"As disruption continues to hit with increasing speed and impact, business leaders more than ever look to trusted advisors for a competitive advantage in the markets in which they operate. It is imperative that AESC and its global members continue to operate at the height of the profession and be at the forefront of talent consulting on behalf of their clients."
-Paul Benson, AESC Global Chair and Regional Market Leader for Europe, Middle East & Africa, Korn Ferry
AESC research published in State of the Executive Search and Leadership Consulting Profession reveals “2018 brought the best growth for the profession since the Global Recession. Executive search experienced 12% growth by year’s end and leadership consulting grew by 12.8%. We estimate that global revenues for the executive search and leadership consulting profession, across all lines of business, has now climbed to $15.6B USD.”
Is that growth sustainable? What will drive continued growth in the profession, and how will the changing needs of clients shape the services offered and even the profiles of search and leadership consultants themselves?
Members of the AESC Global Board of Directors representing 13 firms from nine countries consider the future of the profession, its drivers and its impact.
It’s the economy
Rodrigo Forte, Managing Partner EXEC/Panorama Search, Brazil says, “When you see the economy growing, you will see our profession growing. It’s the same everywhere.” In both developed and emerging markets, the profession trends closely to the state of the economy. For this reason, executive search activity can be an early economic indicator, a valuable gauge beyond the profession itself.
The state of the world
Ineke Arts, Partner at Hoffman & Associates/ IIC Partners, Belgium suggests that growth in the profession may also be impacted by broader global events. “The growth and the stability of executive search and leadership consulting depends so much on the geopolitical situation. The growth forecast for the coming years is not as positive as everyone has expected, and that is, of course, due to different political situations, including Brexit and the trade wars,” she says. “Nevertheless we feel there is stability in the profession of executive search and in leadership consulting. That is positive. I feel that this will continue over the years if nothing dramatic happens. If we talk about Brexit, I feel this has not had a huge impact on our situation here in Brussels, in the region. We have even clients who have decided to establish themselves in Brussels and not in London because of Brexit. So, it can have a positive impact for the local market as well.”
As disruption continues to hit with increasing speed and impact, business leaders more than ever look to trusted advisors for a competitive advantage in the markets in which they operate.
According to Alicia Hasell, Managing Partner of Boyden, Houston, “There’s always a need for a different type of talent, and that can be affected by global economic forces, administration changes and/or the rise of new industries. So a lot of factors weigh in on that externally, and I think those are going to be the things that drive change and growth going forward. Internally, I think what will drive growth is the consolidation of firms in our profession, the fact that new firms are emerging and trying to reinvent the wheel or disrupt the industry.”
Growth in the profession may trace the arc of global economic development. For Richard Boggis-Rolfe, OBE, Chair of Odgers Berndtson, “Over time the world is getting richer and despite all the uncertainties in the world, one way or another the global economy is continuing to develop.”
The profession is gaining traction with more economies and more sectors adopting search and leadership consulting services. Forte sees potential, “especially in countries where executive search is not so mature, like the countries in the Latin American region. Brazil has been the most mature market in Latin America, but we still have lots of space for improvement compared to the US and Europe, for example.” That logic applies to growing markets worldwide.
Meeting evolving demands
Disruption is the norm, and the pace of change is accelerating at a punishing rate. Organizational leaders simply must be able to adapt.
Julian Ha, Partner at Heidrick & Struggles says, “We’re seeing more opportunities to advise clients on not just talent, but also broader human capital solutions. Given that the problems we’ve tried to address are even more complex than ever, we think we’re in a very good position to help them navigate those challenges, today.”
“It’s always been the case that leaders have had to face a lot of critical decisions across many areas in terms of trying to figure out how to accelerate their performance, create a better, stronger, more robust culture for innovation, therefore we’re also seeing now the very appropriate emphasis on diversity and inclusion," says Ha. Leaders today really need, and want to understand how, to make their teams able to deliver on that, on how to both be agile, and to be able to embed that mindset of continuous innovation into the DNA and the culture of their organizations. We’re certainly helping our clients with that.”
