2009 Global Executive Search Trends

Mary Kier

Patricia Epperlein

Peter Waite

USA
The global economic crisis has frozen executive recruiting in all parts of the world. Companies internationally have started trimming internal sourcing and recruiting units. Others who have been using external recruiting companies are now adopting a "wait and see" policy when it comes to adding a new team member. Renegotiation of executive services fees, delays in decision-making on both client and candidate sides are starting to become more prevalent.

"There is clearly a contraction in the market," says Mary Kier, Vice Chairman for Cook Associates Executive Search. "2009 will most likely see less search activity than 2008, simply because most companies do not know what the future will bring," says Kier.

Joseph Daniel McCool, a BusinessWeek online columnist, thinks that 2009, compared to 2008, will be a year of careful strategic selection of C-level executives, cautious assessment of internal and external talent pools and thoughtful consideration of succession plans.

"I believe smarter organizations will be choosing to work with a smaller number of recruitment partners more strategically than ever before in order to identify succession risks early and to engage in talent mapping that will surface potential successors (inside and outside)," says McCool, who is the author of Deciding Who Leads which was recognized as "one of the best business books of 2008" by Soundview Executive Book Summaries.

In addition to a more strategic approach to executive search partner choice, risk management is the popular headline of the business industry these days.

"Companies would be wise not to overlook their own succession risk management," says McCool. "If they do, they'll pay a high price, not only in terms of the high cost of continually recruiting from the outside, but also in terms of their credibility with shareholders and the growing number of institutional shareholders who are now demanding a voice in board- and C-level succession decisions," explains McCool.

South Africa
Imports partners Germany 10.9%, China 10%, Spain 8.2%, US 7.2%, Japan 6.1%, UK 4.5%, Saudi Arabia 4.2% (2007) 2008 was a year of numerous challenges for South Africa: shortage of power, rising fuel costs, double digit inflation, and double digit mortgage rates.

Although all micro- and macroeconomic factors speak for a rather tough year, Georgina Barrick, Managing Director at Renwick Talent, InterSearch, South Africa, is optimistic. "We have identified that we have as many (only different) challenges facing our business now as we did in the so-called boom times. We believe that the current crisis could provide a huge opportunity for South Africa," says Barrick.

Barrich's optimism stems from the fact that South Africa has a shortage of 511K job categories listed on the National Master Scarce Skill report. This data registers a comprehensive number of skills that are needed by the country to secure economic growth. "This (filling in job categories) will require a massive cohesive intervention on behalf of government and big business to maximize the transfer of skills in the small window of opportunity."

Belgium
Frank Schelstraete, a partner at Schelstraete & Desmedt InterSearch in Brussels, Belgium, sees the plum of uncertainty, accompanied by the fear and flow of bad news that was characteristic of 2008, to continue into 2009.

According to Schelstraete in Europe, in Belgium specifically, hiring in general has gone down by 20-30 percent. "Investors and companies in general are waiting; others are simply trying to survive," explains Schelstraete.

" Executive search companies will most likely strive for survival by reducing fees and working on a contingency basis," says Schelstraete.

Malaysia
The executive search industry in 2008 and prognoses for 2009 are no different in Malaysia than in any other part of the world.

" Given the financial crunch, companies are shopping for cheaper recruitment options. Many prefer on-line recruitment or are less inclined to give retained positions," explains Jennifer Khoo, Business Director, EML-BNB Executive Search Malaysia, "Renegotiating search fees has become regular," says Khoo.

" 2009 will be more challenging but there might be opportunities in selected industries," says Khoo.

Brazil
Brazil's executive search services industry experienced growth in 2007, which resulted in a direct pressure in the market and a need for executive search companies to differentiate, be more efficient, and offer competitive fees. The 2008-09 global economic meltdown holds a lot of changes for the industry.

"In 2009, only the strongest will survive," says Patricia Epperlein, Partner & Managing Director at Mariaca Executive Search in Brazil. "More and more companies are freezing hiring. Most of the searches in the last few months have been for substitutions," said Epperlein.

"We are still not sure in Brazil if we are at the beginning, the middle or towards the end of the crisis. We believe that there may be a reduction by five-10 percent in executive recruitment in 2009, but this has not yet happened," says Epperlein.

Australia
Until the end of 2008, Australia's economic sky was mostly cloudless. According to the Australian Bureau of Statistics, the unemployment rate for October 2008 was at an all time low of 4.5 percent.

