Headhunters feel the pinch

first_imgThe economic crisis has seen leading headhunters watch their revenueplummet. Now they are turning themselves into corporate mentors, writes StephenOverellFor those of you who missed the annual results of Whitehead Mann, the UK’sbiggest headhunter, published this month, here they are. Group turnover is up11 per cent to £64.6m, while operating profit has risen by 33 per cent to£11.5m1. How nice. But what makes the results intriguing is that executive search isofficially in the doldrums. Last year was the annus horribilis of the sanguineworld of headhunting. Between 1993 and 2000, worldwide search revenues tripledfrom $3bn to an estimated $8.3bn2, while the number of search firms in Europeand the US swelled to more than 175,000. The war for talent sent demand skyhigh. In 2001, revenues plummeted by a third, dragged down by the bursting of thedotcom bubble, the global recruitment freeze and the psychological fall-out of11 September. Loyalty, stability and retention became the new currency – wordswhich don’t sit easily with the headhunter’s craft. According to analyst Hunt Scanlon, the top six firms in the world borelosses of $600m in the year to May 2002 after making $2.4bn the previous year. TMP Worldwide, the sixth largest by revenue and owner of the onlinerecruitment network monster.com, posted a drop in revenue of 38.7 per cent in20013. The happy, heady days when whole teams of executives cheerfully jumped shipand headhunters bragged of their latest well-connected scalps – former healthsecretary Virginia Bottomley to Odgers International, top spook Dame StellaRimington to GKN – suddenly seemed a distant memory. So how has Whitehead Mann bucked the trend? Partly because the UK was neveras badly affected by the downturn as the US. But also because it backedwholeheartedly an accelerating trend that has taken hold in executive search:the move into headhunters seeing themselves as being in ‘the talent business’in the widest sense and offering leadership services, such as managementdevelopment and audit, coaching, mentoring, assessment and succession planning.In February 2001, Whitehead Mann acquired the Change Partnership, one of thecountry’s best-known coaching practices. Twenty per cent of the firm’s incomenow comes from non-search work. Coaching revenue is up by 50 per cent. “Coaching is being used more and more as a retention tool for seniorexecutives,” says Gerard Clery-Melin, the company’s chief executive.”It is getting people to feel loved and developed, and proving veryeffective.” It is far from being alone in feeling this way. Many others are hoping newservices will bring about a renaissance. At Norman Broadbent, as blue-chip afirm as ever existed, 40 per cent of its work does not involve headhunting.Clients now want “diverse human capital solutions”, according tochief executive Doug Bugie. “Historically, search has been transactional. But now it is more aboutlong-term relationships in which we look at a company’s current and futureleadership needs,” he says. “We are moving down the organisationlooking at succession issues.” The company does all the assessment and development work for Microsoft andthe Royal Bank of Scotland, while even the Learning and Skills Council has nowoutsourced all its hiring to Norman Broadbent. At the world’s second biggest headhunter, Heidrick and Struggles, nowtagging itself ‘the leadership firm’, UK managing partner Peter Lever says:”People are one of the biggest investments any company makes and it hasbecome apparent they are being treated as assets, rather than costs.” The firm uses what Lever calls “the Jack Welch model” of humancapital. “You have the solid 70 per cent in the middle, the top 20 percent of stars and the 10 per cent who are underperforming and need to bemanaged out. We benchmark management teams against the best in themarketplace,” he says. The irony of this poacher-turned-gamekeeper make-over is probably lost onheadhunters. Ever since some far-sighted souls realised that one of theconsequences of the war for talent in the late 1990s was the ‘commoditising’ ofexecutive search, top firms have been engaged in strategic repositioning toprotect their margins. From being seen as the ultimate well-groomed executive pimps, sleuthing bumsto fill seats, they now want to be seen as strategically involved in their clientorganisations; corporate talent agents concerned as much with retaining anddeveloping in-house star-performers as with poaching somebody else’s. Theknowledge of what tempts someone to jump ship transfers easily enough into whatwill make them stay put. After all, many headhunters have long fostered theimage of avuncular sage to career-focused youngsters. Just like all rebranding exercises, and especially those that followcorporate gloom, there is doubtless a degree of hot air in all this. Nevertheless,the re-branding of executive search is a telling sign of the times. First, it seems that providing a ‘transactional’ service is no longerperceived as a viable model for the long-term – something the HR professionforesaw some time ago. It has to be ‘transformational’ and ‘strategic’. Ofcourse, delivering the right person into the right role is of immense value.But it is no longer acceptable to be quite so hands-off as executive searchtraditionally has been; value is about delivery, involvement and results overtime. Second, it entrenches a move towards organisations having a very small poolof close, trusted partners, who they call on for a diverse range of servicesand who know the business intimately, rather than lengthy lists of contingentsuppliers. One service is a gateway to others. And third, it says a lot about our reputation-obsessed times. Headhuntersalways had something of the rascally middleman about them, with their networks,pretext approaches and target-stalking. Positioning themselves as leadershipexperts, talent agents, coaches and mentors fits with the snowy-whitezeitgeist. Maybe the war for talent had more profound effects than anyone realised.”The principles of the war for talent still hold true,” claims BerndUhe, a partner with the McKinsey consultancy. “Making sure great peopleare joining and then creating jobs for them may be the model which headhuntersincreasingly move into.” References 1 Annual results press release, 11 June 2 The Association of Executive Search Consultants: www.aesc.org 3 Figures from State of the Industry Report 2002, Hunt Scanlon:www.hunt-scanlon.com Research Viewpoint plusRead related articles on this topic from XpertHR’s extensivedatabase free. Go to www.xperthr.co.uk/researchviewpointJoin the Xperts take a free trialBy calling 01483 257775 or e-mail: [email protected] is a new web-based information service bringing together leadinginformation providers: IRS, Butterworths Tolley and Personnel Today. Itfeatures a new Butterworths Tolley employment law reference manual, a researchdatabase and guidance from 13 specialist IRS journals, including IRS EmploymentReview. Previous Article Next Article Related posts:No related photos. Headhunters feel the pinchOn 25 Jun 2002 in Personnel Today Comments are closed. last_img read more