October 3, 2019 – Brand equity extension is a means for companies to define and enter new and attractive businesses with existing brands. While most brand equity research has taken place in consumer markets, the concept of brand equity is also important for understanding the competitive dynamics and price structures of business-to-business markets such as the fast-growing executive search industry.
Boutiques, technology and a focus on private equity recruiting continue to drive growth across the recruiting sector. According to recent statistics collected by Hunt Scanlon Media, the nation’s Top 50 executive search firms saw revenue jump nearly 14 percent this past year. Just among these firms alone, clients are spending billions of dollars annually on executive recruiting.
Total revenues for the Top 50, which employed almost 3,000 recruiters across their Americas offices last year, surpassed $3.8 billion – an all-time high. Growth rates are expected to continue, as the sector turns to new service offerings in the face of a talent crunch that’s been steadily expanding around the globe.
Ken Vancini knows about growing a successful search firm. He is the founder of Innova International, an advisor to the executive search industry. Its mission is to help executive search firms adapt, scale and grow by delivering exceptional advisory work in a rapidly changing industry. The firm’s advisory work focuses on financial modeling, hiring and recruiting new partners, developing compensation models and incorporating the latest technology, all while advising on industry best practices.
Vast Majority of Recruiting Firms Expect Increases in 2019
A brand new report by Bullhorn has found that 79 percent of recruiting firms expect to bring in more revenue this year than last. Optimism reigns across the sector despite growing concerns and emerging challenges related to automation, macroeconomics and politics.
Prior to starting Innova, Mr. Vancini founded ZRG Partners. Along with his partner Larry Hartmann, ZRG unlocked the formula for scaling a search firm. Under their leadership, ZRG became recognized as a global leader in executive search, realizing a 30 percent compounded annual growth rate from inception. Mr. Vancini led global research, recruitment, accounting, information technology and marketing from his Boston office.
Mr. Vancini recently sat down with Hunt Scanlon Media for an exclusive interview on why brand equity is so important for growing executive search firms. Following are excerpts from that discussion.
Ken, what is brand equity, and why is it essential to a search firm?
Brand equity is the commercial value that derives from the client’s perception of the brand name of a particular firm, rather than from the service itself. I recently met with the founder of a Midwest search firm. It has six partners each making substantial income. They also have 11 support staff. The partners spend every day knee-deep in closing and executing on search assignments. The founder told me that clients approach them almost daily with new assignments they must turn away. The reason is one of many, such as the firm’s capacity, the level of the search, international requests or unfamiliarity with a related niche. The bottom line is this: This firm, like many others I talk with, doesn’t have the experience or knowledge to build and scale itself. They have deep industry knowledge and a long and successful history of successfully completing search assignments. This is untapped brand equity. Executive search firms are frustrated as they try to scale their business for the future. Many I talk with mention the substantial cost of ill-advised hires and failed strategies.
“In today’s market, revenue producing partners have many options. If your firm is considering hiring new partners, you need to have a very clear strategy. You should ask yourself why a partner will want to join your search firm. Your firm’s value proposition, support model, culture, compensation are all very important.”
Are search firms using brand equity to their best advantage?
Executive search firms are enjoying tremendous growth. As a result, personal income is at an all-time high for search professionals. Still, firms have incredible depth and breadth of knowledge that remains untapped. Firms have the cashflow to lay the groundwork for future profitable growth in both good times and bad. They just don’t know where to begin.
Recruiting Sector Jumps 13.9 Percent, Driven by Tightening Talent Markets
A constricting labor market with low unemployment means companies are struggling to find qualified talent. When the right people are found, the costs associated with hiring them are rising, making a lengthy onboarding process now the rule, not the exception.
How does a firm build a model for growth?
We can create a business model that considers the following: Growth projections from current revenue producers, revenue from new partners/ billers (senior partners, partner and principal level billers), search execution costs (associates, research, administrative functions), and corporate support functions, etc.
What are a few strategies for scaling a business and leveraging brand equity?
Most firms focus on hiring additional partners who work in their niche or a similar niche. I see more and more firms adding capacity to handle professional search to complement their C-level executive search. It can be relatively easy to expand one’s geographic footprint domestically/ internationally. I also see a move toward more and more firms offering leadership advisory and assessment services.
In today’s’ competitive market, finding and hiring revenue producers can be challenging. Any thoughts on how to overcome this challenge?
The most asked question I hear is: ‘How does our firm go about hiring new revenue producers?’ In today’s market, revenue producing partners have many options. If your firm is considering hiring new partners, you need to have a very clear strategy. You should ask yourself why a partner will want to join your search firm. Your firm’s value proposition, support model, culture, compensation are all very important.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media