search-consult Issue 9

/ ISSUE 9 2001

The International Executive Search Magazine

Management of Change: Gene Shen, CEO of A.T. Kearney Executive Search on the restructuring of his firm

Competition from Within?

Can HR departments Really Compete with Search Firms?

Scandinavian Search: Results of an Exclusive Survey by search-consult

www.search-consult.com

How to Succeed in Tough Times and Mushy Markets

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global executive search

search-consult Entrepreneurial Spirit & freedom from bureaucracy Trusted relationships with clients Global Commitment to client service through our international offices

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

ADVERTISING/ SUBSCRIPTIONS/REPRINTS

High-Touch personal service

Carol Crawford Yann Le Leyour enquiries@search-consult.com

Boyden is investing through the recession We are adding leaders globally to our practice teams in: ●

Board Search

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Management Assessment

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Financial Services

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Pharmaceuticals

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Consumer

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Professional Services

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High Tech

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Many Other Areas

Work with Boyden to find leaders as business comes out of recession For a confidential discussion, contact Chris Clarke, President

or log on to www.search-consult.com

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

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

search-consult is published 10 times a year by Dillistone Systems Ltd, Calvert House, 5 Calvert Avenue, London, E2 7JP, United Kingdom and printed by Printhouse Corporation, London NW10 6ST, www.printhouse.co.uk. All statements, opinions, and expressions are the sole responsibility of the authors and the Publishers reserve the right to amend / alter articles as necessary. The Publishers cannot be held responsible for any loss or damage, however caused, of any materials supplied. Any materials supplied may not always be returned. No part of this publication may be reproduced in any format without prior written consent of the Publishers.

364 Elwood Avenue Hawthorne, NY 10532 cclarke@boyden.com

Front Cover: Gene Shen, CEO, A.T. Kearney Executive Search. Photography courtesy of A.T. Kearney Executive Search.

www.boyden.com

© Copyright 2001/2 Dillistone Systems Ltd

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Korn/Ferry Announces New Strategy www.search-consult.com

UK and Europe North and South America South East Asia and Australia

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KORN/FERRY INTERNATIONAL has unveiled its new global strategy and management team. In the announcement, via live satellite from London to Korn/Ferry's 107 offices in 39 countries, Chairman and Chief Executive Officer Paul C. Reilly outlined his vision for expanding Korn/Ferry from a traditional management search firm to a relationship driven provider of executive human capital services.

"Our clients around the globe have told us unequivocally that they want and need a strategic partner to help them contend with the dramatic technological and demographic forces that are reshaping the demand for talent," said Reilly. "We will meet that demand by evolving our business model in a three-stage process that starts with traditional search services, evolves to larger client relationships, and ultimately emerges as a true solutions provider."

Korn/Ferry will focus on building client relationships around a variety of products and services, including executive search, Futurestep services and management assessment. As part of the operational transformation, Korn/Ferry has consolidated its global support functions of marketing, technology, finance and human resources, and has begun co-locating its front office operations for Korn/Ferry and Futurestep around the globe.

The company has closed its

JobDirect subsidiary and exited the college market.

The company has also stepped up its investment and commitment to its management assessment business, naming Gary Hourihan as the Global President of Management Assessment.

He previously served as Korn/Ferry's Executive Vice President of Organizational Development and is considered a leading authority on management incentive and benefits strategy. Prior to Korn/Ferry, Hourihan was founder, Chairman and CEO of SCA Consulting, one of the world's leading management and compensation consulting firms. Earlier this year William M. Mercer Inc. acquired SCA. "With Korn/Ferry's position as the world's largest executive recruitment company, Futurestep's role as the leading Internet-based provider of middle-management recruitment services and our recent enhancement of our management assessment business, Korn/Ferry is better positioned than any competitor to build numerous global account relationships based on a variety of human capital products and services," said Reilly.

"We have put in place the strategy, the structure and the team that will ensure Korn/Ferry's leadership role in the human capital sector for years to come," said Reilly.

Reilly also announced a range of senior management changes. These are covered in the ‘People’ section on Page 26.

ISSUE 9 2001 search-consult

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DHR confirm acquisition of StratfordGroup www.search-consult.com

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AS REVEALED IN THE LAST ISSUE of search-consult, DHR International, the 6th largest and fastest growing retained executive search firm in the US, has acquired the assets of Spherion Corporation's (NYSE:SFN) StratfordGroup.

StratfordGroup served as the global retained search subsidiary of Spherion.

StratfordGroup is ranked the 13th largest retained executive search firm with offices in strategic metropolitan areas throughout the United States. It provides executive search expertise in the following practice areas: Academia, Energy, Engineering, Financial Services, Healthcare, E-commerce, Consumer Goods, Manufacturing, Nonprofit, Professional Services, and Telecommunications.

Whitehead Mann acquire boutique, reveal results www.search-consult.com

NEWS

THE WHITEHEAD MANN GROUP has announced strong figures for the first six months of 2001. At a time when many firms have reported falling revenues, Chief Executive Gerard CleryMelin revealed that WHM had seen revenues increase by 34% to ÂŁ31.5

David Hoffmann, Chairman and CEO of DHR International comments, "We could not have found a better addition and strategic fit than the StratfordGroup. They bring new expertise to DHR in such practice areas as healthcare, nonprofit, energy, as well as others.

The geographical locations of Stratford provide leadership in markets currently unserved by DHR. Amazingly, DHR and Stratford have only one shared client. We also feel strongly about the culture fit of the two firms."

"The combination with DHR affords Stratford and its consultants the opportunity to operate on a larger national and international platform. One that we believe will serve our existing and prospective clients well," Larry Imely, President of StratfordGroup has commented.

Million while profits have increased by 50% to ÂŁ5.2 Million The firm has also announced the acquisition of Baines Gwinner - a leading boutique in the Financial and Professional Services sectors.

Looking to the future, Mr Clery-Melin commented "Although we do not expect revenue in the second half of the year to be significantly ahead of the first half of the year, our focus on higher margin executive search and consulting as well as the flexibility of our cost base efforts affordsus considerable scope to respond to changing market conditions"

EMA Partners name Gloderer President www.search-consult.com

THE MEMBERS OF THE international network of executive consultants EMA Partners International (Executive Search & Management Consulting Association) headquartered in London have elected Wolfgang Gloderer, owner and managing director of EMA Partners Deutschland, president.

The global consulting network EMA Partners International, was founded in 1988 in England and operates in the national and international recruitment sector for technical, as well as managerial positions. EMA currently ranks among the TOP 20 of leading consulting networks worldwide with more than 100 consultants in 24 countries, on all continents.

>STOP PRESS < Nicholson International NICHOLSON INTERNATIONAL, THE UK based firm with extensive overseas operations are believed to be close to announcing a change of ownership.

Sources indicate that an MBO is being negotiated as we go to press.

Nicholson International was founded by David Nicholson and have offices in 24 countries.

Search in the Middle East

Surviving the slowdown

Research skills

Search in China

We hear from a local practitioner.

Which search markets are surviving and which are growing ?

The first of a series of articles on executive research techniques.

A new industry in one of the most important markets in the world - an exclusive survey by search-consult.

search-consult ISSUE 9 2001

www.search-consult.com

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COMING UP IN FUTURE ISSUES:

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Korn/Ferry re-launches Management Assessment KORN/FERRY INTERNATIONAL HAS relaunched Management Assessment service under the new product name "Strategic Management Assessment."

Strategic Management Assessment utilizes a database of more than 100,000 managers and executives as benchmarks to establish key factors to evaluate skills, expertise, experience and values required to build a competitive advantage for a company's management team. This newly-created behavioral competency model has been statistically validated on the basis of the largest database ever used for this purpose, providing a strong foundation against which clients can now compare their designated executives.

Management assessment is most often employed for critical situations such as a merger or acquisition, succession planning, strategy changes or restructuring.

"Korn/Ferry's proprietary management assessment process provides a thorough and statistically validated analysis of how an organization's leadership team 'fits' with its current and future business strategy and culture," says Gary Hourihan, Korn/Ferry International's Executive Vice

TMP Worldwide announces collapse in Search revenues www.search-consult.com

NEWS

TMP WORLDWIDE HAS ANNOUNCED that Commissions and Fees in Q3 fell by 5% to $361.2 Million (from $381.1 Million in Q3, 2000) but that adjusted net income for Q3 actually rose to $39.6 Million, up from $29.1 Million in the prior year. Closer analysis of the figures reveals that the search division saw revenues fall to $23 Million - down 52% on Q3 of 2000. Over the first nine months of 2001 the practice has achieved revenues of $87 Million down from $135 Million.

President, Organizational Development and head of its Strategic Management Assessment Practice. "Our new strategic assessment product allows us to benchmark a client's team against other top performing executives in selected functions and management levels. Most important, the entire assessment process can be performed in a relatively short period of time, thanks to the technology component that has been developed."

Korn/Ferry's Strategic Management Assessment also features Web-based preassessment exercises that capture each participant's decision-making styles and career motives. These exercises enrich the assessments and offer real-time tangible feedback to each assessment participant to help shape his or her development actions and career path.

This enhancement is linked to the competency model to provide a seamless data profile of each participant and to enrich Korn/Ferry's findings and development recommendations. Clients can leverage assessments performed as a solid basis for recruitment, internal placement for succession planning, management and executive development and training and career development.

