethics today work far better on behalf of the client than they did a few years ago. Let me explain why. It is incumbent upon any retained search firm - certainly those who are members of the AESC - to explain to the client exactly what the roles, responsibilities, ethics and blockages are in relation to a search.

Instead of having some 'cookie cutter' set of rules that may or may not satisfy a client, what we say is ethical is that the search firm and the client have a written understanding of what their relationship is. It ensures that the client is satisfied with all elements that are important to them.

Certainly, there are some guidelines/rules - in terms of off limits and evergreen - but in terms of negotiating specifics it is most important that a clear understanding exists between all parties. You need to sit down and have that understanding."

Mr Vautour does not see a problem with parallel processing (putting one candidate forward to multiple clients) so long as the client is aware and gives consent. He makes clear, however, that this is not something which Russell Reynolds would be willing to do; and he believes that taking an equity interest merely aligns the interests of the search firm with those of the client's shareholders.

"We are in business to have professional interaction with our clients and they may be in a position where equity payments are much more feasible - than would be a cash payment. If we are willing to accept that, there is nothing unethical about it. It is good

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Eric Vautour business sense and puts the onus on the firm to find a successful candidate for the client."

Another area which has been under the spotlight recently is the structure of the industry. A number of the industry majors are embarking on strategies of horizontal integration - moving into service areas such as management appraisal or lower level recruitment; in many cases technology is used to facilitate this. Mr Vautour believes that technology has had a positive impact on the industry and is not a serious threat at the top level.

"Information technology is a tool for our business; it facilitates information processing and provides greater knowledge. But, I believe, it is not going to impact senior level executive search.

I do not accept the fundamental premise that the very best people will put a resume in an online database. But, if you do accept that premise, you have to accept that clients do not want job seekers.

The fact is that I have yet to come across a client in a board room who feels that people who put themselves in that type of position (registering online)

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would be the kind of person that they would want within their ranks. Rather, they want the kind of person who is very successful and happy in their work. That is what we do - we identify the talent and entice it away. That will even have a premium put on it because of the competition.

I believe that the role of the web is to be a modernized 'wanted ad'.

Technology makes the advertising more efficient, but it does not make a 'wanted ad' into something a senior executive will consider".

Mr Vautour also disagrees with the commonly held belief that the availability of huge amounts of candidate information on the web will "disintermediate" the researcher function.

"Frankly, research is more important now than ever before. Clients demand a level of knowledge and of understanding of their business that they did not demand even five years ago. You have to come to the table as a search consultant with a very extensive understanding of the client's business or function. They are not going to take the time to teach you.

Therefore, the research element of what we do - in terms of understanding an industry - is probably even more critical now than it was 5 or 10 years ago."

Mr Vautour believes that as the industry continues to grow, the role of the AESC will become greater and greater.

"It is no longer a club - when the AESC founded many years ago it was a club of a few search firms. They were all very similar in nature and background. That is very different now - we have members who are sole proprietors, we have large global multinationals; we have public companies, private companies and sole proprietors; we have European, US and Asian members. The complexities with which the organization has to deal are nothing but increasing." www.search-consult.com

For more information , visit: Web:

www.aesc.org

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Search in Germany-

legal update

By Barbara Kwateng, search-consult German legal cases continue to cause problems for German search firms - along with opportunities for firms in Switzerland and Austria. xecutive Search and Selection in Germany has always been subject to a tight legal framework. It was only as recently as 1994 that the recruitment market opened up. Prior to this the Arbeitsamt (German equivalent of a Job Center) was the only agency legally entitled to broker positions of employment. In the last 7 years private consultancies have also been allowed to engage in appointments.

However, the industry has been hit by judgments, sometimes contradictory, over the last 2 years. All this could benefit Search firms outside of Germany willing to exploit a large market.

Executive Search and Selection firms in Germany work. When the IT firm Bechtel took a Search firm to court in 1999, it was in protest against the phone calls made

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by the Search firm to its senior employees as well as those in middle management.

Allegedly a Search Consultant from the accused firm had contacted the company's main switchboard and then the Support hotline in an attempt to reach the prospective candidates. This prompted Beehtel to request an injunction against the Search firm and sue for compensation.

