search-consult issue 5

The International Magazine for Search Professionals

July

2001

/ IS

SU

E

5

www.search-consult.com

Eric Vautour - RussellReynolds & The AESC

Relocating CandidatesOverseas

Executive Search inGermany - Legal Update

Exclusive interview with Paul R. Ray Jr, Ray & Berndtson

A Phoenix from the FlamesExclusive interview with Paul R. Ray Jr, Ray & Berndtson

Eric Vautour - RussellReynolds & The AESC

Relocating CandidatesOverseas

Executive Search inGermany - Legal Update

A Phoenix from the Flames

2 search-consult July 2001

S E A R C H - N E W S

3July 2001 search-consult

IN RESPONSE TO Aslowing search market, global Searchfirm Heidrick & Struggles announcedthat it was cutting 300 jobs. The cutswill affect 13% of the workforce andwill lead to a one-time charge ofbetween US$9 and US$10million as aresult of severance pay, for example.This translates into a charge of US$0.25to US$0.28 per diluted share. The aim ofthese redundancies is to make annualsavings of US$30 to US$35 million.

The company attributed these cuts tothe ‘cooling of demand for executivesearch and leadership consultingservices […] in the United States and[…] the rest of the world’. Heidrick &Struggles Chief Executive, PatrickPittard, comments, “Unfortunately theUS economy is not improving and […]we are now seeing some softening inEurope as well. While we had hoped toavoid making staff reductions, it is clearthat we must now make someadjustments to our cost structure”.

Goldman Sachs downgraded itsearnings per share estimates to $1.00

from $1.17 (for the fiscal year 2001) andto $1.50 from $1.70 (2002). A GoldmanSachs report stated, "While these work-force reductions are a bit late, it isprobably deep enough to make a realimpact."

Thatcher Thompson, analyst at MerrillLynch said the share prices of Heidrick& Struggles as well as Korn/Ferry coulddrop another 30 percent before the endof the year. However he understoodtheir predicament “You don't want to cuttoo much muscle because, ultimately,demand will return. But you don't wantto let your earnings dwindle down tonothing. So it's tough."

The Merrill Lynch analyst cut both hisforecasts and ratings on two of thelargest executive recruitment firms,Heidrick & Struggles International andKorn/Ferry International. The effect wasa heavy drop in share price for bothfirms. Heidrick & Struggles expects thatrevenue in the second quarter of 2001will be in the lower bracket of theestimated US$125 million to US$135million.

Heidrick &Strugglessheds 13%of workforce

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Front Cover: Paul R. Ray Jr., Chairman and CEO

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www.search-consult.com NEWS

Purchase online at www.search-consult.com

bookshopThe Board Book : MakingYour Corporate Board aStrategic Force in YourCompany's Success by Susan F. Shultz.

Susan Shultz is principal of SSAExecutive Search and arecognized speaker oncorporate governance.TheBoard Book is designed as apractical guide to recruiting andmanaging corporate boards. Itcertainly achieves its objective;packed with case studies -Motorola, Pepsi Bottling,Pinnacle West, Compaq andmany other major USbusinesses are quoted and theauthor also makes good use ofwisdom imparted by othersearch firms - research fromfirms such as Korn/Ferry andSpencer Stuart are quoted atappropriate moments.

Secrets of the ExecutiveSearch Expertsby Christian Schoyen and NilsRasmussen

Headhunters have a knack formaking "miracles." Out ofseemingly thin air they locatestar job candidates, folks whorarely materialize using theusual recruitment sources. Howdo they do it? This compellingbook reveals the strategies usedby top-ranking executive searchprofessionals. It focuses on thecrucially important researchprocess, explaining how tomaximize the power of bothtraditional and online resources.Plus, readers get tips on workingwith outside search firms, stepsfor locating candidates abroad,and explanations of industryterms: a full arsenal of valuableinformation.

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The classic best-seller just gotbetter! Newly revised andexpanded, Billing Power is acomprehensive, easy-to-readguide packed with innovative,money-making techniques, time-saving tips and proven methodsfor increasing your billings.

The industry standard!Softcover, 224 pages, illustrated.Bill Radin is a top-producingrecruiter, manager and trainerwhose innovative techniqueshave helped thousands ofrecruiting professionals achievepeak performance and careersatisfaction.

Headhunters Revealed!Career Secrets forChoosing and UsingProfessional Recruiters by Darrell W. Gurney

Friendly and concise...awelcome resource. Gurneyexplains in upbeat, chummyprose all there is to knowabout the recruitment process."Publishers Weekly, May 29, 2000

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Winning the Talent Warsby Bruce Tulgan

"Every page will grab you andchange your thinking....greatsolutions to the greatestbusiness challenge in the neweconomy."Douglas McCracken, ChiefExecutive Officer, DeloitteConsulting

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Recruit & Retain The Bestby Ray Schreyer, John Lewis, Jr.McCarter

The signs on the road to thenew economy point to an all-out war for talent.Organizations increasinglyencounter difficulties inrecruiting and retaining toptalent because they have yet todeal with today's most criticalhuman resource issues.Toremain competitive, you mustcreate a talent poweredcompany consisting of highlymotivated, skilled, and loyalemployees.That's the centralmessage in Recruit and Retainthe Best.

The Global 200 ExecutiveRecruiters :An EssentialGuide to the BestRecruiters in the UnitedStates, Europe,Asia, andLatin America (JosseyBass)by Nancy Garrison Jenn

"The Global 200 ExecutiveRecruiters is another proof ofNancy Garrison Jenn's in-depthknowledge of the world'sexecutive recruitment market.Though interesting forrecruiting companies to learnabout their sector and theircompetitive position, the bookis particularly of help to theirclients and potential clients inassessing executive search firmsand the recruiters with thosefirms.

Executive Recruiters :A 5Step Power Strategy forUsing America's TopHeadhunters to AdvanceYour Careerby Scott W.Walmsley

Executive recruiters can be thekey to your careeradvancement. Professionalrecruiting firms are hired bymany of the world's top, mostdesirable companies to findprofessionals for what are oftenthe highest compensated andmost prestigious positions inbusiness.

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The executive-search





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Korn/Ferry datareveals mixed results

THE LATEST DATA FROM KORN/FERRY,based on a quarterly survey of 4,900 clientfirms, suggests that growth in demand inEurope for executive talent has not beenenough to cover the steep fall in demandin the US and in Latin America. Overalldemand fell by 11% compared to the firstquarter of 2000 - when the industry wasbooming.

In the North American region, "executivedemand for CEOs, CFOs, board membersand other top managers remains solid,"says James Boone, President of theAmericas for Korn/Ferry International."However, ebb of demand at the upper-middle management levels has led to adecline in total number of searches. Weexpect this [...] to continue into the secondquarter."

Demand for executives in the region fellsignificantly in the advanced technologysector and fell to a 22% share in the firstquarter of 2001, compared to a 30% in thesame period in 2000. The secondstrongest sector experienced a slightincrease, the requirement for financialservices executives rose from 16% to 17%in the first quarter of 2001. Part of thereason for this was that the weakness inmergers and acquisitions was offset bystrengthing fixed income, assetmanagement and private banking sectors.

The healthcare and pharmaceuticalsindustry has been exempt from aweakening economy, demand forexecutives in the sector jumped to 16% inquarter one of 2001 as opposed to 12% forthe same three months last year."Healthcare [tends] to be less affected byeconomic slowdowns," says Mr. Boone. "Inthe last two years, the healthcare industryhas been buoyed by $30 billion in newinvestment into the biotechnology sector.We expect significant executive demandthrough the year." Likewise, the industrial

sector experienced a significant rise indemand, finishing with a 14% share Q12001, compared to 9% last year.

As far as functions were concerned,chief executive officers represented 13%demand in North America, equal to itsshare in the same quarter in 2000. Thisobviously being welcome as this is thefunction where some of the biggest feesare paid. " There are simply not enoughtalented chief executives who can stewardcompanies through challenging economictimes," says Mr. Boone. Further growth ispredicated.

General managers commanded thelargest share of functional demand (25%)in the first quarter of 2001. The number ofsearches at the board level rose notably to5% from 2% in the first quarter of 2000.

The outlook seemed a little more forlornsouth of the Equator. Mr. Boone, however,remains positive. "Demand for topexecutives in Latin America remainssteady in such large markets as Mexicoand Brazil. In tougher economic periods,companies are more likely to replaceexecutives versus hiring for businessdevelopment purposes. If the U.S.economy pulls out of its slowdown, weexpect to see executive demand to grow inLatin America."

Unsurprisingly, the advancedtechnology sector was hit hardest in LatinAmerica falling from 27% to 15% in Q1 ofthis year. On an optimistic note, demandfor consumer industry executives improvedby 3% in Q1 of 2001, compared to 14% in2000. This, believes James Bonne, is " totry to recover some of its losses inexecutive talent after cutting costs in theprevious quarters."

Latin American financial services searchrose significantly, finishing with a 17%market share. General management

executives led all functional categories,increasing significantly to 32% in Q1 2001,compared to 21%, Q1 2000. "The increasein demand for talented general managersis directly related to the economic coolingin Latin America," explains Mr. Boone.

