2006 AESC Americas Conference Summary
Moving the Agenda Forward

It was appropriate that the AESC 2006 Americas Conference "Moving the Agenda Forward" be held in New York, a city that never stops moving. The sanctuary of the Harvard Club provided an ideal pit stop for the large audience who ceased search activities (discounting avid blackberry and mobile phone use, zealous networking and the occasional meeting breaks) in order to regroup and review their profession.

Back row left to right: Larry Holmes - Columbia Consulting Group, Marc Lamy - Boyden, Les Stern - Heidrick & Struggles, Anders Borg - Hansar International/Penrhyn International, Nirmit Parekh - 3P Consultants (Penryhn International). Front row left to right: Luca Pacces - Spencer Stuart, Jean Van den Eynde - Russell Reynolds Associates (Chairman of the Board), Vincent Swift - TRANSEARCH International, Ulrich F. Ackermann - TRANSEARCH International, John Peebles - Peebles Associates.
Members not present in photo: Charles Wardell III - Korn/Ferry International (Vice Chair), W. Carl Lovas - Ray & Berndtson (Treasurer), Charles Bien - Boyden, Steve Fisher - A.T. Kearney.

Members of the AESC Board of Directors

Janice Reals Ellig, President of Gould, McCoy, Chadick, Ellig and AESC Americas Conference Chair opened the event, acknowledging the success of last year's conference and pointing out the value of these events in enabling search professionals to continue improving their knowledge and expertise. For all other times we have AESC President Peter Felix sending regular industry thought pieces to ensure members protect their reputations and the reputation of the industry.

Small Firm Forum

Moderators:
Susan Chadick — CEO, Gould, McCoy, Chadick, Ellig
David Friedman — Principal, Bridgewell Partners

Lively discussions took place at the Small Firm Forum on Wednesday morning. The forum received an outstanding turnout and key topics addressed during this session included the Overall Executive Search Market, Client Expectations, Accountability, Growth Strategy and What Keeps Search Consultants Up at Night — all from a small firm's perspective.

To view the full summary from the small firm forum, please click here.

State of the Industry by Peter Felix - President, AESC

Peter Felix reported that the executive search profession has grown at a compound rate of 40% in the past two years with many firms experiencing high demand generated by active stock markets, industry restructuring and M&A, and expansion in the new key markets; China, India, ECE and Brazil. Underlying demand is the need for management transparency in the wake of Enron, executive mobility and a growing shortage of talent in most major markets.

Click here to watch clip

For Peter Felix's powerpoint presentation click here.

For those who might be interested in video content from the conference, please email marketing@aesc.org

The Changing Nature of Professional Services by Barry Salzberg - Managing Partner, Deloitte & Touche, USA & Chair, US Executive Committee

Attracting and maintaining talent with broad attributes is a great challenge for the professional services industry today and the rush to find critical talent is on as the baby boom generation reaches retirement. Neither the deep technician nor the head in the clouds idea person fit the bill in total; there is a need for both. The evolution of the professional services industry has brought greater visibility, liability and the current business model of incorporating a wide range of professional services. With this comes a change in priority for candidate attributes, for example the need for people with broad skills and uncompromising ethics, with integrity at the top of the list. A greater focus on a changing demographic means organizations are now hiring a much more diverse pool of talent. Therefore clients value search firms that present candidates with a diverse range of skills and perspective.

Organizations now require superior industry expertise and knowledge in order to beat the competition. Candidates must possess strong communication and networking skills and be adept in developing relations, team work and effectively meeting with people. Pure technical competence does not fit the bill. Leaders must understand the diversity prevalent in today's workplace. Companies that do not place effective managers will experience the highest rate of attrition.

Today's global work experience does not necessarily require leaders to leave their own country. However, it does require the ability to work effectively with different cultures and lifestyles. There is a premium on leaders who can adapt to various cultures, work well in a team and exert influence rather than control. It is vital that managers possess this ability, especially in today's fast paced environment. Clients want and need fast, bullet proof solutions. In summary, candidates need flexibility, breadth, a diverse background and emotional intelligence, admittedly a tall order!

Executive search consultants provide a vital service when sourcing large numbers for an organization, which may otherwise be unable to meet demands. This is a tremendous opportunity for continued, robust relationships with executive search consultants. Firms need to be creative about where they can obtain talent to refuel growth. Today 20% of hires are "boomerangs", for example back-to-work mothers and retirees. Minorities and women must be included in the pool of candidates.

An open, inclusive, performance oriented culture is important in creating a successful work environment; values and consistency are important to candidates. Employees want to be more involved in managing their work/life balance. Deloitte and Touche operate a Pursuit Program that offers employees up to a five year work break - this proves a vital part of catering for a diverse workforce and retaining talent long-term.

Executive search consultants can improve partnerships with professional services firms by achieving a greater understanding of the client's business, and in particular when candidates are not a good fit for the client's culture. In this sense, not pushing business when the candidate/client fit is incorrect could be the best business deal you ever do. Professional services are currently experiencing robust growth, dynamic change and endless opportunities and look forward to partnering with executive search consultants to achieve their goal of openness and integration.

For a transcript of Barry Salzberg's speech click here.

Executive Compensation: What Lies Ahead?

