Spring is here and along with it some positive news.  The financial markets have made a strong come back and we're beginning to hear of the "green shoots" associated with improving credit markets, reduced anxiety over Obama's economic team and the early signs of a bottom in the real estate market.  As Warren Buffett recently stated, "real estate got us into this mess and I'd watch something like housing starts for the signs of recovery".

Regardless of your metric, the worst seems to be behind us and we're sensing a change in sentiment.  As an executive recruiter and adviser to leaders, my business tends to track with consumer confidence which has improved somewhat over the last 60 days.  Not surprisingly, clients have increased their activity level and are beginning to show the signs of "getting on with it" and making decisions.  Along with the lack of major negative surprises comes spring and all the discussion in the media of "green shoots".  The optimism is encouraging and it feeds on itself.  While I expect to see unemployment rise well into 2010, the senior executive talent market should noticeably improve during the second half of 2009.

During the early summer, look for some correction in the equity markets and with it the return of cautious optimism and discussion of a prolonged recession.  We should then expect to see increased M&A activity as private equity investors and strategic buyers feel the time is right to buy.  This, in turn, should be followed by a mid to late summer rally in the markets and a noticeable increase in CEO turnover by those of us who keep an eye on the talent market.  At that point, the stage will be set and executive recruiters along with senior level job seekers should breathe a sigh of relief.

In the meantime, what should senior level executives do while waiting for the market to turnaround?  My suggestion would be to remain patient and forget about the perceived stigma associated with being unemployed.  Use your time wisely, but don't be in a rush to get repositioned in a market with few opportunities.  Enjoy the summer and be ready for a much improved market in the fall.

Having recently listened to the CEO of one of the leading executive search firms, I was struck by his realization that executive search must change dramatically.  We've all seen and heard the reports of the industry being down by as much as 40% in revenue this year, and clearly businesses don't prepare for such dramatic contractions.  Interestingly, the strategy in response to the collapse doesn't sound all that different from the previous strategy leading me to ask, "Will the executive search business return to basics?"

You know the strategy if you're a senior executive in a large company and a frequent buyer of executive search services.  The big firms have assessment businesses, and they want you to work with them to assess your team and senior leaders.  While these services were thought to be the key to the diversification strategy for the big firms, they have barely moved the needle and for good reason - companies don't want to retain a search firm to assess their team, and the experienced partner they've come to know doesn't do the assessment.  Sure, it's another potential source of revenue for the big search firms, but clients don't really see the value.

So what makes the big search firms think that more aggressive diversification and expanded services offerings will improve their businesses when the previous experiment barely moved the needle?  The answer is they have no choice.  As revenue expectations per partner are increased, the big firms will look to the greatest source of new revenue - their big company clients and the successful candidates they helped hire.  While it makes great sense, there's only one problem - the clients don't want their recruiters to become management consultants.  When they truly need to focus on talent development, retention, compensation and succession planning, they turn to their HR leaders who in turn reach out to specialists in their field.  

As one senior statesman recently told me, "The executive search business will likely go full circle.  With the success and growth of any business comes the diversification away from the core value proposition and with it the dilution of it's strength.  Eventually, great recruiters will figure this out and the big search firms will see an exodus of talent.  After all, this is a personal service business and recruiters can't serve the client if they spend all their time selling products off the shelf."

Let me know what you think.  Are you likely to turn to one of the Big-5 search firms for additional leadership advisory services?