search-consult Issue 30

2007 / ISSUE 30

The International Executive Search Magazine Published by Dillistone Systems

Executive Search in China:

Assuring Success in Light of Global Ambition

TRANSEARCH Celebrates 25 Years HR Interview: Cognizant Shift in Demand For Top Management Emerging Markets: G7 Becomes E7

Additional speakers from Japan and Thailand added – join speakers from 10 countries at this vital event !

dillistone number 30c.indd 1

Initial speakers list annouced - see page 13 for details!

3/20/07 11:16:14 AM

!%3# ! PDF !-

dillistone number 30c.indd 2

3/20/07 11:16:45 AM

S

E

A

R C

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

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

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

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

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

All statements, opinions, and expressions are the sole responsibility of the authors and the Publishers reserve the right to amend/alter articles as necessary. The Publishers cannot be held responsible for any loss or damage, however caused, of any materials supplied.

Any materials supplied may not always be returned.

No part of this publication may be reproduced in any format without prior written consent of the Publishers.

© Copyrights 2007 Dillistone Systems Ltd

H

- J

O

E

M

C

C

O

O

L ’

S

C

O

L U

M

Joseph Daniel McCool is a writer, speaker and independent consultant on executive recruiting best practices, search firm strategy, and corporate management succession. He is writing a book about the global executive search consulting business and its impact on corporate performance, culture and profits. He is the former editor of Kennedy’s Executive Recruiter News and its International Directory of Executive Recruiters, and his views have been cited in The Economist, The Financial Times, The Wall Street Journal and other media around the world.

THE TRUTH ABOUT FEES The business of executive search consulting is cyclical in nature. That explains why, when corporate demand for senior-management talent intensifies, the pendulum of bargaining power shifts from the employer to the exceptional leadership candidate and search consultants can take their pick of plum assignments.

When economies contract, corporations scale back recruiting, leaving lots of search consultants competing for a much smaller number of compelling engagement opportunities. That, inevitably, leads some unscrupulous recruiters to aggressively discount their fee, trying to use “price” as a competitive offset to another firm’s more established credentials and experience.

Some on the corporate side of the search engagement find bulk discounts appealing.

And some recruiters believe they need to be very flexible when corporate budgets are strained. But experience suggests the hiring organization isn’t guaranteed a high-quality result from an aggressively priced search, and the search firm isn’t likely to carve a path to true strategic partnership by laying its foundation on discounted terms.

These are indeed good times for most search consultants. Search assignments are up, and so too are the engagement terms, reflective perhaps that while the market for leadership talent may indeed have put more senior-management candidates in play, the work of orchestrating today’s search assignment hasn’t gotten any easier.

Corporations are feeling mounting upward pressure on executive search fees, and despite the engagement of search firms along “preferred supplier” agreements, the occasional meddling of Purchasing and Procurement departments, and multiple-hire fee concessions, they’re still paying very close to the traditional one-third of total first-year cash compensation, plus expenses.

Today’s search for top-notch executive leadership puts the search consultant in an extremely influential position to shape the future of organizational performance.

And while some corporations have built their own internal management sourcing or recruiting capability, most still rely on search consultants to conduct the most senior – and the most difficult – of recruitment assignments.

Recently, I gave a speech that included my own “Blueprint For The Search Firm Of The Future,” outlining the professional service offerings I believe marry the best with search consulting and key lessons about search firm differentiation. After discussing my views with a corporate search firm engagement executive, I came away from the conversation even more convinced there are far more opportunities ahead for search firms on the fee and engagement front than competitive threats.

As demand for senior executive talent rises, conversations with clients have shifted away from the fee and engagement terms that pervade when earnings miss their mark and corporations spend more cautiously. Today, the conversation is where it should always be – focusing the search on exceptional leadership candidates and building a pipeline of corporate management talent for the future.

Joseph Daniel McCool jdmccool@adelphia.net

Joe McCool is a speaker at the upcoming Executive Talent in Asia conference. In addition, he will be running a unique workshop on the management of search firms. See pages 14-16 for more details and to book.

ISSUE 30 2007 search-consult

dillistone number 30c.indd 3

N

3

3/20/07 11:16:47 AM

S

E

A

R C

H

- T

R

A

N

S

E

A

R

C

H

TRANSEARCH Celebrates

25

Years:

“Always Striving Towards Excellence”

T

he challenges and opportunities of the globalising economy are closely intertwined with those of TRANSEARCH. With revenues at US$112 million in 2006, this leading global search organisation is celebrating 25 years of excellence, continuing to exceed its clients´ expectations and establish effective partnerships.

Alain Tanugi, Founder, Chairman of the Board of TRANSEARCH International Partners and Head of its global Board Practice, met with Jason Starr and Pilar Gumucio to discuss the key factors that have made, and continue to make, TRANSEARCH a world class leader in executive search.

Q: TRANSEARCH is celebrating 25 years this year. To what do you attribute your permanence in the search industry?

Alain: In a nutshell, I would have to say: commitment, loyalty, teamwork, leadership, management, money and a keen survival instinct are the key factors that lead to success in this business!

To succeed in this industry you need to understand executive search like the back of your hand. You have to understand people: the people you work with, your clients and, of course, the talent you find for them.

You also have to be nimble. The market is moving extremely fast as you must be able to anticipate what is occurring and

4

By Pilar Gumucio and Jason Starr be able to respond quickly. Otherwise, you’re going to be a dinosaur and vanish like so many others who were unable to adapt.

Alain Tanugi

What differentiates our firm from other search firms is that our people are actually exceptionally passionate about their business, demonstrating a strong commitment that transcends from our Board members down to our consultants.

Q. You mentioned commitment as one of the key factors for a successful business. Can you tell us more about your commitment to ensuring customer satisfaction?

Alain: Customer satisfaction. It’s our vision and driving force. We know that achievement goes well beyond providing an outstanding search service. It’s taking into account all the contact points and steps within our processes, analysing them, and making improvements where necessary - then delivering results optimally and consistently.

When we founded this business in 1982 we made a conscious decision to organise ourselves around the client.

We’re proud to say that nearly threequarters of our global business comes from hiring organisations we’ve had the privilege of partnering with on previous executive search assignments.

Q. How do you measure customer satisfaction and how do you define good performance?

Alain: Since business is in a constant state of change, this is a never-ending process. That’s why we survey our clients and candidates regularly to identify any areas needing improvement. Our aim is to always exceed our clients’ expectations.

Moreover, good performance comes from exceeding what we expect of ourselves, not just what our clients expect of us. Good performance shouldn’t be judged simply in the results you achieve.

It’s also determined by how those results are achieved.

The best performances come when we take the time to ask pertinent questions,

search-consult ISSUE 30 2007

dillistone number 30c.indd 4

3/20/07 11:16:48 AM

S

to learn from our past and always place the client above everything else.

Great performances come from asking ourselves some basic questions, such as: Why are we doing it this way? What other factors should we be considering? What can we do to make the process faster? How can we make it more reliable? Ultimately, the final judgment on performance comes down to one simple question: Is this the best we can offer? If not, what else can we do?

Q: It seems that there is a growing trend among clients to demand real value from their search firms. How does TRANSEARCH respond to this challenge?

Alain: What we have learned over 25 years is now widely accepted as indisputable fact: organisations that put people first, finish first. We create value for our clients by making their best interests our best interests.

We have found that a value added service offering is the way forward. We have in addition always strived, and will do so more in the future, to operate as the benchmark for quality in executive search.

Furthermore, we measure our own success on the impact our executive placements have had on our clients’ bottom line. To achieve this, it is vital that we ask our clients to pledge a real commitment to partner with us, in the short, medium and long-term.

Q: TRANSEARCH is celebrating 25 years in existence this year – what would you have done differently?

Alain: It has been an extraordinary journey and I would not change a thing…well maybe one thing (he smiles).

TRANSEARCH has a strong sense of European values and ethics. I think that it has not been easy to adapt a European culture in North America. It goes without saying that the executive search industry is dominated by what happens in North America, in particular in the USA – I think I would have Americanised TRANSEARCH more and changed the

E

A

R C

H

centre of gravity from Europe towards North America.

This reminds me of that famous quote: “There’s only us. There’s only this. Forget regrets or life is yours to miss. No other hope. No other way!”

Q: I know you currently have offices in most major economic centres with a good consultant complement. Do you have any plans to grow TRANSEARCH further? And if so, what is the motivation behind this?

Alain: I do not believe that we should ever become complacent with what we currently offer clients and candidates.

