Better Days for Executive Search Firms

Thanks to greater economic activity, executive search firms are posting improved results as their clients shop for new talent at the top.

According to the Association of Executive Search Consultants, the average consultant enjoyed revenue growth of 26 percent in 2004. Top firms, like industry giant Korn/Ferry International, saw even more improvement: Revenue in the United States rose by 31 percent in the 12-month period ending January 31, 2005.

The biggest overall contributor to the search industry was financial services, which accounted for nearly a quarter of search firms’ revenue last year. But the hottest sector was in life sciences and health care. In the fourth quarter of 2004 alone, that industry began 27 percent more searches than it had in the third quarter of 2004.

According to Jeffrey Frerichs, a consultant with the search firm Witt/Kieffer in New York, increased demand for executive talent in health care exists not because the sector is performing particularly well, but because “change is accelerating.”

On that point, Frerichs says health care firms seek leaders who can deal with “a business where revenue may be declining, but accountability continues to rise.” Profit may be slipping for some health care organizations, but the need for leaders who understand government regulations such as the Health Insurance Portability and Accountability Act is not.

Candidates also need to possess a firm grasp of financial matters and an understanding of global business and know how to work with doctors, Frerichs says.

Alicia Russell, associate director of the Alexander Group in Houston, says that in the first quarter of the year, individuals tend to be more proactive about finding new opportunities. That, coupled with improving business and employment climates, could mean the most recent quarter’s results will look even better than the last.