On the other hand, the European marketsaw a strong, growing demand for seniorexecutives in the first three months of2001, rising by just under nine percentcompared with the first quarter 2000.“Despite global economic uncertainty,Europe's companies began the year byfocusing on consolidating their leadershipteams" tells Dick Buschman, the firm’sPresident of Europe.

The financial services sector continuedto be the strongest sector for executivedemand in Europe with a 22% share, amarginal rise of just 1%. Investment bankswere the companies who were particularlytrying to attract new talent where needed.“After this period of consolidation we maystart to see the results of any slowdown atsenior levels" believes Buschmann.

The second highest sector for executivedemand in Europe was the advancedtechnology sector, where demand stood at18% in the last quarter as opposed to 17%in the first quarter 2000. According to Mr.Buschman, "This may seem surprisingfollowing the slump in ...the Internetsector“. However now “companies arecurrently more concerned with managingcost rather than business development,acquisitions or extensive marketingactivities."

The industrial sector experienced thethird strongest sector for executivedemand. This reached 17% (2001figures)rising from 15% in the first three months of2000. Demand for senior executives in thehealthcare sector rose from 7% to 8%.

By contrast, the functional area of senior

marketing & sales/advertising & PRexecutives experienced something of adownturn. A drop from 26% in Q1 2000 to2001 to 21% over the same period, thelowest level for almost six yearsrepresenting “less [capital spent] onpositioning and image." Demand for chiefexecutives and board-level executives rosefrom 4% in the first 3 months of 2000 to7% in Q1 2001 and demand for generalmanagers also rose slightly from 25% to26% over the same timeframe.

Overall demand for senior executives inthe Asia/Pacific region was down 14% inQ1 2001 compared to the same period in2000. This was up 8.6%, however incomparison to the fourth quarter of 2000."There is still healthy demand for "A" listexecutives however, [despite] a morecautious approach to hiring newleadership," says Charles Tseng, Presidentof Korn/Ferry’s Asia/Pacific region.

Overall, the technology sector continuesto drive demand with a 20% share in firstquarter 2001, down from 24 percent a yearago. A possible new economy-to-oldeconomy shift is being witnessed. A trendthat Tseng believes “we may continue tosee into the next three quarters." Thegrowing search industries included theindustrial sector at 19% percent (up 10%),the energy branch at 5% (up 2%), andfinancial services industry at 17% (up 9%).

Searches for board directors inAsia/Pacific rose 3% on last year’s figuresfrom a year ago and CEOs are up twopercent. Commenting on the entire firm’sprogress, Windle B. Priem, President andChief Executive Officer said "While capitalspending by businesses continues todecline, there are signs that the businessclimate is improving in a number ofindustries."

Korn/Ferry International Executive Demand Index First Quarter 2001 vs. 2000

Share of Total Hirings By Industry

* Less than one percent Reproduction permitted with attribution to Korn/Ferry International,

the world’s leading executive search firm

Europe Latin America Asia North America

Industry % 1st Qtr.2000

% 1st Qtr. 2001

% 1st Qtr.2000

% 1st Qtr. 2001

% 1st Qtr. 2000

% 1st Qtr. 2001

% 1st Qtr.2000

% 1st Qtr. 2001

Agriculture/Mining/ Natural Res ources

2 1 5 2 2 3 1 1

Energy/ Utilities

3 3 1 5 3 5 4 3

Advanced Technology (E lectronics, Com puters, Software, Comm unications, Telecommunications)

17 18 27 15 24 20 30 22

Industrial (Manufacturing, Manufactured Products, Chemic als)

15 17 16 16 9 19 9 14

Cons umer Products

12 10 14 17 14 13 4 5

Aerospace/ Defense

1 1 * * * 2 2 1

Fashion/Retail & Wholesale Dis tribution

4 4 4 5 7 3 7 6

Financial Services (Bank ing, Brokerage, Insurance)

21 22 10 17 8 17 16 17

Real Es tate, Building, Cons truction

1 1 3 5 2 1 2 1

Healthcare and Pharmaceuticals 7 8 4 7 12 4 12 16

Not-for-Profit, Government, Associations, Education

1 1 4 1 2 3 3 6

Entertainment/ Hospitality/Leis ure

5 3 5 6 7 4 4 3

Professional Se rvices

11 11 7 4 10 6 6 5

Total 100 100 100 100 100 100 100 100

Share of Total Hirings By Function

* Less than one percent Reproduction permitted with attribution to Korn/Ferry International ,

the world’s leading executive search firm

Europe Latin America Asia North America

Function % 1ST Qtr.

2000 %

1ST Qtr. 2001

% 1ST Qtr.

2000 %

1ST Qtr.2001

% 1ST Qtr.

2000 %

1ST Qtr. 2001

% 1ST Qtr.

2000 %

1ST Qtr.2001

Board Level 1 2 * * 2 5 2 5

Chief Executive Officer 3 5 4 3 8 10 13 13

General Management 25 26 21 32 26 21 25 25

Finance & C ontrol 18 24 18 15 14 12 16 17

Human Resources & Administration

11 10 10 10 12 8 6 7

Information Systems 8 4 12 4 11 13 9 6

Manufacturing, Engineering, R&D, Technology

8 8 8 9 6 7 6 7

Marketing & Sales/Advertising & Public Relations

26 21 27 27 21 24 23 20

Total 100 100 100 100 100 100 100 100


AS REVEALED IN search-consult (issue 4) Boyden iswidening its geographicalcoverage. The firm has addedoperations in Jakarta to itsintegrated structure. In the US,David J. Carney will run the firm’sCleveland office, opened in June2001. Managing Director ofBoyden’s Pittsburgh office,Thomas Flannery, elaborates onthe strategy of this move. “Boydenis consolidating its geographicalscope globally. The opening of theCleveland office is central to thisaim and is also part of a plannedexpansion of Boyden’s USpresence”.

With an M.B.A. from HarvardBusiness School, Carney’sbackground is search andmanagement consultancy. Hissearch experience includesconsulting at Christian & Timbersand at A.T. Kearney Executive

Search. David J. Carney will alsobe part of Boyden’s professionalservices practice.

Likewise in Germany, thecompany is expanding. From the1st July, Ulrich Schumann will leada new Düsseldorf operation. Mr.Schumann was previously withthe search firm H. NeumannInternational and was electedPartner at Boyden at the start ofJuly. Accompanying thisexpansion is the news that R.Michael Kerber and ThomasBreitzmann have also been madepartners. Like Mr. Schumann,Thomas Breitzmann comes from H.Neumann International where hespecialised in healthcare andbiotechnology. From July, he willwork out of Boyden’s Berlin office.Mr. Kerber has been with Boydensince September 1999, conductingsearches in Telecommunicationsand Change Management. Thisraises the number of partners inGermany from 8 to 11.

BOYDEN expands

7July 2001 search-consult6 search-consult June 2001

THE BRITISH ARM OF THEfirm TRANSEARCHInternational UK is to mergewith the London basedproperty specialist-ThomasCole Kinder. Alain Tanugi,Chairman of TRANSEARCHInternational said: ‘ThomasCole Kinder is the leadingproperty search firm in the UKwith a well-establishedreputation. This merger

provides us with an excellentplatform from which todevelop as a major player inthe UK central tostrengthening our globalpresence.’

The tie up with Thomas ColeKinder is the latest in a seriesof additional offices forTRANSEARCH. Earlier thisyear the firm announced newoffices in Poland andSwitzerland.

TRANSEARCHInternational merge withLondon property boutique


SOLER THE LEADINGNorwegian Executive Searchfirm, has been bought by TMPWorldwide. The 8 partners ofOslo-based search firm votedto sell their share in thecompany in a deal whichstrengthens TMP Worldwide’spresence in Scandinavia. InOctober 2000, TMP acquiredtwo Danish Search firms andin February 2001 expanded its

operations in Sweden.Soler’s Managing Director,

Olaf Bergesem states “we aredelighted about this deal. Weexpect to continue our stronggrowth under the umbrella ofTMP”.

In response to a question ofname, he says “Soler is a verywell known and respectedname in Norway.” The firmplans to phase in the TMPname over the coming year.

Norwegian Search firmsells to TMP worldwide



WHITEHEAD MANNannounced a 109% increase inGroup turnover in the year toMarch 31, 2001. The Group’sacquisitions over the yearcontributed to 74% of thisgrowth. In the last 12 monthsthe company has added UKcompetitor, GKR, AmericanPendleton James andexecutive developmentspecialists, The ChangePartnership, to its operations.Despite slowdowns in the verymarkets where WhiteheadMann has made acquisitions,the firm’s turnover has grownfrom £27.7 million(US$39.1milloin) to £58.1million (US$ 82. million). TheWhitehead Mann Group,founded in 1976, nowemployees 360 workers andhas footholds in the US, Europeand Asia Pacific. It reported

that the average salary of theirplaced executives has risenfrom 125,000 in 2000 to145,000 today.

Chief Executive, GerardClery-Melin, stated, "We havedelivered on our intention todevelop and expand ourservices globally. Theintegration of GKR hasestablished Whitehead Mannas the UK's leading executivesearch firm. In Europe, the USand Asia Pacific, we now havethe people and structures inplace to drive the growth ofour international business.Through the acquisition of TheChange Partnership Limitedand the development of newassessment services, we nowprovide clients with thewherewithal to competeeffectively in the "War fortalent".