We might have a presence in most major economic centres, but that does not imply we should not strive to strengthen our presence whether that is through extra offices or consultants.

I always try to ‘walk the talk’ – our clients know that talented people have a positive impact on the business’s bottom line and we strive to implement this philosophy in TRANSEARCH as well.

We aim to find the best talent not only for our clients, but for ourselves as well. This implies continuous growth and renewal.

I believe that it would be shortsighted to ignore the importance of the emerging economies, like Eastern Europe, India, and China. Having opened new offices in Poland and Russia in the past quarter does make a positive difference to our presence in Eastern Europe. We currently do have a fantastic team in India. There is, however, room for growth in China. As for the more traditional economic centres – the USA is still a big challenge for us, and with a renewed effort we have in the past year explored the market for possible partners.

Q: How do you plan on depicting TRANSEARCH as a truly global search provider, currently and during the next 25 years?

Alain: I always say: ‘the proof is in the pudding’! With 54 offices in 34 countries we are really able to serve our clients and candidates in the leading and emerging economic centres of the world. All our consultants have been handpicked,

- T

R

A

N

S

E

A

R

C

and can deliver results for their clients by combining their geographic reach, industry specialisation, functional expertise, and outstanding leadership services, one search at a time.

Our clients, whether large or small, global or local, benefit greatly from our resources because we can leverage the most relevant resources and relationships wherever they may exist. This enables us to understand our clients’ cultures, operations, business strategies and industries thoroughly. This has been a winning recipe for us in the past.

However, I do think that we need to be careful not to get caught up in our own success and forget to reinvent ourselves.

We have such a strong culture in the company that without realising it, we can sometimes say: “but that is not our way of doing things” and then we miss out on opportunities. We should always take the signal from what our clients are saying to us!

I predict that the next 25 years will see TRANSEARCH stronger than ever.

We will continue to build the legacy with a younger talent pool of consultants, while remembering what works and what doesn’t!

I think the key is never to become complacent, ask those difficult questions, and challenge the status quo, even if it means the answers are not what we want to hear. In the end, we will be stronger for it!

Alain Tanugi has over 30 years experience in executive search. Prior to founding TRANSEARCH in 1982, he was the Managing Director of a well-known French recruiting firm that he founded in 1975. Previously, he was Managing Director of a Paris-based firm dealing with career counselling, outplacement & training. Alain is Chairman of the Board of TRANSEARCH International Partners Plc and heads its global Board Practice. He is based in Paris.

TRANSEARCH International has representation in most of the major economic centres of the world with 54 offices in 34 countries and is currently ranked in the top ten largest global executive search firms by Executive Recruiter News (ERN). TRANSEARCH International was founded in 1982.

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

ISSUE 30 2007 search-consult

dillistone number 30c.indd 5

H

5

3/20/07 11:16:51 AM

S

E

A

R C

H

- H

R

I

Cognizant:

N

T

E

R

V

I

E

W

Passion,

Partnership and Being Able to Make a Real Difference

I

n a highly competitive industry such as IT, attaining and retaining innovative leaders, developing strategic partnerships and focusing on customcentered solutions is paramount for a company to continually be successful.

Cognizant Technology Solutions is a perfect example that encompasses this formula for success, proving to be extremely effective. With more than 40,000 employees worldwide, this prominent leader in IT consulting and technological services has recently been named as one of Forbes’ Best Small Companies in America for the fourth consecutive year. Moreover, it has also been ranked among the top 20 information technology companies in Business Week’s Hot Growth Companies as well as listed in Business Week’s top 100 Fastest Growing Tech Companies.

What has helped the company become so successful? According to Stephanie H. Kelly, Vice-President, Human Resources, North America at Cognizant, it’s “phenomenal growth can be attributed to its ability to attract people who share a real commitment, a passion for making a difference. That passion is evident in everything we do; a culture that enables a commitment to client delight; business growth that rests on the resultant track record of delivery success and, of course, outstanding career opportunity fuelled by that business growth.”

The key factors that have precisely made it so effective are what Cognizant also demands of its search providers. Kelly, as a client and an HR professsional that has worked in this industry for more than 20 years, spoke to search-consult to provide some insight on identifying some of these

6

By Pilar Gumucio critical elements that can really make a difference in establishing a successful partnership.

THE BIGGEST TALENT CHALLENGES First of all, it is essential that search providers fully understand how their client’s company works and especially what their clients’ key HR challenges are.

In the case of Cognizant, Kelly reported that the company’s three biggest “talent challenges” involve sourcing, building and integrating leaders for a bright future.

She stated that the company has grown so rapidly in such a short period of time that in many ways it is still very much a start up environment, yet the scale, the scope and the global challenges it has to resolve are very similar to those found in a large corporation.

As a result, “a lot of our focus in search is to identify people who are at once comfortable with ambiguity and, at the same time, collaborative and able to navigate a large, complex organization. They must also be hands-on and capable of leading large distributed service engagements and teams.”

How does Cognizant attract and select this top talent? Kelly described how a key component for success is based on the preservation and extension of the firm’s corporate culture.

She explained that in order to achieve this objective, this IT consulting company has elaborated many strategies to cultivate top talent. On one hand, the firm is building and developing talent from within. For example, Kelly described the Hi5 program that is often referred to as the blueprint for Cognizant’s DNA.

According to Kelly, this is a “a truly unique and capstone program that focuses on our five core leadership competencies: clients, colleagues, creativity, commitment and collaboration.”

On the other hand, the evolution and expansion of Cognizant’s product and service offerings demands that Kelly and her team be able to effectively integrate their external top talent.

She reported: “We focus about 35% of our sourcing at the executive level on retained search with key partners who understand both our culture and our business model, another 30% of our sourcing is referral-based and the remainder is directly sourced.”

SEARCHING FOR THE BEST Within this context, the HR VP admitted that “selecting the right search partner is critical for their company’s continued success.” As a result, it is vital that the client and the search provider be able to establish “a strong relationship that must be built on trust and mutual benefit.”

Kelly explained how Cognizant’s search process is fairly comprehensive and, at times, can even be daunting for candidates. This market leader has placed a great deal of emphasis on effectively managing candidate time through “interview days”. Although it is a heavy burden on the business teams, consecutive meetings with a full panel of leaders are essential to fully insure the attraction of candidates who can, and will be, successful when they join this leading IT consulting firm.

She elaborated: “The reality is that individuals who join us have a network in place before they start as their peers and

search-consult ISSUE 30 2007

dillistone number 30c.indd 6

3/20/07 11:16:51 AM

S

their leaders have all engaged with them during this recruiting process.”

Is the candidate a perfect match?

Instead of performing a series of scientific tests, Kelly and her team insist that the best way to effectively assess if the candidate has the critical skills, experience and the cultural fit required to be successful at their company is to evaluate the candidate’s behaviour during these meetings and really understand the rapport that is developing between all the parties involved in this process.

While a carefully defined specification is frequently noted as critical to recruiting new leaders at many companies, Kelly insisted that Cognizant defines a successful recruit as someone who can help to build and define his or her own objectives.

“The right talent is identified through their ability to get the Cognizant culture through the interview process and to leverage the network they’ve built upon joining.”

GREAT EXPECTATIONS The right search provider, in turn, is selected on the basis that they can understand what Cognizant is all about, providing them with top quality candidates that satisfy or better yet, exceed their expectation levels.

According to the HR VP, Cognizant expects its search partners to have a full understanding of the company, the business, the leaders whom they are working with as well as its recruiting team.

“A key success factor is their ability to help us to reduce the cycle time. As you often hear, ‘history is the best indicator of success,’ and we do rely heavily on track record,” reported Kelly.

She also described how executive recruiting firms must have specific experience and expertise in the industry in which they are sourcing, be highly competitive and demonstrate their commitment as they place the client’s interests above their own.

Another key factor is being able to establish the right rapport with “the partner you work with from that search provider”.

“We want to be able to develop a strong bond and a real atmosphere of trust. If that

E

A

R C

H

- H

Stephanie H. Kelly

is in place, then we can rely comfortably on their advice about shifts in the market, critical skills and making changes to our offerings,” insisted Kelly.

According to the HR VP, this type of advice “makes the company better at what it does, and can also fuel its success.”

AN EFFECTIVE PARTNERSHIP Today businesses are highly dynamic and extremely competitive as search is no exception. In order for this relationship to be successful, it is vital that the client and the search partner both be able to work effectively together. For the HR VP, “the search process is not one you can delegate.

A sourcing partner must, in fact, partner with you” throughout the entire recruitment process.

This implies that Kelly and her team “cannot sit back and wait” for the search provider to send them a nice written report.