The court agreed with Beehtel. In December 1999, a high court in Stuttgart ruled that "...any attempt to source candidates on their work telephone number is inadmissible", the reasoning behind this being that employees were being disrupted from working by telephone calls from Executive Search firms. The consequences of this are serious for the German industry, especially against a backdrop of lower rates of growth for the first quarter of 2001 in comparison to the same period in 2000 (source BDU). It raises the possibility that researchers will be

converted into night rather than daytime workers and puts them under greater stress. Let us say that a researcher spends an average of 6 hours a day telephoning potential candidates. These top- level candidates are typically in their offices from 9am till 7:30pm. In line with the Stuttgart judgment, this leaves approximately 3 hours when the potential candidates can be contacted; i.e. outside of work and not on a work telephone number. This means that a researcher's workload is doubled. They will need to produce the same amount of work, still to a high standard, in half the time. As a response to the increasing difficulty in contacting potential candidates, we could see increased outsourcing of research activities to external specialist firms. In any case, one sees a future of burnt-out researchers leaving a trail of high staff turnover behind them and less efficient completion of assignments.

This judgment in December 1999 was

received by Christoph Weyrather, Secretary of the Bundesverband Deutscher Unternehmensberater (BDU or Association of German Management Consultants) as an "inhibition to competition". The Stuttgart ruling did decide, however that there were plenty of other opportunities to contact potential candidates, for example at specialist trade fairs.

However in June 2000 a district court in Mannheim, southern Germany, concluded that it is permitted to make short telephone calls to prospective candidates. Although every judge has the obligation and power to decide what they believe is right, judges in Germany have a strong tendency to orientate towards what was ruled in similar previous cases.

This is especially the case when the law is not clearly defined. In view of this, the Mannheim decision was all the more unusual. The judgment certainly gave hope to firms in Germany.

The reasoning behind the Mannheim court's decision is that "...sourcing candidates from a rival company is part of economic competition". Furthermore, the court's basis was that "no sensible or understanding employer would complain if his/her employees were occasionally to make personal telephone calls (e.g. 5 minutes in duration)". After all "...the caller did not attempt to pressurize the target person or falsely lengthen the conversation by taking advantage of [the target candidate's] politeness".

However the ruling was compounded by the Federal Supreme Court's statement in November 2000 that "...revising the judgment of the Stuttgart high court (June 2000) has no legal significance and therefore has no prospect of succeeding".

Could we see leading German Search firms rejecting their indigenous talent in favor of recruiting national and international Executives based abroad?

Perhaps. The U.K. and South East Asia are hotbeds for multi-lingual, highly talented Executives working in impressive multinationals. The Search market there could see challenges from German counterparts. However the scale of this

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challenge would be restricted as, on the basis of these rulings, (Stuttgart June 2000 and Federal Supreme Court November 2000), German Search firms could not contact those Executives abroad on their work telephone numbers. They are still subject to the German judiciary system. As unlikely as it seems, the German company could be prosecuted by a foreign company in a German court of law. To avoid this scenario, a German Consultant would have to travel abroad and from there he/she could make a call to a candidate who works anywhere outside of Germany.

However, there has been no case of a German company taking a foreign Search firm, for example a Swiss firm, to court. If this were to be the case, it would be most likely that Swiss law would prevail. This means a Swiss Search firm contacting those working in Germany at work would not need to have the same fear of prosecution. They, after all, are likely to be exempt from the legal framework surrounding the German Executive Search firms. This leaves German firms suffering greater prejudice in comparison to their foreign colleagues. On the horizon therefore, the Austrian and Swiss market

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will become more powerful, taking advantage of their legal exemption and language ability, leaving their German counterparts' business to shrink.

Seemingly the legal jungle faced by German Search firms could directly benefit those companies with offices outside Germany. One knock-on effect is surely to be that corporate clients will avoid handing assignments to Search firms in Germany, preferring their European counterparts who operate under a more relaxed legislation.

Unluckily for German Executive Search companies, it is not likely that this discrepancy will be a topic for the European Supreme Court on the basis of unfair competition, according to Dr. Andreas Quiring of law firm Quiring, Simon & Frick. Search firms "...shouldn't place too much hope on this".