Whitehead Mannannounce year end results



S E A R C H - P E O P L E

Heidrick & Struggles International has a newmanaging partner of the San Francisco office. Asan ex-Bank of America human resourcesexecutive, Laurence O’Neil led the globalcorporate and investment banking humanresources team. In his capacity as partner, hewill also function as Western Region coordinatorfor the search firm’s financial service practicesand is a member of the global financial services,e-business and industry practices.

Martin Hewett has joined TMP WorldwideExecutive Search as partner in the globaltechnology sector. Concentrating on placementsof board directors, presidents, CEOs, COOs, andCTOs, Mr. Hewett will be based in the Encinooffice. Hewett’s background is as a partner atMcCray, Hewett & Associates. This followedhis presidency of Panorama SoftwareCorporation.

D.E. Foster Partners has hired Tim Brown as adirector of their executive search outfit in Dallas,an alliance firm of KPMG. Mr. Brown waspreviously at TMP Worldwide.

Christian & Timbers have recruited CraigSmith and Steve Finder as VPs based in SanFrancisco. Mr Smith was previously at Heidrick& Struggles where he was a principalconsultant with the firm’s software and ITservices practice. Finder has also worked withHeidrick & Struggles, but joined Christian &Timbers from a technology boutique.Meanwhile, in London the firm have recruitedRobert Wilder from SHP Associates. Mr Wilderalso worked with Norman BroadbentInternational earlier in his career.

Laurence O’Neil has been named ManagingPartner of Heidrick & Struggles San Franciscooffice.

Bennett Associates Ltd, the Hong Kong basedconsultancy has announced the appointment ofFrank Moy as Director – Financial Services andIT Practice. Mr Moy has considerableexperience in banking and financial serviceshaving been one of the first US bankrepresentatives to relocate to Beijing (1983).More recently he worked with Internet firmecmarket.com.

Gerry O’Keefe, London director for Boyden’sGlobal Technology Practice and Nick Robeson,Managing Director of the London Interimpractice have both joined the board of BoydenLondon. Mr O’Keefe joined Boyden three yearsago from Logica whilst Mr Robeson joined lastJuly from Harvey Nash.

Keep us up to date with any corporate announcements! Email [email protected]

Key moves in Executive Search this month

WHITNEY GROUP ANDO’Neill Associates have joinedtheir Asia/ Pacific operations.O’Neill Associates wasestablished in 1994 in HongKong under the leadership ofHarry O’Neill, labelled inHeadhunter's Poll February2001 as the "most admiredindividual headhunter for debtand global markets searches,Asia-wide." It expanded itscoverage to Sydney under themanagement of CatherineAndersen. The firms ManagingDirectors-Mr O’Neill, Mr

Andersen and Hong Kong-based Charles Peat, will nowbe working under the bannerof Whitney O’Neill withextensive presence in Tokyo,Hong Kong, Singapore andSydney. Stephen Clasper willbe the CEO of the new entity.The firms’ specialities infinancial servcies search differsomewhat. Whitney Groupconcentrates on investmentbanking, private banking andcorporate finance. On the otherhand, O'Neill deals with thedebt, derivatives and treasurymarkets.

Whitney Group And O'Neill Associates

Combine Operations in Asia Pacific


THE ADVENT OF THEresearch specialist is apparentin Manchester based,Armstrong Craven announcedis plans to expand by 18%over the next six months.Established in 1990, theexecutive research andbusiness information, company

today announces that it is setto recruit nine new jobs as aresult of growth in itsspecialities. Its services forventure capitalists, such ascompany research prior todeals, industry sectorinformation, referencing oncompany directors andpsychometric profiling, havealso witnessed strong growth.

Research specialistsannounce businessexpansion


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Phoenix

S E A R C H - S T R A T E G Y




achieve 60 days, we had to restructureour business fully. We moved from linearprocessing to forming teams in parallelwhilst working with the client to makethings happen. We invested heavily intechnology - from having very littletechnology to being a virtually paperlessfirm."

The restructuring saw the 'research'element of the business split into twosections, a centralised knowledgedevelopment department (primarilyresponsible for name generation) and aconsultant team whose responsibilitiesprimarily include sourcing and makingfirst contact with candidates. Today,there are 18 people in knowledgedevelopment and 40 consultants. Thebusiness was also restructured on anindustry basis, rather than a geographicalbasis.

"Today, we are the only full service firmthat is genuinely organised aroundindustry based P&Ls. We do not haveregional Profit and Loss reporting.Everyone in our firm is in a practice, notan office. I do not know the revenues inNew York, but can tell you the revenues inHealthcare or Financial Services.

Compensation within the business wasalso restructured away from rewardingthe biggest billers and towardsrewarding teams who achieved highcustomer satisfaction. Of course, this didnot go down well with all of the firm'sbillers.

"Our goal was to have deeper and morecommitted relationships with a smallernumber of clients. That meant that any ofour people who were 'solo cowboys' didnot like the changes we were making.From 1997 onwards we began to losepartners. The market was growing andwe were contracting."

Over four years, the firm lost 39% of itspartners. Even today, the firm has fewerpartners than it had in 1996. Ray admitsthat the changes led to a degree ofupheaval that he had not foreseen.

"I was talking to a partner at Accenture(formerly Andersen Consulting) aboutwhat we did and he said 'I've got somegood news and some bad news for you;

� Put time and effort into understandingthe culture of the clientThe firm set about restructuring the

business to achieve these ends. Theproduct remained the same - senior levelexecutive search - but every element ofthe process behind the product wasupdated.

"We set ourselves a BHAG - a big,hairy, audacious goal. This was our "60-70-80" target. We planned to get all ofour searches to the offer stage in 60 days;we would focus on key accounts - weplanned to generate 70% of our businessfrom these firms; and we wanted to beawarded 80% of the search business thatthey offered. If successful, it would be avirtuous circle - we would be providing abetter service to our clients and so theywould give us more business. We wouldknow them better and so we wouldprovide a better service".

"At the time it was taking us 180 daysto get searches to the offer stage. To

T he story begins in 1996.Outwardly, at least, Ray &Berndtson in the US was doing

well. The firm was profitable and, withrevenues growing at 18% + per annum,the firm was growing faster than themarket average.

However, Ray and others wereconcerned that the growth was notsustainable. They saw a business spreadwidely across many clients, too highlyleveraged, and with less than satisfactorycompletion data.

A survey of 300 clients and prospectiveclients seemed to confirm this; "Theresult was a fairly damning commentaryabout our industry and, in fact, we saw areal need: no firm was giving clientswhat they required."

The survey defined the 'perfect' searchbusiness as one that would:� Complete searches quickly� Be proactive and not merely accept

client assumptions

the good news is that your strategy isright on target, the bad news is you haveunderestimated how long it will take tomake that shift. It is a totallycomprehensive shift in the organisationand so it will take longer than three yearsfor the process to be completed.'"

The firm also undertook a rebrandingexercise, changing the name of thebusiness from Paul Ray & Company toRay & Berndtson to reflect the US firmslinks with its international associates (seefollowing page).

Ray believes that his business has risenlike a "…phoenix from the flames".

"Several people wrote our obituaries,said we were dead. To paraphrase MarkTwain, however, 'reports of our demiseare greatly exaggerated'".

"The fact is that we have come out ofthe other side as a far better business -last year we grew by 20%; our averagesearch size rose by 26% and our averagebilling per partner rose to over$1,000,000"

Ray & Berndtson has released internalstatistics to search-consultdemonstrating the impact of therestructuring (see box). While a numberof the metrics are certainly impressive,Ray acknowledges that there is morework to be done.

"We haven't hit 60 days yet and, to befrank, I think it will be difficult to everachieve that goal. We are hitting 60days with 20% of our searches - but it is

only possible on some types of searches.We are achieving 75% of business fromtargeted clients; and we are getting ameaningful amount of business fromthese firms. I doubt it reaches 80% asclients protect themselves by havingmore than one firm; however, when weachieve over 50% of a firm's business wefeel great. We are one of the providersof choice for Fortune 500 clients,including IBM, Pepsico, Walmart,ConAgra, Textron and others."

Ray believes that the firm's businesshas come through the upheaval with astructure that leads the market.

"This evolution has strengthened us asa firm," said Paul. "We're just the rightsize, we've got a great environment forpeople who want to practice search, andwe don't have the internal politics oflarger companies. This allows us to focuson our clients - and provide high qualityservice that we believe is unmatched byour competitors."

"We weathered the storm and nowevery major competitor has come afterpeople in our firm. We are leading edge- everyone is focusing on cycle timesnow - but we did it first."

Ray & Berndtson

Flamesfrom the

Paul R. Ray Jr is one of the most highlyregarded individuals in search. The first(and so far only) person to hold both theGardner W. Heidrick and EleanorRaynolds Awards, he was also the firstperson to spend three years as Chairmanof the Association of Executive SearchConsultants. His day job, however, is Chairman andCEO in the U.S. and co-chair globally, ofRay & Berndtson - a top 10 search firm.Five years ago his firm undertook arestructuring which, at one point, lookedas though it might damage the business.For a while it was losing partners at atime when other firms where growingand Ray admits that some commentatorshad written the firm off. Today, however,the business is reporting metrics whichsuggest the restructuring has begun topay off. Jason Starr spoke exclusively toPaul R. Ray Jr, Chairman and CEO, Ray &Berndtson.