Instead, they must actively track each step of the process, getting input from all the interested parties so that they each “know exactly what they are working to achieve.”

Like most clients, Cognizant has some search providers that are perfect models, some that need to be tweaked and others that just don’t work and need to be completely re-replaced. Cognizant reviews its list of search firms quarterly and re-prioritizes accordingly, always aiming is to have a full network of search partners

R

I

N

T

E

R

V

I

E

who collectively cover the variety of needs, ranging from global search capability for selected key roles to highly specialized local boutique firms with capability in select niche areas.

At the same time, Kelly cautions search providers to always remain centered on their primary task, which is to extend their reach to include top quality passive candidates from the widest possible talent base.

If search firms become too focused on Cognizant internally, their value as partners can be seriously compromised. If they broaden their offerings to include other services - such as coaching, integration and talent maps – Kelly believes that they are wasting valuable resources on “distractions” instead of bringing in that sought-after talent.

Cognizant has demonstrated its passion and commitment to working with its clients to make a real difference in their businesses.

In turn, it expects its search partners to be passionate and really committed to working with them, developing strategic partnerships and making a positive difference, providing executives that will fuel further success.

Cognizant’s HR VP explained: “By building strong partnerships from the outset, we hope to ensure that there is always a ready pipeline…that our partners are constantly looking for talented execs with Cognizant DNA.” Stephanie H. Kelly is Vice-President of Human Resources for North America. In addition to talent management for Cognizant associates in Canada and the US, Stephanie and her team maintain global responsibility for our immigration operations, human capital IT initiatives and leadership development.

Prior to joining Cognizant in 2004, Stephanie was an Associate Partner with Accenture, where she helped to support their transformation from a geographic partnership to a global public company.

During her seven-year tenure, Stephanie led Human Resources for their financial services technology practice and later their global technology practice cross-industry. She was a charter member of the team to define their solution center and offshore delivery capability, and served as both team leader and chief architect of the company’s workforce model and variable pay components.

Stephanie is a Periclean Society graduate of Skidmore College and a member of the Society of Human Resources and the Conference Board.

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

ISSUE 30 2007 search-consult

dillistone number 30c.indd 7

W

7

3/20/07 11:16:53 AM

Unique “drag and drop” functionality allows users to create company and people records directly from websites without retyping!

Powerful new “Search Engine Style” document search allows users quickly and easily to find information hidden away in résumés, profile reports, articles, company reports, etc

FILEFINDER provides further improvements to time management functionality by means of two-way synchronization of Appointments, Tasks and Contacts with MS Outlook (and on to PDAs). We’ve gone one step further, however, and added context sensitive calendar and task functionality to FILEFINDER – clicking an appointment / task in the calendar instantly brings up all appropriate contact information.

New résumé / CV screening functionality allows consultants to flip backwards and forwards through résumés / CVs, adding comments and updating status details from a single screen.

Advanced email integration allows improved management of incoming and outgoing emails via MS Outlook. A new interface, improved templates, additional CC and reply functionality along with support for SMS and TAPI compliant telephone systems are all provided in the new FILEFINDER system.

USA: +1 (201) 653-0013

dillistone number 30c.indd 8

Australia/Asia: +61 2 8221 8860 sales@dillistone.com 3/20/07 11:16:54 AM

Either contact us for a free one-to-one demonstration, or attend a 30-minute overview webcast on FILEFINDER 8 from your own desk.

Available dates and times include: TIME

DATE

LANGUAGE

May 1, 2007

ENGLISH

May 2, 2007

ENGLISH

May 2, 2007

FRENCH

10am GMT

11am CET

May 3, 2007

GERMAN

10am GMT

11am CET

May 8, 2007

ENGLISH

10am GMT

11am CET

10am GMT

11am CET

UK

EUROPE

AMERICAS

ASIA / AUSTRALIA

2pm ET / 11am PT 1pm AEST

May 9, 2007

ENGLISH

May 15, 2007

ENGLISH

2pm ET / 11AM PT

May 23, 2007

ENGLISH

2pm ET / 11AM PT

Spaces are strictly limited.

To book send an e-mail to sales@dillistone.com

All backed up by superior service: • 24-Hour Support available to all contracted clients • Free online refresher training for System Administrators • Free-to-attend User Conferences planned for New York, London, Frankfurt, Hong Kong and Sydney To join the webcast or to arrange your personal demonstration of the latest FILEFINDER 8, please an e-mail stating your preference to sales@dillistone.com TODAY or call one of our regional offices listed below.

Germany: +49 (0)69 27 40 15 807 www.dillistone.com dillistone number 30c.indd 9

UK / Other Europe: +44 (0)20 7749 6100

3/20/07 11:16:57 AM

S

E

A

R C

H

- C

H

I

N

A

Executive Search in China:

C

hina is already among the top three markets for many multinational companies’ worldwide revenues and profits, so why not for search firms? Will the global strength of international search firms be determined by their strength in China within the next decade or so?

As the demand for internationalcaliber executives in China grows most fiercely at the mid-to senior levels, CEOs in China are citing recruitment and retention of talent as their single biggest headache and biggest hurdle for growth.

Is China a “heaven” for executive search firms – where there is more business than they can handle and where growth can “hide all sins”?

The war for talent has become a global issue and occurs not only in China - where it gets very visible publicity. But how is the war in China different from others? And what does it mean to search firms?

CLIENT-DRIVEN CHALLENGES Like our clients, search firms must take a long-term, strategic view in China.

But long-term success requires shortterm “firefighting” tactics and a keen nose on the ground. The stakes are high and the expectations are even higher.

As clients’ operations start to mature in China, all returns on investments,

10

By Louisa Wong-Rousseau including recruitment investments, are getting more tightly measured. Clients expect the same global standards and quality process in China, yet they also require: • Extremely fast response times (1 week to present candidates), • Voluminous market data, for comparisons and benchmarking (especially as salaries lack consistency and historical comparisons, and are changing fast), • High degree of flexibility to offer multiple solutions at the same time, (one-stop supplier handling all types of recruitment as the market is still highly fragmented), and • Resourcefulness / readiness, to provide alternative and out-of-the-box solutions to stay ahead of clients, especially if the obvious or best options are not feasible or available, e.g. go beyond China.

A successful search consultant in China must not only be a top consultant who is armed with knowledge and commitment to standards and quality, but also a “firefighter” and entrepreneur.

There are no short cuts; hence, consultants must work extremely hard to keep up with market changes.

Recruiting, retaining and developing consultants are key issues. Training is even more critical now to ensure only the

best quality, particularly in interviewing techniques, assessment methodologies and in the presentation of documents and communications such as candidate letters, reference reports, etc. As China becomes an important part of multinationals’ global value chain from scientific research to sourcing and sales, local operations including the search process must comply with global practices with greater scrutiny in terms of quality of assessment, more flexible fee arrangements, guarantee periods, among others.

Search firms must also invest in building the pipeline of consultants through hiring fresh graduates. The average age of consultants in China tends to be younger, especially as energy and spontaneity are important to consulting success.

Search firms used to debate whether to open an office in Shanghai or Beijing, but today the concern is “how fast you can open offices” given the strict local license requirements, which is crucial as clients’ continuous growth rely heavily on secondary and tertiary cities scattered across different locations.

On-the-ground coverage is important in China; especially when you take into account this country’s enormous size and diversity. Given the significant costs of living, high salaries, and reluctance of candidates from Shanghai and

search-consult ISSUE 30 2007

dillistone number 30c.indd 10

3/20/07 11:17:03 AM

S

Beijing to relocate, search firms that can successfully handle such assignments for secondary and tertiary cities have the unique opportunity to develop deeper relationships with clients, which bodes well in the long-term.

THE WAR FOR TALENT IN CHINA In China, the war is “different” and is in fact “magnified” in both scale and complexity due to a number of factors: • China is “big” and “hot”; hence, the stakes and prizes for winning are high; it is also “young” as significant MNC investments started only 10 to 15 years ago; • Sudden shifts leading to rapidly changing profiles of success: Long-term investment -> sustainable and scalable growth, Entrance strategy -> execution excellence, Provincial -> national to regional global value chains, Low-cost manufacturing for exports -> world’s largest consumer market and global hub for R&D and Sourcing; • China used to be a “dumping” ground for talent (hardship location) – now only “top guns” are considered for top jobs and proven success in China is critical to become a CEO; • “Promoting too soon” and recruitment failures are frequent, given that many jobs in China are newly created positions and thus lack “benchmarks for success” that lead to clear-cut job profiles and selection criteria; • Extremely high expectations of candidates, rapidly increasing salaries, the highest turnover rate in Asia (average of 14%), and mobility issues both within and outside of China; • China’s looming talent shortage, which is most acute for mid- to senior level positions ( i.e. 5-10 years of experience or local senior managers in the 40-50 age group who are mostly products of the “cultural revolution” and hence still lack years of western-style management experience).