Dr. Quiring has published essays on the subject. "Contacting a work number with the intention to source candidates is allowed when its duration does not considerably exceed that of normal private telephone calls made in the office" he wrote in 2000 (source: Aufsatz in WRP 2000, 33). In respect of the Stuttgart ruling, he stated in 2001 that

IN THE EVENT OF A LEGAL CAUTION, DR. QUIRING WOULD ADVISE COMPANIES TO: 1. Check whether the assertions are factually correct and to what degree the accusations can be proved.

2. Examine whether the assertions that could be proved contravene the law.

3. Make sure that the assertions only concern this case and what has already occurred.

If you think the court will rule in your favor, then: 1. Do not sign the off-limits contract and give the reasoning behind your decision.

2. Defend yourself before a court of law.

If you believe that the court will rule in the prosecution's favor, then: 1. Sign an off-limits contract with the prosecuting party with certain limitations.

2. Submit this off-limits contract with a dissolution clause; this is in case the Federal Supreme Court views similar facts of a similar case as permissible.

3. Instead of submission, you should wait for the process to continue, for the prosecution to proceed with the case and only accept legal prohibition [which can be a very lengthy process]. copyright: Dr. Andreas Quiring, Munich 2001

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"...sourcing candidates using private telephone numbers is, in principle, permitted. Telephone calls in work surroundings for primary exchange of necessary information is also admissible." (source: Aufsatz in WRP 2001, Heft 5).

Confusion, however, arises in respect of other statements made by leading lawyers on the issue. "Any attempt to source candidates via telephone, fax or email is inadmissible. Using a company's postal address is equally improper," writes Trube (source: Aufsatz in WRP 2001, 97). Dr. Martin Reufels, Heuking Kühn Lüer Wojtek, on the other hand, takes another angle, "Only if it is clear that the potential candidate is interested in a certain position and wants further information on the subject, is it permissible to make contact at work" (source: Aufsatz in GRUR 2001, 214).

Despite these verdicts, no law has

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been passed which constitutionally forbids contacting candidates at their work premises. This is exactly what German Search companies are trying to remind themselves; the judgments merely have application to the cases in question and no more. Therefore it is still "...legitimate to call a potential client tomorrow" says Wolfgang Lichius of Kienbaum Consultants International.

There is an air of "no change" amongst many firms. "For us, it's business as usual," says Heinz Bischof of Transearch Cetra in Frankfurt. Others, however, are slightly more cautious on this note. "We simply avoid calling people at their offices now" says Peter Nowack, Managing Partner at Boyden Global Executive Search. But if, as previously mentioned, in a grey area of the law, a judge is likely to follow the decisions made in similar cases, a Search firm has very slim chances of winning before a

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German court.

To try and prevent the situation where in future cases, judges decide in favor of the Stuttgart ruling and therefore against the Search firm, the BDU has employed two Professors of Law to produce an expert report. This is in fact to clarify whether this particular judgment represents improper discrimination or contravenes the constitution.

The viewpoint the Professors will be taking is that the Stuttgart judgment limits the freedom to choose and carry out a career. In the meantime, the BDU advises its members to keep candidate telephone calls at work to a minimum.

www.search-consult.com

For more information , visit: Web:

www.bdu.de www.heuking.de

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in Italy ALDO NEUBURGER offers a ‘helicopter’ view of the Italian search industry Earlier this year, my colleagues and I launched Hunters Strategic Executive Search into a booming Italian search market. Our experience at TMC Amrop – purchased by TMP Worldwide in 1999 – told us that a niche existed for a smaller, high quality and locally owned business in a market dominated by the top six International firms and by Eric Salmon & Partners.

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etained search is an established service in Italy now, dating back to 1975 when Egon Zehnder opened on office in Milan, to be closely followed by Heidrick & Struggles. I have worked in Search myself since 1986; between myself and my three partners at Hunters we can boast 45 years of experience. Over that time the market has changed somewhat; ten years ago, the key markets were in Consumer Goods, Manufacturing and Pharmaceuticals. Over the last three years demand for search from the new economy has been massive but, as in the rest of the World, this has died down to some extent and we are now finding most demand comes from the traditional sectors. Financial services, perhaps, is the only addition to that list and search firms are increasingly involved in Management Appraisal services – particularly in the Banking sector.