Correction www.search-consult.com

NEWS

We have been asked to point out that, whilst J. Friisberg and Partners is part of the IIC Network (Search in the Nordic Countries, Issue 6), it continues to operate under its own management committee as an autonomous business grouping.

Furthermore, a number of the trends described as relating to the Nordic countries, could more accurately be labelled as appropriate to Scandinavian countries.

We apologize for the inaccuracy.

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WEB RESEARCHER

Eliyon.com Whilst much has been made of the impact of the Internet on recruiting, the bulk of the impact has been felt by lower level, contingency-based recruiters.

For search, where the focus is on finding the best candidate and selling a position to him or her, the concept of the 'job board' is generally not all that relevant.

From time to time, however, a tool comes along which is genuinely relevant to the search industry. One of the latest is Eliyon.com.

Eliyon is, quite simply, a superb resource for researchers working in the US market. In short, it is a database of (at the time of publishing) 6.4 million people working at 560,000 companies.

How does it work?

A researcher using Eliyon may begin by searching for companies within a specific industry (found through a free text description) and located within a specific state. For example, a search for executive search firms in the New York area will return 209 organizations. Selecting one will return a synopsis of the key information on that organization - contact information, URL, company description and a button marked "Find People Employed At". Clicking this brings up a list of current and former employees (in the case of Korn/Ferry, over 100 people are identified).

To review the information on a person, the user simply clicks on his or her name - returning information such as career history, academic background and a biography.

Although tremendously powerful, the site is not perfect - all of the data is put together from the web using advanced language extraction tools.

It is impressive stuff, but not always accurate particularly when determining the current and former employments of an individual. Also, as with any web based tool, the information provided is only as good as the information it finds - and that can mean that it is dated.

Despite these few caveats as a tool for kick starting a search, Eliyon is without doubt one of the best we have seen.

ISSUE 9 2001 search-consult

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Heidricks announces $3.9 Million loss in Q3 www.search-consult.com

NEWS

HEIDRICK & STRUGGLES HAS, despite extensive cost cutting, announced a loss for the third quarter of 2001. The firm, number two in the World, announced a loss of $3.9 Million for the period - compared to a profit of $10.8 Million in the previous year.

Executive Search revenues dropped to $99 Million (from $142.3 Million in Q3 2000). US Revenues dropped to $54.6 Million (from $87.8 Million); Latin America fell to $3.7 Million (from $4.9 Million); Europe dropped 17% to $33.9 Million (from $41.1 Million) whilst Asia Pacific dropped to $6.8 Million from $8.5 Million 12 months ago. Leaders Online reported a profit for the first time revenues fell to $5.6 Million from $5.7 Million, but net income was $1.1 Million thanks to extensive cost cutting.

"The overall business environment continues to have a significant impact on executive search. However, because of our world-renown reputation for providing top quality search services at the highest levels of our client organizations, we continue to experience solid demand at that level. In addition, our balance sheet puts us in an enviable position to weather this current economic storm and to react quickly when opportunities arise. As we told our investors last week, we are in the process of reshaping the firm to operate successfully in these difficult times and to prepare for an even stronger future" said Piers Marmion, Chief Executive Officer of Heidrick & Struggles International, Inc. "We are firmly committed to creating an organization characterized by the overarching principles of unmatched service for our clients and profitability for our company."

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Boyden President K o r n / F e r r y forecasts shake out management news www.search-consult.com

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CHRIS CLARKE, PRESIDENT OF BOYDEN, made a series of hard-hitting remarks to future business leaders during a speech at Britain's Henley Management College.

In a wide-ranging presentation, Clarke argued that the decision of search firms to go public was "laying the seeds for future disaster." He argued that public firms had diversified into businesses where they had no competencies, had overpaid when acquiring other firms and had cut corners to the detriment of client service.

Clarke, a visiting Professor at Henley, went on, "Accordingly, the stock prices of publicly quoted search firms had all collapsed prior to September 11, as their diversifications did not pay off and as acquisitions were made at too high a price at the crest of the boom. As the new capital raised was unnecessary and squandered, the only way to pay an investor is from the hide of the professional searchers. It is no surprise that all the firms in public ownership have changed their search CEOs in the last few months, are downsizing by up to 35% and are closing offices. They are now explaining to their remaining clients why their erstwhile searchers have left the firm. Others are queuing up to leave."

Looking to the future, Clarke went on to say, "the underlying drivers of the Search Industry are still in place. There will be a demographic reduction in management experience for the next twenty years as the baby boomers retire. This restricted supply of candidates, coupled with the return to global growth and international trade, will move the Search Industry towards its own recovery in the second half of 2002."

Clarke made one further prediction: "There will be a shake out of players…

Those which are publicly owned will go private or be snapped up. There will be wailing and gnashing of teeth, but for the survivors there is a bright future."

www.search-consult.com

AS PART OF THE CHANGES (PAGE 3) announced by Korn/Ferry, a new management structure has been announced. Reilly announced that Chris van Someren, President of Korn/Ferry's Global Consumer Practice, would assume this new role, which will focus on building truly global client relationships. In his previous position, jointly based in the firm's London and New York offices, van Someren worked primarily with Fortune 500 clients placing hundreds of CEOs and other senior level executives for global consumer-oriented and market driven companies.

Reilly also announced the recruitment of a new senior executive and member of the operating committee, Robert McNabb, who was named President of Futurestep Americas and Asia/Pacific. McNabb was previously president and chief executive officer of Corestaff Staffing, and earlier served as executive vice president of Kelly Services.

The other members of the operating committee include James Boone, President of the Americas for Korn/Ferry; Dick Buschman, President of Europe for Korn/Ferry; Charles Tseng, President of Asia/Pacific for Korn/Ferry; Ken Brotherston, President of Futurestep Europe; Gary Hourihan, President of Management Assessment and Elizabeth Murray, Executive Vice President and Chief Financial Officer.

Reilly announced that in addition to his role as President of the Americas, James Boone will chair the operating committee.

Reilly also announced that Stephen Semprevivo, formerly CEO of Futurestep, would assume the role as Korn/Ferry's Chief Administration Officer, overseeing the global integration of all marketing, technology and human capital to support the new strategy.

Richard Milliman, formerly President of JobDirect, assumes the role of Assistant to the Chairman, and will work with Reilly on strategic investments and new ventures.

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

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NEWS

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Recent and upcoming interviews include: • Hobson Brown Jr. - President and CEO, Russell Reynolds Associates • Russell S Reynolds Jr Chairman - The Directorship Search Group • Regional Focus reports looking at Australia, Spain, Portugal and France Back Issues Copies of back issues of searchconsult are available for £15 per issue. Contact carol@searchconsult.com for further information

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ISSUE 1 ● Dr Jürgen Mülder Heidrick & Struggles ● Executive Search and Management Appraisal

ISSUE 2 ● Steve Potter TMP Executive Search ● Executive Research The Outsource Option

ISSUE 3 ● Jeff Christian Christian and Timbers ● Focus on the Whitehead Mann Group

ISSUE 5 ● Paul Ray Jr Ray & Berndtson ● Search in Germany The Law

ISSUE 6 ● Pat Pittard Heidrick & Struggles ● Germany's top 25 Search Firms

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ISSUE 4 ● Windle Priem Korn/Ferry International ● Chris Clarke Boyden Global Executive Search

/ ISSUE 9

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The International Executive Search Magazine The International Executive Search Magazine

Management of Change: Gene Shen, CEO of A.T. Kearney Executive Search on the restructuring of his firm

Competition from within?

Can HR departments really compete with Search firms?

Scandinavian Search: Results of an exclusive survey by search-consult

www.search-consult.com www.search-consult.com

ISSUE 7 ● Russell S Reynolds Jr. Directorship Search Group ● Search in South Africa ● Corporate Governance

ISSUE 8 ● Hob Brown Jr. Russell Reynolds Associates ● Global Leaders ● Maintaining Quality in Search

How to succeed in tough times and mushy markets

ISSUE 9 ● Gene Shen - A.T. Kearney Executive Search ● Competition from within - in house executive search

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Management

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When the headlines about the search industry scream "industry in turmoil", part of the evidence cited to back up the allegation is that, during 2001, five leading search firms announced changes in their corner offices. For at least one of these firms, the need to change was as much a reflection of internal restructuring, as it was of trends within the industry as a whole. In this exclusive interview with search-consult, Gene Shen, the new president of A.T. Kearney Executive Search discusses his succession and his plans for the future. he roots of the current restructuring within A.T. Kearney Executive Search can be traced back to the third quarter of 2000 and the decision taken by Fred Steingraber, CEO of A.T. Kearney , to retire. His succession plan an unusually democratic process involving the nomination of candidates from within and beyond the consultancy - took some nine months but eventually led to the promotion of Dietmar Ostermann - a 38 year old who had only recently been named head of the firm in Europe.

Ostermann undertook a review of the business, and during this process came to question the value of the Search

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Gene Shen subsidiary. It was felt that the business (which is relatively small in financial terms - it achieved revenues last year of US$65 million compared to the Management Consultancy, which achieved $1.3BN) was not fully leveraging its links with its parent. It was decided that a management change was necessary.