The war has led to aggressive hunting, especially since top talent in China now see being “headhunted” as a prestigious affirmation of their value, whereas a decade ago most managers would be squeamish about receiving a call from a

u

u

u

u

Louisa Wong-Rousseau

headhunter. As local managers see more and more of their best colleagues change jobs due to headhunting, a paradigm shift is bound to occur. Aggressive hunting has also intensified hostility and bad will among companies, which in turn has made the recruitment process even more difficult for search firms given companies’ improving retention tactics.

Most multinational companies, in particular those known to be “winners” in the talent wars (such as GE, P&G, Unilever, Nestle, IBM and Motorola), are hotbeds for executive talent, especially in the fields of finance, HR, legal, etc. These companies have consistently invested in hiring graduates and developing them through vigorous programs; hence, they continue to have a stable pipeline of middle-level managers despite hostile hunting from competitors.

However, as a safeguard against aggressive hunting, especially from local competitors, most of these MNCs have already put in “shields” to ensure retention, such as non-compete

E

A

R C

H

- C

H

I

N

agreements, pensions, supplementary benefits / insurance, housing funds, retirement, etc. While it is difficult to enforce non-compete clauses in China due to differences in local laws and practices, according to a recent Bo Le Associates survey, many local Chinese still consider moving to a competitor as “unethical.”

Successful Chinese companies, on the other hand, are not necessarily winning the talent wars. But they are winning the market shares! In the long run, this puts them in the position to win the war for talent by attracting top guns through bigger budgets, more responsibilities, etc.

Chinese companies with global ambitions, such as Haier, Lenovo and Huawei, are overhauling their management teams and chasing the same talent sought by multinationals.

Senior local managers, in particular those who have hit the “ceiling” of their careers with MNCs given their limitations on mobility, are prime targets for these local companies.

According to an internal survey by Philips Electronics in China, in 2003 they found that 80% of students wanted to join international brands such as Philips. In 2004, it dropped to 60% as more locals wanted to work for local companies.

As foreign investments pour into China, search firms are also tapping more and more top talent for startups, turnaround for pro- or pre-M&As, among others, which offer ownership and significant upsides. These are well-financed startups that require bilingual managers who have an intimate knowledge of the Chinese market and a keen understanding of the needs of foreign investors.

Interim management has become a proven solution for crisis, pre- and post- M&As, integrations, closures and start-up operations. China will continue to face many such issues; hence, interim management is being considered by companies as a viable alternative to executive recruitment.

As remote

ISSUE 30 2007 search-consult

dillistone number 30c.indd 11

A

11

3/20/07 11:17:06 AM

S

E

A

R C

H

- C

H

I

N

locations or secondary cities emerge as main targets for growth, and with cycle times becoming even tighter and more closely measured, interim management solutions will become even more viable.

The supply of potential interim managers is also increasing as China faces an aging population, the need to prolong work life, increased M&A activity and privatization, and a continuous inflow of expatriates. The popular notions and cultural perceptions about interim managers will also change over time.

MANAGING EXPECTATIONS OF TOP TALENT One of the key tasks of a CEO in China today is how to manage the often unrealistic expectations from HQ on how fast China should grow. Similarly, search firms also master expectations from both candidates and clients.

The changing cultural attitudes of Chinese executives affect mobility, lifestyle preferences, and other factors that have impact on how search consultants manage the expectations of candidates.

China’s phenomenal growth has developed a perception among local executives that jobs will always be available – breeding unrealistic expectations. Top talents want to move up, get promoted, obtain glamorous job titles, and assume regional positions.

Hence, job security and loyalty have not been a main concern or priority, which has led to extremely high turnover and job-hopping.

Rapid increases in salary and “firefighting” tactics used by companies in attracting candidates have also led to C&B discrepancies across different functions and levels of seniority, further exacerbating candidates’ unrealistic expectations.

As top local talent become savvier about executive pay, search consultants must also be well-versed in emerging C&B trends in China, including supplemental retirement insurance, savings plans, housing plans and even enterprise annuity.

12

A

Executive candidates often ask search consultants why they should relocate if there are plenty of other opportunities waiting for them in Shanghai where they can enjoy local provincial benefits that other provinces cannot match. To overcome the mobility issue search consultants must take a national approach in sourcing candidates and be able to break stereotypes and convince his/ her client that places such as Chengdu also produce top-tier candidates.

These candidates may not appear as sophisticated as those from Shanghai but they have proven track record locally.

Their salaries are relatively lower and can be motivated to relocate given a premium. Foreign and Asian expatriates, particularly those from Hong Kong and Taiwan, are more willing than locals to take up assignments in remote locations.

In these cases, national coverage in China and the ability of search firms in handling cross-border assignments within the region comes into play.

While candidates’ expectations remain high, clients have been seeking alternatives and are becoming more confident about choosing “not the obvious best choice” and opting for the “less obvious” solution, i.e. take more risks. Search consultants must be able to provide market data to support and help clients in looking for alternative options while seeking the obvious best choices.

HUMAN CAPITAL IN THE “CHINA CENTURY” There used to be a debate as to whether the so-called “China Century” poses any threat or opportunity to the global economy. But now the more pressing question is: what if China fails, what will this mean to the stability of the world? What is the search industry’s role in this new era?

As professional search consultants, we have an important role in contributing to sustainable growth - not only in China but all over the world - and human capital is an important determinant of this.

We can also play a more active role in shaping future leadership by coaching

and mentoring candidates, and there is no better place to do this than in China given its sponge-like propensity to absorb new paradigms. CEOs in China, for example, have unique historical and cultural circumstances that require different leadership styles, e.g. more “paternalistic”. But they must also share similar traits with their counterparts in the US or Europe: highly measured performances, good social and corporate governance, leading by example, and the courage and determination to make tough decisions.

And so, is it indeed a “China Century” for search firms? In the final analysis, it is not about how big the Chinese market is for executive search or whether firms should adopt a different approach here. Ensuring success in China – as it emerges as a global economic power – is in the interest of every professional.

Louisa Wong-Rousseau is Group Managing Director of Bó Lè Associates.

Under Louisa’s leadership, Bó Lè Associates has become the leading international search firm in Asia with a well-developed network of 13 local offices (Hong Kong, Shanghai, Beijing, Guangzhou, Chengdu, Suzhou, Taipei, Singapore, Jakarta, Manila, Bangkok, Kuala Lumpur, Ho Chi Minh City) throughout the region and over 180 staff.

Operating since 1996, the firm has completed over 5,000 assignments in the last 11 years. Based on its track record and dedication to developing local talents, Bó Lè Associates has received numerous awards including “China Recruitment Firm of the Year” from a Euromoney publication and “Top 10 Search Firms in China” from Shanghai Business Magazine.

With over 20 years of executive search experience, Louisa is a recognized authority on recruitment, talent developments and the Chinese market. Her opinion articles and interviews have appeared in the South China Morning Post, Asian Wall Street Journal, Time, among others. A sough-after keynote speaker, she has spoken in over 120 major forums in 31 cities all over the world.

Louisa had prolific stints with JP Morgan’s corporate finance division, and later with Alexander’s Department Stores in New York in strategic planning.

Prior to founding Bó Lè, she was the Managing Director and Chief Representative for China of Russell Reynolds Associates. She holds an MBA from the Harvard Business School and a BS degree from the University of Toronto.

www.search-consult.com For more information visit: Web: www.bo-le.com Louisa Wong-Rousseau is speaking at the upcoming Executive Talent in Asia conference. See pages 14-16 for more details and to book.

search-consult ISSUE 30 2007

dillistone number 30c.indd 12

3/20/07 11:17:06 AM

Join us at The 2nd Executive Search Practitioner Conference 2007 – Europe’s leading event exclusively for Executive Search Professionals Unlike other events, this conference is designed to allow delegates to share ideas, network and learn from colleagues and friendly competitors from Executive Search firms around the world.

The inaugural event drew delegates from 25 countries, and this year we are expecting an equally international audience. To achieve that, we’ve enticed speakers from around the world including: • Ulrich Ackermann, Member of the Board, TRANSEARCH International Partners Plc, (Stuttgart, Germany) • Christopher Clarke, President, Boyden World Corporation (New York, USA) • Peter Felix CBE, President, Association of Executive Search Consultants (New York, USA) Additional speakers to be announced - for the latest information, visit www.search-consult.com/practitioner2007 Book Now for Early Bird price!

