Executive talent

Global Magazine from AESC

 

The Era of the Talent Advisor

By developing leadership consulting services, executive search firms are cultivating closer relationships with their clients and furthering the value the provide.

This is the most exciting time for people in our profession. The opportunity for us to be at the center of conversations with clients around strategy, capability and culture has never been more important to our clients.

Catherine Bright, Private Equity Practice Leader, Europe, Spencer Stuart.

The profession of executive search consulting spun out of management consulting in post- World War Two America. The pioneers of the profession, who had experience working at McKinsey and Booz Allen, heeded the words of Edwin G. Booz, who once said: “Often the best solution to a management problem is the right person.” As the likes of Sidney Boyden, Gardner W. Heidrick, John E. Struggles and Spencer Stuart created their own executive search firms, they retained the skills and style of working that they had learned in their management consulting days: credibility, reliability, responsibility and discretion. Their desire was to help clients execute their business strategy by identifying the right people to deliver. These early executive search consultants were renowned for their understanding of what their clients’ needs were, and were seen as a key for breaking up the “oldboys network” that had come to dominate hiring for management positions.

Now, almost 60 years later, executive search is an $11 billion profession globally and is recognized by clients around the world as the most effective way to identify and attract the best executive talent. But the profession is evolving, and in order to go forward, it is following the path of the profession’s forefathers by partnering with or adding leadership consultants. “We’re seeing a big shift in the market,” says R.J. Heckman, Vice Chairman, Leadership and Talent Consulting, Korn Ferry. “Not that long ago, many clients would choose to have their executive search and leadership assessment done by separate organizations…While finding and recruiting the right executives is critical, today’s companies also need someone to help with finding out more about their leaders for tomorrow.”

Considering executive search firms’ stature as executive talent experts, it is perhaps natural that they would evolve to include services like succession planning, executive assessment and cultural assessment. But, as Richard Metheny, leader of Witt/Kieffer’s Leadership Solutions Practice, explains, this diversifying of services is driven by client demand. “Every service we have – whether its succession planning, onboarding, executive retreats – has come about because our clients have requested it. This isn’t about bringing in more business to the firm; it is about meeting our clients’ needs.”

While the emphasis is still on solving clients’ issues with the strategic use of talent, by expanding their offering, executive search and leadership consulting firms can enhance the traditional value proposition of identifying and attracting the best executive talent. Aimee Williamson, Executive Director, Leadership & Succession – Australia at Russell Reynolds, says: “Increasingly our engagements are reflecting a deeper and more strategic advisory component, for example in long-term CEO succession, large development programs and at business turning points like industry disruption and M&A. Leadership assessment today has taken on a life of its own distinct from periodic searches. We find ourselves embedded as business partners of our clients – the regularity of our conversations might surprise some.”

Bolstering the profession with leadership consultants

This was a shift for us in defining that we are no longer an executive search firm, but a talent advisory firm. We wanted to go beyond helping clients with a specific situation, by taking a braoder, more holistic approach.

Jose Ruiz, Chief Executive Officer, Alder Koten.

But while leadership advisory services and executive search may occupy the same space in terms of the level of seniority that they are concerned with, they are two distinct and specialist professions. Krista Walochik, President of Talengo, says: “It is crucial to identify service experts and bring them into your firm. It can change your market approach and increase your client loyalty.”

Indeed, executive search firms have bolstered their ranks with leadership consulting experts from management consulting firms, HR consultancies and independent leadership consulting firms to ensure that they have experts in everything from psychology to organizational development. Many of the individuals quoted in this edition of Executive Talent have had long careers in other professional services firms before joining an executive search firm, either to lead or enhance a growing leadership consulting division.

For Eva Carloni, CEO and Founder of TRUST Partners, the evolution worked the other way around. “We started out as a leadership advisory business and had created a lot of knowledge from doing so,” she says. “We knew our clients, we knew their culture, and that made it easier for us to think about finding the right executives. We haven’t found it at all difficult to align the two services.”