The search firm's succession process mirrored that of its parent. Each officer in the business was asked to nominate

By Jason Starr candidates from within A.T. Kearney Executive Search, Management Consultancy and from beyond the business. Representatives of both the management consultancy and of EDS the ultimate parent of A.T. Kearney Executive Search - interviewed the leading nominees. According to Shen, the process led to an "enlightenment about the strengths of this firm and…. an understanding that EDS and A.T. Kearney consider Executive Search to be a valued partner, not an inconsequential business."

Shen was promoted to the presidency having been head of the firm's Global Financial Services practice. During his two years in the earlier role he had built the practice up to $17.5 million from $3 million while recruiting 35 staff worldwide. Prior to this, he had been a founding partner at The Whitney Group.

His mission today is to broaden the executive search practice into areas such as executive coaching, compensation analysis and management assessment, areas that he believes are natural extensions of the executive search expertise, while simultaneously aligning the search practice groups to mirror the management consulting practices.

"In a phrase, our objective is to provide

'Human Capital, with intellect.' I think that being backed by a major management consultancy and the EDS platform provides a tremendous opportunity for us to be of much greater and deeper value to our clients than a traditional search firm would be."

Shen believes that a strategy of integration could become a virtuous circle - the search business can feed the consultancy while the consultancy can feed the search business. "When the consultants are working on a strategy with a client they will often note a talent gap and a need for incremental - often external - talent. Similarly, the search process creates dialogues about needs of critical strategic importance.

By collaborating more we can provide our clients a number of different core competencies that they will find critical in terms of identifying or enhancing strategic advantage. This enables us to make a much more multi-faceted proposition to our clients than could a one or two dimensional firm."

Clearly, as the boundaries between the executive search firm and its mainstream consultancy begin to blur, the commentator must ask - why not merge the two businesses into one - configure A.T. Kearney on a practice group basis and include specialist search consultants on the same client teams as the other consultants?

"As our industry evolves and we evolve, that will become more of a consummate model. I think in certain ways this structure is more advanced in Europe - Egon Zehnder, for example. It is certainly a sound philosophy."

The concept of synergy through cross selling is not a new one but, as Shen acknowledges, this is not always easily achieved.

"In the distant past we have developed relationships with our consultancy partners based more on personal initiative than on institutional prerogative.

We are institutionalizing it far more than in the past."

This is being achieved in a number of

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ways. In addition to realigning practice groups, Shen talks of developing mutual proposals, creating interlocking regional and industry specialized MBOs between the management consulting and search professionals and of hiring search consultants with mainstream management consultancy backgrounds.

Shen is also instituting further changes behind the scenes. He is shrinking the management group of the firm - for example, the three regional director positions in the US have merged into one.

"My role is to create a lean and mean management infrastructure that will deal with the core issues of running the business - financial control, research,

“.... I believe that our equity will prove to be a far more powerful lure than

one dimensional search practice.” that of a pure,

knowledge management, recruiting and branding. Search professionals are at their best when they are working with their clients - I want to enable them to maximize the amount of time spent doing that."

The company has, like many of its competitors, cut a number of its staff over the last couple of months - however, recruitment plans are afoot to ensure that the overall number of employees will remain at the current level (around 240 people across 29 offices worldwide) and may even rise.

"The figures will probably increase incrementally somewhat, but much of what we do will be in the form of upgrading. We are looking to motivate, develop, and augment our staff in the key industry groups - Financial Services, Technology, Consumer, Education, Automotive, Healthcare, Corporate Governance, Management Assessment and Coaching."

Shen argues convincingly that A.T.

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Kearney is uniquely positioned in a middle ground between the large public firms and the private search businesses.

"We have all seen the lure of equity over the last couple of years. It's become a key component of consultant compensation. I think people's appetites have been whetted now in terms of building long-term wealth in an enterprise. The question is, however, should search firms be public? Most people - particularly with the benefit of hindsight - argue that they should not. In our case, we can offer equity but the difference is that the equity is not in a pure search play - the equity is in a Fortune 100 multinational that is focused on profitability. I believe that our equity will prove to be a far more powerful lure than that of a pure, one dimensional search practice."

Shen believes that his firm now has a footprint in most of the major search markets around the world - the one exception, Greater China, should be addressed in 2002 through the opening of a Shanghai office. Acquisitions are possible but less likely - although, as Shen remarks, "…what is the difference between acquiring a boutique or acquiring three or four individuals? We are open to both prospects and are actually discussing them."

Three months into his new role, Shen is aware that his task will not be easy but is optimistic about his chances of success.

"This is a challenging role, not only because of the market that we are dealing with but also because I don't think that we have truly leveraged our potential over the last few years in the way that we could. So, one of the things we are doing right now is formatting our strategy going forward, learning from our past mistakes and our past successes. We are forging a new value proposition that we believe will be unrivaled in the industry." www.search-consult.com

For more information, visit: Web: www.executivesearch.atkearney.com

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Profile: Dr. Bjørn Johansson Associates

By Barbara Kwateng urich is the home of one of Europe's most successful privately owned executive search firms, Bjørn Johansson Associates. In this exclusive interview with Dr Johansson, we discuss how such a small firm is able to implement international assignments without a network structure and staff retention in the search industry.

The firm prides itself on its position in the market. "We only work at the very top echelons of search. It's a claim that one hears often. All of the largest search firms say they are also working at the highend of search but my estimate would be that 70- 80% of their assignments are middle and upper middle management searches. Ours are exclusively senior management projects".

Bjørn Johansson Associates' fee structure reflects this positioning. The firm ignores the traditional 'one third of first year salary' rule and instead goes for a price based on the complexity of the search. When Bjørn Johansson first started the firm 9 years ago, the lowest fee he would accept for a search was $100,000. Now Bjørn Johansson Associates charges a minimum of $130,000 for any one search. "Our minimum fee level is high… Through this we have positioned ourselves at the top of the market. I don't understand the theory behind our competitor's pricing structure. They may be charging less to search for a CEO in Latin America than for a CEO for an investment banking firm based in Manhattan. In reality, the Latin American assignment may be much more complex… We sometimes feel that our

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fee level should represent 100% of the first year's compensation. My clients don't care whether the assignment is costing them $300,000 or $500,000, they are looking for the best solution and want me to do the search".

As a result, the firm can survive on a low level of searches annually. Bjørn Johansson Associates only needs to do 30 searches per year "to be happy". These searches are not limited to Switzerland.

The firm feels it can achieve worldwide success without being part of a network structure or with numerous offices across the world. This is achieved using an array of "close friendships" rather than through a more formalized network structure. The "friendships" which the company maintains are with firms such as Heiner Thorborg based in Frankfurt and Eric Salmon working out of European locations such as Paris and London - firms with a similar ownership structure to that of the Geneva based firm. The circle was wider; it used to cover Rollo Associates in Los Angeles until the founder Bob Rollo sold to TMP Worldwide and Peter Christ in Chicago who sold his firm to Korn/Ferry International.

Bjørn Johansson Associates claims to give away over $1,000,000 in searches annually. The reasoning behind this can range from "…a conflict of interest to an inappropriate search level. Sometimes it could be because a client firm does not want to spend the fee level we demand," explains Bjørn Johansson. When giving away searches, the firm always hands them to individual consultants rather than to a firm. "One rule is that the

receiving consultant does the best search they have done that year," he continues.

"The system is reciprocal. If I need advice on another search, the person will give it to me free of charge. If they need help on understanding the Swiss market, they will also receive this at no price. Most of the time, I'm giving more than I'm gaining but it helps maintain important friendships".

These relationships help Bjørn Johansson Associates remain international. Despite being a one-office firm, it completed assignments in 7 different countries this year alone. "Most of our searches are done worldwide in terms of candidate identification. We would then fly to the required destinations to interview these candidates whether they be in Sydney or in Stockholm," explains Johansson.

Unlike many of its competitors, Bjørn Johansson Associates does not have its own research department. In its 9-year life, it has worked with the same external research firm which it uses to produce biographies but not to actually contact the candidates.

Outsourcing research enables Bjørn Johansson to keep to his vision of a small, personal search firm. When he launched the firm nine years ago it boasted 8 employees. Today, the number is the same. Having spent a total of 13 years at the big search firms Spencer Stuart, Korn/Ferry International, Paul Ray & Carré Orban International, Dr. Johansson believes that smaller firms are better able to manage client relationships. "From my experience, time constraints mean that

the larger search firms often delegate their relationships down the hierarchy.

However my firm is small enough to ensure that I am always involved in every search. The client knows they’re not just paying for the firm's name. My involvement in a search goes further than just a sales pitch," explains the Norwegian national.

The Managing Director refers to Bjørn Johansson Associates as less of a hierarchy and more as "a family". Dr Johansson feels that every effort is made to foster a family atmosphere. "We go on retreats together for days at a time. For instance, this year, we're going skiing in San Moritz for 4 days. We enjoy each other's company. As well as going abroad to meetings together, we also go to the circus, the cinema and to dinner together.

We're all on a first name basis; the atmosphere is positive and informal. I believe that my colleagues are proud to say they work here".

Creating this atmosphere is one way in which the firm attempts to retain its employees. Staff retention does not just start with the reward strategies which kick in when a new employee joins - It starts with the way in which recruitment is done; "you can't allow yourself too many mistakes at a small firm". At Bjørn Johansson Associates, the family principle is used in recruitment. Everyone has an equal say in the hiring process.