Only GBP379 / US$740 / EURO599 + UK VAT (17.5%) per delegate.

Early bird discount offer is valid until May 31, 2007.

After this date standard prices apply: GBP479 / US$899 / EURO699 + UK VAT (17.5%) per delegate.

Group discounts available! Please call us on +44 (0)20 7749 6102 or send an email to events@search-consult.com Booking form can be found on page 16 of this magazine or it can be downloaded from www.search-consult.com/practitioner2007.

“If you want to keep up-todate with developments in the field of Executive Search, this conference is a must.”

Dr Forde May Managing Director Forde May Consulting Ltd, UK “The conference proven to be rich in content, which covered comprehensively the hottest topics in the executive search industry. From my experience and point of view, I believe such events are very important as up until these days not much has been said about our industry.”

Svetlana Sarantseva Executive Search Consultant SUNDUS Management Consultancy, UAE “Exceptional speakers, interesting issues, a highly informative and enjoyable day among peers.”

Harris Karaolides Managing Director Symvoli - InterSearch Greece More testimonials available online at www.search-consult.com/ practitioner2007

The inaugural Executive Search Practitioner Conference was attended by delegates from 25 countries: Australia Austria Belgium Hong Kong Czech Republic Estonia Germany Greece Hungary Ireland Latvia Lebanon Luxembourg Mexico New Zealand Portugal Romania Russia Singapore Slovakia Switzerland The Netherlands UAE United Kingdom USA dillistone number 30c.indd 13

3/20/07 11:17:08 AM

dillistone number 30c.indd 14

3/20/07 11:17:14 AM

dillistone number 30c.indd 15

3/20/07 11:17:31 AM

dillistone number 30c.indd 16

3/20/07 11:17:38 AM

Success... ...is About People Who Lead.

Boyden has been leading for over 60 years, founded with a vision to match top executives with exceptional companies, so each can be successful. Today we continue to lead through innovations that ensure our clients reach their goals now, and in the future.

Allow us to introduce to you the enterprising people of Boyden, and show you how our global experience and personal commitment can help your organization achieve its potential.

Visit us at www.boyden.com to find the Boyden office near you.

|

dillistone number 30c.indd 17

Europe

Middle East

Africa

|

The Americas

|

Asia

Pacific

|

3/20/07 11:17:39 AM

S

E

A

R C

H

- R E S E A R C H

How Foundation for a the Successful

Research Sets

Executive Search S

"

trategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat" - Sun Tzu. The above quote by Sun Tzu, author of the once flavor-of-the-month ‘Art of War’ book used in business schools, typifies my attitude toward recruiting and search.

Jumping into a search without a clearly mapped-out strategic approach is no better than thinking through an approach to a search without clear definition of the steps to action.

As an executive search research and recruiting professional, I consult with my clients—predominantly retained search firms—with a method that identifies the parameters of an assignment (the ‘pieces’ to help set a strategy) with the goal of creating the tactics (eg: target lists, client company competitive knowledge, prospects, etc) and delivering ‘actionable intelligence’. Without a research strategy we put ourselves behind the eight ball.

While experts and other ‘human capital’ professionals have offered up

18

By Marc Barowsky

various philosophies, methods and tips concerning search execution, my mission is to make a compelling argument for the research function as critical to a successful

Marc Barowsky

search assignment. My position is that the research phase of an assignment is the key

to launching a successful search quickly and effectively.

Whether you have a dedicated, skilled research team, contract this out to people like myself or are ‘chief cook and bottle washer’, research will likely play a significant role in most of your assignments.

There are side benefits to implementing a research methodology such as easier and clearer communications with clients.

Another benefit is that a documented strategic approach gives you immediate credibility.

ALL top tier retained search firms depend on a detailed search process which begins with research. Some of the more progressive, and aggressive, contingency firms are beginning to find a place for research in their organizations.

One firm I have consulted with, SearchPath International, is integrating it into their training and development program. Tom Johnston, the President, CEO and Founder of SearchPath, states his position simply: “Research is the most critical part of both identifying and moving a candidate

search-consult ISSUE 30 2007

dillistone number 30c.indd 18

3/20/07 11:17:40 AM

S

through the search process as well as our business development efforts”. Tom goes on to say that strong research can give a consultant that extra edge by helping them understand the business landscape.

The firm at which I began my career, a top-tier retained global executive search firm, called the first step in a search, getting off to a FAST START—and the first activity in that Fast Start was to meet with research and discuss the client needs.

Generally, the elements of a Research Strategy are: • Gathering of search team and discussion of client needs, • Initial discussion of target firms or organizations, • Brainstorming alternative ‘targets’, • Documentating targets and notation of ‘hands off’ or ‘especially desirable’ targets, • Research feedback and estimate for deliverables, • Identifying resources available / needed to begin process (databases, associations, sources, industry newsgroups, etc), • Setting timeframe for deliverables, • Collecting and identifying - in parallel targets and prospects.

The above elements are the steps or building blocks that help to create focus and direction on a search. They become a touchstone and reference point at any given time on that search. I can think of other components that you might add to the above list, or occasions when you might omit or alter one (ie: when there is a

E

A

R C

very limited well known set of targets).

Now that I have given some definition to what I mean by a Research Strategy, I’d like to examine in greater depth a few of these elements and propose exactly how they can be powerful tools in executing a successful search.

Regardless of the fee structure of your search assignments (contingency, retained, con-tainer, etc…) a client would be impressed with a presentation (i.e.: pitch/bake off or status call) that illustrates you have a research strategy. So an immediate benefit is differentiation that you have a clearly mapped out and customized approach to their needs. Having a clearly articulated research method allows you communicate both to the search team and to your client during the search. For example, providing a company target list to your clients allows them to give you specific feedback that helps you to refine your search and deliver better candidates.

That feedback, positive or negative, is critical since you know early in your search if you’re on track or in need of “search triage.”

Having a research methodology is particularly useful for difficult assignments, such as searches in unfamiliar territory. A method helps you map out and review the search landscape, revealing how likely you are to quickly identify appropriate target firms or candidates. Once you’ve discovered the level of difficulty in the search you can better set benchmarks and timelines.

I would even suggest that establishing a strong search strategy can help you during the candidate development and recruitment

H

- R

E

S

E

A

R

C

H

process since you will be preparing or familiarizing yourself with the competitive landscape, industry news and trends, and where your client fits into that picture. As a researcher you should always be alert to these industry events, news and trends as this knowledge will enhance your overall understanding of your client’s industry.

Another benefit of preparing an effective research method is that the investment of time will help you and your team to document your target list of firms.

This is especially useful if you are working in an industry or industry niche that is highly segmented - opto-electronics networking equipment comes to mind, for example.

As your research efforts improve, you may well find companies that even your client didn’t know about...like that small consulting firm “started by a former mid to senior level executive of the 800 pound gorilla industry heavyweight”. That’s the company that isn’t on the radar but has talented people who may end up being sources or prospects.

Another benefit to establishing an executable research strategy is that it creates a roadmap that leads to a quick launch, short turnaround of qualified prospects and sustainable activity.

In conclusion, neither Strategy nor Tactics alone is sufficient in difficult executive search assignments. What that translates to for our purpose is: it’s best to have a solid research method. www.search-consult.com For more information contact: Email: barowskyresearch@verizon.net

NEW COURSE ON ONLINE RESEARCH Marc Barowsky is an accomplished research and executive search professional with more than 10 years of online search experience and over five years of executive search execution and retained search research experience. He has worked with partners at most of the major “big six” global retained search firms and many partners and principals at numerous small to mid-sized retained search firms. In recent years Marc worked on functional roles in HR, sales, marketing, leadership development across various vertical industries such as: financial services, credit/risk analysis, consumer foods retail as well as assignments for search firms seeking to grow their own teams.

Online Research Training – London, UK - May 14th – 18th , 2007 This series of 1-day seminars will cover Executive search Strategy & Tactics from a primarily research perspective with a specific focus on utilization of the internet and online tools & techniques which can be applied to search assignment execution and projects relevant to executive search.

This course will feature handson training with each delegate sat at a PC. As a result, places are stricktly limited to 6 per day.

