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?

When I first entered the senior level executive recruiting ranks over twenty years ago, the fundamentals associated with the art of recruiting were just beginning to show the signs of stress associated with the changes to come.  Vast libraries of printed biographies and organizational charts were mined by researchers and librarians copying pages and pages of information to share with the recruiters preparing to aim their sites.  Computers and databases were being built as well and the expansion of offices around the world depended on leveraging technology, new tools and acquiring talent.

Well, we all know the story as it was repeated in one business after another - technology changed the game and the process of reengineering led to major changes in how everyone thought about their jobs.  Executive search was no different and the large firms leveraged their ever expanding proprietary databases to grow their businesses as well as the industry as a whole. Then came the internet and along with it some level of fear to many recruiters who made their living recruiting middle management talent.  While search revenues spiked due to the roaring demand for talent as we approached full employment, the equity markets exploded and the success of Monster.com and other job posting boards seemed to confirm that executive search would in fact be changed forever.

I'll never forget a conversation I had with the Chairman of Monster back in 1999 when I served as the Managing Partner of another successful boutique we eventually sold to Korn/Ferry.  Monster.com was one of the internet darlings at the time, and they along with their newly public counterparts in recruiting, competed to acquire a limited number of niche boutiques.  While we were happy and enjoying our success, we decided to "take the meeting" and Monster's Chairman flew out to meet us.  After all of the introductions and pleasantries about the weather and the flight coming out, Monster's Chairman cleared his throat and said, "I just want you to know that you're all dinosaurs but I'm going to buy you anyway".  Fast forward ten years, and he may have been right, not about us hopefully, but certainly for some.

As it turns out it wasn't the internet so to speak that would disintermediate executive search, but rather the applications it has enabled.  Today, the explosion and acceptance of social networking sites allows people and companies to "go direct".  In just a few years, we'll all be just a few clicks away from learning about someone we'd like to meet with someone we know well positioned to facilitate an introduction.  If that's the case, why would you feel the need to retain a recruiter?  Well, we'd like to think we'll still add value, but the marginal performers in executive search will certainly fade away.  And along with these changes, the big firms will shrink and the rewards will go to the quick and the nimble. 

Open networks will indeed change everything and executive search will return to a niche business. The art of recruiting, not the access to information and people, will rule the day.

How do you use today's tools like LinkedIn?  Can companies truly go direct?  Let me know what you think.