Late last year, Canada’s small community of executive recruiters, the big-game headhunters who poach and staff the nation’s C-suites, was rocked by news of a recruiting coup within its own ranks. Roughly half the staff at Odgers Berndtson Canada, one of this country’s biggest search firms, resigned (or were cut loose, depending on whom you believe). The very same day, they reopened shop under the banner of Boyden, a large U.S.-based company with little presence north of the border.

The defectors included some of this country’s most seasoned recruiters, folks who had handled marquee assignments with Canada Post and Bank of Canada (including the hiring of Stephen Poloz to replace Mark Carney), top oilpatch companies and universities. “The guys and gals Boyden acquired are best of breed,” says Mark Surrette, a former Halifax-based Odgers partner with more than 30 years in the business. And the sheer numbers were striking: three entire offices, with close to 90 people, that represented Odgers’ Ottawa, Calgary and Vancouver regional operations and more than half its Canadian revenues. “Sometimes you’ll see a cohort leave or, on a rare occasion, an office,” Surrette notes. “I don’t think I’ve ever seen a mass exodus like this.”

The secession turned Boyden Canada into a significant player overnight, but aside from finding a new name on the doors, clients barely noticed. Since the regional partners owned those businesses, “we just declared a change,” says Catherine Van Alstine, a partner in Vancouver. “We had a divorce clause. There was no fight; we just left.”

Those familiar with Odgers’ Canadian operations, however, knew there was more to the story. Joe Zinner, a veteran recruiter who runs a boutique search firm in Toronto and worked at Odgers from 1999 to 2002, says the departures followed a decade of growing frustration with Odgers’ Toronto head office, which had been trying to dictate business priorities and leaving the regions out of major national decisions. “There was long-standing discontent with what the partners saw as [chairman Carl] Lovas trying to drive his own agenda,” says Zinner. A former Odgers partner who spoke on condition of anonymity adds, “The whole tenor was one of command and control, even bullying.”

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While strategy disagreements and personality conflicts drove the corporate drama, the split was also a symptom of a larger shift shaking up the US$10-billion global executive-search industry. Like other professional services, executive recruiting is undergoing a sea change as technology and clients’ toughened expectations challenge the industry’s traditional ways of practice. The demise of Canadian legal powerhouse Heenan Blaikie earlier this year and the merger of global consulting giants PwC and Booz & Co. are just two signposts of the upheaval heading every recruiter’s way. Facing an onslaught of nimble entrepreneurial innovators, some recruiting incumbents are opting to go broader, expanding to offer “talent management solutions” such as succession planning and employee assessments, while others go deeper, specializing in high-demand industries or executives with particular skill sets. Many are customizing their fees and approaches to top clients’ needs. The result, according to a 2013 report by industry research firm HSZ Media, is “one of the most significant paradigm shifts in the history of executive recruiting.”

Today, the industry is dominated by global giants such as Korn Ferry and Spencer Stuart, but their core search business has increasingly been eroded by specialist boutiques. Odgers Berndtson, a U.K.-based multinational, has been working, like many of its rivals, to broaden its service lines; to do so efficiently, it wanted to own all outlying affiliates outright. “The big names in the industry are becoming increasingly monolithic,” says Jim Harmon, who ran Odgers’ Ottawa office and is now Boyden’s managing partner in Toronto. “Odgers sees a rollup of all the offices under a common ownership as a better way to serve clients. We completely disagree.” Boyden contends recruiters must be agile and responsive to clients’ needs. This means regional offices need to have enough expertise and flexibility to serve their local clients. It’s a question of strategy that will pester myriad consulting firms in the future: Does their success, and perhaps very survival, mean being big or nimble?

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At the highest levels, executive search has long followed a set formula. Typically, when a firm wins an engagement, it spends several months defining the candidate criteria, quietly reaching out to leaders worldwide, compiling a short list, interviewing and investigating candidates, then acting as a hush-hush go-between for the client and the top prospects. In recent years, the initial stages of this process have been revolutionized by technology. LinkedIn and other social media have levelled the playing field between established recruiters and the independents they dismiss as resumé peddlers. “In the ’80s and ’90s, my capability was based on the strength of my network,” says Surrette of the candidate databases headhunters build over decades. Now, corporate HR managers can easily find and contact prospects themselves. The impact has been greatest at middle-management and lower levels, but it’s creeping up corporate hierarchies. “If you go on Linked­In, you’ll see jobs posted in the $250,000 to $400,000 range,” says Zinner. “RBC is posting vice-president jobs there.”

With access to the tools to do their own legwork, clients are also rebelling against the fees executive-search firms demand. Elite positions are typically filled through retainment arrangements, whereby the recruiter is hired as the client’s exclusive agent to identify and vet prospects according to an agreed-on methodology. In exchange, the firm charges a third or more of the recruit’s first-year salary, plus administrative charges—money it usually receives whether or not it successfully fills the post. “This industry has for years been done in a cookie-cutter way,” says Harmon. “Clients are simply not willing to accept the standard fee model anymore.” And companies want searches concluded faster, with targets identified quickly and with precision, says David Perry, an executive headhunter based in Ottawa. “It has to be rifle shooting, not a scattergun approach.”

Multinationals like Time Warner and W.R. Grace & Co., however, are increasingly opting to set up in-house executive-search units, relying on services like LinkedIn’s Talent Solutions. According to HSZ Media, internal recruiting efforts have grown by 25% over the past five years. “More and more, our competition is not the executive-search firm across the street but organizations that think they can recruit for themselves,” says Ken Werker, Boyden’s managing partner in Vancouver.

As a result, an executive headhunter now needs different skills to gain top-tier assignments. “Technology is a giant Yellow Pages,” says Surrette. “We’ll all bring to the table roughly the same list of prospects. Where I earn my money is in going from the list of prospects to the choices to hire.” That demands emotional intelligence and a knack for building relationships: engaging and courting candidates, identifying individuals who mirror the values and culture of the client company, and having the matchmaking skills to usher the two parties into a happy union. The ability to distil complex issues into simple facts and glean character when assessing individuals—“you only get that from experience,” says Surrette.

As technology commoditizes the lower end of recruiting, more and more search firms are targeting C-suite engagements at global corporations—assignments for which the barriers to entry remain high and client sensitivity to fees relatively low. This shift to high-level, high-value engagements in large part explains why the industry revenues in North America were up 8.5% last year despite the number of searches dropping, reports the global Association of Executive Search Consultants. At this level, elite headhunters with deep connections retain a big advantage. Top executives don’t post resumés on Linked­In and are guarded by flanks of assistants. “The CEO of Canadian Tire or Barrick will only talk to you if they deem you worthy of their time,” says Perry. “My industry is finding out too late that it should position itself as a trusted adviser. Most recruiters are positioned to build transactions and now are trying to change gears.”

Adopting the adviser role has the added benefit of opening the door to providing the additional services recruiting firms hope will offset dwindling search revenues. Korn Ferry, for example, now derives 40% of its revenue from performance assessments and other HR-related consulting. “The age of the generalist, whether you’re a lawyer or a strategy consultant or an executive-search consultant, is really over,” argues Carl Lovas, chairman of Odgers Berndtson Canada. Firms now need recruiters who focus on, say, the financial sector or mining, instead of a particular region. In Lovas’s view, this trend is tilting the search business toward integrated global firms—like the ones that have long dominated other professional services—that are capable of acting as multi-pronged talent consultants to address a client’s needs anywhere in the world. “You’re either going to be in that league or not,” he says. “The regionally owned, smaller organizations that by definition have to be generalists, there’s still room for them but not in the way there was historically.”

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