Globalization and boundless economic ties have changed Australia's economic climate. China is Australia's second-largest export destination, thus Australia is highly dependent on China's economic well-being, which has been hit strongly by the global financial crunch. Developments in China directly affect Australia's economy.

" Many of our clients are not recruiting and are waiting for natural attrition to reduce headcount," says Peter Waite, who represents the Asia Pacific region, South Africa, Middle East and is a Board member of InterSearch.

According to Waite, junior and middle management recruiting has been very dry, while C-level executives remain in demand. He predicts that the next quarter will be critical for Australia since there might be more clarity about the Chinese and global economic states.

Japan
The financial industry meltdown prevented David Wouters, Managing Partner of InterSearch Japan, from reaching his projected budget.
" The uncertainties in the world's marketplace have been complicated by the lack of transparency emanating principally from the financial industry and some of the most prominent and respected global corporations...and often from our own governments," says Wouters.

The "fear" factor is evident in management decisions. "Clients fear making the wrong hiring decision or just because of the uncertainties in the marketplace," explains Wouters. Today's market forces prospective clients to postpone projects or create new conditions in their contracts, which causes delays in the decision-making process. "We see this as a weakness in leadership, but none-the-less something we have to deal with," explains Wouters.

" The eventual solutions will take time as the seeds of greed and mistrust have been sewn for at least the past eight years," concludes Wouters.

Wouters expects 2009 performance improvement to reach a mere 25 percent with a full recovery to occur in 2010.

India
" Though the pink slip syndrome is evident in India in the financial services, media, retail and aviation sectors, what is more worrying are the hiring freezes occurring across these industry segments. 2009 may witness a tough job market in terms of recruitment and compensation,"says Jyorden Misra, Founder of Spearhead Corporate Services Pvt. Ltd.

Due to India's integration into the world economy, it is unlikely that India can remain immune to the global financial crisis. "The crisis in sectors such as financial services and realty, which were affected first, will have a domino effect on other sectors in the long term," explains Misra.

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Growth Despite Gloomy Outlook
Despite the gloomy economic state of the world, certain market sectors are expected to strengthen in 2009. According to the Association of Executive Search Consultants (AESC) survey, the healthcare and government sectors are going to see a 30-32 percent increase in executive job opportunities.

Recruiting demand in non-profit (52%), education (48%), professional services (39%), media/entertainment (34%) and IT (30%) are expected to remain relatively stable.

Regional health of practice areas differ from country to country depending on particular micro socio-economic factors.

" As in any economy, great companies look for great leaders, and even though the economy will be forcing companies to hesitate to make changes to their executive teams, they may find they must make those changes in order to stay ahead of their competition," says Kier. "Companies that look to innovate with new products will have to innovate with key people as well," concludes Kier.

"In the U.S., there are many executives departing the financial services and real estate markets and beginning to explore new opportunities in life sciences/healthcare and the emerging fields of green and clean energy and technology," says McCool. McCool believes that these are the long-term growth markets and many recruiters will be entering these markets in 2009.

Key areas in South Africa include: information and communication technologies, construction, and engineering. Depending on the prices in commodities, mining may once again become an area of interest for executive search recruiters in South Africa.
Schelstraete of Belgium mentions public and social sectors to be in need of more skilled professionals. "Large construction companies and some fast-moving consumer goods companies have been less influenced by the economic meltdown and will be recruiting," explains Schelstraete.

Khoo of Malaysia confirms a demand in food, education, hospitality and pharmaceuticals industries. Latin America, Brazil in particular, is concentrating on IT, energy, logistics and legal services sectors with CFO functional segment leading the demand. Besides investing in green energy and efficient IT management tools, companies that cater to low-to-middle-income consumers are expected to be actively recruiting.

The ongoing transformations in Brazilian socioeconomic status levels and consumption profiles, resulting from the upward migration of millions of people into the middle class, are leveraging opportunities in a number of segments."About 10 million Brazilians have recently been upgraded to "C" class (middleclass status) and, despite the crisis, this segment will continue to consume and contribute to Brazil´s growth, projected at 2.5 - 3% for 2009," says Epperlein.

In Australia, construction and engineering industries are expected to see relatively high demand. "The Australian government has introduced two stimulus packages and a considerable amount of infrastructure projects are being fast tracked," explains Waite.
According to Wouters, Japan is going to deal with a lot of high-level management replacement assignments in a variety of industries, the highest demand in the high technology industry.