Martin Schubert, Partner, Eric Salmon & Partners, describes organizations “in technology, in industry, in financial services, even in consumer goods and life sciences, experiencing a change in their business models that are much more global, much more virtual, with diminishing hierarchies that require different leadership types. And this drives both leadership advisory and executive search.”
Growth in Retained Executive Search
The executive search industry has an enormous growth opportunity going forward,” according to Morten Nielsen, Senior Partner at Witt Keiffer in the US. “We’ve been through five, six, seven years of almost unprecedented growth, and I think there’s much more to come. A lot of it lies in our ability to continue to become better trusted business partners to our clients.”
Growing pressure on clients’ ability to adapt may drive growth. “With increased disruption across all sectors, executive mandates change rapidly.” Dorota Czarnota is Country Manager for Poland at Russell Reynolds Associates and leads the firm's activities in Central and Eastern Europe. She says, “What a company needs from its senior team may change significantly in the space of just three to five years. New mandates can mean turnover; they can also mean the creation of new positions to oversee new initiatives. As a result, organizations that are trying to keep pace with external changes will continue to need help finding new leaders to make them successful.”
Organizations may seek help in areas where they never used a search consultant before. “More and more jobs are being filled by search, which would never have been filled by search before,” according to Boggis-Rolfe. For example, “We in the UK have a very substantial sports practice and recruit people to run sporting organizations like Manchester United. This was never done by search in the past and now it is.” He adds, “There’s almost no type of organization that doesn’t use executive search. Government does, charities do, education, healthcare, sport, even niche sectors like gaming all use search, whereas they didn’t before.”
Evolution of roles
Growth is also driven by the need to find talent to take on new organizational roles. It isn’t possible to hire a person with 20 years experience in a role that has only existed for a few years. Search consultants will increasingly address that growing challenge.
Sonal Agrawal, Managing Partner for Accord Group India/ AltoPartners explains, “Our value lies in being able to translate the business challenge into some sort of proxies or solutions in terms of the talent available out there: to be able to come back to clients and give them a sense of the landscape, to be able to pick and choose from the overall skill sets that candidates might have, to be able to extrapolate those experiences, and pull it together and make some sense of it for clients to think outside of the box.”
The opportunity for growth lies in organizations needing experienced professionals “to think outside of the standard job description, or the role, or position description, to find things that will actually work,” Agrawal says, “rather than just qualifications and criteria.”
Nobi Kaneko is President, Kaneko & Associates in Tokyo and Los Angeles. He says, “For our executive search industry, the growth is likely to be felt in those positions, directly related to Business 4.0. Across all industry sectors, we'll see more opportunities in such positions as cybersecurity, data analytics and AI-related positions, regardless of industries."
The hallmarks of agility and deep industry knowledge within the profession allow clients to fill new roles with the right skill sets. Kate Bullis is Managing Partner SEBA International. “I think about roles like customer success in the technology world. The customer success role didn’t exist 10 years ago. Chief revenue officer didn’t exist. What does that look like? The go to market officer or the chief customer officer is sometimes a combination of marketing, sales, and customer success. How do we define what these positions should look like and what the profile of the right person should be in these newly created roles? That’s one area where we will have plenty of opportunity,” she says.
Boggis-Rolfe suggests, “There is immense opportunity for search because it’s easy for organizations to recruit cookie cutter people. It’s much more difficult for organizations to recruit people who don’t match clearly defined, existing career profiles. When there’s a challenge, when it’s difficult to recruit somebody, that’s when the client wants to use search. If it’s easy, they might not need it.”
Growth in Leadership Advisory
Clients’ needs are nuanced and fluid, and in the area of talent, those needs are exponentially more complex. AESC recently surveyed business leaders worldwide to better understand their top business challenges today and by 2025. The resulting study, Executive Talent 2025, reveals a clear trend—business leaders have identified an increased openness to working with their executive search consulting firm on a broad range of leadership advisory services. In five years, business leaders identified succession planning, leadership effectiveness and organizational effectiveness as their top three areas for using an outside advisor. Business leaders are showing an increased openness to using an executive search and leadership firm for these important services.
As organizations focus on actualizing their digital transformation across the enterprise, C-Suite leaders are increasingly turning to external trusted advisors to help them deliver and develop the digital talent they need. As a result, ‘digital leadership’ was ranked as the fastest growing business advisory service for 2019.
