It’s a different world for the executive recruiters and consultants who used to command big salaries to fill jobs than it was merely two years ago; the economy has put the squeeze on them, as well.
The annual double-digit gains in the executive recruiting industry—a niche within the recruiting world—enjoyed through much of the 1990s has been replaced with a substantial downturn in the last few years. The downturn, as expected, has meant recruiter layoffs and the closing of recruiting companies. Overall, analysts estimate the industry lost $3 billion in revenue and as many as one out of three recruiting firms over the past two years.
For many of these companies, the last two years have been the most difficult in the history of the recruiting business. It’s a considerable difference from a few years ago, when employee-needy companies were beating down their door.
Fueled by the tech and economic boom that pushed the nation’s jobless rate to a record low, executive recruiting became a $13 billion industry in 2000. But the souring stock market, cost cutting, and layoffs reduced executive recruiting to a $10 billion industry. Now, executive recruiters are working harder than ever just to survive, with many recruiters taking second jobs.
The Executive Recruiter News, an industry newspaper, estimated as many as 500 firms, accounting for 10 percent of the industry, folded in the past two years. Others estimate as many as one in three companies has gone under.
Among the casualties was New York-based Thorndike Deland Associates, which was one of the oldest recruiting firms in the country. Founded in 1926, the firm closed in 2001. Another was one of the nation’s largest, Fort Worth-based Ray & Berndtson, which filed for bankruptcy in September and was bought out by a subsidiary of Texas-based EDS.
Surviving firms haven’t had it much better. Chicago-based Heidrick & Struggles Inter-national, a top recruiting company in the country, lost $63 million in the past seven quarters and cut 800 jobs—approximately one-third of its employees.
All is not lost, however. Analysts and recruiters are anticipating the economy and the recruiting business will recover as companies become less reluctant to bring on new employees. Most feel assured this will happen in 2003. The general consensus is the market will either remain static or improve in the first quarter of 2003, and the longer term perspective for 2003 is better than 2002. Some estimate revenues will grow as much as 8 percent.
The industries highlighted as most likely to see a staffing demand are health care, consumer products, and industrial/manufacturing. Those industries deemed most likely to continue to struggle include technology and financial services. The upturn in demand will only occur, it’s argued, when business confidence returns and there’s resolution of the situation in Iraq. IBI