Some of the sectors which are already gaining ground in India are Developmental (i.e., non-profit), Health Care, Life Sciences, Microfinance, and Telecom sectors.

The Health Care sector has been given considerable support by the Indian government. The 2008-09 budgets have ensured state support in the form of a five-year income tax omission allowance to all new hospital projects in smaller towns. "Despite the economic slowdown, growth in health care recruiting is expected to continue," says Misra.
Misra projects that U.S. President Barak Obama's Health Care initiative is going to lead to more affordable health care services. The need for affordable generic pharmaceutical products may lead U.S. health care specialists to look overseas to alternative pharmaceutical companies. Misra expects Indian pharmaceutical companies to be considered a serious partner in this endeavour. This will lead to further recruiting opportunities in this segment.

While on the microfinance ground, Misra expects mainstream investors to find opportunity in this sector despite the unfavourable climate.

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2009 CEO Characteristics in Demand
Whether in Japan, Australia, Belgium, Malaysia, Brazil, India or the United States, companies will be looking for innovative, stress-tested leaders who can utilize existing resources, create value, and be a positive and stimulating communicator.

"Companies will want to hire people who are resilient, can think on their feet and who can energize themselves and others," says Kier.
Barrick believes that in South Africa, CEOs, whether prospective or standing, will need the ability to manage the business with less human and financial resources as companies reduce assets. "They will need to be tenacious, excellent leaders and capable of achieving financial results and maintain or grow market share in a difficult economic environment," says Barrick.

Khoo of Malaysia expects executives with a proven successful track record to be the joker card- holders for prospective CEO opportunities. "Candidates who can drive and implement cost savings and are good at multi-tasking will be given a priority," says Khoo.

According to Epperlein in Brazil, companies are looking for executives who are inventive in creating value while reducing production and operation costs and thus will survive or even thrive through the crisis.

Another major skill companies will be looking for in prospective CEOs is careful attention to unseen opportunities and good communication abilities.

Requirements in Australia do not differ much from other continents when it comes to leadership needs. "Unspotted track record of business management in distress is certainly going to be the foremost distinction for the successful candidate," forecasts Waite.
A strong and stable career history is going to be a decisive factor for Human Resource Managers in India. "Given the uncertain times strong business management skills, global awareness and long-term vision are going to be important for the winning talent," says Misra.
Whether these characteristics will lead in fostering a much-needed sense of stability only time can tell.

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2009: What's in Store?
The current marketplace evokes uncertainty, which goes hand-in-hand with risk aversion. And therein lies the dilemma. This seemingly minor relationship of uncertainty and fear of risk leads executives, recruiters and organizations to search for permanence in the familiar. That is why confident decisions are going to be crucial this year.

"When it comes to decision making, it really all comes down to the number of confident decisions one makes, and doing the homework on the market, the challenge, the resources in order to establish that confidence," says McCool. "In this environment, companies cannot and should not tolerate a pattern of repeated mistakes by any leader, including the CEO," he says.

Another major challenge of 2009 is finding a way to do more with less. This complex task entails a number of adjunct aspects such as confidence in company prudency, lack of confidence in changing employment and reluctance of companies to recruit.

"We will have to deal with the challenge of presenting career opportunities to candidates and being able to convince them that the client company is financially sound and that there is a security," explains Waite. "Many candidates are reluctant to make a move in this uncertain time. "Better the devil they know," says Waite.

This issue leads to another challenge that is, at the same time, ironically, a solution."Executive search companies will have to ensure a closer cooperation between clients and candidates and communicate positivity and optimism to both," says Waite.
Despite being somewhat sheltered from the slowing global economy, India is implementing new strategies to combat the ripples of the turbulence.

"The main challenge in India will be in moving comfortably-placed candidates to exciting new ventures and start-ups. Especially in industries that may be feeling a cascading effect from the economic downturn," says Misra.

McCool sees the main challenge of 2009 in the companies' ability to balance between managing expenses and yet upholding organizational excellence. "The board and top management has to walk a fine line between cutting back and rewarding/incenting their executive teams so they stay engaged, motivated to succeed and can be retained. Everyone needs to take on a longer-term orientation to career growth and wealth creation," says McCool.

Wouters of Japan expects to deal with the challenge of engaging in new business endeavors with international companies opening branches in Japan. "We must take a more aggressive approach to new companies entering Japan," says Wouters.