Ray & Berndtson USA - key operating metrics1997 2000

Revenues $36 million $40.3 million

Average Search Size 216,318 275,000

Average Billings perPartner $857,000 $1.02 million

Partners 43 40

Percent of Revenue from Targeted Clients 50% 75%

Average Cycle Time 174 days 128 days

15% 90 days or less 38% 90 days or less

5% 60 days or less 20% 60 days or less

Number of PartnersPromoted from Within 22% 33%

Number of Clients 650 400


For further information on Ray &

Berndtson, please visit:

Web: www.rayberndtson.com

in m

illio

ns

S E A R C H - S U B S C R I B E


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Today, Ray & Berndtson is apartnership with offices across theWorld. The majority of these officesare locally owned with the largestmembers being the US, Germany andthe new UK business, Odgers Ray &Berndtson.

With a business structureddomestically along industry lines, itcould be argued that membership of anetwork is illogical, the argumentbeing that any profit centres builtaround an industry practice in the UShave to stop at the coast. Practicebased P+Ls may not be producedinternationally. If a search crossesborders, fees must be split by region.Ray does not accept this view point,arguing that small internationalmarkets need generalist searchpractices.

"It works really well. If you thinkabout it, in the big markets -Frankfurt, for example - they are verymuch structured by industry. They arevery strong in the financial services,technology and business andprofessional services sectors, for

example. They may not have as manysectors but those that they do have arevery clear - they match up well.London is moving fast in thatdirection. If you look at the smallermarkets, it really doesn't matter. InHelsinki, for example, we have justtwo partners so, by definition, theyhave to be generalist. That is not inconflict with where we are - we relyon local market expertise. In smallmarkets, they have to be broaderbased."

Ray believes that Ray & Berndtsonin the US now boasts one of thepremier cultures in the industry.Internationally, he believes that thefirm has been able to hold ontomembers during a turbulent few yearsin the industry by working hard oninternational integration.

"Truly, we operate more like a firmthan any other global partnership.We work hard at branding, atgovernance and at global practicegroups. We look to build a sense offirm amongst our partners."

To help them achieve this, Ray &

Berndtson brought in AndersenConsulting (now Accenture) to helpdevelop an international structure forthe business. The board meets threetimes a year and the group has ameeting of all partners on an annualbasis. All members own stock in theholding company "Executive SearchInternational". Unlike a number of thesearch partnerships, ESI does notemploy its own staff; rather it pays forthe use of staff employed by the USand German businesses. Rayestimates that this gives it theequivalent of three-to-four full timestaff.

The group has been able to retainits members fairly successfully duringa period of relative upheaval in theindustry. To date, it has lost only itsSwiss member (to Korn/Ferry) and itsCalgary office (to Russell Reynolds).

"We are a partnership that has heldtogether and grown at a time when anawful lot of our competitors have beendismantled. We have actually hadvery little attrition."

RAY & BERNDTSON - INTERNATIONAL OVERVIEW



Profile

Paul

R.

Ray

Jr

Paul R. Ray Jr graduated from the

University of Arkansas with a

degree in business. He then went

to law school at the University of

Texas, and passed the bar. His

first job was as a Marketing

Assistant for R J Reynolds; he

worked his way up to Marketing

Director with the firm before

leaving in 1978. He then joined

Ray & Berndtson - the business set

up by his father, Paul Ray Sr - as

a Consultant in the Fort Worth

office. In 1981 he was part of the

21-man team that lead a LBO of

the business from NYSE listed

firm American Appraisal

Associates. He became EVP and

Chief Operating Officer in 1984,

President and CEO in 1985 and

became Chairman and CEO in

1999.

108117

130

142

176

$-

$50

$100

$150

1996 1997 1998 1999 2000

Ray & Berndtson Global Revenues by Year

in m

illio

ns

S E A R C H - R E V I E W


P aris was the recent setting of the4th in a series of Executive Searchdebates organised by search-

consult. Following the success of theprevious events in New York, London andFrankfurt, leading representatives of theFrench Executive Search Industryassembled in Paris' chic 8thArrondissement. Together, they discussedthe new issues faced by the Frenchsearch industry in today's fast movingeconomic environment.

The speakers, leading exponents ofFrench Executive Search, were: PatrickJames Bruneteau (B et Associés), MarcLamy (Boyden Global Executive Search),Lilian Poilpot (Morgan Howard) and AlainTanugi (TRANSEARCH International).

Paul Cowap opened the event byintroducing Dillistone Systems andsearch-consult. He then introducedPatrick James Bruneteau - also themoderator for the day - the speakers andthe agenda.

Patrick James Bruneteau, of B etAssociés, launched the debate with avery interesting survey on "Que pensentet que disent aujourd'hui les Dirigeantsd'entreprises françaises sur l'ExecutiveSearch ou le Conseil en Recherche deDirigeants ?" (What do CEOs andPresidents of French firms think aboutExecutive Search?). The purpose of this

survey was to ascertain how theExecutive Search world is perceived,appreciated or criticised by its clients,candidates and all others involved in therecuitment process.

This new study reveals the followinginformation and/or trends:

What are the most essential qualitiesexpected from a firm? Please rankthem from 1 (most) to 9 (least)?Companies require above all else that thefirms be able to answer their needsquickly, closely followed by a need for atrue and detailed understanding of thecompany's culture. In third position, aflexible and fast-reacting operation,followed by in-depth knowledge of themarket or of the client's business sector.Then come competitive fees, total andpermanent secrecy, high consultantavailability, follow-up of the candidate'sintegration in the company, and finally,bringing up the rear (9th position), anoperational presence on the Internet!

In which cases do you use a DirectApproach firm?91% of the time, managers say they usehead-hunting firms to recruit CEO's (ahigher proportion than the 83% in 1998),Financial Managers (91.20%), Commercial

Managers (89%), Computer SystemsManagers (97%), Marketing Managers(79.80%), HRM's (89%), Research &Development Managers (70%),Purchasing Managers (66.50%) and SalesManagers (62.50%). Quality and Exportmanagers brought up the rear, with 43%and 49%, respectively.

Is the size of the firm a major factor inyour choice? The answer is NO with 91.80% asopposed to 78% in 1998.

In your opinion, should a Search firmuse the Internet?63% of the Managers thought this wasnecessary.

ParisBy Paul Cowap and Bruno Grunberg

The Executive Search Debates:

TALENTAD

The Debate Panel





Can your relationship with your"Hunter" be described as a relationshipwith a provider or as a form ofpartnership, or as a friendlyrelationship, maybe even like the oneyou would have with an associate?The majority (91%) consider therelationship with a Head-hunting firm asstrictly professional and choose theoptions that describe two partners;friendship is mentioned in 27% of casesand 75% of the Managers say they do notconsider the relation with their firm to bemerely like the one they have with aprovider.

In your opinion, which elements orcriteria should be improved in yourrelationship with your "Hunter"?The leading answer, with 75.60%, is a"better match between the candidate andthe job", closely followed 73% whorequested more flexibility in the fees.Naturally, Managers expect fast reactiontimes from the firms and 57% would likeeven more. 61% would also like to have asingle main contact for each mission.

The full study is available from B etAssociés.

The next Panelist, Marc Lamy,Managing Partner of Boyden GlobalExecutive Search, set out to explain codesof good practice. He pointed out thatmuch of what he was about to say mightappear obvious on a first hearing.Nevertheless, it appears that more andmore Executive Search companies,especially during these last two euphoricyears, have given a bad name to "theindustry" by adopting unacceptablepractices.

His approach started with a clearlydefined overview of the Clients' rights(what he called the Bill of Rights). Hethen went on to discuss at length whatthe candidates' rights should be underany circumstances.

The Clients' Bill Of Rights shouldinclude 10 commitments. The first keycommitment is Confidentiality (bothinternal and external). The client must be

assured that he is entitled to havesomebody in front of him who willunderstand perfectly his needs andexpectations. All these commitmentsshould appear very clearly in a concisecontractual written document. Ofcourse, this will give more work tocorporate lawyers, but guarantees bothparties a clearly defined frameworkwithin which to operate efficiently.

The search firm must force itself tocommunicate faithfully and regularlywith its clients. The client is alwaysentitled to be kept informed at all stagesof the assignment if the assignmentprocess is to be made more transparent.

Nowadays, quality control is abuzzword in all industries, so why shouldit be neglected in Executive Search? Theclient, again, has a right to receive fromhis supplier only the best candidates –those who really are a close match withthe assignment profile.

The client must be able to cancel theassignment at any time without anykind of penalty whatsoever.

In recent years, a very unacceptablepractice known as ”parallel processing”has come into existence (even if it hasalways existed at an endemic level). Thispractise consists of getting a candidate“involved” in multiple assignments.

If a candidate is hired and ultimatelyturns out to be unsuitable, the search firmshould then be able to reopen theassignment without any delay and at areasonable price instead of artificiallyrecreating a new assignment in order toresubmit a new full assignment invoice tothe client.

If an Executive Search firm wants aclient to be loyal, it also must befaithful to the client! Although thisstatement may sound obvious, experiencesuggests that it has not always been thecase for everybody.

The rights of the candidates are justas important; people within industry arestarting to get tired of being consideredas traders in a massive “meat market”.