"Anyone joining the firm has an interview with everyone at the firm" he explains. "Everyone has a vote which can act as a veto. That is to say, if someone vetoes a potential employee, then this potential never becomes actual". This could make the hiring process longwinded and difficult. Some would argue in favor of executive decisions rather than vetoes held at every level in the firm.

However Dr. Johansson sees things differently. "If you bring an element into the firm that someone is not comfortable with, you can destroy the whole atmosphere and reduce morale, impacting on performance".

Despite these efforts, the firm is not immune to the 'war for talent' in the

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Although the firms size has remained relatively steady over the years, people have come and gone. Dr. Johansson accepts that "people are forever looking for new challenges, whether this be a different firm or starting a family. People come and go at all levels. We are in a business with little loyalty."

It could be argued that lack of loyalty exists on both sides, the organization and the employees.

The boom in search business did not help matters. "When times were good, people were trying to hire all over the place. Professionals took positions on the basis of money instead of culture or

Dr. Bjørn Johansson quality. We are now entering a new dimension where firms are letting go of up to a third of their workforce, eroding morale and lowering quality."

Aside from the current economic climate, Bjørn Johansson believes that employees also leave firms because they no longer identify with their founders. "If you look at the large executive recruitment firms, they have all changed their CEO in the last year. I believe leadership will be the next big problem in search. The visionaries like Lester Korn, Spencer Stuart and Egon Zehnder are no longer in the limelight. What this world needs are more individuals and stars like Gerry Roche and Tom Neff. The main thing is to remain focused amongst changes in staff and if you start to fiddle with the brand itself, then you have a problem".

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The company is about to enter this process again quite soon. It is looking for a new consultant to help combat the fact that they are "drowning in business".

When Bjørn Johansson Associates finds consultants, they encourage them to go and look at the competition to "make sure they are making the right decision". Dr. Johansson believes that it takes 7- 10 years to discover whether a consultant is measurably good at their job. "By then, you've placed over 50 people and have seen how these candidates are performing in their jobs. This is evident over a period of 3- 5 years. After 5 years, the consultant shows how well they have met the client's wishes. If 70% of placed candidates have left within the 3- 5 year period, the consultant needs to question their methods". Over a 10-year frame, a positive or negative trend will appear.

Having started out in 1980 with the first search firm in Europe, Spencer Stuart, Dr. Johansson spoke at the recent AESC conference about the need for executive search to return to its traditional values. "Search firms have diversified so widely. Nowadays they do Internet recruitment, advertising, human resources consultancy, management assessments and countless other things.

Clients don't know what search firms do anymore, what our brand is. When firms start putting in adverts for a Chief Financial Officer, then I have to put up my hand to say that as an industry, we're losing credibility. We pride ourselves on doing executive search only".

Bjørn Johansson believes that the call for traditionalism in the industry is as much about ethics as it is against diversifying. "Today search has become mass production. Ethics have disappeared into the background. The off- limits status used to be respected however we are increasingly hearing of firms presenting candidates to different clients at the same time. This is simply not ethical". www.search-consult.com

For more information, visit: Web:

www.bja.ch

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Winning the War for Talent:

The New Strategic Imperative Review of the AESC conference by Neasa Ni Liathain, AESC Europe ertainly this year's AESC European conference in Amsterdam was the location to discuss the War for talent and how to master the concept. What a pleasure to see clients and search firms sitting down together identifying talent. Some 130 top retained executive search consultants from all over Europe met and exchanged views on the growing gap between talent supply and demand and how industry leaders can develop innovative management strategies to retain and gain their competitive advantage.

On the eve of the conference a cocktail reception was held for those attending the conference where fellow members of the AESC met each other as well as European press representatives from the Wall Street Journal Europe, the Financial Times and also the Dutch financial newspaper Het Financieel Dagblad.

Representatives from other industries were also present notably those that were to participate in the industry sector panel the next day and the sponsors which included search-consult and parent company Dillistone Systems.

At dinner that evening the AESC Research on Leadership and Corporate Governance Award was officially presented to Professors Michael Segalla, Groupe HEC, Lorenz Fischer, University of Cologne and Karl Sandner, Vienna

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University of Economics and Business Administration for their article entitled: "Making Cross-cultural Research Relevant to European Corporate Integration", which was published in European Management Journal Vol 18 N°1 February 2000. Professor Michael Segalla accepted the award on behalf of his co-authors and reiterated the importance of academic participation for business strategy.

AESC members took the opportunity to thank and applaud Anthony Saxton who stepped down as Chairman of the AESC Europe after many years of supporting and advising the AESC and as advocate of the profession.

Didier Vuchot, Korn/Ferry International succeeds Anthony Saxton as European Chairman of the AESC and Roger Stoy, Heidrick & Struggles succeeds Eric Vautour, Russell Reynolds Associates as global Chairman.

The conference kicked off next morning with a speech from Jean-Philippe Caude, Leaders-Trust International and Chairman of the AESC Conference Committee who introduced the impressive schedule consisting of four main stages: McKenzie and Company inc. presentation, an industry panel entitled Talent strategies: current state of play and industries perspectives, The President, Peter Feilx's speech on AESC activities and an executive search panel

featuring AESC members.

Center stage was then given to Bernd Uhe, Nicolaus Henke and Beth Axelrod of McKenzie and Company inc. who argued that winning the war for leadership talent is about much more than frenzied recruiting tactics.

This dynamic presentation proved to be of great interest to the audience apparent from the buzz at the coffee break. The retained executive search industry can lead the transition of change that is evident through their role as "thought partners" to CEOs. Bernd Uhe explained that winning the war for talent was about the timeless principle of attracting, developing and retaining highly talented managers. Due to the fact that the working models that were predominant in the past have changed in the last few years means that the employee has more flexibility and freedom than ever before.

Managerial positions are multi-tasking; it is typical for executives to move from one company to another and network-based structures have an effect on these events.

These factors have many implications for companies and it is for this reason that a talent strategy is equal to a business strategy today and recruiting strategies need to be rebuilt and weaved into the organization structure. There are, however, roadblocks to achieve this goal and companies face some roadblocks as

products and budget are firstly more important and negative feedback is difficult to give. Also according to McKenzie, no urgency is apparent as a lack of talent is not transparent and there is a hesitation relating to strategic choices that are made within the company structure. A longer-term talent plan is an unknown concept to most companies and there is always low incentive to attract people and to develop a strategy that retains them. Incentives should be based on long-term impact rather than short- term impact. It is in this area of development that the retained executive search consultant can assist companies to develop their strategies visà-vis retaining and gaining talent.

Morning coffee was followed by the industry panel, Talent Strategies: Current State of Play. Richard Donkin, editor of ft.com careers page and journalist with the Financial Times moderated this panel and introduced his four panellists from different industries. Ben Cannon, Director, Organisational Effectiveness, Goldman Sachs, Paul Culleton, Human Resources Director, Johnson & Johnson, Anthony Gilbert, Group Management Development Director, Vodafone Group and Alan Burnside, Human Resources Director, Valeo Climate Control. A company's corporate culture was deemed to be very important when interviewing a potential candidate for a position. Did the potential employee belong and fit in to the corporate culture? Ben Cannon described the following questions: Can I make a difference to the company, to my family, to the world? Is work interesting, intellectually, emotionally? Do I belong here? Am I building wealth and doing that quickly - thus investing in my own personal freedom? If these factors were fulfilled by the company towards the individual early, the chances are that he/she might stay.

Paul Culleton clarified the Johnson & Johnson credo for the audience and mentioned that J&J did not adopt a structure and opted for the free approach to entice individuals to develop their careers there. He explained that if people

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were to stay at J&J rather than joining competitors the company would be pleased with this type of cross fertilization to other sectors, which unfortunately was not the case often enough. He also claimed that in-house HR executives were in direct competition with executive search consultants and did not have the same amount of mobility as the consultants. Talented individuals crave to be understood, to have compensation discretion and to manage their own careers. Alan Burnside stated that economics was the bottom line at his company, closely followed by environment. In terms of Human Resources the company still had a long way to go. Anthony Gilbert claimed that Vodafone is reinventing itself to focus on customers and that it is a brand to believe in. Its vision and values means that it does emphasize people within its HR strategy. It was also emphasized by the panel that work and life balance was equally important to individuals today.

After lunch, Peter Felix, President of the AESC introduced the AESC initiatives to date and its mission to represent the retained executive search profession globally through government affairs and legal challenges, as well as visibility and promotion of the industry in the public arena . Also inherent to the AESC projects is the BlueSteps.com project, one of the many member benefits available to the members of the AESC. He explained that BlueSteps.com has global scope and is an online database with over 3, 000 profiles of talented, multilingual executives worldwide. It is also an interactive directory, an automated referral system and offers visibility for member firms. It is another talent pool for members of the AESC to use when looking for candidates on a global scale. He encouraged members to take advantage of the database, easily accessible on www.bluesteps.com Joe McCool of Kennedy Information introduced the next panel moderated by David Lord, Executive Search Information Services. The participants to the panel

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consisted of Beth Axelrod, Principle with McKinsey and Company Inc, Matthew Wright, President of Russell Reynolds, Bjørn Johansson, Managing Director Bjørn Johansson Associates, Glenn Irvine, Managing Director Glenn Irvine International, Dick Buschmann, President of Korn/Ferry International, Manuel Marquez, Managing Director of Spencer Stuart Europe and David Schwartz, Human Capital Management Director of Goldman Sachs.

All agreed that talent management is very important to executive search firms.