Brazil and South Africa have their own particular socio-economic challenges influenced even greater by the global economic conditions.
Contracted economy, increasing credit and increasing consumption are the three challenges leading Latin American economists mention while projecting for 2009 in general.

Increased government participation to help offset the current economy is seen as a major factor in salvaging the situation. Epperlein believes that the private sector has to be an active participant in its turn. "In Brazil, we need to continue with our projects and our efforts for a more ample global presence and competitiveness in the global arena. We cannot afford to interrupt the negotiations with the rest of the world and lose the space we have conquered for our products and services," says Epperlein.

Executive search practice in South Africa is sensitive to external and internal socio-economic as well as the political climate. The formation of a new political party, the Congress of the People (COPE), as a result of a breakaway of the African National Congress (ANC) party members, inspires hope that the domestic political climate will stabilize and democracy will prosper. "We will finally settle down to become a normal democracy where the ruling party has 50% (and not 2/3rds) of the seats in the National Assembly." says Barrick.

Eagerly anticipated stabilization in Zimbabwe is another factor leading to economic progress in the region, which will ultimately affect executive search demand.

Overall reluctance to launch retained searches, flexibility in search fees and terms are yet another unavoidable challenge the industry is going to face in 2009.

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Coping: Leading in 2009
Winston Churchill once said that attitude is one little thing that makes a big difference. Attitudes are contagious. In 2009, exuding a positive attitude will be one of the most important behaviors to help navigate through the turbulence.

"For years there has been a war for talent, now there is a war for employment," says Schelstraete.

That is why Schelstraete is going to give hope to people he works with, highlight positive news, meet more candidates and keep clients aware of the opportunities for recruiting.

Barrick seconds the approach. "It is never easy to conduct a truly consultative service-based business," says Barrick, "So let's be nimble, let's be innovative and let's continue to deliver with passion."

Barrick's South African market research has shown that only 15 percent of the market share is currently owned by other parties. Barrick's focus is on the other 85 percent still "unstamped" market. "We have identified key short-term objectives and measure ourselves monthly in our progress towards achieving them," says Barrick. "We have launched an internal campaign amongst all our staff called "passion lives here."

"We are trying to move from the pervading negative to the positive with the idea that we do not want any global recession to become a self-fulfilling prophecy in South Africa," says Barrick.

Khoo of Malaysia is going to be more aggressive in her recruiting strategies aiming at more recession proof industries. "We are going to be more insistent targeting local conglomerates that are less exposed to the global economic downturn," says Khoo.
For Epperlein in Brazil, the solution of 2009 issues lies in transforming challenges into opportunities for growth.
Both Waite and McCool of Australia and the United States respectively agree that the solution lies in developing closer and more effective communication with the clients.

"We are going to assist our clients with people retention strategies, help redesign the corporate structure and size of their businesses," projects Waite.

"I believe it will require far more intimacy with a select group of external talent advisors who can connect the company to key leaders in the talent market and also benchmark the strength of internal succession candidates," says McCool.

"Companies clearly need to develop more of their own leaders from within, but likewise, they'll also need to go outside selectively to bring in new ideas, fresh talent and some innovative perspective," says McCool.

Meanwhile Wouters of Japan is going to focus on staying in the public's attention by efficient marketing and public relations efforts.
Misra of India sees the way out by arming with key strategic tools. "In the current scenario, as companies employ "targeted hiring strategies", it is important to equip ourselves, more than ever, with information and an active awareness of the availability of specific skill sets in the market place," says Misra. Fortified with the right strategies, executive search consultants can help position prospective candidates more effectively.

Although the globe is bent with the hurdles of a rough economy, executive search firms see opportunities on the horizon. Good executives will no longer be adequate for futuristic companies looking for excellence in CEOs and hence, with executive recruiters. Thus, executive search firms will have to be ready to meet the demands of their clients and provide services better than ever before. Whoever withstands the storms of 2009 will be ready to embark again.

Cook Associates, Inc., is a retained Executive Search and M&A Advisory Services firm. Our core business is creating value at the intersection where talent and opportunity connect, and we are uniquely positioned to help our clients capitalize on the brightest talent and best performing companies in the marketplace. Out client base ranges from multinational corporations to early stage entrepreneurial companies, private equity and venture capital firms. Brand name clients include American Express, The Blackstone Group, Dover Corporation, GTCR, Heinz, Juniper Networking, Levis Strauss & Co., Pitney Bowes, and Sirius Satellite Radio. For additional information, please, visit www.CookAssociates.com.

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