A candidate should always beapproached only if the firm really has asuitable position to offer him. He should

be fully informed of what the position isand of what it actually involves. He isentitled to have his private life protected(i.e. respected); never forget that acandidate is first a human being and nota piece of merchandise.

Lilian Poilpot, Morgan Howard GroupDirector, then presented to the audiencewhat he described as the “Head-hunter ofthe future”.

To justify the title of his speech, MrPoilpot based his presentation on theadvent of the current technologicalrevolution. As a consequence of thechanging economic environment, therequirements of clients have in turnevolved.

His suggestion is that the ideas of spaceand time have been totally changed andpartially abolished with the dawn of thedigital revolution (Internet, telecoms,etc…). Projects are becoming more andmore global. The world has become onemarket, a ‘global village’. Simultaneously,new markets have appeared, most ofthem linked with the new informationtechnologies.

Companies therefore need a globalunderstanding of the global market. Atthe same time, they must be more andmore specialised. They must fit this newparadigm in order to avoid being the nextvictims of the “Darwinisme economique”.Adapt or disappear is their only choice.

The Clients, to adapt to this NewEconomic Deal, need their suppliers toadapt accordingly. They will demand agreater understanding of this neweconomic climate and of their specificnew requirements.

This new environment will require theheadhunter of tomorrow to be morespecialized in order to have the bestpossible understanding of his clients’demands. He will need to be a well-informed industry expert. He has to turninto a fully integrated consultant, eachtime getting closer to his client (as anygood strategy consultant should).

The final speaker was Alain Tanugi,Chairman and Chief Executive Officer ofTRANSEARCH International. After a briefbut very rich and animated presentation

on how the perception of the work forcehas changed for companies, he gave theaudience the results of a very relevantsurvey called “Le palmarès desentreprises préférées des dirigeants dedemain” (Future senior executives’ mostsought after companies).

The work force, considered at thebeginning of the century as a productincorporated in production (a cost - likecapital), became a resource andeventually an asset. Any good managertherefore, has to monitor his assetsefficiently and maximise their gain.Proficient HR Management is not onlyabout hiring the best people, but aboutbeing able to optimise their abilitiesand retain them.

As a result the work force hasbecome human capital and needs tobe managed similarly to all thecompany’s assets.

When the floor was opened toquestions, the entire debate soon

became very focused on a very old andtypical French question about state-regulation (laws putting boundariesagainst the scavengers of the industry)vs. self-regulation (the search firmscreating their own "Cartel"). Thedebate proved to be very animated andcontroversial, giving a good idea ofwhat the future of the industry couldbe.

search-consult.com would like tothank all those who attended thisdebate, especially the speakers. Thefloor actively participated during thedebate, in the unique and passionateFrench way - ensuring a memorableand interesting morning.


For more information please visit:

Web: www.search-consult.com

Future senior executives' most sought after companiesTRANSEARCH International

(a synopsis of the most important results)

This survey was answered by future senior executives who graduated from themost prestigious French Business and Engineering schools.

business sense and puts the onus on thefirm to find a successful candidate for theclient."

Another area which has been underthe spotlight recently is the structure ofthe industry. A number of the industrymajors are embarking on strategies ofhorizontal integration - moving intoservice areas such as managementappraisal or lower level recruitment; inmany cases technology is used tofacilitate this. Mr Vautour believes thattechnology has had a positive impact onthe industry and is not a serious threat atthe top level.

"Information technology is a tool for ourbusiness; it facilitates informationprocessing and provides greaterknowledge. But, I believe, it is not goingto impact senior level executive search.

I do not accept the fundamentalpremise that the very best people will puta resume in an online database. But, ifyou do accept that premise, you have toaccept that clients do not want jobseekers. The fact is that I have yet tocome across a client in a board room whofeels that people who put themselves inthat type of position (registering online)

S E A R C H - P R O F I L E


S E A R C H - P R O F I L E


Eric Vautour is Chairman of the Board ofDirectors of the Association of ExecutiveSearch Consultants and also leads theAssociation and Government Affairspractice of Russell Reynolds Associates.In this interview with Jason Starr, hediscusses links between government andsearch, the role of the AESC and hisopinions on the industry.

P rior to joining the search industry,Mr Vautour held a number ofgovernmental positions, including

a spell at the White House under RonaldReagan. His final position in governmentwas Deputy Associate Director ofPresidential Personnel, a post he helduntil he joined Russell Reynolds in 1987.

"I always wanted to get in to business,but wanted to stay in touch withgovernment - and I didn't want to lobby.I was given the opportunity by RussellReynolds to run our public policy practice.All I recruit are heads of big national andinternational associations; heads ofgovernment affairs for big corporations

and board directors with public sectorexperience for major corporations."

Mr Vautour is one of a number of searchprofessionals who have worked inpolitics or Government. Steve Potter ofTMP, Virginia Bottomley of Odgers Ray &

Berndtson and John Redwood of NormanBroadbent are just three of a long list.

"If you look through the ranks of searchprofessionals in the US - particularlythose of 15-20 years experience - a lot ofthem have come out of politics. I thinkthere are lots of reasons for that -

primarily, interpersonal andcommunication skills which arefundamental to both roles."

During his period with RussellReynolds, Mr Vautour has beenresponsible for a number of headlineplacements, filling CEO positions forgroups such as the American MedicalAssociation, the American TruckingAssociation and the The InternationalCotton Association.

He was elected Chair of the AESC in1999 and is currently in the second yearof a three year tenure. He describes histime with the industry association as a"tremendous experience" and believesthat the Association plays a vital rolewithin the industry.

"The organization has done atremendous amount on behalf of theprofession. It will continue to. We havegrown internationally - we now have aEuropean council and we are forming inAsia Pacific and Latin America.

It does a number of things on behalf ofour members; it advocates to

government; it lobbies and has had somesignificant successes over recent years -both in the US and the EU; it providesmember services such as professionaldevelopment and professional training."

One of the key roles of the AESC is topromote standards within Search.Contrary to the opinion of many in theindustry, Mr Vautour believes that ethicalstandards have improved and that clientsget a better deal today than they havedone previously.

"I think ethics today work far better onbehalf of the client than they did a fewyears ago. Let me explain why. It isincumbent upon any retained search firm- certainly those who are members of theAESC - to explain to the client exactlywhat the roles, responsibilities, ethicsand blockages are in relation to a search.Instead of having some 'cookie cutter' setof rules that may or may not satisfy aclient, what we say is ethical is that thesearch firm and the client have a writtenunderstanding of what their relationshipis. It ensures that the client is satisfiedwith all elements that are important tothem.

Certainly, there are someguidelines/rules - in terms of off limitsand evergreen - but in terms ofnegotiating specifics it is most importantthat a clear understanding existsbetween all parties. You need to sit downand have that understanding."

Mr Vautour does not see a problemwith parallel processing (putting onecandidate forward to multiple clients) solong as the client is aware and givesconsent. He makes clear, however, thatthis is not something which RussellReynolds would be willing to do; and hebelieves that taking an equity interestmerely aligns the interests of the searchfirm with those of the client'sshareholders.

"We are in business to haveprofessional interaction with our clientsand they may be in a position whereequity payments are much more feasible- than would be a cash payment. If weare willing to accept that, there isnothing unethical about it. It is good

would be the kind of person that theywould want within their ranks. Rather,they want the kind of person who is verysuccessful and happy in their work. Thatis what we do - we identify the talentand entice it away. That will even havea premium put on it because of thecompetition.

I believe that the role of the web is tobe a modernized 'wanted ad'.Technology makes the advertising moreefficient, but it does not make a 'wantedad' into something a senior executive willconsider".

Mr Vautour also disagrees with thecommonly held belief that the availabilityof huge amounts of candidate informationon the web will "disintermediate" theresearcher function.

"Frankly, research is more importantnow than ever before. Clients demand alevel of knowledge and of understandingof their business that they did not demandeven five years ago. You have to come tothe table as a search consultant with avery extensive understanding of theclient's business or function. They are notgoing to take the time to teach you.Therefore, the research element of whatwe do - in terms of understanding anindustry - is probably even more criticalnow than it was 5 or 10 years ago."

Mr Vautour believes that as the industrycontinues to grow, the role of the AESCwill become greater and greater.

"It is no longer a club - when the AESCfounded many years ago it was a club of afew search firms. They were all verysimilar in nature and background. That isvery different now - we have memberswho are sole proprietors, we have largeglobal multinationals; we have publiccompanies, private companies and soleproprietors; we have European, US andAsian members. The complexities withwhich the organization has to deal arenothing but increasing."

EricVautourProfile:

Chairman of the AESC and Head of the Association andGovernment Affairs Practice for Russell Reynolds

By Jason Starr, search-consult

“....I have yet to comeacross a client in a boardroom that feels thatpeople... (who registeronline)... would be thekind of person thatthey would wantwithin their ranks.”


For more information , visit:

Web: www.aesc.org

Eric Vautour

S E A R C H - M A R K E T




Search

legal updateBy Barbara Kwateng, search-consult

German legal cases continue to causeproblems for German search firms - alongwith opportunities for firms inSwitzerland and Austria.

E xecutive Search and Selection inGermany has always beensubject to a tight legal

framework. It was only as recently as1994 that the recruitment market openedup. Prior to this the Arbeitsamt (Germanequivalent of a Job Center) was the onlyagency legally entitled to brokerpositions of employment. In the last 7years private consultancies have alsobeen allowed to engage in appointments.However, the industry has been hit byjudgments, sometimes contradictory, overthe last 2 years. All this could benefitSearch firms outside of Germany willingto exploit a large market.