David Lord had three questions that all panelists would answer during the time allocated. These were: What are the changes facing the industry at the moment? What are the greatest challenges facing each company and where do the panelists see the executive search industry five years from now?

Partnerships and relationships were deemed important to the panellists.

Glenn Irvine and Bjørn Johansson emphasized the fact that there are different challenges facing smaller firms in comparison with larger firms. Smaller firms are effective through their networks and their quality of work. Manuel Marquez, Managing Director Europe, Spencer Stuart claimed it had its second best year in 2001 although profitability had suffered. He said that social systems and larger organizations take time to digest changes. Future challenges to the executive profession will be the emergence of talent agents , new and more sophisticated services to the clients' community such as management appraisal and the development of new practices such as board practices.

McKenzie closed a very successful discussion with the remark that talent strategies of the future need to be assessed and that specific changes needed to be added on to the strategies of companies.

www.search-consult.com

For more information, visit: Web:

www.aesc.org

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Australia and New Zealand:

Search in the Antipodes

By John B. Peebles he Australasian executive search market has felt the impact of the global slow down and the events of September 11 - in spite of its isolation from the rest of the world. Australia has been hit harder than New Zealand, which has remained buoyant on the back of good international commodity prices for primary products, particularly in dairy.

The executive search markets in Australia and New Zealand are well developed. Australia has for many years had a significant presence of the major search recruiters, with only minor representations of international search firms in New Zealand. Behind the internationals in all centers are numerous regional or local firms and a number of individual operators.

The best brands are well established in Sydney and Melbourne and include "the names" of Egon Zehnder, Russell Reynolds, Spencer Stuart, Korn/Ferry and Heidrick & Struggles. Korn/Ferry is the only big firm with an office in New Zealand, although the majors market into that country's top corporates. TMP search has a presence in both Australia and New Zealand but industry observers comment that they are submerged in the wider TMP recruitment brand making it difficult for clients and candidates to distinguish boundaries

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between search and selection.

Long term, Australia will continue to dominate the region, with New Zealand, in effect, operating as a "state". Auckland is the third key center in the region and with a flying distance trans-Tasman of three hours, it is a regular "commute".

The most noticeable feature of downturn in this region is the predictable pattern set

by US based multi-nationals in a time of crisis, namely a capital retreat to the US. The markets in Australasia are small, and with 20 million people in total neither Australia nor New Zealand have escaped the effects of globilization which has seen decision makers in multinationals, and executives driving supply chain agreements, retreat from either or both countries.

The Australian downturn was not eased by some noticeable company collapses this year, (for example Ansett Airlines), with the resulting loss of thousands of jobs. With Australia better placed in resources and wealthier than New Zealand, country management has been in retreat to Sydney or Melbourne. With those decision makers now resident in Melbourne, Sydney, and increasingly Singapore or other parts of Asia there appears to be a much more remote approach to decision making in the region.

The scale of market downturn in Australia

can be seen in reports from analysts such as ANZ Bank who stated at the beginning of October that the number of jobs advertised in Sydney newspapers have fallen 49.6% since the peak in November 1999. That is certainly impacting on Australian recruiters.

The relatively small size of companies in the region - particularly in New Zealand and the weak value of both currencies mean that markets of such small scale do not hold international interest or make significant gains in profitability to warrant heavy offshore investment. The search firms will inherently remain small by international standards.

Most search recruiters in Australia list three to fifteen professional consulting people backed by research and support facilities.

In New Zealand the larger search firms hold only two to four professionals plus research associates and support. That's not surprising in a country where there are only 70 companies with more than 1000 employees. It is a country of small business.

Merger and acquisitions in the region has also seen the number of companies dwindle - a process not unheard of offshore.

The recession can be gauged by the down sizing of the search firms (and locals have certainly not escaped cut backs) and the way in which fees have been

restructured. In the region it is harder than ever to maintain fee levels that US and UK firms view "as the norm". International firms quote 28% up to 33% of annual remuneration but often show lower yields with the effects of 'project fee' charging that has become a norm in the market.

Search firms in Australia and New Zealand have also been subjected to an increasing number of client led "supplier agreements" where the client has ordained a fee regime on the basis of multiple assignments or guarantee of exclusivity.

The key international players face a competitive local market with some very able regional/domestic suppliers who have extended their global reach with modern technology and network alliances.

A real difficulty for international firms in multiple country searches out of this region is attracting the attention and support of international partners with the lower fees structured in Australian or New Zealand dollars. Those fees convert on less than favourable terms into US dollars or UK pounds. Apart from a few major searches the market pays much less than the United Kingdom and the United States with average salary packages for CEO'S in Australia or New Zealand unlikely to reach internationally attractive levels.

There are companies that offer CEO packages on an international scale but those are not the market average. This is clearly seen in recent salary surveys such as Mercer Cullen, Egan Dell whose last remuneration report suggests CEO's in the top group in Australia are between A$500,000 to A$800,000. The highest third quartile figure in that survey of 293 CEO's was just over $1 million in the food manufacturing sector (March 2001).

Newspaper reports list top CEO's of the major Australian companies at well above this. One article last year noted that the chief executives of the top 150 publicly listed companies had an average pay rate of A$1.8 million ,with a gross package value of A$8.4 million.

Similar newspaper reports list New Zealand's top CEO remuneration at NZ$2.9 million (US$1.2 million), with only a few breaking the NZ$1 million mark

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John B Peebles John B Peebles was educated in Auckland, holds Diplomas in Business Administration and Printing, an MBA and a Post Graduate Certificate in Business Research. He is currently enroled in a doctoral programme at Waikato University. Trained as a journalist after leaving university, he

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(US$420,000). The constant plateau of the New Zealand sharemarket means share options have not developed as an incentive.

Search firms in both countries are being called on more regularly for international reach - one firm reported up to 30% of offshore candidates on offer from its shortlists. There is a strong demand to seek expatriates who wish to return to Australia or New Zealand, understand the culture and will accept the market conditions.

Tracking these people in their careers offshore is increasingly important for the search consultant.

The search market in both countries for the next nine to twelve months is expected to be equally if not more difficult. With a tighter economy where employers will squeeze consulting fees it is unlikely there will be significant growth.

The New Zealand market (still buoyant on the back of high commodity prices) will suffer more in 2002. It has had little growth in search in the past five years as companies regionalize and disband their headquarters in New Zealand. That has meant more high-level functional roles in

moved into management with a major newspaper publishing and printing group, and attended Australian Administrative Staff College, Mt Eliza, Melbourne in 1972.

Professional Director of John Peebles Associates, he has worked in the senior executive recruitment market for nearly 30 years and is one of the most experienced chief executive and senior executive recruiters in Australasia.

He has also completed major organizational reviews and audits. Past/present directorships include The Broadcasting Corporation of New Zealand and Chair of the Board of the Auckland Philharmonia Orchestra.

New Zealand but fewer searches for chief executives who report independently offshore or to local boards.

That New Zealand has held against the trend can be seen in the New Zealand institute of Economic Research update in September 2001. It reported labour market conditions in NZ had improved from all angles in the June 2001 quarter. Paid hours, filled jobs and wages all increased and unemployment sank further to a thirteen year low around 5.2%. This is well below the European unemployment average of 8.3% or, say, Canada at 7.3%.

In Australia employers are "bunkering down" for the worst result in years and there are obviously signs of deferral in IT, capital expenditure and new employment initiatives. New Zealand is cautious, but holding, with more senior executives pessimistic about economic growth in 2002.

This will mean 2002 is the year of the "survivor" in search. www.search-consult.com

For more information, visit: Web:

www.jpasearch.com

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How to Succeed as an

Independent Recruiter in

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Tough Times

Mushy Markets he first order of the day is mangiare. That means earning money, you know filthy lucre!

Forget lofty Vision and Mission Statements, posh office pads too. They come later, at the fatter cat stage. Eating comes first. Cash flow therefore is the indispensable nutrient.

Decide your positioning. Choose between being a mini-domestic "metoo", milquetoast emulation of the multinational marauders or a bodacious "me" operation daring to stand up to the biggies by being at least distinctive and probably better.

Promotion comes next. Direct and indirect, lashing together old linkages for new forays, cold calling and hobnobbing, strategizing and targeting, all the stuff of basic training. An article here, an interview there, a speech wherever, all help. Make noise. Get people to know about you, to have you in their mind when the next search comes up. Don't worry too much what is said about you.

Worry aplenty about how well known you are.

Turn out a good product. A good

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product begets the best promotion: wordof-mouth. Stay away from the blather, the platitudes and the preaching. Reap realities. Evaluate honestly. How? On what you know the client requisite to be.

No artful articulations nor silky, seamless nostrums to leverage and enhance candidate acceptability, please. Get to the hard facts. Go for the warts! Hide nothing! The market for snake oil dried up a long time ago. Draw from the expertise your own professional life experience has imbued in you. Don't delude yourself or clients. Headhunting is neither esoteric nor mesmerizing. It is common sense well organized, intuition well harnessed, judgement as objective as you can make it and as subjective as the case warrants. Some recruiters sermonize on the notion that regimented candidate evaluation uniformity is a sine qua non to successful executive recruitment . Nonsense!

Recruiting firms are by their very nature a breed apart staffed with individuals who rather tend to think for themselves, individualistic types with personality and professional traits which

By John Smith

,as a rule, set them a distance from orthodoxy.