The structure of the Executive Recruitment business has changed

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somewhat too. There is a huge market for selection services (client paid advertising) and many of the international search firms dabble in this. Korn/Ferry International (K/F Selection) and Spencer Stuart (Selector Europe) can be seen advertising in publications such as Republica. We are also seeing increasing Internet based recruiting activity at the middle level.

Most of the top level Search firms are based in Milan, although a few have a satellite office in Rome. This can be one of the most serious barriers of entry to the industry – the real estate market in the business districts of Milan has recovered over the last year or two and finding suitable accommodation is not easy.

Whilst the Italian search market is still fairly undeveloped – for example, there is no independent research community to speak of, the demand is certainly there.

We launched Hunters in March of 2001 and we already (as of June 11) have 15 assignments on our books. We expect to complete around 45 in our first year. In our experience, assignments can be completed rather more swiftly in Italy than in other countries – projects rarely last over three months and candidates tend to have shorter notice periods – and this means that we believe a Partner can work through around 16-17 assignments over the course of a full year without diluting the quality of service.

Profile

Aldo Neuburger

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Aldo Neuburger joined TMC Amrop International as Partner in 1986 and since then has completed more than 300 executive search assignments.

His clients range from family businesses up to multinational companies. Neuburger started his professional career at Olivetti where he held a HR position. Following this, he joined the Arnoldo Modadori Editore publishing house as Publication Rights Director. He has a degree in Economics and Commerce from the Bocconi University of Milan. In addition to his native language, Neuburger speaks English, French and Spanish.

He joined Hunters Strategic Executive Search in 2001.

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Relocating

candidates overseas

By Sergey Frank, Partner Kienbaum Executive Consultants obs and professions are not, of course, done in the same way all over the world. But you would never know it from the way most people talk.

Many people in international and multinational companies try to do business in Tokyo or Paris just as they would in New York or London. Perhaps it is because they hear so much about the onward march of globalisation, sophisticated communication and information technologies, and the unprecedented accessibility of international travel.

Perhaps it is just human nature. This makes international search assignments so difficult and this is why soft skills such as the adaptation to a foreign business environment are so important.

Furthermore, an expatriate expects certain elements contained in his total package such as housing, school fees, paid home leave etc. to be offered when working in a foreign country. This aspect has to be taken into account when selecting suitable candidates for top positions abroad, especially by an executive search consultant.

The following observations may be used as an "intriguing checklist" for executive

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consultants in their international selection process interviewing suitable candidates and, further, understanding whether a particular candidate may be the right person. This checklist goes beyond such obvious items like knowing the foreign language and culture and adopting oneself to different customs and communication patterns. This depth is necessary.

Otherwise, frustration, resignation, a failed project as well as a mutual dissatisfaction may arise rather quickly between all persons involved.

Whatever the explanation, it inevitably leads to difficulties and confusion in working abroad. Although everyone understands in principle that working internationally may require you to cope with different styles of decision-making, ways of thinking and priorities that are different from those at home, these "cultural factors" are a vague and fuzzy concept that is not easily applied in practice. It is inadvisable to commence working internationally with the belief that "business is business all over the world". The best practice in domestic situations may not be applicable in foreign countries.

When you start working abroad, the potential for misunderstanding is greater than it is at home: you and your business partner or colleague may waste time talking past each other; you may need to give complete explanations of your position; you may need to master a particular kind of persuasive skill.

International assignments have many obstacles. National characteristics, for all the stereotypes, really do differ considerably from one country to the next. If you neglect the existence of these characteristics you may jeopardise the success of the whole assignment.

Some factors may make themselves felt even before the substance of the business communication has been commenced.

Inappropriate gestures and other nonverbal behaviour may contribute to a psychological atmosphere that makes communication difficult. Different social etiquette or different notions of status and dignity can throw egos off balance.

Although the intensity of modern international interactions, notably in business, communications and education, has produced a sort of "internationalised culture" that reduces the clash of cultural

backgrounds and stereotypes, even relatively "cosmopolitan" candidates can fall into the trap.

