Interview: Weathering the Downturn in Europe – A Perspective From Paris (Part 2)

March 4, 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.

What has the recession done to recruiting fees across Europe? And is there concern that pressure on fees might continue for some time to come?

I’m afraid that the average fee level that we have known in the past is a thing of the past. There will be continued downward pressure on search fees as the natural reflex is to negotiate fees for high-end professional services. There is a trend that the search consultants take an equal stake in the risk of a new hire, by making the final fee proportionally higher than the average three equal installments (which are becoming two). It will be interesting to see how this unfolds and what becomes acceptable to clients and the search industry.

David Hoffmann of DHR International in Chicago told us that his concern now is he's not sure where a recovery is going to come from. Do you share his concern, Alain?

We are already seeing some recovery, but it is slower than we would like. But there is definitely some improvement.

Within Transearch International, which regions are starting to show signs of improvement — tell us about Latin America, Eastern Europe, Asia Pacific etc.

China and India of course have surged ahead — many forecast growth there of at least 10 percent for each country. Latin America is less bullish and recovery will be slower there and many of the regions’ economies are tightly linked to that of the USA. Eastern Europe on the other hand was slower to be affected by the global crisis, but was nevertheless affected severely when some of the Western European countries already stabilized. Having said that some of our global clients who have had hiring freezes in Western Europe, and in the USA, have been planning expansion in Eastern Europe and the rest of the developing world.
Where can we expect to be in, say, 2015 — how differently will the industry look then?
The major trend that will become a reality in the next few years is research becoming a commodity. Social networks and media have made it easy for anyone who knows how to find information. With the advent of this technology we are now almost borderless. More and more companies will have in-house search practices and it will be up to search consultants to reinvent themselves to justify companies using their services. This is an opportunity for us though – hopefully one that will not go unnoticed.

Can we expect to see more focus on assessment services and leadership development-driven services as opposed to traditional executive recruiting services being offered?

Several players in the industry have already made an enormous shift in focus from being an executive search provider to providing human capital services solutions. Does that mean there no place for traditional executive search in the future recruiting landscape? I don’t think so – I do think however that executive search consultants need to be more proactive, dynamic, flexible and consultative in their approach to clients and candidates.

Do you have any concerns about how we as an industry make the leap to a more sophisticated service offering in the next five to 10 years?

Of course I have concerns – the question is do we as an industry have the capability to absorb such a wide range of skills required for a more sophisticated offering? I’m not convinced that as a majority we currently do – I think there are pockets of greatness, but it is not widespread and to survive and prosper we need to renew the talent in our own industry.

This concludes Part Two of our interview with Alain Tanugi. To read Part One, please go to HSZ Media news archives.