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?