In any case, many business communications take place in a less cosmopolitan context. Additionally, people in highly specialised fields often conduct their jobs without having sufficient background knowledge. Even in the European Union, where people are used to travelling on holiday to a variety of different countries and doing business with each other, mistakes are often made.

The solution to the misunderstandings and difficulties arising from cultural differences is not to wish for the day when everyone around the world learns to behave according to the same rules. This is as unnecessary as it is unachievable.

The answer is to understand and respect cultural differences. This does not mean becoming subservient to the foreign culture: adopting and imitating your foreign partner's gestures and behaviour risks not only appearing ridiculous, but also arousing suspicion about your sincerity. Preferably, the secret for dealing with cultural differences lies in attempting to understand and respect different cultures, while remaining faithful to your own.

Even surrounded by the communication technology of the third millennium, the skills of knowing how to talk to people and get what you want from communication remain much as they always have been. In fact, due to globalisation, these vital skills are needed more than ever today. They are put to use whenever a professional is in a business situation to buy industrial equipment, license technical know-how, or communicate with his/hers subordinates, colleagues and bosses. Moreover, these skills are needed in medium-size and start-up companies, as well as in the multinationals where they have been nurtured for a long time.

Even good candidates may very likely be ill-prepared for an international job that they might face. In the sense that they might be working at headquarters

Sergey Frank

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every day and have only occasional business trips abroad, they assume that they will be able to deal just as successfully in a foreign country. Many seem to believe that in important respects business is identical all over the world, they further believe that knowing their own business is sufficient preparation for overseas ventures. Nevertheless this assumption is mistaken. Business varies hugely from one place to another, "do exactly as people do" - and this is of great importance as direct interpersonal contact is vital in many transactions.

Despite e-mail, the internet, mobile phones and all other forms of modern communication, you need to develop a certain amount of sensitivity for communication and unexpected patterns in other countries. So here is a mental exercise that is designed to reduce the frequency of nasty surprises when you are working abroad. And the chances that it will succeed are promising - after all, business is, by its very nature, used to solving problems, and rapidly too. The following may provide a checklist within the interviewing process for internationally suitable candidates: 1. Consider the basic assumptions of the market. Will a candidate who worked successfully in one culture flounder in another one? Some examples in the US might be: "Money talks"; "Everybody is equal"; "Hard work is rewarded".

Examine how well the candidate will be able to cope with the requirements of the "new" country. Having a look on the following example illustrates the considerations one should make when placing an expatriate: An English “Fast Moving Consumer Goods� company had a bad experience with local managing directors in its subsidiary in Italy for several years. The assignment was defined to find an executive with UK background and working experience in Italy who was able to run an Italian operation but also to comply with UK reporting structures and communication. Here, the ideal candidate had to fit into a rather "lowkey" UK-mentality with all the outspoken

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and very expressive and communicative patterns which are typical for Italy.

Besides all other professional requirements, the candidate had to be very British and, at the same time, very Italian without losing his identity. Also here the search was successful.

2. Placing a female executive abroad, the consultant must consider traditions and social circumstances in the chosen destination. Does the host country seek to establish equality between the sexes?

Sweden and Greece, for instance, treat this matter in totally different ways.

3. The search firm should advise the candidate in matters of intercultural communication.

Consequently, the project will be more successful for all sides. The candidate will integrate better into the new business environment and know how to adjust his/her behaviour.

Topics to be discussed with the candidate should be: How should you greet colleagues, superiors or subordinates?

How should you discuss the pros and cons of an action plan? What will it be like to take part in a meeting? How should you behave at lunch with a colleague, client or customer?

4. It is vital for the success of the whole project that the search firm informs the expatriate about communication styles and the general procedure of doing business in the host country. Equally, the following matters should be discussed with the candidate in advance: ● How direct are you? How else could you go about obtaining information?

What is the style of communication in the host country? ● Systems of motivation and reward: What are the assumptions about what makes people work well and what constitutes an incentive or reward?

How do you go about punishing or criticising a persons conduct? What incentives will be appropriate? ● Giving and receiving instructions: What do you assume about your role and the role of others in your organisation?

What is the expected behaviour and responsibilities that accompany these roles? What relationship should exist

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between people in these different roles? How do these roles and relationships differ in your host country? ● Making new business contacts: How much time do you spend socialising?

