Interview: Weathering the Downturn in Europe – A Perspective From Paris (Part 1)

February 25, 2010 – Alain Tanugi has over 30 years experience in executive search. Prior to co-founding TRANSEARCH in 1982, he was the managing director of a well-known French recruiting firm that he founded in 1975. Previously, he was managing director of a Paris-based firm dealing with career counselling, outplacement & training. For the last 20 years, Mr. Tanugi has been chairman of the board of TRANSEARCH; under his management the firm has grown into a top nine worldwide retainer-based executive search organisation. Based in Paris, he also heads the TRANSEARCH global board practice. In the following two-part interview, Mr. Tanugi discusses a wide range of issues – from the current state of the recruiting industry to where it is heading, how smaller firms might be coping better than larger ones, downward pressure on the fees recruiters charge their clients, the rise of India and China as recruiting hot spots, as well as the rise in social networking around the world, and how recruiters should use this time to reinvent themselves for 21st century recruiting.

Tell us what is happening in the French marketplace today.

The French market has endured a lot of pressure in 2009 and this has resulted in a decrease in business of about 40 percent. What was surprising is that relatively few players exited the market – they were much better equipped this time to handle the downturn. Several search practices have scaled down at a fast rate and the few who were unable to, had to close down. The market is now characterized by smaller, leaner firms.

Are many new people coming into the profession right now.

The renewal of the executive search industry of its own talent has been put on the back burner as we see few newcomers from other industries entering the business. In the past year and in the short to medium term in the future it will be difficult to attract newcomers as the compensation scheme will not be attractive — firms will be unable to invest money and time into someone finding their feet for lets say six to 12 months before being able to really start developing business profitably.

You said the search business is down as much as 40 percent. Why such a steep decline?

In any crisis the first decision of any company would be to stop external recruiting; companies usually try to fill open positions with internal candidates (even if those candidates do not necessarily measure up or if they do not really fit the profile of the open position). This would minimize redundancies as well.

Outside of France, what about the rest of Western Europe — is it in good shape or bad shape?

Since June 2009 the market started to stabilize in Western Europe. Overall the hiring freezes just started to change in the fourth quarter. Some countries of course have suffered much worse though, with Spain for example showing up to a 60 percent decline.

After 18-plus months now of global recession, can we expect to see a swift recovery in 2010, or do you see this weak economic period to continue for a few more years?

If only I had a crystal ball … it's a difficult question. This has been the worst recession in history and at the start of it we certainly did not foresee a complete meltdown. I do anticipate though that 2010 will be a better year allowing firms to minimize further losses. What has emerged is that smaller dynamic operations are better equipped to deal with a volatile market. In any case many are starting from such a low base (the 2009 performance) that any growth will be relatively better than last year!

How has the decrease in recruiting assignments affected people in the industry? When we met in October you said recruiters can expect to make less money in this business and therefore we can expect recruiters to leave the industry all together — can you elaborate on this a little more?

As mentioned earlier, search firms scaled down to survive and of course some search consultants might have individually decided to leave the search industry all together, but I would have to say it is not as wide scale as anticipated. It would be interesting however to do some sort of independent survey to determine the landscape of the market today.
Next Friday, we conclude our interview with Alain Tanugi.

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