One of the worst recessions in the history of the executive search business is finally becoming a distant memory and the market is once more in full swing. Like any market, the senior executive market responds to changes of sentiment. When the market is cold, many organisations sit on their hands – it’s a buyer’s market and sellers need to adjust their expectations.

But when the war for talent is on, then competition can become fierce and generous terms and conditions chase those with great track records. But, of course, great talent is always in short supply and organisations increasingly appreciate that the most important asset to achieve success is human capital. Thus time, money and attention are good investments if one wants to do the job of recruitment properly.

The retained search business is finding that clients are seeking their help again in large numbers because competition is increasing, because pressures on performance are growing and because the market is open for business, thus offering opportunities for expansion, acquisitions, and expansionist strategies. Dynamic strategies require dynamic people with vision, the willingness to take risks and above all leadership skills. In 2004, the worldwide search business grew by more than 20%, with revenues at some firms even returning to the peak levels of 2000. That the market came back this quickly was in some ways extraordinary, but in other ways, it was only to be expected.

Organisations can only wait for a limited time to replace key executives and expect to cut corners by not using expert help and advice. When finally the dam burst, then demand quickly returned. In this particular recession, the damming up of demand had been so pronounced due to the terrorist attacks of 9/11 and prolonged political and economic uncertainty that the reversal of fortune has been dramatic. And like all reversals, what appeared to be negatives have turned into positives. The wave of regulatory initiatives in the post-Enron era have led to demands for compliance executives, new Chief Financial Officers , more independent directors and, to combat security fears, new Heads of Security.

Many had predicted the demise of the executive search business with the development of internet recruiting, job boards and the introduction of in-house recruiting departments by many corporations. While these have had some impact at lower executive levels, the need for help with senior appointments continues unabated and the most professional and well regarded firms and consultants have survived in excellent shape.

Executive search has entered a new era

The growth of the executive search profession over the past 20 years has been dramatic and this growth is now being experienced around the world. Nevertheless, it is a new era for executive search. Clients are more sophisticated and demanding and are more likely to monitor and control work by search consultants. Some have tried to commoditise the business by seeking bulk discounts and introducing their purchasing departments into the process. Some of these developments will need to be addressed creatively by retained search firms, but others will hopefully recede as clients recognise the need to work with their search firms in even more strategic partnerships.

Talent management is being increasingly recognised as a discipline that needs special attention within organisations and cannot be treated as a normal part of the Human Resource function. It requires innovative thinking, radical approaches to organisation structures and succession planning and expert help from the market so that the organisation is adequately represented in its quest to obtain the best executive talent.

The Association of Executive Search Consultants, as the professional association for the worldwide retained executive search consulting business, is glad to see our business in much better shape around the globe, once again doing its job of helping client organisations to compete to the best of their ability.