Let the good times roll

In recent years, I cannot remember a more positive time for the executive search profession. By Peter Felix, President of The Association of Executive Search Consultants

Today, we seem to be enjoying a combination of forces that are driving demand for executive search to an all-time high, and yet this is tempered by more demanding clients and the recent memory of a frothy market that encouraged over expansion. Together it seems that these forces are helping to constrain ‘irrational exuberance’ and yet provide a supply of high quality, albeit difficult, work that highlights the need for the profession and yet helps us to maintain standards.

As with all professional services, executive search is judged by the satisfaction of the client and the reputation of the individuals practicing it. The media can be helpful or negative in building that reputation. Fortunately, instead of some of the hounding, negative press that plagued the profession in the early 2000s, both in the US and Europe, recent media coverage appears to be much more positive. Articles in BusinessWeek and FORTUNE Magazine in recent months have focused on the high demand for executive talent that is again raising its head as a fundamental in the corporate suite. The coming together of the demographic realities of the War for Talent, McKinsey’s pre-boom analysis of the executive market, with the boardroom pressures in the post-Enron era, are producing a focus and pressure on the need to find the very best high performing executives – and in this, the press recognize the vital role that is played by top search consultants.

But, as BusinessWeek points out, it is not just business as usual. The days of the all-white male board with no international representation seem finally to be now fading fast. Diversity and competence are key criteria in the search for the very best and increasingly the search community will have to look like the market. The days of the glamour CEO died with the recession and the Enron scandals. Now it’s all about people who are top team motivators, first among professional equals, who know how to stimulate best thinking and performance from highly motivated but highly individualistic and non-conformist people – people who will make life choices that may well exclude the top jobs in the corporate hierarchy.

The age of the knowledge worker is with us to a degree that we are only perhaps now beginning to understand. Just as with the digital revolution, it has crept up on us, but we are only beginning to assess its full significance. When the capitalization of a knowledge company such as Microsoft or Google can far outstrip that of a major manufacturing company the leverage of the talented individual is brought sharply into focus. Bill Gates highlights this phenomenon by saying that for Microsoft to lose its 20 most talented individuals would be a crippling blow.

But the beauty of the current benign environment for executive search is that it’s happening on a worldwide scale. No longer do we expect to hear of Eastern Europe or Latin America or India being in the doldrums. In all of the developing markets for search around the world we are seeing highly positive trends. The challenges may not be the same in each market but the need for management talent is undisguised.

According to a recent AESC survey of 221 senior retained search firm executives worldwide, 66 percent predict that the financial services sector will dominate global executive search activity in 2006. In addition, respondents predict the information technology (53 percent) and biotech (55 percent) industries to be strong in 2006.

Retained executive search consultants are equally as optimistic about industry growth for 2006 (77.1 percent) as they were for 2005 (76.9 percent). Respondents expect increased search activity in 2006 versus 2005 in professional services, government, hotels/tourism, transportation and publishing. Additionally, respondents expect less search activity in 2006 vs. 2005 in manufacturing, consumer products, retail, marketing/advertising/communication and media/entertainment.

Peter Felix is President of The Association of Executive Search Consultants, the worldwide professional association for the retained executive search industry. The AESC’s mission is to promote the highest professional standards in retained executive search consulting, broaden public understanding of the executive search process, and serve as an advocate for the interests of its member firms. For more information, or to download the AESC Code of Ethics and Professional Practice Guidelines, go to www.aesc.org.