Whisper it quietly but rumour has it 2012 has not been the best year for external executive search (Korn/Ferry recently announced revenues down 9.5% for Q1 compared to last year). Of course you’ll not find many who’ll admit it and plenty will say they’ve had their best year ever but what’s the reality?
Let’s start by looking at market conditions; are less executives being hired, are search firms no longer able to deliver? Well not exactly, what we are seeing is a major corporate cultural shift in approach to executive hiring and an understanding that one retained search firm may not be the answer to a large volumes of executive hires year on year.
From the late 1990s to pre-recession 2008 the big shift in in-house recruiting was focused on the volume of hires made as finance, procurement, and HR got a grip on reducing total budget spends rather than high cost one off transactions. While you saw many organisations outsource or manage temporary, contract, and permanent volume recruiting spend via agencies more aggressively over time and improve their direct routes to market the impact on search was minimal. That’s changed.
Post recession most firms have got smarter about having direct routes to market at all levels and with even the most senior executive now likely to have some form of public social media profile there are opportunities to directly engage in formal and informal discussion in a way that simply did not exist 5-10 years ago. The search industry may not be dying, and it won’t, but it will be smaller and offer a different service. Why? Well the easy(ier) searches will disappear, the team moves around one executive will be financially capped if permitted at all and delivered by preference in-house as opposed to by a third party, and most importantly companies are hiring professionals directly out of the search world to deliver the same services in-house.
During this period of change coincidentally the search industry became its own worst enemy in trying to protect future revenues and client base. The nature of executive search changed significantly in the 2000s! The metaphorical black book went away as a sales technique (I know that’s a sweeping generalisation!). The emerging pitch became “knowledge is power, and we know more than you”. Search firms got creative, stunning research documents, presentations to make Mac lovers weep with joy at the artistry of what was essentially names on paper alongside colour codes and keys. Spreadsheets! Retrospectively this whole approach may have proved wrong on another level, as recruiting at all levels has become more transactional it may be that the best pitch a search firm could have had would simply to say and prove that “we deliver”. Those people at the top of search firms may have been the same through this period of time but the research minds beneath them became smarter, more consultative, and more able…
Fast forward to today. Who would most businesses like delivering their executive search? A corporate, research driven, career focused, talented, degree educated professional who looks and feels like the organisation you are trying to be in your market? Or the chap who knows a chap on the board who’s done the work for years but does not always deliver and costs a fortune!? Search firms have created the perfect in-house search professionals in their Associate pools for their clients and worse still have failed to offer them a career path within their own firms!
Right now are are at a tipping point in the search industry and many great businesses are reflecting on their search spend and approach. Across sectors you have seen Associates, Junior Consultants, and in some cases Partners jumping ship, swallowing the pay pill and getting the corporate brand on the CV. It won’t happen everywhere but you now have great young(er) search professionals in-house on fixed salaries delivering mandates (that can be cancelled at no cost bar the irritation of recruiter) at a significantly reduced cost while owning the brand’s name and reputation in the market.
External executive search will not disappear, there will always be discreet searches that need to be carried out without the business name behind it to appoint new or replacement hires with minimum fuss in the market. There will always be a market for the specialist either that search partner who knows your business better than you do (they do exist) and always delivers or who can find a security cleared Director of Engineering who speaks Russian and has overseen drilling in Kazakstan for your competitor who you will never know about! But large scale transactional search firms with fixed fees up front, on short list, and on offer are going to struggle to convince clients of their ongoing value while the people they developed at a relatively junior level will be a great asset to their soon to be former clients!
I know this is broad brushed and it will not resonate with all but if there’s two things I firmly believe it is this:
1) Any corporate that spends over £250,000 per annum on search should be employing (or contracting to) an internal search professional or an RPO solution
2) The traditional search firms and models need to change and become far more delivery and outcome focused
This is still an evolving market, search spend is comparatively low in the current climate and the volume of senior hiring is stagnant so it will take time for organisations to either reap the benefits of adopting the in-house approach or reaching a hiring level that can sustain it but more and more businesses have taken the step in 2012 and more and more external professionals want to make the change.
If you already work in-house in executive search and want to share your experiences with your peers at regular meet ups join the Centre for In-house Recruiting Excellence group on Linkedin the next search forum will be held in October.
The team at Social Hire won't just do social media management. Our team work closely with your team to ensure your business sees great value from the service and that your team gets tangible results.
Our digital marketing managers are the wizards that can give you the insight you need to grow your business. Have you had enough of making complex personnel choices that don't work well for your online marketing?
Our specialists are a team that assists our partners improve their presence online by giving online marketing on a regular basis.
You might like these blog posts 5 Content Marketing Mistakes That Will Kill Your Small Business, 9 Social Media Campaign Ideas for You to Try, Winning Combo for Local Businesses: Geofencing and Social Media, and 5 Social Media Selling Tips.