Board assessment and advisory services are expected to grow as organizations seek to ensure relevancy, diversity and digital fluency in the boardroom. As the Baby Boom generation continues to exit the workforce, organizations are realizing the need to fast track high potential but less experienced talent. Leadership development and preparing for succession are both top issues for today’s businesses and as a result, both are also growing advisory services.
“The industry will grow by virtue of our clients looking for more from us.” Cathy Logue is Managing Director at Stanton Chase. “They’re looking to us increasingly as strategic advisors that can help them not only today but as they plan for the future, because it’s just constantly changing, and the pace of change is accelerating. So the growth of the profession will be not only in executive search, but also in these other services that go with that: psychometric assessment, leadership coaching, leadership development, succession planning and more.”
For Hasell, growth in leadership advisory is going to continue to evolve in part due to new services and technological advancements. “We’ve seen the onslaught of coaching as a new industry in the last decade or so that has attached itself to leadership and executive search. Interviews styles are changing, and we’ve gone from a traditional ‘tell me about yourself’ interview to behavioral questions and assessmentbased questions in an interview. All of those will impact leadership and advisory services as a sector.”
Design and development
For Nielsen, the structure and function of organizations and leadership teams is a key growth area. “Leadership solutions have obviously been growing for quite some time, and that’s one part of our profession that will become increasingly important to our clients, including effectiveness in the boardroom and on the leadership team. The composition of these teams is a very important part of the governance and leadership. The development of leadership talent internally is an area where we’ve seen a lot more interest.” For example, “working with our clients on the forefront of organizational design for the future, helping them understand the organizational strategies they could deploy and how those could be effective. That deals with the leadership solutions part of our profession.”
Our clients recognize that it’s not just what someone does that is important, it’s how and why they do it.
As culture becomes ever more important in attracting and retaining top talent, the profession has a growing opportunity to help clients shape culture. Czarnota explains, “Our clients recognize that it’s not just what someone does that is important, it’s how and why they do it. Helping clients understand what motivates a candidate and how well that executive will be able to match and build a desirable culture has become an integral part of our work. We expect it to grow as more organizations seek to gain deeper insight into each team member and then use that knowledge to optimize team collaboration and performance.”
Opportunities for leadership advisory grow as organizations professionalize worldwide. “I see high potential for growing leadership advisory in Latin America, because Brazil and Latin America are full of family companies that need to be professionalized,” Forte says. “We are investing a lot in these services, not only recruiting the executive council members but also helping clients with how to develop, how to implement, and how to evaluate the governance models for these companies.”
Family-owned businesses represent significant market share in Asia, Africa, South America and parts of Europe. The process to professionalize can be lengthy, complex, and high-stakes. Forte explains “We learned through many years that in the family companies, we first suggest that the owners have a consultative board of counselors, for the owner to understand professionalization. We prefer to keep the owner as the head of the business, who can listen to very experienced people, before replacing him or her as executive. Implementing a board of counselors and a new kind of governance is the best start for professionalization. We have lots of space to do this in Brazil, and we have been growing this practice here at my firm.”
He adds, “There is a lot of space for these kinds of services, not only in Brazil but in other less mature markets in Latin America, in Asia. The US and Europe are mature economies, but in other regions, I think there is opportunity.”
Opportunity in innovation
Kaneko sees innovations in the profession also driving growth. “I observe increasing numbers of corporations in establishing People Analytics, which are not what I consider part of traditional HR or IT, but rather a separate entity, especially among Fortune 500 companies and other major entities.” Such innovations, he says, “are likely to have a huge impact across industries and among corporations. If we take advantage of these unique collaborative efforts between leadership consulting and the utilization of people analytics, I think there will be a tremendous opportunity for remarkable growth.”
According to Emanuela Aureli, a London based consultant with Spencer Stuart, “Talent and leadership are key to any success for any organization across any geography and any sector. And what it takes to be a successful leader is shifting and changing constantly, given how frequently things around us are moving. We live in a world of ambiguity, in a world of innovation. And all of this will have an impact on how leaders will lead, how business will grow, and therefore for we, in executive search and talent leadership, how we will support the companies to continue to be successful.”