To book, please send an email to events@dillistone.com or download the booking form from www.dillistone.com/workshops ISSUE 30 2007 search-consult

dillistone number 30c.indd 19

19

3/20/07 11:17:41 AM

S

E

A

R C

H

- S

T

R

A T

E

G Y

in For Top

Shift Demand

Management:

Talent Puts Executives Atop Seller’s Market

I

t’s starting to feel like I’ve seen all this before. A sought-after consumer products executive on the verge of accepting a new six-figure job with a 35% higher salary submits his resignation but suddenly disengages from the courtship process when his current employer responds with a significant counteroffer.

A financial services executive earning $500,000 advances deep into the interviewing process with a prospective new employer in another city and agrees to tour real estate with his wife during his next interview – first-class airfare, fivestar hotel, and full limousine service for the weekend included. He’s offered $750,000 to make the move, but ultimately rejects the offer because his wife doesn’t like the new location.

And an increasing number of executive job candidates are turning their noses at new job opportunities with any company rumored to have a tyrannical CEO, high executive turnover, and/or business practices that might remotely evolve into corporate scandal.

These are the kinds of things that are happening now on the frontlines of the executive talent market. The supply

20

and demand dynamics have given high performing executives more career options than they’ve had in years, and from that perspective, it’s beginning to smack of 1999 all over again. The ‘A Players’ are much more selective about pursuing transition options but they’re also pouncing on the opportunity to get what they want.

INDEPENDENT RESEARCH Our firm’s anecdotal evidence of a resurgent executive recruiting market is confirmed by a spate of recent studies that document an increase in executive job transitions and a move by US employers to change their pay practices to match a tightening and more competitive job market.

Analysis by Liberum Research, an independent market intelligence firm based in New York, revealed a nearly 58% increase in senior corporate leadership churn between September 2005 and June 2006, when 2,463 executive transitions were cited in US Securities and Exchange Commission filings, corporate web sites and news releases.

Liberum documented another 1,914

By Rick Slayton senior management changes as recently as November 2006 alone, the last month for which such data was available.

A study by ExecuNet, an independent executive networking and research organization, shows that 60% of executive search firms plan to hire additional professional staff through February 2007 to keep pace with surging demand for management talent. It also found recently that 79.9% of employers believe the war for executive talent is heating up and that 82.5 % of search consultants are “confident” or “very confident” that the six-figure job market will continue to expand through the first half of 2007.

“A new war for talent has a growing number of executives exploring the market in search of better opportunities,” says Mark Anderson, President of ExecuNet. “With recruiters growing more bullish... turnover could be brisk in the first half of the year.”

And a study of the pay practices of 950 employers by Mercer Human Resources Consulting reveals that the highest budgeted pay increases this year are for companies’ executive employees

search-consult ISSUE 30 2007

dillistone number 30c.indd 20

3/20/07 11:17:41 AM

S

E

A

R C

– especially top performing ‘A Players’ whose skills and experience are in high demand.

A report released last May by global management consulting firm Booz Allen Hamilton showed that global CEO departures reached record levels for the second year in a row, and may be peaking.

Its fifth annual survey of CEO turnover at the world’s 2,500 largest publicly traded corporations also revealed that performance-related turnover set a new record in North America, and mergerdriven successions were at their highest level globally of any year other than 2000.

SIGNIFICANT POWER SHIFT Higher executive salaries, the increase in counteroffers, and the increasing difficulty of recruiting senior leadership talent that corporate employers are now experiencing point to a significant pendulum shift in the high six-figure employment market, and one that has placed the most sought-after executives on top of a seller’s market.

Candidates, as a general rule, have more power today. For much of the past five years, employers were holding the cards in the executive employment market because new opportunities were scarce. But today, it’s clear that the pendulum of the executive employment market has moved way over to the candidate or seller side. The bargaining advantage has shifted substantially beyond equilibrium in favor of the top candidates.

Many corporate employers are finding that it’s taking longer these days to recruit new executives. That’s in part because candidates are being more selective about opportunities. It’s also in part because senior corporate executives who are already stretched thin are also the ones from whom others in their organizations want to gain buyin and secure candidate interviews with before high, six-figure job offers are extended.

Corporate employers are telling us that they have to devote more resources

Rick Slayton

to the recruitment of senior-management talent. The pendulum has indeed shifted back toward executive job candidates, and employers need to do more to attract and recruit them. This is happening because potential recruits want to find not only the right job, but a company with the right organizational DNA. That means a clean reputation, recognition as a market leader, and a high-performance culture.

Increased corporate competition for ‘A Players’ has fueled significant increases in executive pay. Transitionminded executives could expect to realize a salary increase of 10% to 15% if they accepted a new job just 24 months ago. Today, coveted executives are in line to receive salary increases between 20% and 40%.

2007 RECRUITING OUTLOOK I think we’re looking at a pretty good level of executive-level recruiting activity running through the first half of this year, and we’ll have to see whether that extends into the second half of 2007.

I expect that corporate employers will continue to place a premium on ‘A Players’ who have the right mix of professional experience, advanced education, a track record of consistent performance and successive promotions, and the

H

- S

T

R A T

E

G Y

intangibles that comprise executive presence. Leading employers will also continue to create more opportunities for women and minority executives.

Corporate employers should not underestimate the importance of their reputation, their brand, and their overall workplace experience and corporate mission, because top caliber management candidates are usually motivated by the challenge of a new job with a growth-oriented employer with an exceptional culture and sustainable reputation.

Any company that can’t effectively articulate its vision for the future and a compelling employment proposition for world-class management executives will find that their ability to recruit will be diminished or hampered until that changes.

Rick Slayton is President of Slayton Search Partners. Mr. Slayton has developed Slayton Search Partners’ strategic partnership business and leads searches in the industrial and consumer industries.

With more than 15 years of experience in executive search, Rick has successfully served Fortune 100 clients in the transportation, industrial and consumer products industries, as well as the aerospace, electronics and metals sectors. He has placed executives in general management, manufacturing operations, sales and marketing, engineering, finance, and information technology positions. Rick has proven himself to be one of the top supply chain search professionals in the industry.

Prior to joining Slayton Search Partners, Rick was with Bethlehem Steel Corporation where he managed capital projects. Rick earned an MBA from Lehigh University and a Bachelor of Arts in Economics from the University of Michigan.

Slayton Search Partners, Inc. is a top retained executive search firm, serving some of America’s most recognized companies in a variety of specialty areas, including: Consumer & Retail, Financial Services, Industrial, Life Sciences & Healthcare, Private Equity and Professional Services. Slayton professionals have expertise in all key executive functional areas, including: Board Services, Finance, General Management, Human Resources, Legal, Marketing & Sales, R&D, Supply Chain and Technology.

Our consultants are certified in DDI Targeted Selection® Interviewing, the most proven and accurate behavior-based interviewer training program in the world. Headquartered in Chicago, Slayton serves its clients nationwide with offices in major U.S. markets including Atlanta, Denver, Stamford and Washington, DC.

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

ISSUE 30 2007 search-consult

dillistone number 30c.indd 21

21

3/20/07 11:17:43 AM

S

E

A

R C

H

- A

S

S

O

C

I

A T

I

O

N

S

Risingto

ECSSA:

theChallenge

A

s the European Union marks the 50th anniversary of the Treaty of Rome - which gave rise to what is today considered the world’s biggest trading block and accounts for 35% of the world’s GDP – search-consult spoke with Dr. Joachim Staude, President of the European Confederation of Search & Selection Associations (ECSSA), to see how this organisation is developing, what its main objectives are, and ultimately the benefits it has for its member associations and individual member firms.

“ECSSA is still in an infant age”, explained Joachim Staude, after having been formally established in 2004 by the national search and selection associations of France (Syntec), Germany (BDU) and Italy (Assores).

The main objective of the ECSSA is to create “a professional association above the domestic country level” that is committed to: • Developing the Recruitment and Search & Selection industry on a European level, by means of developing the profession itself, which means developing standards, procedures and ethics, • Creating a dynamic forum for networking and exchange of information and views between members, and • Promoting the interests of the Recruitment and Search & Selection industry among different European organisations.

CREATING A SOLID FOUNDATION Dr. Joachim Staude, Board member of the German Association of Management Consultants BDU, was elected as ECSSA’s first President in charge of establishing the necessary pillars needed for this organisation to have a solid foundation.

“Our first, and most difficult, challenge is to

22

By Pilar Gumucio

set up the organisation so that it can vividly take some initiatives,” reported Joachim Staude.

Nevertheless, he admits that at this stage, “this task has only been partially successful.”

ECSSA’s President explains how he hopes that this association will eventually be able to conduct annual surveys of how search and selection is developing in Europe, comparing the size and rate of development, and be able to identify important trends within each of the European countries.

