I know you don't get too much into employment issues here, but I thought this was worth a read...
hunt-scanlon.com
October 15, 2001
Hunt-Scanlon Forecasts Major Decline for Recruiting Industry
Stamford, CT, October 12, 2001 — Based on fresh interviews with recruiting industry chief executives, market research firm Hunt-Scanlon Advisors is lowering its 2001 revenue forecast for the executive search industry, projecting the industry will decline at least 30 percent this year. Hunt-Scanlon initially projected flat industry growth in July, but according to the firm's latest market trend report, business conditions for executive recruiters have vastly deteriorated since the end of the second quarter and have worsened since the September 11th terrorist attacks. Rising unemployment levels and continued lower demand for executive talent were the major factors in Hunt-Scanlon's downward adjustment.
After enjoying a three-year period of robust demand, search firm executives are grappling with the huge imbalance between excess capacity (too many recruiters chasing too few assignments) and significantly lower revenue streams, said Brian P. Lee, chief market strategist at Hunt-Scanlon. "Search management is dealing with the harsh reality that they must realign their expense base to revenues," said Mr. Lee. To maintain some level of profit margin, he added, search firms are lowering their fixed operating costs with a variety of belt-tightening measures, including salary and bonus reductions, office closings and staff layoffs worldwide. For example, staffing giant, Spherion Corporation, is jettisoning its executive search division; it plans to sell the 13th ranked recruiter, Stratford Group, as soon as a buyer emerges.
Mr. Lee said all firms are being affected. "For obvious reasons, the publicly held search firms are planning further cutbacks soon, but private firms are also feeling intense pressure now to scale down." Mr. Lee points to two industry leaders, both privately held, that are planning restructurings and cutbacks. No. 3 ranked Spencer Stuart has quietly cut six percent of its staff; the firm is expected to report an 18 to 20 percent decline in revenues for its fiscal year ending Sept. 30. Its rival, fourth ranked Russell Reynolds Associates, will soon close its Los Angeles operation – a significant decision considering its size and the high-profile nature of the Los Angeles market. Russell Reynolds reported $305 million in worldwide revenue last year, with more than half of its business coming from the North American market. Furthermore, another top 10-ranked recruiter is expected to exit the Los Angeles market within a few weeks.
In hindsight, these measures should have been implemented at least six months ago, said Scott A. Scanlon, chairman and CEO of Hunt-Scanlon. "But many recruiting chief executives delayed restructuring plans in anticipation of a third quarter industry rebound, which never materialized." The majority of industry chiefs polled don't expect a rebound now for at least a year, according to the Hunt-Scanlon study. "This is an unprecedented, historic decline," observed Mr. Scanlon.
ABOUT HUNT-SCANLON
Hunt-Scanlon Corporation is a leading market research firm and online data provider to the executive recruiting and human capital industries. The firm publishes market intelligence, including: industry rankings, online research, real time electronic newswires, three monthly newsletters (Executive Search Review, Online Recruiting Strategist and Diversity Monitor), directories of executive recruiters and senior executives, online database products, and also provides advisory services. The firm's online recruitment portals for senior executives connect buyers and sellers of recruiting and human capital services worldwide. Hunt-Scanlon produces executive-level conferences on human capital management, senior-level recruiting, staffing technology, diversity and talent acquisition strategies for CEO's, senior human resource executives and recruiting professionals.
Contact Information:
Brian Lee – Chief Market Strategist
Hunt-Scanlon Publishing
20 Signal Road
Stamford, CT 06902
Telephone: (203) 352-2920; Fax (203) 352-2930
E-mail: brian@hunt-scanlon.com |