Executive Search and Selection firms inGermany work. When the IT firm Bechteltook a Search firm to court in 1999, it wasin protest against the phone calls made

by the Search firm to its senior employeesas well as those in middle management.Allegedly a Search Consultant from theaccused firm had contacted thecompany's main switchboard and thenthe Support hotline in an attempt to reachthe prospective candidates. Thisprompted Beehtel to request aninjunction against the Search firm andsue for compensation.

The court agreed with Beehtel. InDecember 1999, a high court in Stuttgartruled that "...any attempt to sourcecandidates on their work telephonenumber is inadmissible", the reasoningbehind this being that employees werebeing disrupted from working bytelephone calls from Executive Searchfirms. The consequences of this areserious for the German industry,especially against a backdrop of lowerrates of growth for the first quarter of2001 in comparison to the same period in2000 (source BDU). It raises thepossibility that researchers will be

converted into night rather than daytimeworkers and puts them under greaterstress. Let us say that a researcherspends an average of 6 hours a daytelephoning potential candidates. Thesetop- level candidates are typically in theiroffices from 9am till 7:30pm. In line withthe Stuttgart judgment, this leavesapproximately 3 hours when thepotential candidates can be contacted;i.e. outside of work and not on a worktelephone number. This means that aresearcher's workload is doubled. Theywill need to produce the same amount ofwork, still to a high standard, in half thetime. As a response to the increasingdifficulty in contacting potentialcandidates, we could see increasedoutsourcing of research activities toexternal specialist firms. In any case, onesees a future of burnt-out researchersleaving a trail of high staff turnoverbehind them and less efficientcompletion of assignments.

This judgment in December 1999 was

received by Christoph Weyrather,Secretary of the BundesverbandDeutscher Unternehmensberater (BDU orAssociation of German ManagementConsultants) as an "inhibition tocompetition". The Stuttgart ruling diddecide, however that there were plentyof other opportunities to contact potentialcandidates, for example at specialisttrade fairs.

However in June 2000 a district courtin Mannheim, southern Germany,concluded that it is permitted to makeshort telephone calls to prospectivecandidates. Although every judge has theobligation and power to decide what theybelieve is right, judges in Germany havea strong tendency to orientate towardswhat was ruled in similar previous cases.This is especially the case when the lawis not clearly defined. In view of this, theMannheim decision was all the moreunusual. The judgment certainly gavehope to firms in Germany.

The reasoning behind the Mannheimcourt's decision is that "...sourcingcandidates from a rival company is part ofeconomic competition". Furthermore, thecourt's basis was that "no sensible orunderstanding employer would complainif his/her employees were occasionally tomake personal telephone calls (e.g. 5minutes in duration)". After all "...thecaller did not attempt to pressurize thetarget person or falsely lengthen theconversation by taking advantage of [thetarget candidate's] politeness".

However the ruling was compoundedby the Federal Supreme Court's statementin November 2000 that "...revising thejudgment of the Stuttgart high court (June2000) has no legal significance andtherefore has no prospect of succeeding".

Could we see leading German Searchfirms rejecting their indigenous talent infavor of recruiting national andinternational Executives based abroad?Perhaps. The U.K. and South East Asia arehotbeds for multi-lingual, highly talentedExecutives working in impressivemultinationals. The Search market therecould see challenges from Germancounterparts. However the scale of this

challenge would be restricted as, on thebasis of these rulings, (Stuttgart June2000 and Federal Supreme CourtNovember 2000), German Search firmscould not contact those Executives abroadon their work telephone numbers. Theyare still subject to the German judiciarysystem. As unlikely as it seems, theGerman company could be prosecuted bya foreign company in a German court oflaw. To avoid this scenario, a GermanConsultant would have to travel abroadand from there he/she could make a callto a candidate who works anywhereoutside of Germany.

However, there has been no case of aGerman company taking a foreign Searchfirm, for example a Swiss firm, to court. Ifthis were to be the case, it would be mostlikely that Swiss law would prevail. Thismeans a Swiss Search firm contactingthose working in Germany at work wouldnot need to have the same fear ofprosecution. They, after all, are likely tobe exempt from the legal frameworksurrounding the German ExecutiveSearch firms. This leaves German firmssuffering greater prejudice in comparisonto their foreign colleagues. On the horizontherefore, the Austrian and Swiss market

will become more powerful, takingadvantage of their legal exemption andlanguage ability, leaving their Germancounterparts' business to shrink.Seemingly the legal jungle faced byGerman Search firms could directlybenefit those companies with officesoutside Germany. One knock-on effect issurely to be that corporate clients willavoid handing assignments to Searchfirms in Germany, preferring theirEuropean counterparts who operateunder a more relaxed legislation.Unluckily for German Executive Searchcompanies, it is not likely that thisdiscrepancy will be a topic for theEuropean Supreme Court on the basis ofunfair competition, according to Dr.Andreas Quiring of law firm Quiring,Simon & Frick. Search firms "...shouldn'tplace too much hope on this".

Dr. Quiring has published essays on thesubject. "Contacting a work number withthe intention to source candidates isallowed when its duration does notconsiderably exceed that of normalprivate telephone calls made in theoffice" he wrote in 2000 (source: Aufsatzin WRP 2000, 33). In respect of theStuttgart ruling, he stated in 2001 that

in Germany-

1. Check whether the assertions arefactually correct and to what degreethe accusations can be proved.

2. Examine whether the assertionsthat could be proved contravene thelaw.

3. Make sure that the assertions onlyconcern this case and what hasalready occurred.

If you think the court will rule in yourfavor, then:

1. Do not sign the off-limits contractand give the reasoning behind yourdecision.

2. Defend yourself before a court oflaw.

If you believe that the court will rule inthe prosecution's favor, then:

1. Sign an off-limits contract with theprosecuting party with certainlimitations.

2. Submit this off-limits contract witha dissolution clause; this is in casethe Federal Supreme Court viewssimilar facts of a similar case aspermissible.

3. Instead of submission, you shouldwait for the process to continue, forthe prosecution to proceed with thecase and only accept legalprohibition [which can be a verylengthy process].

copyright: Dr. Andreas Quiring, Munich 2001

IN THE EVENT OF A LEGAL CAUTION, DR. QUIRING WOULD ADVISE COMPANIES TO:



inExecutive Search

ItalyALDO NEUBURGER offers a ‘helicopter’ view of the Italian search industry

Earlier this year, my colleagues and Ilaunched Hunters Strategic ExecutiveSearch into a booming Italian searchmarket. Our experience at TMC Amrop –purchased by TMP Worldwide in 1999 –told us that a niche existed for a smaller,high quality and locally owned business ina market dominated by the top sixInternational firms and by Eric Salmon &Partners.

R etained search is an establishedservice in Italy now, dating back to1975 when Egon Zehnder opened

on office in Milan, to be closely followed byHeidrick & Struggles. I have worked inSearch myself since 1986; between myselfand my three partners at Hunters we canboast 45 years of experience. Over that timethe market has changed somewhat; tenyears ago, the key markets were inConsumer Goods, Manufacturing andPharmaceuticals. Over the last three yearsdemand for search from the new economyhas been massive but, as in the rest of theWorld, this has died down to some extentand we are now finding most demandcomes from the traditional sectors. Financialservices, perhaps, is the only addition to thatlist and search firms are increasinglyinvolved in Management Appraisal services– particularly in the Banking sector.

The structure of the ExecutiveRecruitment business has changed

somewhat too. There is a huge market forselection services (client paid advertising)and many of the international search firmsdabble in this. Korn/Ferry International(K/F Selection) and Spencer Stuart (SelectorEurope) can be seen advertising inpublications such as Republica. We are alsoseeing increasing Internet based recruitingactivity at the middle level.

Most of the top level Search firms arebased in Milan, although a few have asatellite office in Rome. This can be one ofthe most serious barriers of entry to theindustry – the real estate market in thebusiness districts of Milan has recoveredover the last year or two and findingsuitable accommodation is not easy.

Whilst the Italian search market is stillfairly undeveloped – for example, there isno independent research community tospeak of, the demand is certainly there.We launched Hunters in March of 2001and we already (as of June 11) have 15assignments on our books. We expect tocomplete around 45 in our first year. Inour experience, assignments can becompleted rather more swiftly in Italy thanin other countries – projects rarely lastover three months and candidates tend tohave shorter notice periods – and thismeans that we believe a Partner can workthrough around 16-17 assignments overthe course of a full year without dilutingthe quality of service.

Profile

Aldo Neuburger joined TMC Amrop

International as Partner in 1986 and

since then has completed more than

300 executive search assignments.

His clients range from family

businesses up to multinational

companies. Neuburger started his

professional career at Olivetti where

he held a HR position. Following

this, he joined the Arnoldo Modadori

Editore publishing house as

Publication Rights Director. He has

a degree in Economics and

Commerce from the Bocconi

University of Milan. In addition to

his native language, Neuburger

speaks English, French and Spanish.

He joined Hunters Strategic

Executive Search in 2001.