Would more or less socialising be appropriate in the host country? ● Imagine that your present boss comes from the country where you are going.

How does that affect your relations with him or her? Try behaving in this way and observe how your assumptions and responses are affected. ● Ask the candidate whether he is psychologically prepared to cope with all the different conditions and customs when travelling abroad.

5. Language. Of course, English is a global language.

However, the importance of various other languages, especially in Europe, should not be underestimated. Here, even a fragmented knowledge of the language, often sufficient for occasional business trips to such country, may not be enough for communicating with people, leading subordinates and grasping sophisticated notions. Otherwise, the language factor which may have been previously underestimated by a candidate may become a very frustrating element in the successful performance of an assignment abroad. In certain projects a candidate speaking other languages than English will be the most appropriate.

Selecting the right candidate for the right position abroad, the search firm should consider the significance of bicultural skills. The following example is likely to illustrate this. A German manufacturer of technical products acquires a US competitor, which is good in manufacturing but does not live up to R & D standards. For the German parent company, it is vital to establish a similar R & D centre in the US. This should be done by an experienced engineer and manager, who has previously worked in a comparable R & D centre, knows German standards in terms of technology, but is also able to build up R & D

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Innovating change….

operations in a different country. Last but not least, the ideal candidate should be familiar with the US mentality. Since all relevant people in the German headquarters are needed there, the company had to look for someone externally: The ideal candidate found came from competition in Germany, had worked in the US for a couple of years and was able and flexible enough to comply with rigorous German technology standards on the one side and the rather relaxed communication style in the US on the other. This specific combination of different values (German precision, US communication style) has been evaluated profoundly in several interviews with the author.

This kind of mental exercise should increase your sensitivity towards the way business is done in a foreign country. It should not discourage the candidate but should just make him aware of certain obstacles which may come into his way.

Thus it enhances also the level of frustration which may become necessary to make an assignment successful.

Sergey Frank is a partner of Kienbaum Executive Consultants and managing director of the London office. Working as an executive himself he experienced many own assignments in various continents and has a vast experience in particular in the US and Europe concerning the placement of international executive searches. Sergey Frank is a global leader in the following fields of international communication and negotiations: executive recruitment, keyaccount management, international sales strategies, mergers and acquisitions as well as the merger of different corporate cultures. His work on key-account consulting has an international reputation and his insight into crossculture development is unique.

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The BDU Conference in

Bonn

By Barbara Kwateng, search-consult

he Bundesverband Deutscher Unternehmensberater (or BDU; Association of German Management Consultants) recently held their annual conference for human resources consultancies and Executive Search and Selection firms alike. 250 delegates gathered at the Gaestehaus Petersberg, near Bonn, to participate in debates on the changing shape of the sector. As the event's sponsor, searchconsult was there to take part in the day's discussions.

The BDU is Germany's authoritative association when it comes to Executive Search and Selection as well as for Management Consulting.

Other associations have sprung up such as the Verband Deutscher Executive Search Berater (or VDESB; Association of German Executive Search Consultants), favored by some of the highly international firms

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such as Heidrick & Struggles, Ray & Berndtson GmbH, Boyden Global Executive Search GmbH and Korn/Ferry Hofmann Herbold GmbH. However the BDU's Executive Search and Selection branch is the largest of its kind in Germany; founded in 1954, its members represent 70 member firms amassing a turnover of 350 Million DM (154 Million US$) in 2000.

This year's topic was stimuli for change. Under this umbrella came presentations on new technology in the Search process, balancing work and leisure, competing in an international Executive Search climate and knowledge management. One of the most well attended presentations centered on the current German legal situation and its implications for the industry. This topic is covered in more detail on page 18.

