Executive Recruiting Sector Declines 12 Percent

March 27, 2024 – Hunt Scanlon Media has released its annual productivity report of leading executive recruiters. In the U.S. and globally, billions of dollars poured into the high-end recruiting sector in 2023, but at a slower rate than in previous years. “Market turbulence and a soft economy impacted most executive recruiters who pulled through a challenging year,” said Scott A. Scanlon, CEO of Hunt Scanlon. “The recruiting sector declined 12.2 percent in 2023 and hardest hit were recruiters serving the tech stack, VC and high growth companies.”

According to data analysis conducted by Hunt Scanlon, 70 percent of U.S. recruiting firms on its Top 50 ranking reported negative growth. But there were exceptions: No. 22 Modern Executive Solutions earned the distinction as the fastest growing search firm of 2023, rising 40 percent. No. 7 ZRG Partners, which moved up two spots on the rankings, was up 31 percent driven by programmatic M&A, giving it the distinction as the fastest growing search firm among the Top 20. Other notable gains were recorded by Academic Search, which had a 32 percent gain in revenues, Bay Street Advisors, which posted a 31.4 percent revenue increase, and Crist | Kolder Associates, which had a 16.4 percent gain.

“Strong tailwinds in the human capital management (HCM) sector stand to benefit the search industry and will drive growth moving forward,” said Mr. Scanlon. But search remains a highly cyclical and fragmented market. “For this reason, M&A is a crucial lever for industry leaders seeking sustained levels of outperformance over the next decade.”

Powering the consolidation trend are the acquisition targets themselves. Hunt Scanlon said in a recent poll it conducted that 51 percent of search firms are planning to explore M&A solutions over the next 24 months.

“An equally important lever tied to M&A is diversification,” said Mr. Scanlon. “Acquiring new HCM platform verticals – including interim and on-demand talent solutions, leadership assessment, coaching, and culture consulting – is picking up pace. These offerings, with more stable and recurring revenue streams, will give the recruiting industry more resiliency to macroeconomic headwinds,” he noted.

One firm that has deliberately focused its attention on this strategy is Korn Ferry. This past year, the firm strengthened its capabilities in the interim and transition management business with its acquisition of Patina Solutions Group. Also last year, Korn Ferry acquired Salo LLC, a provider of finance, accounting, and HR interim talent.

Heidrick & Struggles Acquires Business Talent Group
Executive search, leadership consulting and culture shaping services provider Heidrick & Struggles has closed the acquisition of Business Talent Group (BTG), a marketplace for high-end independent talent on demand. Financial terms of the deal were not disclosed. The addition of BTG complements Heidrick & Struggles’ strategic growth initiative to expand its suite of executive talent solutions to address new and ongoing client demands and builds on a two-year exclusive collaboration with BTG that began in 2019. BTG will continue to be led by co-founders and co-CEOs, Jody Greenstone Miller and Amelia Tyagi, and operate as a wholly owned subsidiary of Heidrick.

“This combination presents real, tangible opportunity for Korn Ferry and our clients looking for the right talent, who are highly agile, with specialized skills and expertise, to help them drive superior performance, including on an interim basis,” said Mr. Burnison. “Patina offers ideal solutions for today’s nomadic labor market.” Patina brings to Korn Ferry interim executive solutions expertise across multiple industry verticals. Patina’s network of C-suite, and professional interim talent spans functional areas of expertise including finance, operations, legal, human resources, and IT. “Through the acquisition of Salo, Korn Ferry will further broaden its ability to deliver to organizations experienced professionals, who will take on impactful roles on an interim or project basis, particularly in the high-demand areas of finance, accounting, and HR,” Korn Ferry said.

Related: Top 5 Executive Search Trends for 2024

This diversification of offerings outside of traditional search isn’t unique to Korn Ferry, and firms that have been providing ancillary services such as culture consulting, fractional placements, and more are reaping the rewards. “ZRG has been in on almost all of these trends for the last several years,” said Larry Hartmann, CEO of ZRG. “When we started, we were a single-line, retained executive search firm. We now have four business lines (search, interim, consulting, RPO) handling talent needs for our clients across the world. We’ve diversified our offerings because we want to say yes to more clients when they have a need.”