They would not be headhunters otherwise.

They are mavericks. In the main, if they were as superlative as they oft-times bill themselves as being, they would not probably have departed the corporate folds from whence they came. They have strong opinions to be availed forged from searing sojourns in the toasty real world where people are made whole. There is no advantage in suppressing their valuable subjectivity via a desensitizing, cookie-cutter, automaton candidate evaluation format. That discourages stimulating, creative, objective and, yes indeed, very personal insights. By no means can uniform opinion criteria be equally applicable, as claimed, to all candidates, for all jobs, in all countries, cultures and companies. Nope! At Smith Search we give our very best objective and subjective points of view, unvarnished and unhampered.

If the client demands the same criteria with a minimum of variance the solution is quite simple: have the same recruiter carry out the search work in the far corners of the

world irrespective of where it may be.

Some call it Direct Global Search. Call it what you may, it helps explain why, though I operate mainly in Mexico , have also personally conducted searches from the Southern Cone to Scandinavia. It is as inaccurate to assert that all headhunters must judge alike as it is to hold that all men are equal!

The kind of candidates we seek have to be winners, good guys of good stuff. That means they are working, not out prowling around, not sending us their CVs, but willing to listen when we call.

They are bilingual, bicultural, usually MBAs with multinational corporate employment experience behind them, achievers. Sometimes, better yet, they have had a professional punch in the nose - a setback - in their careers which has enhanced their reality check (read maturity) levels mightily in their upward career paths. It's undeniable. Subjective opinion weighs in heavily and is eagerly sought on these not so easily quantifiable considerations.

We local boutique firms do not have international databases, no. Nor do we have group practices, local contacts in most major worldwide markets, nor Preferred Provider Agreements. Not withstanding all that, we do have some pretty important advantages that have kept us not only surviving but prospering, a sampling: 1. We have fewer client off-limit restrictions than multinational corporations with their entangling tentacles around the world. That means the off-limits policy in Mexico, which is usually one year, is less restrictive for the local firm than it is for the multinational.

2. Clients can talk to the recruiting firm's boss/owner/founder, whatever, when dealing with the local firm. Not so easy with a multinational. People like to be able to talk to the boss, the man who made it all happen. And they also know that when confidentiality is paramount, accessing the Head Honcho helps keep a lid on the ruinous rumor mill.

3. Local multinational client General Managers know that in dealing with a

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national recruiting firm they do not run the risk of being bypassed and pressured at the headquarter level. Put quite simply, the politics is a lot less intense.

For the national recruiter the local General Manager is his most important contact, his court of last resort. For a multinational recruiter, not necessarily.

As a result the comfort level for the country General Manager, even the multinational corporation ones, is sometimes much greater with the independent, boutique operation.

4. Most times, client organizations operating in Mexico care a fiddler's farthing about a recruitment firm's capability in far off lands. They want Mexicans for Mexico. Exotic it is indeed to be able to speak of a service capability in Paris, Tokyo, New York or Buenos Aires, but most of the time who cares? Not many, that's who!

Being successful as an independent recruiter in tough times and mushy markets means putting first things first.

Making money is, as I say, understandably then, an overriding concern. Nothing pejorative about that.

Quite the contrary. You can only make good money if you are consistently competent at what you do. If you deny the primacy of making money in the name of some vaunted messianic corporate zeal it does not follow that you are any more competent or any less competent than a boutique operation.

Something else: the best preparation for becoming a recruiter is life itself. Maybe you have been a consultant, but more likely you have been a businessman.

That's better. You have been out there in the trenches, fighting the wars, winning the battles, losing a few but knowing how the game is played not from the ivory tower, theoretical standpoint but from the battlefront itself. This provides you with high sensitivity and deep appreciation capabilities, often not in the purview of many practitioners.

Stick to industry standard ethics. The behemoths are munificent in their pronouncements on the importance of professional ethics and etiquette, yet it is

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John Smith well known that during times of stress and how else can you call these times we are living? - they are often the very first to break ranks.

Many are discounting, some are even working on contingency. The smaller guys such as ourselves, the so called "boutique operations", are much less susceptible to such debauching tactics because we do not have headquarters taunting us for ever better revenue streams, the almighty corporate bottom line.

Furthermore, slashing fees during slashing times serves only to besmirch the intrinsic value added nature of our services. A Top Five Firm's Mexico branch just placed a Director of Finance with a huge multinational corporation, totally on contingency! Had we done that we would be characterized as an amateur, corner store operation not up to industry standard! Yet, I challenge anyone to uncover an instance where we have discounted or gifted searches.

In the end, we local boutique operators get the best dividend of all. We are our own bosses!

John Smith is President of Smith Search in Mexico. www.search-consult.com

For more information, visit: Web:

www.smithsearch.com

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Competition

from Within

By Barbara Kwateng and Jason Starr

n times of economic turmoil, recruiting revenues fall. It's simple cause and effect, a reflection of client hiring freezes.

When the economy picks up, revenues will return.

Or will they?

Every economic slowdown puts pressure on costs and HR is not an exception; can internalizing search produce real savings, or is it a false economy? search-consult looks at the relative merits of in-house and external search functions.

When considering the relative merits of any business decision, it helps to begin by clarifying the definitions.

Large firms have long had an in-house recruitment facility which has primarily been responsible for recruiting for lower level positions - either through the maintenance of a database, advertising on the web or in the more traditional media or through the management of contingency agencies.

In short, recruiting for positions for which there are a relatively large number of suitable candidates. Traditionally, the search firm is called in where there are only a handful of suitable candidates and

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where these individuals have to be approached and convinced of the benefits of making a career change.

These are positions where the cost of using an outside firm is considered to be less than the value added.

Search firms are used in these circumstances because, in theory, they can add value at the various stages of the search process. These are: ● Creating an understanding of the needs of the client. ● Identifying prospective candidates ● Approaching the candidate ● Negotiation and closing the deal Looking at these stages in more detail enables us to debate the relative merits.

UNDERSTANDING CLIENT NEEDS Logic would dictate that no outside organization can understand the client as well as the client can. Dave Quinn who leads the American Express Executive Search practice in Chicago believes that outside search firms can achieve an understanding, but that it takes some time "Typically, the leading predictor of success in any search is the time spent 'prior' to the identification of

targeted candidates. Investing the time to meet with the hiring executives….

And (to) gain an understanding of the organization, its culture and values is extremely important."

A large organization may have many cultures and, therefore, the in-house recruiter will have to work equally hard to determine an understanding of the needs of the client.

The benefit which the external

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adviser brings, however, is the wider view.

Peter Bedford, who heads up recruiting for the British Broadcasting Corporation comments "Headhunting isn't just about sourcing and interviewing.

It's about sourcing, interviewing and insight…". The ability to benchmark one firm against its competitors can bring a degree of clarity and understanding to the decision which is not always available to the internal recruiter.

David Lord, who advises firms on the selection of search firms believes that this brings a lot of value "Search firms may never reach the depth of understanding that internal recruiters can, but the search firm can compare (the client) with other firms they have dealt with - adding value to the process."

for internal search makes it an expensive option for organizations likely to undertake less than 20 searches per annum.

Of course, in many cases, candidates are brought into a new position from a completely separate industry (the legendary placement of Lou Gertzner at IBM by Gerard Roche of Heidrick & Struggles, is a case in point). An inhouse recruiting division is never likely to build up the breadth and depth of knowledge to be able to hire a candidate of this caliber. Peter Bedford of The British Broadcasting Corporation acknowledges this "Sometimes the external perspective is needed for very senior jobs. The Executive Recruiter can provide input based on having seen a candidate at work over several years."

IDENTIFYING CANDIDATES Dave Quinn believes that this gives the external search firm a key advantage over a firm conducting search internally - "The ability to objectively source and identify 'stars' (who most likely are working at direct competitors) is a value added service to firms. In addition, the ability to do so quickly due to our vast networks and databases gives us a further advantage". Michelle Rajkumar is a lateral recruiter for Fixed Income Decision at Lehman Brothers in London.

She acknowledges that information gathering is harder for the in-house recruiter - "The only disadvantage relates to information gathering. If a firm were to use direct headhunting for all of its business divisions then a proper (research) unit would need to be set up with specialist practices". Anna Cornwallis, Recruitment Manager for Accenture, also understands that the internal recruiter begins at a disadvantage "…it takes a lot of time and effort on the part of…. the internal recruiting team to establish and build the kind of knowledge and understanding required…". This has a cost - David Lord estimates that the cost of setting up a suitable 'infrastructure'

APPROACHING THE CANDIDATE A major issue for many search firms particularly the larger ones - is off limits. For the in-house recruiter, this problem does not exist - the internal client is able to recruit from any of its competitors. Michelle Rajkumar sees other benefits.

She believes that candidates that she has dealt with are receptive to a direct approach from a competitor "(the inhouse recruiter is) seen as a trusted advisor maintaining a relationship with (the candidate) from A to Z". She also feels that this ongoing relationship provides feedback to her

“The ability to objectively source and identify 'stars' ...

is a value added service to firms.” business that she would not get if she was dealing with an intermediary - "… the real 'buy off' comes from being able to control the process: I am better equipped to sell Lehman to a candidate I have approached, he or she will get straight and authoritative answers to their questions and, because I report to the business and sit on the trading floor,

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Dave Quinn I am included in every aspect of that hire".

