The beleaguered
executive-search industry isn't bouncing back as fast as expected
-- despite a recent spate of departures of chief executive officers.
About 47%
of 195 recruiters surveyed last month said their business has
declined 20% or more during the first half of 2002, compared with
the same period last year. The poll was conducted by ExecuNet,
a Norwalk, Conn. career-management firm.
The economic
recovery "has been slower than anticipated, so companies
are trying to do more with less and are postponing key hiring,"
says Wayne Cooper, president of Kennedy Information Inc., recruiting-industry
consultants in Peterborough, N.H. At the same time, he continues,
many potential candidates "are staying where they are because
there aren't a lot of options" elsewhere.
The string
of corporate scandals also has slowed the search industry's rebound.
Companies that have avoided such messes "are being more cautious"
about recruiting outside executives, says Christopher Hunt, president
of Hunt-Scanlon Advisors, search-industry consultants in Stamford,
Conn.
Some executive-recruitment
leaders blame the industry's sluggish recovery on an overexpansion
during the late 1990s, when firms aggressively hired well-paid
recruiters and opened additional offices. "You saw a bigger
downward adjustment" during this recession because the dot-com
sector collapsed, says Paul C. Reilly, chairman and chief executive
of Korn/Ferry International, a big search firm based in Los Angeles.
Between February
2001 and February this year, Korn/Ferry reduced its world-wide
work force by 900 people, or 30%. The worst may now be over, Mr.
Reilly believes. "The business has flattened out. It hasn't
been heading down [lately]," he says.
The Korn/Ferry
chief expects a huge rebound in search activity once the economy
revives. "The question is, When will the economy start turning?"
Mr. Reilly says, "When people feel good and are willing to
make investments again. And that includes [investments in] people."
Since June
2001, Heidrick & Struggles International Inc. has shed the same
proportion of its global work force as Korn/Ferry. The Chicago
concern has 65 offices world-wide, down from nearly 80 six months
ago.
"There
are bright spots" in North America but no evidence of a broad
upswing, and Europe has yet to improve, says Eric Sodorff, a Heidrick
& Struggles spokesman. "Are there going to be more cost cuts?"
he asks. "It all depends on how the economy does."
In one sign
of the search industry's malaise, TMP Worldwide Inc. is scaling
back its once-ambitious plans. The New York company ran an advertisement
a few years ago that bragged about its 61 top-notch executive
recruiters, which it largely nabbed through a string of takeovers.
Only 38 still work there, says Carolyn Lomot, a spokeswoman for
TMP, which also owns Monster.com, the popular job-search Web site.
"We
are going to be more of a global boutique with fewer people"
than before, says Michael Kelly, North American president of TMP's
executive-search division. Mr. Kelly confirms the division recently
closed its Austin, Texas, office, but says the firm "will
have capability world-wide to service all of our clients."
He notes he will hire 10 recruiters for North America this year.
"Wešre going after [people] a partner at a time rather than
through acquisitions," he says.
On the other
hand, Spencer Stuart is experiencing an uptick in business volume,
reports David Daniels, CEO of the closely held search firm.
Some
smaller players also are seeing a turnaround. Patricia Cook, owner
of a search boutique in Bronxville, N.Y., says her firm's revenue
rose 50% during this year's first half from the year-earlier period's
depressed level.