At this moment, however, “this type of information is not always reliable and consistent,” stated Joachim Staude. “We are looking at ways to coordinate better with our national counterparts to improve ways of reviewing this data so that we can begin to be perceived as a unified voice that helps track and further develop the profession.”

When ECSSA was first formally created, the 3 founding members agreed to provide administrative and organisational support to help develop and promote ECSSA. Although this agreement has been respected, it is also obvious that the underlining reason that motivates Joachim Staude and his fellow ECSSA board members is their unwavering commitment to create a solid foundation so that this organisation can achieve its main objectives and be the main reference point when people want to know about the search and selection industry in Europe.

BROADENING THE BASES For this plan to become a reality, ECSSA is working hard to add more national member associations. In addition to its 3 founding members, Belgium, Spain and the UK have since then joined the ECSSA and increased the national member associations to 6.

Joachim Staude described how he is hoping to increase the member associations within the next couple of years to 12 countries, including at least two from Eastern Europe.

The main challenge is that the rate of development of the search and selection industry within each European country is not uniform, making the establishment of a single unified confederation much more difficult.

The different languages, cultures and legislations can hamper this process even further, which is ironic since these very factors make the establishment of a unified European Confederation even more paramount.

ECSSA’s President reported: “In some European countries the search and selection industry still needs to be further developed as many countries do not even have a national association that represents their own interests.”

As a result, ECSSA is currently trying to convince search consultants how beneficial it can be for them to create their own national association. This can either be a completely independent association, such as France and Italy have, or like the BDU where it is a subchapter of the overall national consulting association.

LOOKING AT THE BENEFITS The countries that do have a national association are questioning the benefits that a European confederation can provide them.

ECSSA’s executive committee is currently meeting with these associations, explaining its objectives and the benefits it can provide national associations and its member firms when they join.

ECCSA is a confederation of associations, not an association of individual member firms.

search-consult ISSUE 30 2007

dillistone number 30c.indd 22

3/20/07 11:17:47 AM

S

Indirectly, nevertheless, there is an interest of member firms to be part of ECSSA because it is precisely these firms that the national associations represent, providing them with valuable information that they may not otherwise been able to obtain.

At the same time, national associations may try to provide search providers and clients interested in expanding their businesses with some kind of assistance. Nevertheless, due to a lack of information and network opportunities, this task becomes extremely difficult for individual country associations to undertake.

By contacting ECSSA, who through their website provides a profile of each of its member firms, these firms can network and develop a working partnership with various member firms having complete confidence that they are dealing with experienced professionals that share the highest levels of professionalism, quality standards and ethics.

In an environment where consultants offering search and selection are increasingly popping up, some companies are confused on how to select the right search provider, and especially in a different country. ECSSA has facilitated this problem by providing clients access to the names of their 800 member firms as well as the best possible assurance that an assignment undertaken by one of their members will be handled competently since each member must adhere to the minimum criteria established by this confederation.

Joachim Staude explained how ECSSA is in the process of creating a knowledge-based centre so that companies, search firms and national associations alike can have access to value added information, such as pertinent counrty-specific legislations and regulations that have a direct impact on the search industry. Although he is unable to provide an exact time frame for when this task will be completed, ECSSA’s President is content with the advancements that are occurring.

DEALING WITH THE ISSUES “We meet at least twice a year in a rotating country, and we deal with specific topics that come to our attention from our national associations,” reported Joachim Staude.

E

A

R C

H

- A

Joachim Staude

He explained how for the past 3 years ECSSA has been discussing legal issues that directly affect the search and selection processes and see how they differ from one European country to another. Is it legal to contact executives in their work place to offer them an opportunity for a new job?

The responses vary from country to country, which makes cross-border searches much more complex since you must know and understand these critical differences.

“For instance”, Joachim Staude stated, “anti-discrimination is a big concern. Germany passed an anti-discrimination law last August that set up 8 criteria points. This is 5 more points than the European level has, which makes it more difficult when conducting an assignment in Germany because you must make sure there is no conflict between the European and German laws. The court cases that are dealing with these issues also serve as examples for other countries and search professionals to learn from, especially as they implement their anti-discrimination laws.”

ECSSA is also exploring options to train and certify search consultants operating in Europe in order to raise and standardise industry practices. Although this proposal still needs to be further discussed, the shortage of skilled consultants across Europe and an increase in questionable professional practices and dubious consultants is pressing the organisation to take a definite stance.

S

S

O

C

I

A T

I

O

N

Complicating the issue further is the lack of regulation governing the search industry in much of Europe. In Belgium and Italy, search is regulated. But in the UK, anyone can claim to be a headhunter. These discrepancies make resolving this issue much more difficult, yet ECSSA will continue to be a forum and a guide for the European executive search industry.

“At this stage ECSSA is a European association, but we are aware that with globalisation, the need for the search industry to have one voice is also growing.

Establishing solid foundations for a European Confederation of Search & Selection Associations is a first step,” remarked Joachim Staude.

ECSSA’s executive committee is meeting with national associations that represent countries outside Europe, as they are beginning to network and exchange information about how the search industry is developing in these regions. ECSSA is also dialoguing and exchanging information with the AESC, which it views to be a complementary organisation since they are both based on developing the highest levels of professionalism, quality standards and ethics beyond an individual country within the search and selection industry.

As we remember how the EU was created 50 years ago, we see that this process was not easy, faced with various challenges.

Nevertheless, it has continued to make significant advancements, consolidating its foundations and broadening its bases from 6 original members to 27. In the same way, ECSSA hopes to emulate this process, speaking as “one voice” and representing the European Search Industry’s best interests as it continues to rise to the challenges that lay ahead.

Dr. Joachim Staude has close to 30 years professional experience in consulting, HR consulting, executive search as well as selection.

He has served clients in various industries on all kind of management levels and functions, and is currently and CEO of PMC International. A leader in search and selection, Joachim Staude has been elected President of the ECSSA in 2004 and is Vice President of the BDU (Association of German Consulting Companies) since 2001.

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

ISSUE 30 2007 search-consult

dillistone number 30c.indd 23

S

23

3/20/07 11:17:49 AM

S

E

A

R C

H

- E

M

E

R

G

I

N

G

M

A

R

K

E

T

S

G7 BecomesE7

By Mark Geary

B

y 2025 China will be the world’s largest economy and India the world’s third largest economy.

The current G7 will have been replaced by E7 “the emerging seven” - which are made up of Brazil, Russia, India, China, Indonesia, Mexico and Turkey - who will have surpassed the G7 group of developed nations.

THE RISE OF THE EMERGING MARKETS There is already a rapid relocation of manufacturing activity taking place.

Automobiles, aircraft engines, clothing, footwear, computers, mobile phones, domestic appliances, toys and furniture are some of the products that are being made in large and increasing amounts in

Let’s take a look at some of the statistics: Country

Population

Ave Age

GDP

CHINA

1.3 bn

32

2228bn

10.6%

INDIA

1.03bn

22

785bn

6.9%

INDONESIA

220m

27

287bn

5.6%

BRAZIL

184m

28

794bn

2.3%

RUSSIA

143m

38

764bn

6.4%

MEXICO

103m

25

768bn

3.0%

TURKEY

73m

28

363bn

7.4%

The E7 will be 25% larger than the G7 in terms of US dollars and 75% larger in terms of purchasing power parity. In fact, China will have surpassed the US in purchasing power parity by 2050.

What are the implications of this for the management of human resources? We have already seen the electric pace of growth in China, with India fast out of the starting blocks and catching up.

24

GDP Growth

China, India, Russia and Brazil. Walmart alone imports US$ 15bn dollars worth of goods from China.

This trend will continue and accelerate for the next 50 years. Why? Delphi, the major automotive parts supplier to General Motors, illustrates why this is occurring. Delphi is now trying to emerge from Chapter 11.

One of its biggest problems was that its labour costs were too high. As a result of its restructuring, the company

is forecasting that it will be able to reduce its labour costs from US$26 per hour to US$16 per hour. If you take into consideration that the labour cost in China, India, Brazil and Indonesia are US$1 per hour, then you can understand why so many companies are opening up offices and factories there.

The relocation of sophisticated manufacturing from the G7 nations to the E7 nations is already moving at a fast pace. This requires large numbers of experienced expatriates and local managers, engineers and technicians to source this influx. In support of these high tech activities companies such as Intel, Visteon, Phillips and Carrier have set up major Technology centres in E7 countries. We have already seen massive outsourcing of IT and back office operations to India.