This example demonstrates the symbiotic relationship that can be created between executive search and leadership consulting – ultimately elevating the results in both fields, as Russell Reynolds’ Williamson explains: “Companies are seeking a greater level of depth and insight about candidates, with the objective of minimizing risk, and maximizing return when making critical talent decisions – whether that be hiring, succession planning or talent development.”

For many firms, this has been a very natural evolution. Successful executive search firms are going to develop very close and trusting relationships with their clients and they will be approached regarding issues outside of traditional executive search.

Bill Farrell, Managing Partner, Greater China, Boyden.

A method of differentiation

One of the questions around executive search firms offering leadership consulting services is why a client organization would turn to them instead of the range of other providers that specialize in these services.

Kin Chong U is the Managing Director of Signium Management Consulting, based in Hong Kong. Having spent the majority of his career working at SHL and then KPMG, he typifies the profile of the leadership consultants working within executive search firms today. He explains: “There is something very unique about executive search firms and the level at which they work. If you look at the HR consultancies, for example, they only deal with HR professionals. We have direct access to business leaders, and that gives us a deeper understanding of our clients. Given that huge advantage, our leadership consulting business now offers a real genuine business solution.”

For assessments, we rely on face-to-face interviews and not online tools. It is very productive and very rich. We work a lot with family owned businesses and they appreciate that. When it comes to international corporations, online tools can be more representative, but the family owned companies want something more personalized. It is very time consuming but extremely rewarding.

Paulo E. Weinberger, Partner, Sao Paulo, 2Get.

This appeal is also represented in the number of high profile acquisitions that we have seen in recent years: for example, Korn Ferry’s acquisition of Lominger, PDI Ninth House and their pending deal with Hay Group, and Heidrick & Struggles’ deal with Senn Delaney and most recently Co Company. Other firms, like Signium and Talengo, have looked to bolster their ranks with leadership consultants. This is a clear indicator that the partnership is as attractive to leadership consulting and talent consulting firms as it is to executive search firms.

Talengo’s Walochik explains that the depth of experience that executive search and leadership consulting firms possess provides a different value proposition to other firms in the market. “For a one off assessment a client could work with a firm like Hogan,” she says. “But if you’re looking for something that will transform an organization, having a tool-based response will not necessarily ensure that you have the change that you want. We have the ability to benchmark against other industries to provide context to the assessments.”

Due to the fact that many of these services were developed to service client demand, there is often a great deal of versatility and specialization available. These unique methods for assessment, based on the combined expertise of experienced leadership consultants and established executive search firms, act as a true differentiator. For example, one industry that Witt Kieffer specializes in is healthcare in the United States. Metheny explains how they built a new assessment to service a specific need for their clients: “One of the things that the Affordable Care Act has stimulated is a need for more physician leaders, and there just aren’t enough of them. We invested in a major piece of research and, as a result, we have a much clearer picture of what a high performing physician looks like. We have been able to build that into a new assessment specifically for that role.”

Much has been written about the impact that LinkedIn and the internet has had on the executive search profession; critics suggest that candidate identification is now easier and therefore the business model has been undermined. We believe this couldn’t be further from the truth. As the origins of the profession indicate, executive search has always been an advisory service, not a personnel transaction. The formalization of leadership consulting services further elevates the profession above the single step of candidate identification. Peter Cappelli, the George W. Taylor Professor of Management at The Wharton School and Director of Wharton’s Center for Human Resources, explains: “Leadership consulting puts the firms in a different market, further upstream: search operates only when clients have decided that they need to go outside to fill a position, but leadership consulting happens before that, even before clients know that they need anything.”

During 2014, the executive search and leadership consulting profession recorded its biggest ever year in terms of estimated revenue. In the last year we have also seen the first ever billion dollar executive search and leadership consulting firm. While the profession will always have the task of describing the value it provides – a fate that befalls all service providers – it is clear that by expanding leadership consulting services and investing in industry experts, executive search firms are becoming even closer to their clients and elevating themselves as trusted talent advisors.

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