One candidate recruited by Lehman using the direct approach methodology commented, "I felt that the initial approach and process was executed smoothly. From the offset, I was able to obtain 'real' information about the role and the individuals I would be working with. The biggest advantage of speaking with an internal recruiter is that the confidential aspect of our discussions were absolute" NEGOTIATION AND CLOSING THE DEAL Once again, the biggest strength that the executive search business is able to bring to this stage of the process is information. Search firms will normally have a good understanding of the compensation plans offered by competitors of a client and what it will take to persuade a good candidate to jump ship. The problem relates to how search firms are paid. Traditionally, the search fee has been a flat percentage of total compensation, and this means that the consultant managing the assignment is put in a position where negotiating a good deal for a client will, by definition, lead to a smaller fee.

To avoid this, David Lord recommends that fixed fees are agreed between the search firm and its client at the outset of the project. He argues that a fixed fee

David Lord

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set at the upper level of the likely compensation range is in the best interest of both the search firm and the recruiter - an opinion he supports with the following three arguments: i. A fixed fee at the outset creates a meeting of minds over the actual compensation which will be required. Some searches fail because the client thought that he could hire at $150,000; the search firm accepts this despite knowing that a package of around $250,000 will be required to fill post. Client never intended to pay more than $150,000. If fee is fixed from outset, then consultant forced to say that $250,000 required as their fee depends on it. ii. To avoid discussion about fees at a later stage: packages have become more complex. What will 33% be based on? Stock options and other incentives too? Issues such as this will lead to discussion which may be a distraction from the actual search.

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iii. Agreeing a fee in advance removes any perception of conflict that the consultant may have in recommending a higher salary for the candidate (i.e. to increase their fees). Search consultants have opportunity to advise impartially on a number of issues.

In speaking to our interviewees, it is clear that very few organizations would attempt to run an in-house search for the most senior of positions. At Lehman Brothers, for example, any position from VP upwards is likely to be outsourced.

International assignments also tend to be given to the search firms - "(they) can add a lot of value when working on cross border assignments" explains Anna Cornwallis.

This is a point reinforced by David Lord "The farther the search is from the corporate HQ, the more likely a search firm will be used.

The trend in finding executives is to find local people - relocation has become more difficult." Helen Hol, currently at the London School of Economics, but

previously a recruiter with both search firm Amrop and consumer electronics giant Philips, provides an interesting perspective on international search "Salaries differ in different countries; for example, the US firm will pay a higher salary than will a firm in Japan or the Netherlands where the focus is on the overall compensation mix.

Search firms sometimes have problems relating this to the candidate."

David Lord argues that the best model includes "intelligent use of external resources along with some level of internal resources", He talks of clients who have saved up to $5 Million by restructuring the process but points out that the loss in shareholder value caused by a poor recruitment decision at a senior level can be far more than the cost savings of bringing search inhouse "The aims should be: 1 Quality; 2 - Speed; 3 - Costs. Focus on the process and the savings will occur as a happy by-product."

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Tel: (+44) 1423 529087 Fax: (+44) 1423 507466 e-mail: persona@personauk.co.uk Claro Way, Harrogate, North Yorkshire HG1 4DE England

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Search

By Pilar Gumucio

candinavia is the hub of Northern Europe. It is a gateway between three strategic markets: the Nordic countries, Russia and the Baltic region as well the rest of Europe.

While the four countries all trade extensively within Europe, and generally believe in close EU integration, the degree of commitment to the European ideal varies.

Finland is a member of the EU and the EMU (European Monetary Unit), and believes that full integration is vital for its development.

Sweden and Denmark are members of the EU but have not joined the EMU and have opted out of some aspects of the Treaty of Maastricht - wary of deeper integration as well as losing their national identities.

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Norway has not joined the EU, yet takes advantage of many benefits as a member of the EEA (European Economic Area).

For virtually a decade, the Scandinavian economies have performed at above the capacity for sustained growth, growing faster than most of their European counterparts. In fact the World Economic Forum ranks all 4 Scandinavian economies among the top 14 most competitive nations worldwide.

All four Scandinavian countries boast buoyant open economies, enjoying political and economic stability. Economies are managed with a combination of capitalist zeal and an eye for the welfare state.

Many tend to identify Scandinavia as one

block because of the member countries’ intertwined history, close geographic proximity and similar political and social systems. In practice, however, it is fundamental to remember that although the Scandinavian countries may appear homogenous, each has its own path to development -reflected in their values, economic structures and legal frameworks. If you analyze each country's economic structure, you will see that they have their own characteristics: ● Denmark is characterised by highly specialised small and medium sized businesses often in niche production areas- especially in high tech, consumer goods, retail and distribution. Denmark

FINLAND

NORWAY

SWEDEN

5.3

5.19

4.5

8.9

GDP (US$ BN)

158.8

118.3

159.4

227.8

GDP PER HEAD (US$)

28,726

24,376

28,702

24,465

2.9

5.6

2.3

2.9

AGRICULTURE (%)

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3.5

2

2.2

INDUSTRY (%)

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29

25

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POPULATION (M)

Independent Executive Research

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SCANDINAVIA: KEY ECONOMIC DATA

ROYCE ASSOCIATES (est. 1994)

Tel:+44 (0) 20-8682 4027 Fax: +44 (0) 20 8672 6808 email: GeorgeRoyce@cs.com

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Scandinavian

DENMARK

Candidate identification and screening.

Assignments cover a range of industries, functions and levels from junior managers to board level.

Cross-border research in French, German and Spanish.

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REAL GDP GROWTH (%) GDP- COMPOSITION BY SECTOR Annabel Hodgson Newton Research Associates, Unit A6, Hatcham Mews Business Centre, Hatcham Park Road, London SE14 5QA Telephone: +44 (0)20 7639 4844 Fax: +44 (0)20 7639 4833 Mobile: 07957 659103 e-mail: a.hodgson@newtonresearch.co.uk

72

67.5

73

INFLATION (%)

2.9

3.3

3.1

1.0

LABOR FORCE (M)

2.8

2.6

2.4

4.4

UNEMPLOYMENT (%)

5.4

9.2

3.45

6.0

SERVICES (%)

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LEADING SCANDINAVIAN SEARCH FIRMS: Most respected firms in region (based on search-consult survey of search practitioners)

DENMARK

SWEDEN

EGON ZEHNDER RAY & BERNDTSON RUSSELL REYNOLDS AMROP KORN/FERRY HEIDRICK & STRUGGLES LISBERG J. FRIISBERG & PARNERS/IIC PROFESSIONAL SEARCH/CORNERSTONE TRANSEARCH GAARN THOMSEN/AIMS GLOBESEARCH LAIGAARD & PARTNERS PRICEWATER HOUSE COOPERS BRONEE & PARTNERS

AMROP HEIDRICK & STRUGGLES EGON ZEHNDER KORN/FERRY SIGNIUM INTERNATIONAL (SIMS) ALUMNI TRANSEARCH RAY & BERNDTSON BOYDEN HORTON KJELLBERG & PARTNERS MICHAEL BERGLUND CV SEARCH A PIECE OF SEARCH BROGGER & PARTNERS

FINLAND

NORWAY

EGON ZEHNDER JAAKTO LEHTO J. FRIISBERG & PARTNERS/IIC BOYDEN AMROP RAY & BERNTDSON SIGNIUM INTERNATIONAL (SCANSEL) HEIDRICK & STRUGGLES TRANSEARCH KORN/FERRY ACCORD HEAD HUNTING

ISCO/IIC EGON ZEHNDER BJERKE & LUTHER AMROP BOYDEN KORN/FERRY HEIDRICK & STRUGGLES SIGNIUM INTERNATIONAL (SIMS NORGE) TRANSEARCH RAY & BERNDTSON MRI SCANDINAVIA WISE ADVICE

has a strong service sector. ● Sweden has a strong industrial base. It also has a strong service sector. It is the leading financial center in terms of market volume as well as the development of new financial services.

Furthermore, Sweden represents the largest single market among the Scandinavian countries in terms of GDP, trade and foreign investment. Several multinational corporations have established their headquarters there. ● Finland is dependent on natural resources as well as its high tech and biotechnological industries. Its service sector is also very important to its development. ● Norway's success has traditionally been based upon natural resources and is abundant in hydroelectric power. It is a major oil and gas producing country and the largest producer in fish farm industries. Norway is trying to diversify it’s economy as IT and biotechnology are

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becoming important sectors. Its service sector is also very important.

Legal differences should also be taken into account. Finn Aagaard, Managing Director of Professional Search/Cornerstone in Denmark explains, "If you look at the tax systems in Denmark and Sweden, you will see that Denmark has a very high income tax, but a very low social security. It is about 15% lower than Sweden. In Sweden, you have a lower salary, but the company has to pay about 40% of social security. The tax burden is very high in Denmark, but low in Sweden. In Denmark, you can fire people in one month, in Sweden it can take up to 6 months. So there are a lot of things to take into consideration."

THE EXPEDITION BEGINS "The development of executive search in Scandinavia started later than in rest of the [European] Continent," reports Lars-Ove Akesson, Chairman of ESK - Sweden's Executive Search Association. Sweden

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initiated executive search at a very small scale in the late 1960s. Denmark, Norway and Finland gradually followed suit during the 1970s and 1980s.

In all four countries, the first clients to use executive search were the multinational companies that had been accustomed to using this service abroad.