Ald

o N

eubu

rger



"...sourcing candidates using privatetelephone numbers is, in principle,permitted. Telephone calls in worksurroundings for primary exchange ofnecessary information is alsoadmissible." (source: Aufsatz in WRP2001, Heft 5).

Confusion, however, arises in respectof other statements made by leadinglawyers on the issue. "Any attempt tosource candidates via telephone, fax oremail is inadmissible. Using a company'spostal address is equally improper,"writes Trube (source: Aufsatz in WRP2001, 97). Dr. Martin Reufels, HeukingKühn Lüer Wojtek, on the other hand,takes another angle, "Only if it is clearthat the potential candidate is interestedin a certain position and wants furtherinformation on the subject, is itpermissible to make contact at work"(source: Aufsatz in GRUR 2001, 214).

Despite these verdicts, no law has

been passed which constitutionallyforbids contacting candidates at theirwork premises. This is exactly whatGerman Search companies are trying toremind themselves; the judgmentsmerely have application to the cases inquestion and no more. Therefore it isstill "...legitimate to call a potentialclient tomorrow" says Wolfgang Lichiusof Kienbaum Consultants International.There is an air of "no change" amongstmany firms. "For us, it's business asusual," says Heinz Bischof of TransearchCetra in Frankfurt. Others, however, areslightly more cautious on this note. "Wesimply avoid calling people at theiroffices now" says Peter Nowack,Managing Partner at Boyden GlobalExecutive Search. But if, as previouslymentioned, in a grey area of the law, ajudge is likely to follow the decisionsmade in similar cases, a Search firm hasvery slim chances of winning before a

German court. To try and prevent the situation where

in future cases, judges decide in favor ofthe Stuttgart ruling and thereforeagainst the Search firm, the BDU hasemployed two Professors of Law toproduce an expert report. This is in factto clarify whether this particularjudgment represents improperdiscrimination or contravenes theconstitution. The viewpoint theProfessors will be taking is that theStuttgart judgment limits the freedom tochoose and carry out a career. In themeantime, the BDU advises its membersto keep candidate telephone calls atwork to a minimum.


For more information , visit:

Web: www.bdu.de www.heuking.de

S E A R C H - F E A T U R E




Relocating

candidates overseas

By Sergey Frank, Partner Kienbaum Executive Consultants

J obs and professions are not, ofcourse, done in the same way allover the world. But you would never

know it from the way most people talk.Many people in international andmultinational companies try to do businessin Tokyo or Paris just as they would in NewYork or London. Perhaps it is because theyhear so much about the onward march ofglobalisation, sophisticatedcommunication and informationtechnologies, and the unprecedentedaccessibility of international travel.Perhaps it is just human nature. Thismakes international search assignmentsso difficult and this is why soft skills suchas the adaptation to a foreign businessenvironment are so important.Furthermore, an expatriate expects certainelements contained in his total packagesuch as housing, school fees, paid homeleave etc. to be offered when working in aforeign country. This aspect has to betaken into account when selecting suitablecandidates for top positions abroad,especially by an executive searchconsultant.

The following observations may be usedas an "intriguing checklist" for executive

consultants in their international selectionprocess interviewing suitable candidatesand, further, understanding whether aparticular candidate may be the rightperson. This checklist goes beyond suchobvious items like knowing the foreignlanguage and culture and adopting oneselfto different customs and communicationpatterns. This depth is necessary.Otherwise, frustration, resignation, a failedproject as well as a mutual dissatisfactionmay arise rather quickly between allpersons involved.

Whatever the explanation, it inevitablyleads to difficulties and confusion inworking abroad. Although everyoneunderstands in principle that workinginternationally may require you to copewith different styles of decision-making,ways of thinking and priorities that aredifferent from those at home, these"cultural factors" are a vague and fuzzyconcept that is not easily applied inpractice. It is inadvisable to commenceworking internationally with the beliefthat "business is business all over theworld". The best practice in domesticsituations may not be applicable inforeign countries.

When you start working abroad, thepotential for misunderstanding is greaterthan it is at home: you and your businesspartner or colleague may waste timetalking past each other; you may need togive complete explanations of yourposition; you may need to master aparticular kind of persuasive skill.

International assignments have manyobstacles. National characteristics, for allthe stereotypes, really do differconsiderably from one country to thenext. If you neglect the existence of thesecharacteristics you may jeopardise thesuccess of the whole assignment.

Some factors may make themselves felteven before the substance of the businesscommunication has been commenced.Inappropriate gestures and other non-verbal behaviour may contribute to apsychological atmosphere that makescommunication difficult. Different socialetiquette or different notions of status anddignity can throw egos off balance.Although the intensity of moderninternational interactions, notably inbusiness, communications and education,has produced a sort of "internationalisedculture" that reduces the clash of cultural

backgrounds and stereotypes, evenrelatively "cosmopolitan" candidates canfall into the trap.

In any case, many businesscommunications take place in a lesscosmopolitan context. Additionally,people in highly specialised fields oftenconduct their jobs without havingsufficient background knowledge. Evenin the European Union, where people areused to travelling on holiday to a varietyof different countries and doing businesswith each other, mistakes are oftenmade. The solution to themisunderstandings and difficulties arisingfrom cultural differences is not to wish forthe day when everyone around the worldlearns to behave according to the samerules. This is as unnecessary as it isunachievable.

The answer is to understand andrespect cultural differences. This does notmean becoming subservient to theforeign culture: adopting and imitatingyour foreign partner's gestures andbehaviour risks not only appearingridiculous, but also arousing suspicionabout your sincerity. Preferably, thesecret for dealing with culturaldifferences lies in attempting tounderstand and respect different cultures,while remaining faithful to your own.

Even surrounded by the communicationtechnology of the third millennium, theskills of knowing how to talk to peopleand get what you want fromcommunication remain much as theyalways have been. In fact, due toglobalisation, these vital skills are neededmore than ever today. They are put to usewhenever a professional is in a businesssituation to buy industrial equipment,license technical know-how, orcommunicate with his/hers subordinates,colleagues and bosses. Moreover, theseskills are needed in medium-size andstart-up companies, as well as in themultinationals where they have beennurtured for a long time.

Even good candidates may very likelybe ill-prepared for an international jobthat they might face. In the sense thatthey might be working at headquarters

every day and have only occasionalbusiness trips abroad, they assume thatthey will be able to deal just assuccessfully in a foreign country. Manyseem to believe that in important respectsbusiness is identical all over the world,they further believe that knowing theirown business is sufficient preparation foroverseas ventures. Nevertheless thisassumption is mistaken. Business varieshugely from one place to another, "doexactly as people do" - and this is of greatimportance as direct interpersonalcontact is vital in many transactions.Despite e-mail, the internet, mobilephones and all other forms of moderncommunication, you need to develop acertain amount of sensitivity forcommunication and unexpected patternsin other countries. So here is a mentalexercise that is designed to reduce thefrequency of nasty surprises when youare working abroad. And the chancesthat it will succeed are promising - afterall, business is, by its very nature, used tosolving problems, and rapidly too. Thefollowing may provide a checklist withinthe interviewing process forinternationally suitable candidates:1. Consider the basic assumptions ofthe market. Will a candidate who workedsuccessfully in one culture flounder inanother one? Some examples in the USmight be: "Money talks"; "Everybody isequal"; "Hard work is rewarded".Examine how well the candidate will beable to cope with the requirements of the"new" country. Having a look on thefollowing example illustrates theconsiderations one should make whenplacing an expatriate:

An English “Fast Moving ConsumerGoods” company had a bad experiencewith local managing directors in itssubsidiary in Italy for several years. Theassignment was defined to find anexecutive with UK background andworking experience in Italy who wasable to run an Italian operation but alsoto comply with UK reporting structuresand communication. Here, the idealcandidate had to fit into a rather "low-key" UK-mentality with all the outspokenSergey Frank






For more information on Kienbaum

Executive Consultants, visit:

Web: www.keinbaum.de

and very expressive and communicativepatterns which are typical for Italy.Besides all other professionalrequirements, the candidate had to bevery British and, at the same time, veryItalian without losing his identity. Alsohere the search was successful. 2. Placing a female executive abroad,the consultant must consider traditionsand social circumstances in the chosendestination. Does the host country seek toestablish equality between the sexes?Sweden and Greece, for instance, treatthis matter in totally different ways.3. The search firm should advise thecandidate in matters of interculturalcommunication. Consequently, theproject will be more successful for allsides. The candidate will integrate betterinto the new business environment andknow how to adjust his/her behaviour.Topics to be discussed with the candidateshould be: How should you greetcolleagues, superiors or subordinates?How should you discuss the pros andcons of an action plan? What will it belike to take part in a meeting? Howshould you behave at lunch with acolleague, client or customer? 4. It is vital for the success of the wholeproject that the search firm informs theexpatriate about communication stylesand the general procedure of doingbusiness in the host country. Equally, thefollowing matters should be discussedwith the candidate in advance:� How direct are you? How else could

you go about obtaining information?What is the style of communication inthe host country?

� Systems of motivation and reward:What are the assumptions about whatmakes people work well and whatconstitutes an incentive or reward?How do you go about punishing orcriticising a persons conduct? Whatincentives will be appropriate?

� Giving and receiving instructions: Whatdo you assume about your role and therole of others in your organisation?What is the expected behaviour andresponsibilities that accompany theseroles? What relationship should exist

between people in these differentroles? How do these roles andrelationships differ in your hostcountry?

