When economic markets collapsed in 2008, the retained executive-search industry slowed dramatically. According to the New York-based Association of Executive Search Consultants (AESC) trade group, world-wide industry revenues fell 32% in 2009 and hundreds of consultants left the field.
Today, industry revenues are again approaching their 2007 peak, but executive search itself has undergone changes that are important to both employers and candidates.
Retained executive-recruiters still perform the same basic function - conducting personal searches for pools of three to five candidates to fill C-Suite and other top positions on an exclusive basis. Clients pay the recruiters an upfront fee, pay another fee when the search is underway, and make the final payment when the position is filled. All searches are "off limits," meaning that executive recruiters will not solicit candidates from the ranks of their firm's other clients.
But the pre-recession standard fee, of one-third of the candidate's first year's compensation, has given in to variations says an experienced recruiter who asked that his name not be published. "Some clients prefer a flat fee, and others may ask for a discount if we are doing three searches for them at once, for example," he says.
During the recession, when search assignments were few, many firms stayed connected to their clients and earned revenue by expanding their services. Jory Marino, interim CEO of international firm Heidrick & Struggles, headquartered in Chicago says, "The day when our job was moving an executive from Company A to Company B is gone. In addition to our core executive-search services, clients are seeking differentiated guidance and advice on leadership development, board effectiveness and CEO succession planning and on helping to shape their culture."
Other firms are providing services to job candidates. Susan Goldberg, of Susan Goldberg Executive Search Consulting in New York, says she also has a career-coaching practice for those people she cannot place. "I may not be able to place my coaching clients currently, because I don't have any current searches that are right for them. However, at some point in time I may be able to introduce them to people for networking purposes, and perhaps they or someone they know [will be able to] hire them." Executive-search recruiters are essentially matchmakers, says Ms. Goldberg, adding, "I love making introductions that could lead to potential deals."
Identifying and developing leaders within a company is critical, says AESC President Peter Felix, because "there is a shortage of talent worldwide including engineering, general management (CEO and COO) and boards of directors. At the same time, some sectors, like healthcare, energy and manufacturing, are growing at over 30% a year.
J. Larry Tyler, CEO of Atlanta-based Tyler and Company, says his 12-consultant firm specializes in finding executives for hospitals and large physician groups, "but there are not enough physician executives to fill the open positions. And when we do find candidates, teams left running these organizations are busier than ever and don't have time to interview them. Now, before we present candidates, we get clients to clear their calendars for interviews."
"In the past," says Ms. Goldberg, "Clients used to love lots of information on a potential candidate, but now they don't have time for that any more. Now they want bite-sized bullet points."
Social media and other technologies have made it easier for large companies to set up their own internal recruiting functions, says the AESC's Mr. Felix. "In some cases, recruiters are competing with their own clients for candidates." Most search-firm executives, including Mr. Tyler, believe there will always be a place for high-end retained searches, though.
"When we are talking with a prospective candidate about leading an organization, we will tell him or her everything about that company. You can't make a decision without knowing all the facts. No internal recruiter will be as forthcoming," Mr. Tyler says.
Another change, says Mr. Felix, is that most searches now have a global component. Between 2004 and 2008, the global demand for executive-search services increased by 120%. Large global firms like Heidrick & Struggles, may have more than 50 offices all over the world, but even medium-sized firms like Toronto-based Caldwell Partners, with 35 partners, have international offices, says Dave Winston, who specializes in industrial searches from the firm's Dallas office.
"I'm doing a search for a company in Canada," Mr. Winston says, "and just interviewed a candidate from Sydney, Australia."
"Anyone who aspires to a C-Suite or other leadership position in a top organization should plan to live and work abroad in multiple regions throughout his or her career," Mr. Winston says.
"Executives within the workforce today," says Mr. Marino, "should seek out opportunities in companies that enable you to get global experience. It will enhance your ability to get to the top."
Mr. Marino says executive-search professionals are looking for candidates that are "capable and visible" in their current positions, that demonstrate "staying power" in an enterprise and have skills that are transferable across the organization.
If you are being interviewed by an executive recruiter, Ms. Goldberg advises, "be as honest and upfront as possible. If you are contemplating another offer, tell them about it. And make sure nothing you put on to social media could affect you or them negatively."
Be proactive, says Mr. Winston. "Don't wait for a recruiter to find you. Reach out to people in your network to help you find executive recruiters and talk to as many as you can. We are easier to find these days, and each of us will be working at least 10 searches simultaneously."
The AESC offers online services to help both prospective clients and candidates connect with their members. CorporateConnect for prospective clients, provides contact information for the AESC's 350 member firms in 72 countries and profiles over 4,000 of their recruiters. BlueSteps is a career-management program for potential candidates. For a one-time fee of $329, an executive "can be put on the radar screen of our search firms," says Mr. Felix.
The BlueSteps database now has 80,000 resumes of executives from 70 countries and can be accessed only by AESC members, Mr. Felix says. In the past 90 days, some 12,500 executive profiles in BlueSteps were viewed by AESC member-search professionals. Susan Goldberg finds the database useful, "because it gives me access to people I might not have found under a typical retained search."
Despite economic difficulties in Europe and Asia, Mr. Felix is optimistic about the future of retained-executive search. "The American economy is on the move again and it is likely that organizations will ramp up their senior recruiting levels. Executives are not so risk adverse and are beginning to think of new opportunities."
Mr. Winston says, "Some have said our industry may be threatened by technology and internal recruiting, but executive search is really a relationship business. We know executives who are gainfully employed, but who might consider a new opportunity because they have aging parents, a child starting college, or a new grandchild. We know how to connect the dots between our clients and highly qualified candidates."
BlueSteps is the exclusive service of the AESC that puts senior executives on the radar screen of over 8,000 executive search professionals in more than 75 countries. Be visible, and be considered for up to 75,000 opportunities handled by AESC search firms every year. Find out more at www.BlueSteps.com.
About the Association of Executive Search Consultants
The Association of Executive Search Consultants (AESC) is the worldwide professional association for the retained executive search and leadership consulting industry. The AESC promotes the highest professional standards in retained executive search and leadership consulting through its industry recognized Code of Ethics and Professional Practice Guidelines. The AESC also serves to broaden public understanding of the retained executive search and leadership consulting process and acts as an advocate for the interests of its member firms.