Add yet another business to the list of industries hurt by the recession: headhunting. The executive merchants who helped to turn the Organization Man into the Migrant Manager are finding that their business is in a tailspin. Out-of-work managers are flooding recruiters' mailboxes with resumes just as search assignments are drying up.
For two leading search firms, the tough times have affected more than just the bottom line. They're engaged in a bizarre public spat over--of all things--hunting each other's heads. Malcolm MacGregor, president of Boyden International Inc., has complained that a rival headhunting firm, A. T. Kearney Executive Search, is stealing away his consultants. Kearney has hired six headhunters from Boyden since 1989--which has only worsened the recessionary decline in business for Boyden. The latest defection occurred on Jan. 2, when William C. Eatherly joined Kearney's San Francisco office.
MacGregor lashed out against the firm last year in a letter to Charles W. Sweet, president of Kearney Executive Search. "A. T. Kearney's systematic and flagrant pirating of Boyden personnel is shocking and disturbing," wrote MacGregor. "You have brought shame on our profession. Your callous disregard for even the lowest standards of professional morality leaves me personally disgusted." Kearney maintains that Boyden headhunters approached the firm wanting to join. "Everyone came to us," says a Kearney spokeswoman.
'EMBARRASSING.' The brouhaha is ironic, of course, because headhunters make their living by stealing executives away from corporations and sending them to client companies. "It's a bit like the tailor with the hole in his trousers," says Andrew Garner, chairman of Boyden International. Adds James H. Kennedy, a longtime observer of the business as editor and publisher of Executive Recruiter News: "It's downright embarrassing."
And it occurs just as headhunting firms are finding business harder to get. As Corporate America continues to strip away middle managers, the headhunters' business volume is dropping off. "The bread-and-butter search business for middle managers who earn between $90,000 and $150,000 is way down," says Dayton Ogden, managing director of SpencerStuart Associates. "Those jobs just aren't being done anymore."
Korn/Ferry International, the world's largest search firm, expects its U. S. revenues to be down by 10% to 12% this year. Only an increase in billings overseas is expected to offset the decline and produce a flat year. Some top firms are trimming their work rolls, which makes the pirating of big billers all the harder to stomach. Korn/Ferry and Russell Reynolds Associates Inc., the No. 2 firm, reduced their headcounts in the U. S. by 18% and 8%, respectively, last year. "The last six months have been very erratic," says Stephen R. Scroggins, a managing director at Russell Reynolds. "As we get into 1991, we're looking for ways to reduce our headcount further."
The search business has hardly been immune from the musical-chairs game. By and large, headhunting firms don't place great emphasis on developing and training their own staff. They grow by persuading disenchanted consultants to jump ship. "A lot of firms have recruited from the competition as their primary growth strategy," says Ogden of SpencerStuart. But there's greater opportunity to raid the competition these days, he says, because headhunting professionals are making less and may be more eager for a change.
That's not the only reason. The double-digit increases in revenues that made headhunting a booming business in the '70s and '80s have given way to flat or single-digit rises in the past couple of years. If the business is maturing, the only way to grow may be to hire good people from competitors if they can bring their business with them--that is, buy market share. "The business is maturing, and revenues are more difficult to get," says Paul R. Ray Jr., president of search firm Paul R. Ray & Co. To some, the feud between Boyden and Kearney, which began last summer as business began to soften, is just sour grapes. In the U. S., Boyden has been losing ground for years against more aggressive competitors. Kearney has been one of the few bright spots in the industry, having grown to 85 professionals in 18 offices in 1990 from only 23 in nine offices in 1986. In the past year, Kearney says, its billings per professional have risen by 52%.
MacGregor isn't sorry about the letter. He's not as mad as when he wrote it, he says, and, in fact, he seems to have learned from the experience. To help rebuild Boyden, he won't hesitate to hire from his rivals. "There's going to be a lot of going to the competition to get people," says MacGregor. That's the type of hunt he knows something about.