The first session, chaired by Professor

Dr. Wolfgang Jäger from the Technical University of Wiesbaden, looked at the impact of technology on Search and Selection, the opportunities it offers and the limits which frustrate. Gunther Batzke was largely in defense of the benefits of technology. As Managing Director of monster.de, he used an example of a senior position which had been advertised on monster.de. The advert had received a response from over 600 people within 24 hours, who included a Chief Financial Officer, a Human Resources Director and a Treasury Officer, earnings ranging from 250,000-400,000 DM (110,000175,000 US$). This he used to highlight the changing nature of the Internet in the Selection process. However, he was loath to say the online process could replace the human touch, "... quality of interactivity is what will set apart the

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winners from the losers in the Internet marketplace". He was questioned on how one can be sure that the Internet applicants are not inputting their CVs into the database in order to test their worth. Batzke replied, "Perhaps a candidate would do this, say once or twice but they would find it disruptive to be continuously called if they weren't interested in changing jobs". An argument could be raised that the candidate is always interested in finding out their worth; therefore such instances can be avoided with difficulty whether the medium is print, personal contact or otherwise.

The monster.de Managing Director weighed up the costs against the benefits of Executive Recruitment on the Internet.

A single advert on monster.de could be inserted at the cost of 1000DM (440 US$).

For 3000DM (1320 US$), a Researcher can access candidates records stored in the monster.de web-enabled database.

The number of candidates who have entered their own information into the database total 80,000 in Germany and 600,000 in Europe.

However Angela Hornberg, a Consultant at TRANSEARCH Cetra, questioned the caliber of the candidates.

Those applying for jobs via the Internet are likely to represent "a younger computer-literate community". Therefore candidates in the database are not likely to be those executives for whom Search and Selection firms go for. The traditional view which she asserted was senior candidates are simply not 'turned on' by the thought of using the Internet to find a new position. She argued in favor of using the Internet "to complement existing methods of research". Judging by the views and questions asserted from the audience following her presentation, this was also the general view of the audience.

In another presentation, Arnulf Tänzer, Partner at Kienbaum Management Consultants spoke about compensation methods in Executive Search and Selection firms. Through a target-based bonus system and setting of goals, a firm

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can achieve results-oriented leadership structure. Using a model, he showed that through setting a 12-month annual salary as 80% of the total package, a company could achieve better results from its employees through the use of bonuses.

The employee can achieve a 20% bonus. 10% of this bonus is gained through reaching individual targets. The other 10% of this variable bonus is dependent on whether the company achieves its targets. Both the individualtarget and company-target bonuses are measured against a scale, e.g. satisfactorily meeting targets, overreaching targets and so on. All in all, when both the individual and company targets are met, the employee can expect to earn at least a 15-month salary. This means that the Executive Search and Selection firm "does not only encourage individual success but also team ambition and imitative. Consultants take a greater

“...the BDU's Executive Search and Selection branch is the largest of its kind in Germany...its

members represent 70 member firms amassing a turnover of 350 Million DM...in 2000.� interest in the company's general success and not only in their own". The consequence of such a system is that employees feel the effects of increases and loss in profits. Arguably they will work harder to raise their salary, benefiting the company.

Dr. Lothar Heimeier, Managing Director of Heimeier & Partner Management Consultants presented his company's experiences as part of a European Search network to the audience. The topic of this discussion was international Executive Search and Selection.

Heimeier & Partner has been part of the

IMD International Search and Consulting network for over 10 years. He spoke about how Heimeier & Partner decided to join an international network "...to adapt to an increasingly global marketplace we had to either open subsidiaries, perhaps start a franchise abroad or join an international association of leading Executive Search and Selection firms. We took the last option".

Dr. Heimeier spoke of the decisive advantage in joining the international network "...the local partners have excellent knowledge of their market and can ensure the best possible placement using their local knowledge". He went on to say that "...the top candidates identify with the reputable Search and Selection firms; those who are well-known and trusted within the industry. This is another advantage which we gained".

Instrumental to making this, or any network, function is the development of a code of conduct. This "...lays down what each employee's duties are and the network's principles. It is important to create a code of conduct on how candidates and clients should be treated.

For example, that a candidate's CV may not be submitted to a client without the candidate's express permission."

Although this may seem totally logical, problems can arise through regional variations in legal structure and business practice.

The BDU's Vice President, Dr. Joachim Staude was delighted at how the event was received. "An outstanding location, up-to-date and in-depth perspectives and intensive networking opportunities added up to a successful conference. It was precisely the opportunity to share experiences that was so highly valued by our delegates. Furthermore, responses to our questionnaires showed that speakers offered advice and ideas which could be used in everyday business".

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For more information, visit: Web:

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