As more multinationals opened offices in Scandinavia, the levels of foreign investment and trade increased. Government policies also improved the conditions for creating a very dynamic and highly competitive business climate.

In the 1990s, the booms in the IT, electronics, and telecommunications heightened the development of executive search even further in this region. Local businesses, such as Ericsson and Nokia, attempted to strengthen their international operations as they opened offices in other countries of the Scandinavian region as well as Eastern Europe. Executive search also broadened in scope to include lower levels of search as well as incorporate medium and smaller sized companies.

Ulf Assargard, Managing Partner for Amrop Nordic Search in Sweden, explains, "although multinationals started it, it has extended itself and now everybody uses executive search. It's a commodity."

Isabelle Carlnäs, Consultant for Boyden in Sweden, describes an "explosion within the executive search industry" as many multinational search firms and several local search firms "popped up". Eventually, some firms merged and others closed their operations -which in turn, served to make the development of executive search more sophisticated and mature.

EXPLORING THE MARKETS For some executive search professionals, like Ulf Assargard, Sweden may still be considered the "more mature market". He elaborates, "Currently the difference is minimal. It might have been more pronounced 5- 10 years ago, but now the differences are minimal. The difference is that it started earlier and has more multinationals."

Lars-Ove Akesson explains that the process of globalization, in conjunction with

businesses having a deeper understanding of what executive search is, has been significant.

The establishment of professional associations, like ESK in Sweden and the Finnish Association of Executive Search, has and will continue to develop the executive search business in Scandinavia.

Ragnar Luther, Managing Director of Bjerke Luther in Norway believes that firms like his have also helped develop the standards of executive search. "We have started new concepts. We have background in recruitment, unlike many of our competitors that have worked in a specific industry and then opened up a search firm because of their experience and the networks they have made in that industry.

This in itself is not recruitment…we search in all branches because search can be used everywhere - if you have the right education and background. We define ourselves as a search company because we know the business...we get our assignments based on our reputation and our high standards of quality."

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Isabelle Carlnäs, Consultant of Boyden in Sweden, reports that new services - such as Interim Management - are also emerging.

THE LEADING WARRIORS search-consult carried out a survey of practitioners in the region, asking search firms to recommend a competitor. The results (detailed in the chart) included both International firms and local players.

The 'typical' firm lists between 2 -9 consultants who are backed by research and support personnel. The majority of the consultants are highly educated, having completed a postgraduate abroad in Europe or the United States. Since it is a strategic gateway to so many different markets, virtually all the search consultants speak English fluently as well as another Scandinavian language. A few also speak French, German and Russian.

Finn Aagaard explains that "the normal package for an executive is a fixed salary, plus bonus and stocks. The sales executive will be 50% salary and 50% commission." .

Fee structure for search firms reflect those in

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other parts of the World. According to LarsOve Akesson, "the standard for the consulting fee is normally 1/3 of the annual income for the employed candidate".

THE BATTLEFIELD The Scandinavian search market is worth US$50-80 million per annum. Over recent years, the market has grown by 20 - 30% every year. Unfortunately because of the global economic downturn, demand for executive search is appearing to slow down as well.

Of course, some sectors perform better than others. Finn Aagaard believes that "IT, biotechnology and telecommunications are presently the fastest growing sectors in Denmark". Consumer goods, retail and distribution have traditionally also been important sectors.

According to Kurt Kääriäinen, Managing Partner for J. Friisberg & Partners/IIC, "in Finland the most dynamic sectors are IT, telecommunications, electronics, biotechnology and other branches of the medical sector." He adds, "Banking and

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Managing Partner Per A Marum (UVa MBA '91) +47 928 68 068 marum@wise-advice.no www.wise-advice.no

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finance have traditionally also been strong sectors. But since the downsizing, demand has slowed down significantly".

Traditionally the most dynamic sectors in Sweden have been consumer goods, retail and distribution, general industry, telecommunications, and IT. Ulf Assargard believes that currently the fastest growing sectors in Sweden are "IT, biotechnology and other branches of the medical sector."

He explains, "Telecommunications was hot a year ago, but not now". The scenario has changed.

"Many international companies - like Microsoft, Oracle and Ericsson - were investing in start ups. But they have all pulled back. There is not much work in those areas now. It is the more well established multinationals that are looking for people."

In Norway, the most dynamic sectors have traditionally been oil & gas, banking & finance, telecommunications, retail & consumer goods and industry. According to

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WHERE ARE SCANDINAVIAN FIRMS LOCATED? Finland Others 5%

Horsholm 10%

Others 10%

Denmark

Helsinki 95%

Ragnar Luther, "IT is still very hot, although not as much as before."

It is important to take into consideration that Norway has a small population and has virtually reached full employment.

Therefore, the labor market is limited and heavily regulated. Ragnar Luther believes that within this context, search becomes more important as a means of "obtaining high quality candidates".

Sweden

Kolding 20%

Others 20%

Copenhagen 60%

Uppsala 5%

Norway Others 9%

Gotenborg 11%

Malmo 10%

Oslo 91%

Stockholm 54%

BEYOND THE BORDERS Cross border search is important for the Scandinavian countries. Lars-Ove Akesson admits, "The Scandinavian region is often considered a common market for many business activities." In fact, many Scandinavian companies are consolidating and merging to compete effectively in global markets.

Kurt Kääriäinen agrees "…in many cases, the whole Scandinavian area is considered a search area. We are looking for the best candidates in the whole region."

Research by search-consult suggests that around 20% of assignments involve a cross

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border element.

According to Ulf Assargard, "the flow of nationalities goes more within a company such as Ericsson or IBM".

Multinational companies, whether foreign or Scandinavian-born, tend to hire personnel that have the same nationality as the multinational company as they set up offices in other Scandinavian countries or expand to other regions.

Ragnar Luther, Managing Director of Bjerke & Luther, explains "they are different settings and frameworks, but the right person can do it from anywhere. What is different is the framework where the company operates. What is different is the relationships, salaries, benefits, ways of hiring and firing, and so forth. It is our job to get the right person, the right job and the right place."

Finn Aagaard - Managing Director of Professional Search/Cornerstone in Denmark, believes that "there are differences in each country". He explains that what is essential to remember when selecting to use search firms is "the

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knowledge about these differences" that counts, especially when deciding where to open offices.

This tends to mean looking for candidates in other Scandinavian countries, Germany, Netherlands, United States and Great Britain.

Many of the cross border searches in Finland come from Eastern Europe and the Far East as Finnish companies are expanding there.

WHAT IS OVER THE HORIZON Executive search in the Scandinavia is certainly dynamic, with a bright future for many years to come. Moreover, if you take into consideration that many companies are merging and expanding beyond the Scandinavian region.

Scandinavia's history has demonstrated that time after time; these countries have proven their capability in adapting to new challenges. As descendants of the Vikings, they have proven their resilience, their keen sense of survival and their desire to venture off to the unknown. This, in turn, is reflected in how the Scandinavian search industry operates.

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headlight Birger Jarlsgatan 2 114 34 Stockholm Sweden Tel: +46-8-679 5410 www.headlightinternational.com

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Key moves in Executive Search this month TMP Worldwide has announced a host of senior level management changes.

These include Tom Zorn named President of Directional Marketing, North America, J.P. Sakey named President of eResourcing, North America, John Mclaughlin named acting President of Executive Search, North America, Andrew Grant named President of eResourcing, Europe and Andrew Simpson named President of Executive Search, Europe.

British firm Cresta Resources is continuing to expand its Investment Banking Search division with the appointment of Simon Barker and Tom Buckett as Senior Consultant and Consultant respectively, taking the total number of consultants to 10.

DHR International has named a number of new recruits. Stephanie Gamber joins as a Senior Vice

President in Philadelphia, Gabriella Colantonia as an Executive Vice President in Los Angeles and Rick Land takes on a similar position in the Atlanta Office.

Heidrick & Struggles has named John Gardner Vice Chairman, Board Services. Mr Gardner will lead the CEO practice.

Stuart Sadick is named Managing Partner for the North Eastern region of the US. Brian Sullivan becomes Vice Chairman for client services.

Roy F Hebard joins Slayton International from A.T. Kearney Executive Search. Mr Hebard will lead the firm's retail and consumer practice.

Cleveland, Ohio-based executive search firm Christian & Timbers has hired Charles Durakis, former CEO of HireFuze.com, as vice president in the

firm's Columbia, Maryland, office.

News on a series of top-level management changes at Korn/Ferry International is covered in the news section.

A Search Consultant without the Internet is like a fisherman without a boat.

Spencer Stuart names Susan Coffin, formerly with Heidrick & Struggles, as Director of its North American Industrial Practice.

NEWS EXTRA Search Network "The International Network of Associated Consultants" has named Kenzer Corporation as its most recent member. This brings the total membership to 19 firms. The network, founded in 1992, is strongly represented in Europe but Kenzer is only the second member to join in North America.

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

SEARCH-TALENT Dedicated to careers in Executive Search

Know your career Know Search-Talent For new career opportunities from around the world view the Talent pages at www.search-consult.com or contact the talent team: Tel: +44 (0) 20 7749 6102 Fax: +44 (0) 20 7729 6108 24hr: +44 (0) 7711 326 188 E-mail: talent@search-consult.com Calvert House, 5 Calvert Avenue, London, E2 7JP UK

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