Insights
Q1 2009 State of the Industry Report
Executive Recruitment Hit by Large and Fast Recession
Declines felt across all regions and industries in quarter one, but former industry strengths are set to reappear.
Worldwide executive searches fell thirty-five per cent in the first quarter of 2009 against the same period a year ago, with average net revenues down thirty-eight per cent for the same period, revealed the Association of Executive Search Consultants (AESC) today. Senior executive recruiting, an estimated $11 billion industry prior to the downturn, experienced record profits by the end of 2008 following five consecutive years of exceptional growth. The latest data represents the first quarter where significant declines were felt across every region and industry, providing evidence of a fast and impactful recession.
Commenting on these results, AESC President Peter Felix stated, “The figures for the last quarter underline the severity of impact that the global recession has had on organizations and businesses around the world. No region, industry or function has been unaffected. Top management have been caught in the headlights of overwhelming uncertainty and have acted more to protect assets and reduce costs than to plan for the future. It is thus no surprise that the worldwide executive search profession has been affected.”
Executive searches in the financial services industry suffered the hardest blow with a forty-one per cent yearly drop in the first quarter of 2009. The industrial sector, which holds the largest industry market share, fell twenty-seven per cent year-on-year. Senior executive searches in the life sciences/healthcare sector showed the least decline in quarter one 2009, down twenty-one per cent from quarter one 2008.
“This may be the only quarter where we witness such widespread declines as the forces driving previous highs, such as the worldwide talent shortage, gradually reappear. It is our firm belief that this shortage will begin to reassert itself as the world finds its footing and a tipping point is reached in the recessionary cycle,” explained Mr. Felix.
“We are already seeing greater optimism as the financial crisis is brought under control and greater confidence is shown in world stock markets. This change in outlook coupled with the critical need of top management to ensure that it has the correct leadership, and the renewed mobility of talented executives will soon begin to show in improved figures for executive search consulting.”
Regional Trends
Declining 37% from Q1 2008 to Q1 2009, North America witnessed the greatest yearly drop in search activity, closely followed by Asia/Pacific (-36.5%), then Europe (-33%), and Central/South America (-27.4%). The quarterly trend also shows that North America experienced the greatest decline in Q1 2009; down 16% from Q4 2008.
Financial Trends
The first quarter of 2009 saw the average revenue per consultant fall 35.4% year-on-year (from Q1 2008) and decrease 23% quarterly. The average fee per executive search assignment fell 6% annually from Q1 2008 to Q1 2009 and declined 12% quarterly, from Q4 2008 to Q1 2009.
The AESC State of the Executive Search Industry Report is quarterly research carried out by the Association of Executive Search Consultants (AESC) since 2004 on trends in the global retained executive search industry. Data for the report is collected from a consistent sample of AESC member search firms representing the activity of over 1500 executive search consultants in 46 countries worldwide. Data does not account for annual inflation. AESC access to retained executive search data positions this report as a leading indicator of the future worldwide management employment market and a barometer of hiring trends for top-level and seldom advertised positions in key market sectors.