ZRG Acquires Walking the Talk
ZRG has acquired Walking the Talk, a consulting and advisory firm focused on culture transformation. As pioneers in this field, understanding the impact culture has on growth, performance, and reputation, Walking the Talk has grown to become the largest consulting firm solely focused on the culture agenda. The firm operates globally and has supported clients on dozens of engagements, which can last anywhere from a few months to a few years. “Hiring top talent that aligns with a client’s culture objective has been a key success factor for ZRG,” said Larry Hartmann, CEO of ZRG. “With the addition of Walking the Talk, we will expand our consulting and talent solutions capabilities, helping our clients address challenging topics like change management and culture transformation. Walking the Talk’s intellectual property developed by Carolyn Taylor and the team will enhance our ability to understand, measure and assess culture contribution at multiple levels. We see great power in the combination of our two businesses,” he said.

Last year, ZRG acquired The Registry, a Peabody, MA-based interim executive solutions firm specializing in higher education. Since 1992, The Registry has helped colleges and universities across the U.S. and abroad during times of transition with experienced and diverse interim leaders. The firm has recorded 1,200 placements at over 500 institutions of all types. Two years ago, ZRG also acquired Walking the Talk, a consulting and advisory firm focused on culture transformation. Headquartered in Amsterdam, specializes in enhancing performance results by aligning culture with strategy. Since the company was established 11 years ago, culture has landed firmly on the agenda of most executive teams and boards of directors.

Coaching and Assessments

Coaching and assessments have also become an integral part of professional development in the corporate world and search firms have taken notice. True, No. 6 on Hunt Scanlon’s rankings, recently acquired Bleeker, an executive coaching and assessment company. Bleeker’s assessments, derived from neuroscience, and their inquiry-based coaching services have been rebranded as True Advance and are now part of True’s platform of products and services. “Through integrated assessment and coaching, True has enhanced our comprehensive talent management platform, solidifying our role as strategic partners to businesses building their leadership,” said Joe Riggione, co-founder and CEO of True. “True Advance provides leaders with invaluable insights about themselves, while simultaneously offering companies transparency into prospective hires’ performance and alignment with the existing leadership team dynamics.”

Related: Recruiting Firms Continue to Focus on Winning New Business in 2024

“Integrated assessment and executive coaching solutions is one of the fastest growing segments within executive search,” said Mr. Scanlon. “This all ties into the integrated human capital models that we’ve been helping our M&A buy-side clients think through and build out. If we look at human capital solutions as a matrix it is easy to see how team building, employee engagement surveys, culture assessments, leadership consulting, and executive coaching all work in unison to provide a highly tiered, strategic approach to talent. It’s been a slow build to this point, but we believe integrated human capital solutions are the new growth platforms for search firms,” he noted.

The Christopher Group also acquired Six Summit Leadership, an executive coaching and leadership development firm. “We are extremely excited to continue to innovate and add value for our current and prospective clients,” said Nathaniel Schiffer, managing director of The Christopher Group. “This acquisition not only broadens our capabilities but also reinforces our dedication to assisting our clients in nurturing effective leadership and fostering positive change within their organizations.”

Other Hunt Scanlon Report Highlights:

• The Hunt Scanlon ‘Top 50’ U.S. Recruiting Firms produced revenues of $6.047 billion in fees generated in 2023, a 12.2 percent decline.
  
• The Hunt Scanlon ‘Big 5’ Global Recruiting Firms reported $6.731 billion in professional fees, a decline of 3.9 percent. Russell Reynolds Associates moved up two spots in the rankings to No. 2.
  
• A wave of consolidation and diversification into aligned HCM markets will fuel M&A activity in 2024 and extend into 2029.
  
• The executive search industry is poised for growth by leveraging strong momentum in the HCM market. This will be driven by advancements in AI and technology – which will enhance service delivery and effectiveness – and a growing need for strategic human capital advisory solutions.

To view Hunt Scanlon’s latest rankings, visit https://huntscanlon.com/top-50/

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media