15 Jan 2010
Last year marked the 50th anniversary of the AESC and almost of the birth of the retained executive search profession itself. In 1959 only a few small firms practiced executive search, most of them being in the United States, and most often lead by principals who had left management consultancies such as McKinsey and Booz Allen.
Worldwide revenues were then only a tiny fraction of the $11bn that they reached in 2008.
Much has changed since then, but much has also remained the same. As always, the purpose of retained executive search has been to provide an exclusive and committed service to the top management of organisations when recruiting executive talent. Confidentiality, ethical and professional practices, and high level consulting and recruiting skills still typify the seasoned executive search consultant. Such attributes are rightly valued by clients, as confirmed in the AESC’s latest Talent Management survey where 97 percent of clients rated ethics, professionalism and confidentiality as highly important in the conduct of executive search.
Maintaining the highest quality in executive search consulting is at the heart of the AESC’s mission and that of its member firms. AESC member firms worldwide are accredited with the AESC seal of quality and abide by a strict Code of Ethics and Professional Practice Guidelines. Member firms also stand by AESC Bills of Rights for both Clients and Candidates. In 2008, AESC members handled over 50,000 senior-level executive search assignments around the world and by the end of 2009 employed more than 6,000 search professionals in 1,000 offices across 70 countries. But not even quality could defend against the 12 months from October 2008 to September 2009, as the world was hit by the financial tsunami and the management of many organisations around the world went into a freeze.
The strong trends which had driven the high demand for executives in the previous five years seemed to disappear as everyone held their breath to see what impact the crisis would have on their business. For the first six months of 2009 it was plain that executive search assignments had slowed to almost a trickle with global revenues down on average 40 percent. Very few search firms experienced less than 25 percent declines in revenue and some saw as much as a 50 percent decrease.
The first signs of recovery began to appear during summer 2009, when ‘green shoots’ emerged as Boards of Directors began to take long delayed decisions to either replace or upgrade senior appointments. But still the demand was patchy, uncertain and very dependent upon sector or geography. Certain parts of the world and certain industries did not seem as badly affected as others. Energy, healthcare and consumer goods, though down from last year, were not decimated. Australia, Latin America and Canada held up much better than the United States, the UK or continental Europe.
But the real revival began in mid-September 2009 as we continued to hear better news from around the world. The market now seems to be easing and every search colleague whom I speak to assures me of a stronger pipeline, of management now taking decisions, of replacement and upgrading, and of strategic thinking on the part of client organisations. In other words, management are now back in the driving seat and are confident enough to be taking critical, longer term decisions about their senior executive talent. Even the financial services industry has begun significant recruiting again resulting from some of the major banks performing better than expected.
We are all aware that there has been a sea change and that the world post-recession will look unlike that pre-recession, at least for the foreseeable future. America needs to become a nation of savers, not spenders; China needs the reverse. Western financial institutions will be under the eye and thumb of the regulators until they mend their ways.
Globalisation has continued imperceptibly and as we surface from the gloom we find that the balance of power has changed: G7 to G20.
Yet some things are recognisable from before the driving force of scarce commodities, the demographic shifts in developed economies, the shortage of talent in emerging markets compared to the avowed expansionist ambitions of those countries. China and India, while still relatively small markets for executive search, are showing strong resurgence and many commentators expect them to lead the world out of recession. As major Chinese and Indian corporations seek expansion overseas so they will need foreign management skills and they will need to compete in the international executive marketplace.
In the developed economies demand is coming from a range of sources: Boards and C-suite executives finally making long delayed decisions, boardroom struggles and controversies over executive performance, government regulation and the imposition of pay constraints. All are stimulants for change and a call to one’s executive search firm for help. At the search firm, consultants need to be ready to get back into action to be confidants to the HR Director and top management, strategic advisers on human capital management and objective assessors of management quality. Clients now need urgent help after months of procrastination and uncertainty.
This is an exciting time again with the gloom lifting and challenges stirring people to action. The world needs rebuilding after one of the most severe shocks in generations and talented people will provide many of the solutions. AESC member firms are there to offer a helping hand to find these executives and attract them to exceptional opportunities.
For more information about the AESC, its services and its member firms, please visit http://www.aesc.org