This is happening in Brazil, Mexico and Vietnam as well. Russia has become a global player in both oil and gas. Brazil has become a pioneer in bio-fuels. Indonesia has developed its vast natural resources – including timber, oil, gas, minerals and precious metals. As Turkey’s economy develops closer economic links with the EU, the role of the state is shrinking as massive privatization efforts are taking place in essential sectors, such as industry, banking, transport and communications.

In fact, Turkey is becoming a major

search-consult ISSUE 30 2007

dillistone number 30c.indd 24

3/20/07 11:17:50 AM

S

player in the garment industry. Mexico is considered to be a major oil exporter as the North American Free Trade Agreement (NAFTA) that was signed by the US, Canada and Mexico in 1994 has provided a means for this country to access the US market, leading to an emergent industrial sector. Therefore, all these E7 countries are increasingly becoming major influences in different sectors of the global economy.

BROADENING THE BASES MNC’s are expanding into the E7 for two main reasons. First of all, because it is cheaper to source or manufacture their products in these countries as the costs are significantly lower than in the developed economies of Europe and the US. Competition in the high street is so intense that MNC’s are being forced to find cheaper sources of production.

Secondly, local producers in the E7 are developing international brands, such as Embrayer Aircraft in Brazil, Kingfisher Beer from India and Haier and Broad Air Conditioners from China.

Global trade in goods and services is expected to rise more than threefold to $27 trillion in 2030, and trade as a share of the global economy will rise from one quarter today to more than one third. Approximately half of this increase is expected to come from developing countries. This is dramatic, especially when you take into account that only two decades ago developing countries provided 14% of manufactured imports to rich countries. This figure is now 40%, and by 2030 is expected to supply more than 65%.

At the same time, according to the latest figures of the World Bank, import demand from developing countries is emerging as a locomotive of the global economy. By 2030, 1.2 billion people in developing countries – 15% of the world population will belong to the “global middle class,” up from 400 million today.

This group will have a purchasing power of between $4,000 and $17,000 per capita, and will enjoy access to international

E

A

R C

H

- E

M

E

R

G

travel, purchase automobiles and other advanced consumer durables, attain international levels of education and play a major role in shaping policies and institutes in their own countries and the world economy. In China itself, it is estimated that there is already a middle class (annual income US$ 60,000) of 150m consumers who aspire to, and are, capable of purchasing branded/ imported luxury goods.

Mark Geary

SEARCHING FOR ADDED VALUE Major companies operating in the emerging markets are now looking for high-quality professional executive search firms to recruit for them experienced and technically qualified executives who can speak the language and understand the cultures of these countries. Whilst expatriates will be needed to assist with technology transfers, the majority of these executives will be coming from within the E7 countries. Thus, the Chief Executives and HR Director of major corporations in the US and Europe increasingly want to engage the services of executive search firms that have in depth knowledge and experience in these emerging markets.

They are increasingly requiring these firms to provide them advice on how business is done in these countries

I

N

G

M

A

R

K

E

T

and not just a recruitment execution service. They also want to have a global or regional service provider who can provide a single and authoritative point of contact.

Our own experience in China has demonstrated that because so many firms are setting up for the first time they want advice on where the main activity clusters are, where to locate, how to find an office, how to structure remuneration packages as well as recruiting their staff. Therefore, we have developed our services to respond to each of our client’s individual needs.

We have also seen that our executive search assignments are becoming much more intra-regional. Companies are looking to attract candidates who have good interpersonal skills and understand the cultural nuances.

However, candidate pools tend to be regional rather than global as there are important differences between South America, Middle East and Asia Pacific.

Expatriates are still in high demand, especially those with technical skills who are needed to assist with the transfer of technology. Nevertheless, local country operations are increasingly being managed by internationalized local mangers that have received their education and have gained work experience in Europe and the US. Clients are increasingly demanding that their search partner assess the cultural fit. Those search firms that have local senior consultants who are effective in assisting them to make the “right choice” are greatly valued as they are able to enhance this partnership even further.

Companies that are starting up operations in a country for the first time are progressively looking for advice on payment structures, preferred locations and business introductions. They are increasingly selecting search firms that can provide them with these types of consulting services rather than simply providing them with a good recruitment service.

ISSUE 30 2007 search-consult

dillistone number 30c.indd 25

S

25

3/20/07 11:17:51 AM

S

E

A

R C

H

- E

M

E

R

Looking at the search-consult global league table of the top 5 executive search groups published in 2006, it is instructive to see that the famous names which would have appeared ten years ago whose operations were clustered in the G7 have now been replaced by new groups who have a very wide global coverage and are more strongly oriented towards the E7. These groups largely consist of the better quality local executive search consultancies that provide a wider range of services, which are by definition closely in touch with their local markets. Their consultants are normally senior local business executives, with the occasional expatriate who has been in the country for a number of years and is very well networked. It is obvious that this trend will continue to dominate the search world for many years to come.

The future is the E7. This is what is now driving global economic development.

Executive search consultancy is not just about finding heads, but about strategically partnering with clients to add value in all aspects of human resourcing.

Mark Geary is Managing Director of AsiaNet Consultants Ltd., which is a leading sourcing consultancy in the Asia Pacific region with offices in Hong Kong, Shanghai, Beijing and Guangzhou.

The firm assists companies to set up offices in China, recruit executives and source suppliers.

Prior to joining AsiaNet, Mark held senior executive positions with major international companies such as Inter Continental Hotels & Resorts, ICI and Inchcape PLC. His extensive experience extends throughout the international arena, particularly in the USA, Europe and Asia Pacific regions.

He has lived and worked in UK, Hong Kong, Taiwan and Malaysia. His knowledge of the Asia markets and wide network of international contacts permits him to have a sound understanding of different cultures, customs and industry sectors.

Mark holds a Degree in Business Administration, is a Fellow of the Chartered Institute of Personnel and Development and a Member of the Institute of Directors.

He is the founder and Joint President of the International Executive Search Federation. IESF has 86 offices in 42 countries and is listed as the world’s second largest executive search network and is rated as the No. 1 firm in the Asia Pacific Region in search-consult’s latest annual survey.

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

G

I

N

G

M

A

R

K

E

T

S

Executive Search Events 2007 Executive Search Workshops IIC Partners Americas Regional Meeting TRANSEARCH Partners Meeting FILEFINDER Americas User Conference Executive Search Workshops AIMS Partners Meeting Horton Global Partners Meeting

APRIL 17-18 19-20 20 25 26-27 27-28 27-29

EREC 2007 ER International Partners Meeting CFR Consulting Group Partners Meeting Online Research Training Workshops IIC Partners European Regional Meeting EMA EMEA Regional Partners Meeting

MAY 2-3 5-7 10 14-18 23-25 TBC

EESN Partners Meeting Alexander Hughes International Meeting of Consultants

JUNE 1-2 Stockholm, Sweden TBC Cyprus

AIMS Partners Meeting Horton Regional Partners Meeting ER International Partners Meeting Executive Search Workshops The 2nd Executive Search Practitioner Conference FILEFINDER Global User Conference CFR Consulting Group Partners Meeting IRC Recruitment Annual Conference Executive Search Workshops IIC Partners Annual General Meeting Executive Search Workshops Executive Search Workshops EMA Global Partners Meeting

London, UK Miami, FL, USA Paris, France New York, NY, USA New York, NY, USA Bergen, Norway San Francisco, CA, USA London, UK Lake Maggiore, Italy Milan, Italy London, UK Madrid, Spain Vienna, Austria

SEPTEMBER 6-8 Dubai, UAE 7-9 Dublin, Ireland 21-24 Timsoara/Brasov, Romania OCTOBER 2-3 London, UK 4 5 11 11-12 11-12 17-19 23-25 25-26 TBC

London, UK London, UK Lisbon, Portugal Madrid, Spain New York, NY, USA Vienna, Austria Brussels, Belgium Chicago, IL, USA Barcelona, Spain

NOVEMBER 6 Hong Kong, China FILEFINDER Asia User Conference Executive Talent in Asia: The Global Perspective on the New Battleground 6-7 Hong Kong, China EESN Partners Meeting TBC Athens, Greece

Web: www.asianetconsultants.com Meet Mark Geary at the upcoming Executive Talent in Asia conference. See pages 14-16 for more details and to book.

26

- see FILEFINDER at this event. Tell us about your events: editorial@search-consult.com

search-consult ISSUE 30 2007

dillistone number 30c.indd 26

3/20/07 11:17:53 AM

dillistone number 30c.indd 27

3/20/07 11:18:00 AM

dillistone number 30c.indd 28

3/20/07 11:18:03 AM