Panelists:
Joseph E. Bachelder III — Founder & Senior Partner, Bachelder Law Firm
Jill Kanin-Lovers — Board of Directors, Chairman of the Compensation Committees; Alpharma, Dot Foods, Heidrick & Struggles
Alan M. Johnson — Managing Director, Johnson Associates

The issue of executive compensation now receives an enormous amount of press coverage and generates considerable management concern. The Wall Street Journal recently installed a section titled "Executives on Trial" and much of what is discussed here relates to compensation. The ongoing criticism of executive pay impacts on data availability and expectations, which is not necessarily fair nor appropriate. The vast amounts of public data available on the internet encourages the candidate to make pay comparisons, meaning the executive search consultant has to be sharper to compete with the knowledge of the candidate.

Boards do not like to be labeled as excessive, in some cases a large increase in salary is unavoidable. One example being candidate relocation, where a change in the cost of living means a large increase to balance the rise in pay for candidates moving to a more expensive area. Overpay is also relative to other companies, comparative groups are important for committees to make the right decision, weighted against the compensation committees' aim to avoid criticism (and appear in the Wall Street Journal). Ultimately the compensation committee has to do the right thing in the best interests of the firm.

Perquisites are less of a focus and tend to look bad in the press. Pay for performance is the new trend; greed is out, pay for performance is in. Compensation committees like to see this written into the contract. Transparency is vital at all times, it is never a good idea to take actions that you do not wish others to be aware of, or that are improper.

For Alan Johnson's powerpoint presentation click here.

Talent and the Entrepreneurial Frontier

Panelists:
Scott E. Kingdom — Global Managing Director, Korn/Ferry International
Gary Matthews — CEO, Sleep Innovations
Steven A. Shenfeld — Partner & Senior Managing Director, MD Sass
Daniel J. Schultz — Managing Director & Co-founder, Draper Fisher Jurvetson Gotham Ventures
John Wood — Consultant, Spencer Stuart

What makes a successful entrepreneur? The real skill and "DNA" of an entrepreneur is the ability to move quickly and deal with risk, along with strong team and consensus building. Many people no longer view corporate life as stable, therefore it is not considered a huge risk to change to entrepreneurial life. It's important to bring diverse and global talent to the slate and clients report that they rarely see this kind of candidate slate. When selling talent, you are selling the difference that one person can make.

When presenting the DNA of an entrepreneur to a client, the search consultant needs to assess whether the individual's energy and personality will work with the organization. Great recruiters take time to understand the culture of a company and provide this information to candidates. They question the values, cultures and decision making processes of the firm. Entrepreneurs that start their own business have a very different chemistry to the people who come in to an organization from the outside to run the business. Candidates must be fit for the longer term view of the role.

The Changing Context of CEO Succession and Selection by David Nadler - Chairman & CEO, Mercer Delta Consulting

The changing environment of corporate governance has had a tremendous impact on directors and boards with the role and responsibility of boards being questioned. CEO succession is specifically one area where boards can add the most value today. More than three quarters of board members identify the value of having a CEO succession plan. Yet this is also rated as the service that boards deliver least effectively and is clearly an area with a significant amount of dissatisfaction. Boards are recognizing that they have to live with their succession choices.

Ten best practices for board engagement in CEO succession:

Begin succession planning 3-5 years out from the event
Ensure full board involvement, now less the job of the CEO
Create open ongoing dialogue
Develop and align the board on criteria - utilize a forward vision and long term thinking
Formal assessment processes using a range of available data
Interact with internal candidates (i.e. informal dinners) because it's not just how they present in the boardroom
Stage the succession but avoid "horse races"
Developing internal candidates is typically preferable to external recruitment - external candidates are more costly
The outgoing CEO should leave immediately, or stay on as Chairman for a maximum period of 6-18 months
Ensure a comprehensive emergency succession plan

Emerging Models of CEO Succession:

Concurrence Model (previous) - CEO led program of succession
Collaborative Model (current) - Collaborative model where CEO is process driver
Board Driven Model (future) - Move to a board driven model

Accelerate Profitable Growth by Renovating Before You Innovate by Sergio Zyman Chairman and CEO, Zyman Group

Renovate, don't innovate - maintain the core DNA of the brand, which is almost impossible to change, whilst transforming the business you compete in. The number one issue facing companies today is growth. Sergio Zyman's philosophy is to "Sell more stuff to more people, more often and for more money, more efficiently". Some companies, however, such as FedEX, Apple and Starbucks, have successfully innovated by significantly changing the market place they compete in.

Leadership is about telling people where you are taking them, if you have no vision then neither will your followers. In order to achieve this vision and subsequent following, you must understand what you want to be when you grow up. This knowledge will drive the core essence of your brand and determine how far it can grow. Everything communicates, for example what you don't say and do can in many ways be communicating as much as the messages you choose to transmit loud and clear. Improve the chances of getting clients to pay full freight for your services by ensuring every element of the brand experience is in line with the vision you wish to communicate. Consider what you can do to help your clients succeed, in the case of executive search, coaching services and retention strategies, helping clients succeed will pay strong dividends for you.

There is room for search firms to act more aggressively in getting clients to communicate what they want. Consultants need to establish clearly up-front what is going to get done. The potential for executive search in the current business climate is huge. Consultants can gain better recognition for the industry by avoiding the servant role and fervently advising clients of what they need, which will please clients in turn. Renovate the customer experience for the executive search industry by following logic and by trying to understand the mindset of the client. Create an experience where the client feels as though the consultant really understands their pain.

Feedback from Conference Attendees

"Excellent group of sophisticated, bright, business focused professionals. THANKS."

"Professional presentation - good data, a lot to absorb".

"Great food for thought towards building the new business model/platform for search firms."

Video Content
For those who might be interested in video content from the conference, please email marketing@aesc.org

With Kind Thanks to our Sponsors

2006 AESC Americas Conference Summary Moving the Agenda Forward