Putting Managers To The Test

Even as Labor Ready struggles with flagging demand for its workers, another human-resources company on BusinessWeek's Hot Growth list is on a tear. Los Angeles-based Korn/Ferry International is at the opposite end of the pay scale, and its 450 headhunters are well-positioned for the global talent hunt, resulting in a 25% sales jump in the latest quarter. Helping top executives hop from one company to another is only part of Korn/Ferry's role these days. Some 20% of the firm's $500 million in revenues come from fast-growing side businesses that provide online tools to help clients evaluate and recruit middle managers.

Zurich Financial Services, Harrah's Entertainment, and Sun Microsystems have all enlisted Korn/Ferry to perform such tasks as figuring out who to keep and who to let go after major mergers or planning for the retirements of senior managers. Such tasks involve both assessing and coaching internal candidates. Korn/Ferry Chief Executive Paul C. Reilly hopes the unit that provides these services will account for an even larger share of the company's sales in the next few years. "We're becoming a very different firm," Reilly says. "Everyone talks about the 50 million baby boomers retiring. Companies have to focus not just on finding talent but retaining it."

The heart of Korn/Ferry's new business is an electronic questionnaire that takes about an hour to complete. To grasp your natural management style, it presents a hypothetical situation. The company is going to move you from headquarters to a subsidiary in a small town, say. The pay will be less than you make now but could rise with bonuses. The previous manager was well-liked by his staff even though he made tough decisions. Your profile, on the other hand, says that you solve problems by taking entrepreneurial actions and placing risky bets. A strike is now brewing at the plant, and Human Resources wants a leader with a firm hand. Does this transfer to the plant constitute a reprimand to you, or is it meant as encouragement? "There are no right or wrong answers," says Gary Hourihan, who heads Korn/Ferry's manager-evaluation business. "The behavioral and cultural fit is the major derailer of careers today. What works at IBM might not work for Microsoft."

Ironically, Korn/Ferry's questionnaire has its roots in a dot-com flop. In 1998 the company launched Futurestep, an online recruitment site for middle managers. Wanting to be more than just a résumé listing service, Korn/Ferry partnered with the management consulting firm Decision Dynamics to develop the online evaluation. Furturestep's original business model didn't work. The company found that advertising to bring in online résumés was too costly. And clients still wanted face-to-face interviews, something that required a lot more time and manpower than the lower-level jobs paid in recruiting fees. Today Futurestep contracts out with companies only on larger assignments, say to hire 50 store managers for a big retailer's expansion or to take over the entire recruiting efforts of a company. The questionnaire lives on, though--a sign, no doubt, of Korn/Ferry's flexible management.

Having that history helps. Hourihan says Korn/Ferry has collected more than 1 million profiles of managers over the past six years. By cross-referencing basic data such as salaries and titles with the more nuanced answers to the questionnaire, Hourihan's team has figured out which managers end up being the most successful executives. It's not the command-and-control types of old who make it to the top, he says. It's team-oriented leaders who gather information from multiple sources. Decision-making styles also evolve over the course of an executive's career, from direct, fast, and firm in the early stages to a more inclusive, exploratory approach at higher levels. "That's the formula for success in the Western world," Hourihan says.

By Christopher Palmeri

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