Executive Recruiters Pull Off Another Remarkable Year, Remain Bullish for 2023
May 4, 2023 – Hunt Scanlon Media has released its annual rankings of leading executive recruiters. In the U.S. and globally, billions of dollars poured into the high-end recruiting sector in 2022, a result of continued pentup demand for senior-level leaders and their key reports. Despite market turbulence and a softening economy in the second half, executive recruiters pulled out another remarkably good year. The industry grew 11 percent in the U.S. and nearly 10 percent globally. Nobody seems to be complaining.
According to data analysis conducted by Hunt Scanlon, 30 of the 50 largest U.S. recruiting firms enjoyed double digit growth, or more. No. 45 Artico Search, a new entrant, earned the distinction as the fastest growing search firm of 2022, rising 241 percent. The firm’s co-founders – Mercedes Chatfield-Taylor and Matt Comyns – serve the venture capital, PE, and cybersecurity sectors. Modern Executive Solutions, another newcomer, also reported triple digit growth. Both firms were founded in 2021. No. 14 ranked JM Search, up 40 percent, was named the fastest growing search firm among the Top 20. No. 18 Kingsley Gate Partners was in hot pursuit of that distinction, growing 39.5 percent.
Search firms are considering any number of strategic steps to keep growth going. Recruiters are entering new sectors, pruning low performing talent, and top grading where they can, acquiring rivals, establishing new global footprints, and expanding into adjacencies that align with their offerings. No one is standing still. Hunt Scanlon sees this as the perfect time to reassess, realign, and prepare for a long runway of growth ahead.
The Hunt Scanlon “Top 50” U.S. Recruiting Firms produced record revenues in 2022, reporting $6.5 billion in fees generated, an 11.2 percent rise. The Hunt Scanlon “Big 5” Global Recruiting Firms reported $6.9 billion in professional fees, a record, up 9.5 percent. Fastest growing was No. 1 ranked Korn Ferry. “It’s clear that the global economy has been in transition for several months,” said Gary D. Burnison, CEO of Korn Ferry. “We are seeing change on every front – from over a decade of high liquidity and historically low interest rates to changes in central bank policies, significant shifts in global trade lanes, and persistent inflationary pressures. In response, companies and our clients will undoubtedly have to continue adjusting their organizational and workforce strategies to tomorrow, which is opportunity for Korn Ferry. We are incredibly well-positioned as clients continue to navigate an economy in transition.”
“We are pleased with the financial, operational, and strategic progress achieved during fiscal 2022 as we reported record net revenue on top of the historic billion-dollar milestone we achieved last year,” said Krishnan Rajagopalan, president and CEO of Heidrick & Struggles. “During the year, we expanded our core executive search business and its geographic presence; On-Demand Talent continued to grow; Heidrick Consulting improved operations and efficiencies; and, we began beta testing a new digital product, Heidrick Navigator, which is receiving positive feedback from initial client usage. Additionally, our recent acquisition of Atreus, a leading player for executive interim management in Germany, meaningfully adds to our On-Demand Talent segment.”
A wave of consolidations and M&A activity continued at a feverish pace in 2022. Outside investors finally caught on to the sector’s expansion potential and long growth runway ahead. Top search leaders also found ways to maximize profit (cutting back on office space helped every search firm achieve a better bottom line in 2022). That made them highly attractive to private equity firms looking for platforms they could accelerate.
In 2022, we saw Diversified Search Group (DSG), a leading search firm backed by private equity firm ShoreView Industries, acquire Alta Associates, a Flemington, NJ-based search firm founded by Joyce Brocaglia specializing in cybersecurity, IT risk management, and data privacy earlier this year. “This is a strategic acquisition that will add significantly to our business offering in a key field that touches every client we serve,” said Aileen Alexander, CEO of Diversified Search Group. “There could not be a better match between our companies who share a mission for advancing diversity and cultivating new leadership, and fits with our strategic growth goals,” said Judith M. von Seldeneck, the founder and chair of Diversified Search Group.
Hot adjacent businesses for search firms to enter include interim solutions. Acquisitions were also for key for top firms looking to expand in this area. Korn Ferry acquired two executive search firm in 2022 that specialize in providing interim recruiting services. The firm acquired Patina Solutions Group and Infinity Consulting Solutions (ICS). The acquisitions are expected to be immediately accretive to Korn Ferry’s adjusted earnings. Meanwhile, Heidrick closed the acquisition of Atreus, one of the leading players for executive interim management in Germany.
Hunt Scanlon also found that leadership consulting, RPO, culture change and DEI consulting, and online coaching and assessment are other recent avenues for growth at top search firms.
