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?

While the previous recession and stock market correction is now almost a distant memory, technology and the internet were the story as "irrational exuberance" drove stocks through the roof.  What followed was a massive sell off of internet, telecom and technology stocks while other sectors of the market performed much better on a relative basis.  2001 and 2002 were tough, but the manufacturing, consumer and service industries pulled us out of the mud.

Today, the recession is global and cuts across all sectors with no one left untouched.  Unlike the previous downturn, this recession is not isolated to a few industries and the stock market has sold off across the board.  But what may be lost in all of the gloom and doom is the story of productivity gains and how far we still have to go.  Just ask the executives at HP, IBM, Oracle, SAP, Cisco and EMC and you'll hear about the story that is very much in process.  During the past few years, companies have invested heavily in ERP solutions as CIOs, systems integrators, and offshore developers have been working flat out.  While virtualization and on-demand solutions improve the CIO's ROI, lasting productivity gains stem from the business integration and change that ERP enables.

This is the good news as CIOs were in the middle of large scale IT transformations driven by CEO expectations of improved productivity.  Today, these productivity gains are showing up in the results of companies across many industries, but the spending on IT and team building was shut down due to the severity of the recession.  Just as the CEOs of technology companies selling to CIOs suggest little visibility into when CIOs will start buying again, CIOs tell us they don't know when their CEOs and CFOs will release the purse strings.  But importantly, both tell us that when it comes back it will likely come back with a vengence.

As executive recruiters and advisers with deep expertise in technology, we see it.  The supply of business-oriented IT leaders hasn't magically increased in spite of the impression that we are in a buyers market for talent.  The translators who are the key to engaging with business leaders and driving the adoption of new technology enabled processes are in short supply.  Nearly every CIO in the country doesn't have the expertise they need in this area, and when CEOs and CFOs feel comfortable spending again they'll aim their investments where they can improve productivity.  As a result, technology will lead us out of this recession and companies well positioned for the spend will benefit first.

What is your view on how technology drives productivity?  Do you see technology spending returning in 2009 or 2010?