� Making new business contacts: Howmuch time do you spend socialising?Would more or less socialising beappropriate in the host country?

� Imagine that your present boss comesfrom the country where you are going.How does that affect your relationswith him or her? Try behaving in thisway and observe how yourassumptions and responses areaffected.

� Ask the candidate whether he ispsychologically prepared to cope withall the different conditions and customswhen travelling abroad.

5. Language. Of course, English is aglobal language. However, theimportance of various other languages,especially in Europe, should not beunderestimated. Here, even a fragmentedknowledge of the language, oftensufficient for occasional business trips tosuch country, may not be enough forcommunicating with people, leadingsubordinates and grasping sophisticatednotions. Otherwise, the language factorwhich may have been previouslyunderestimated by a candidate maybecome a very frustrating element in thesuccessful performance of an assignmentabroad. In certain projects a candidatespeaking other languages than Englishwill be the most appropriate.

Selecting the right candidate for theright position abroad, the search firmshould consider the significance ofbicultural skills. The following example islikely to illustrate this. A Germanmanufacturer of technical productsacquires a US competitor, which is goodin manufacturing but does not live up toR & D standards. For the German parentcompany, it is vital to establish a similarR & D centre in the US. This should bedone by an experienced engineer andmanager, who has previously worked ina comparable R & D centre, knowsGerman standards in terms of technology,but is also able to build up R & D

operations in a different country. Last butnot least, the ideal candidate should befamiliar with the US mentality. Since allrelevant people in the Germanheadquarters are needed there, thecompany had to look for someoneexternally: The ideal candidate foundcame from competition in Germany, hadworked in the US for a couple of yearsand was able and flexible enough tocomply with rigorous German technologystandards on the one side and the ratherrelaxed communication style in the US onthe other. This specific combination ofdifferent values (German precision, UScommunication style) has been evaluatedprofoundly in several interviews with theauthor.

This kind of mental exercise shouldincrease your sensitivity towards the waybusiness is done in a foreign country. Itshould not discourage the candidate butshould just make him aware of certainobstacles which may come into his way.Thus it enhances also the level offrustration which may become necessaryto make an assignment successful.

Sergey Frank is a partner of KienbaumExecutive Consultants and managingdirector of the London office. Working asan executive himself he experiencedmany own assignments in variouscontinents and has a vast experience inparticular in the US and Europeconcerning the placement ofinternational executive searches. SergeyFrank is a global leader in the followingfields of international communication andnegotiations: executive recruitment, key-account management, international salesstrategies, mergers and acquisitions aswell as the merger of different corporatecultures. His work on key-accountconsulting has an internationalreputation and his insight into cross-culture development is unique.

By Barbara Kwateng, search-consult

Innovating change….

The BDUConference in

BonnT he Bundesverband Deutscher

Unternehmensberater (or BDU;Association of German

Management Consultants) recently heldtheir annual conference for humanresources consultancies and ExecutiveSearch and Selection firms alike. 250delegates gathered at the GaestehausPetersberg, near Bonn, to participate indebates on the changing shape of thesector. As the event's sponsor, search-consult was there to take part in the day'sdiscussions.

The BDU is Germany's authoritativeassociation when it comes to ExecutiveSearch and Selection as well as forManagement Consulting. Otherassociations have sprung up such as theVerband Deutscher Executive SearchBerater (or VDESB; Association of GermanExecutive Search Consultants), favored bysome of the highly international firms

such as Heidrick & Struggles, Ray &Berndtson GmbH, Boyden GlobalExecutive Search GmbH and Korn/FerryHofmann Herbold GmbH. However theBDU's Executive Search and Selectionbranch is the largest of its kind inGermany; founded in 1954, its membersrepresent 70 member firms amassing aturnover of 350 Million DM (154 MillionUS$) in 2000.

This year's topic was stimuli forchange. Under this umbrella camepresentations on new technology in theSearch process, balancing work andleisure, competing in an internationalExecutive Search climate and knowledgemanagement. One of the most wellattended presentations centered on thecurrent German legal situation and itsimplications for the industry. This topic iscovered in more detail on page 18.

The first session, chaired by Professor

Dr. Wolfgang Jäger from the TechnicalUniversity of Wiesbaden, looked at theimpact of technology on Search andSelection, the opportunities it offersand the limits which frustrate. GuntherBatzke was largely in defense of thebenefits of technology. As ManagingDirector of monster.de, he used anexample of a senior position which hadbeen advertised on monster.de. Theadvert had received a response fromover 600 people within 24 hours, whoincluded a Chief Financial Officer, aHuman Resources Director and aTreasury Officer, earnings ranging from250,000-400,000 DM (110,000-175,000 US$). This he used to highlightthe changing nature of the Internet inthe Selection process. However, he wasloath to say the online process couldreplace the human touch, "... quality ofinteractivity is what will set apart the

can achieve results-oriented leadershipstructure. Using a model, he showed thatthrough setting a 12-month annual salaryas 80% of the total package, a companycould achieve better results from itsemployees through the use of bonuses.

The employee can achieve a 20%bonus. 10% of this bonus is gainedthrough reaching individual targets. Theother 10% of this variable bonus isdependent on whether the companyachieves its targets. Both the individual-target and company-target bonuses aremeasured against a scale, e.g.satisfactorily meeting targets,overreaching targets and so on. All in all,when both the individual and companytargets are met, the employee can expectto earn at least a 15-month salary. Thismeans that the Executive Search andSelection firm "does not only encourageindividual success but also team ambitionand imitative. Consultants take a greater

interest in the company's general successand not only in their own". Theconsequence of such a system is thatemployees feel the effects of increasesand loss in profits. Arguably they willwork harder to raise their salary,benefiting the company.

Dr. Lothar Heimeier, Managing Directorof Heimeier & Partner ManagementConsultants presented his company'sexperiences as part of a European Searchnetwork to the audience. The topic of thisdiscussion was international ExecutiveSearch and Selection.

Heimeier & Partner has been part of the



“...the BDU's ExecutiveSearch and Selectionbranch is the largest of itskind in Germany...itsmembers represent70 member firmsamassing a turnoverof 350 MillionDM...in 2000.”

winners from the losers in the Internetmarketplace". He was questioned onhow one can be sure that the Internetapplicants are not inputting their CVsinto the database in order to test theirworth. Batzke replied, "Perhaps acandidate would do this, say once ortwice but they would find it disruptiveto be continuously called if they weren'tinterested in changing jobs". Anargument could be raised that thecandidate is always interested infinding out their worth; therefore suchinstances can be avoided with difficultywhether the medium is print, personalcontact or otherwise.

The monster.de Managing Directorweighed up the costs against the benefitsof Executive Recruitment on the Internet.A single advert on monster.de could beinserted at the cost of 1000DM (440 US$).For 3000DM (1320 US$), a Researchercan access candidates records stored inthe monster.de web-enabled database.The number of candidates who haveentered their own information into thedatabase total 80,000 in Germany and600,000 in Europe.

However Angela Hornberg, aConsultant at TRANSEARCH Cetra,questioned the caliber of the candidates.Those applying for jobs via the Internetare likely to represent "a youngercomputer-literate community". Thereforecandidates in the database are not likelyto be those executives for whom Searchand Selection firms go for. The traditionalview which she asserted was seniorcandidates are simply not 'turned on' bythe thought of using the Internet to find anew position. She argued in favor ofusing the Internet "to complementexisting methods of research". Judging bythe views and questions asserted fromthe audience following her presentation,this was also the general view of theaudience.

In another presentation, Arnulf Tänzer,Partner at Kienbaum ManagementConsultants spoke about compensationmethods in Executive Search andSelection firms. Through a target-basedbonus system and setting of goals, a firm

IMD International Search and Consultingnetwork for over 10 years. He spokeabout how Heimeier & Partner decided tojoin an international network "...to adaptto an increasingly global marketplace wehad to either open subsidiaries, perhapsstart a franchise abroad or join aninternational association of leadingExecutive Search and Selection firms. Wetook the last option".

Dr. Heimeier spoke of the decisiveadvantage in joining the internationalnetwork "...the local partners haveexcellent knowledge of their market andcan ensure the best possible placementusing their local knowledge". He went onto say that "...the top candidates identifywith the reputable Search and Selectionfirms; those who are well-known andtrusted within the industry. This isanother advantage which we gained".

Instrumental to making this, or anynetwork, function is the development of acode of conduct. This "...lays down whateach employee's duties are and thenetwork's principles. It is important tocreate a code of conduct on howcandidates and clients should be treated.For example, that a candidate's CV maynot be submitted to a client without thecandidate's express permission."Although this may seem totally logical,problems can arise through regionalvariations in legal structure and businesspractice.

The BDU's Vice President, Dr. JoachimStaude was delighted at how the eventwas received. "An outstanding location,up-to-date and in-depth perspectivesand intensive networking opportunitiesadded up to a successful conference. Itwas precisely the opportunity to shareexperiences that was so highly valued byour delegates. Furthermore, responses toour questionnaires showed that speakersoffered advice and ideas which could beused in everyday business".


For more information, visit:

Web: www.bdu.de

search-consult issue 5

Documents

charge of us

flames2 search

search professionalsjuly

annualsavings of us

heidrick strugglessheds

aslowing search market

searchconsultin response

ray jr