Again, we saw M&A activity for firm’s looking to expand in these areas as well. N2Growth, a Philadelphia-based management consulting and executive search firm, is expanding to Mexico with its acquisition of Mexican talent and leadership advisory firm FluidMind Consulting and appointing the firm’s founder, Carlos Alfonso Gonzalez, as managing partner. “FluidMind Consulting’s leadership advisory practice was a perfect fit for our firm’s mission and philosophy: to find the best leaders by first identifying their leadership DNA,” said Kelli Vukelic, CEO of N2Growth.
ZRG acquired Hub Recruiting, a tech enabled RPO provider to address volume hiring needs globally. “Increasingly, our clients have asked for support for volume hiring in complex sales, engineering, and technical roles, but we did not have that capability,” said Larry Hartmann, CEO of ZRG. “Hub adds that capability, enabling us to support recruiting for project-based, volume hiring of more senior roles globally. We believe when a company aligns strategy and culture with the right talent, amazing success can be achieved, and our offerings now address these core areas.” ZRG also acquired RoseRyan Inc. Since 1993, Campbell, CA-based RoseRyan has engaged over 1,000 clients on projects including outsourced accounting for start-ups, corporate governance, interim solutions, and strategic projects such as IPO readiness, SEC reporting, financial planning and modeling, technical accounting, audit support, and mergers and acquisitions.
Heidrick & Struggles recently entered into an agreement to acquire businessfourzero, a London-headquartered consultancy specializing in developing and implementing purpose-driven change. “This acquisition will not only deepen Heidrick & Struggles’ existing set of leadership advisory and industry-leading culture and organization solutions, but also accelerate the company’s ability to help clients drive successful business transformations by linking purpose and strategy to leadership and culture,” said the firm.
Hunt Scanlon Ventures was at the center of much of the consolidation activity, having closed 13 deals in its first three years of operation. Acquisition activity will extend into 2028 as the industry expands. Hunt Scanlon’s M&A business has 26 deals in the pipeline for 2023, according to the Greenwich, CT-based firm.
How Firms are Performing
During the fiscal year 2022, Egon Zehnder reported global revenues increase of 12 percent increase at constant exchange rates. The firm grew the number of consultants to 567, all of whom are dedicated to helping leaders across industries and regions. As part of the annual partner election process, Egon Zehnder elected a diverse class of new partners in January 2023, with a broad array of backgrounds and areas of expertise, reinforcing Egon Zehnder’s commitment to diversity, equity and inclusion and creating a workplace where difference is valued and embraced. “Our impressive financial results for FY 2022 are a testament to our unwavering commitment to our clients, as well as to our continued investment in our people and technology,” said Ed Camara, CEO of Egon Zehnder. “We are grateful for our clients’ trust in us and remain focused on delivering the highest level of service and value.” Egon Zehnder’s success also came in the form of its heightened focus on sustainability, developing an impact team and naming a global head of sustainability in the firm.
Recruiting Firms Leverage Technology to Fuel Growth
After a banner year of growth, recruiting firms have a renewed focus on winning new business and expansion. And many believe their use of technology will help them get there. A new report from Bullhorn outlines it all. Let’s take an inside look!
“Looking ahead, we remain focused on our unique role of connecting leaders with challenges they can address in positive, lasting ways,” said Michael Ensser, chairman of Egon Zehnder. “We will continue to expand our presence in existing markets, and by entering new ones, so that we can be even closer to our global clients. That is how we deliver on our purpose of leadership for a better world.”
Bespoke Partners announced the firm achieved 266 percent revenue growth over the past three years, though it did not participate in this year’s rankings. The firm closed out 2022 with record revenue and winning its 1,000th executive search engagement, as demand surged for its unique C-suite talent and leadership advisory services focused on PE software recruiting. “Talent is the critical factor in achieving an investment thesis,” said Eric Walczykowski, CEO of Bespoke. “Our clients know that the right leadership team is essential for timely execution on value creation plans. We’re proud to be their trusted partners in identifying and addressing key leadership needs across their portfolios.”
Additional key milestones achieved by Bespoke Partners over the last 12 months include: receiving a strategic investment from AEA Growth to drive further growth and expansion; laying the groundwork for the recently announced office in San Francisco; growing to nearly 100 employees and rounding out the firm’s executive team with a new CFO, chief people officer, and chief marketing officer; aligning the company’s services into focused functional role practices, including CEO, CFO, go-to-market, talent leaders and technology leaders; and tapping firm founder Kristie Nova to lead the firm’s CEO practice.
Bespoke further captured attention in the industry in 2022 by launching its unique two-year guarantee on executive placements. Placements conducted utilizing the firm’s FIT profile leadership assessment service will now be guaranteed for two years, doubling the industry standard. “No other firm has made such an unequivocal commitment to partnering with its clients to cut the risk of hiring the wrong C-suite leader,” Mr. Walczykowski said. “The two-year guarantee is our pledge to our clients to empower them to achieve excellence in human capital.”
