Trouble at the top

Companies are now in greater need than ever before of management professionals to steer them through troubled times. But, as the latest report from the Association of Executive Search Consultants (AESC) shows appointments of senior executives have slowed across the world.

Times are tough but the need for high quality senior executives to steer businesses through the recession continues to be recognised, according to the latest report from the Association of Executive Search Consultants (AESC).

It claims that in the third quarter of this year, net revenues from executive searches worldwide grew by 2.8%, the smallest annual growth recorded for over three years. There was a 6.3% fall compared with the second quarter of this year - the first quarterly drop for almost two years following four years of exceptional growth.  

The report gives details of executive searches around the world, looking at average revenues per consultant. These were down by 5.1% since the previous year and by 8.5% since the second quarter of the year. Meanwhile average fees per assignment rose by up 7.8% on the year; and were down 2.2% on the quarter. An analysis by AESC of industry trends revealed that while industrial sector searches rose by 11% year-on-year there were decreases in searches within the professional, financial, consumer and non-profit sectors.

Despite these figures however, Peter Felix, president of the AESC, said he is optimistic about the long term prospects for the industry, in light of the fact that the decline in senior appointment has been relatively small: "As might be expected during economic turmoil, executive search clients are being more cautious about initiating new senior hires than they were earlier this year.  Nevertheless, the extent of the decline in worldwide revenues for the industry is still relatively minor and many parts of the world and many sectors are still showing strong demand.

He goes on to say that he believes that as companies work on plans to survive the economic storm, the need to make senior executive appointments will increase. "I am confident that, once the current uncertainty abates, and organisations begin to plan their way out of recession, executive search consultants will see strong demand from clients who require help in finding and recruiting the best talent available to them.

Executive talent is still in very short supply around the world and only few organisations will ignore the necessity to invest in their leaders for the future," he concluded. The worst yearly declines in executive appointments were experienced in Europe, where executive searches were down by 7.6 year on year and 10% over the quarter. The only region to see an increase over the year was Central/South America (18%), which also saw the smallest drop over the quarter (2%).

Richard Boggis-Rolf, CEO of the AESC UK steering committee and CEO of Odgers Ray & Berndtson said that the current situation requires organisations to address the shortfall in their senior executive appointments in order to survive market conditions. "In a recession, businesses must be level-headed in their approach to making senior appointments. They should be prudent but should recognise that they have an excellent opportunity to bring in new talent," said Boggis-Rolfe. "These market conditions call for leaders with experience, flair and the skills to transform organisations to ensure success. Nothing is more important than having the right people in the key roles. But those who perform well in one set of market conditions may not adapt when conditions change and boards have a duty to ensure that their key executives have the skills which new circumstances demand."