October 2012
We are pleased to provide you with our most recent thoughts on issues relating to executive search. Unfortunately, what we report mirrors what we all see in the news daily – good news followed by bad, and dismal quarterly results followed by results which exceed analysts' expectations.
We've had a very positive year. While we've experienced some slow periods, they've been eclipsed by periods of extremely strong activity. We've been fortunate to have worked in the following sectors in 2012 where we've seen a great deal of activity –Specialized Financial Services, Real Estate, Life Sciences & Pharmaceuticals, Manufacturing, and Education/Not for Profit.
Demand continues for those positions responsible for Risk, Compliance, Environmental & Regulatory issues. If there is a common theme for us this year, it is our pursuit of candidates who bring technical depth, but can communicate these issues in such a way that Board members can understand the risks and potential trade-offs.
While we strive to conduct our searches as quickly as possible while maintaining a thorough approach, we find that search timeframes are lengthening. In some recent instances, clients have slowed down the process as they re-evaluate their needs or other issues require attention. In other situations, we've had to broaden our reach, as our initial search efforts did not yield candidates that met or exceeded our clients' expectations.
On a local level, in discussions with career transition professionals, we've begun to hear rumblings about layoffs occurring within one or two major banks and insurers.
The majority of our work is Canadian. In order to obtain a more global view, we track our former employers, publicly-traded Korn Ferry International (KFY) and Heidrick & Struggles (HSII). We're not particularly interested in how their top-line quarterly revenues compare to revenues in the corresponding quarter the previous year. Rather, we look for trends from quarter to quarter. Admittedly, the latest results are a bit of a dog's breakfast.
Heidrick & Struggles reported that its first quarter revenue fell 16%, only to rise the following quarter by 9%. The Americas and Asian region revenues both dipped and then somewhat recovered, whereas the European region's revenues did not recover in the last quarter.
Korn Ferry's results contradicted those reported by Heidrick & Struggles. KFY's revenues for the past three quarters have decreased 8%, recovered 6.5%, and then dipped 10% respectively.
HSII's stock is currently trading at approximately 52% of its 52-week high, while KFY is trading at roughly 75% of its 52-week high. HSII has experienced departures of some high profile consultants which have likely contributed to its woes.
A study recently completed by the Association of Executive Search Consultants (AESC) surveyed 731 executives worldwide. Its findings suggested that 65% of respondents believe long-term incentives motivate them to higher levels of performance. Further, many executives suggested that an increasing lack of long-term incentives contribute to a high turnover rate at the senior levels. 40% report that they receive no long-term incentives. More than half (54%) indicated that they would consider a career move for a better role/increased responsibility even if it entailed a pay cut.
Compensation at the highest levels is frequently noted in the media. Yet, based on salaries of 186 C-suite executives in public, private and non-profit organizations globally who were polled, the average annual base salary was $278,800 USD, while the average bonus was less than $50,000 USD. While more than half the respondents reported an increase in total compensation last year, many expressed concern about declining salaries in certain fields and sectors.
We've outlined a great deal of conflicting information above, underscoring the prevalence of mixed messages in the market at large. We hope that the coming months bring more positive than negative news, and wish you a successful last quarter as we drive toward the close of 2012.