Related: Top 5 Trends Governing Global Executive Search
In 2022, ON Partners, ranked No. 17, made over 400 C-level and board appointments with a 115 percent three-year growth average. Such companies like WellnessLiving, RxBenefits, Thermo Fisher, and Mindbody have worked with ON Partners to onboard executive leadership across each company respectively. The firm has built out its executive leadership team to continue its expansion into growth markets, including the appointment of partners Matt Mooney and Tim Conti as co-presidents. Empowering the firm during its next phase of growth, ON also promoted Vicky Wilkens to chief commercial officer and Greg Kleeh to COO.
“2022 represented a major period of expansion and growth for ON Partners, with demand for C-level and board executives across several sectors including life sciences, consumer, sustainability and clean tech, and private equity,” said Mr. Mooney. “The executive shifts we’re making illustrate our commitment to building the most innovative and disruptive pure-play retained executive search firm in the industry.”
“After a strong 2022, we’ve built momentum going into the new year and the new leadership team has already been hard at work,” said Mr. Conti. “We’re excited about expanding our work into growth markets and continuing to deliver a premiere executive search experience for our ON community, and we’ve never been better positioned to do that.”
“2022 was another banner year for DHR Global and in particular we really showed strength throughout the entirety of our business, including our senior level executive search, our JobPlex offering in our leadership consulting business,” said Geoff Hoffmann, CEO of DHR Global. “We are certainly optimistic about where 2023 will lead. I think there is a little bit more apprehension among businesses right now about their hiring outlook, just given some of the macro trends that they’re happening across the world. There a lot of events that are that are making people probably rethink where they see growth in their business in the next year or two. However, as we have seen, over the past couple of years, all that sentiment can change rather quickly. We are not anticipating a market downturn by any stretch of the imagination in 2023. Probably more modest growth from what we’ve experienced in the past couple of years.”
In regards to growth in 2023, DHR has its sights set on a couple locations where they see the demand and the need from clients. “I certainly think that we’re going to have a focus on some of our European markets and some of our Latin American markets, in particular in a couple of emerging markets in Asia as well,” said Mr. Hoffmann. “From a North American perspective, it’s really going to be much more focused, not so much on geographic coverage but on building out some of our industry groups as well as some of the subsets of those industry groups in order to provide the best possible service for our clients.”
“Our business in 2022 went exceptionally well,” said John Marshall, CEO of JM Search. “Our revenue was up 40 percent from 2021, following 71 percent growth in the previous year. From that standpoint, it was a very busy year. There was a lot of pent-up demand from the second half of 2021 rolling into 2022. Following the pandemic, companies realized they needed to get back in the game, particularly in terms of growth.”
“Although everybody is projecting some form of a recession, we have not been vulnerable to it yet,” Mr. Marshall said. “I don’t think a potential economic downturn, or any other macro factors, will affect our business tremendously either. Our clients in the private equity space still realize they need to focus on improving their portfolio companies to thrive. They’re very focused on growth, and for many clients, there’s been a strong emphasis on human capital in that process. They know the right executives can set them up for success, which is especially important during times of uncertainty.”
“I’ve always said, in this line of work, when times are good, companies are looking for leaders who can grow their business,” said Mr. Marshall. “However, when times are rough, they need to seek better leadership. The need for exceptional leaders never really goes away. As a result, the need for skilled recruiters who can identify qualified candidates is always present, too. With that in mind, our outlook for the rest of 2023 is bullish. We expect a year of continued growth.”
“2022 was a record year for StevenDouglas across both the executive search and interim resources businesses,” said Matt Shore, CEO of StevenDouglas. “We grew our top line organically from $95 to $128 million, opened new markets, and were fortunate to attract some amazing talent to the firm.”
“As it relates to 2023, we are still cautiously optimistic even with the headwinds in front of us,” Mr. Shore said. “One of the benefits of being a boutique firm is that there is always more market share out there to be had if we do a great job for our clients and create great outcomes. The first quarter started off a little slower than we had hoped, but my sense is that it is not for a lack of mandates, it is more of a function of hesitancy on both the client and candidate sides of the equation. In many cases, candidates have gotten cold feet at the end of the process and have decided it is safer to stay where they are. On the client side, some of the clients are just moving slower than usual as they assess the landscape.”
“My sense is that companies and executive teams have learned that you need to always be prepared for the unexpected and that the economic good times and practically free money never lasts forever,” Mr. Shore said. “Hopefully, they are realizing that being over-leveraged and bloated leave them exposed to outside forces outside of their control. Fortunately, we were operating with no debt and we were running the company in a fiscally conservative way, so we were able to capitalize on the turmoil in the market and double our revenues in the two years following COVID.”
“My advice to other CEOs is to not over-react at the first sign of trouble as many firms laid off staff and then found themselves in the market trying to hire people when things settled down,” said Mr. Shore. “We were in a great position, as we did not let anyone go, furlough staff, or cut compensation plans, so we were able to retain all of our staff and attract some great people while everyone else was panicking.”
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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media