“My Company’s offices are in Queen Anne’s Gate – not so very far from here. It’s one of those very quiet, old-fashioned London streets. You know the sort of thing – elegant doors, brass knockers, blue plaques bearing witness to the great and the good who lived or worked there – and the rest.

It wasn’t always like that. As I learned only recently – from someone who inhabits our own world. This was an extremely well informed freelance researcher to whom I had just been introduced and who, on hearing that we were in Queen Anne’s Gate, asked me exactly which building? When I told him, and when I found out exactly why he asked, I might have been relieved at avoiding the connotations. But any relief was short-lived because, as he went on to explain, it wasn’t just one building. The one he meant was probably No 1 but in fact, virtually every other building in Queen Anne’s Gate – in the mid 18th Century, was an extremely expensive and upmarket bordello. In fact – it was for that reason and that reason alone that our street was best known!

Houses of ill-repute – lots them. How strange and ironic that, some 250 years later this particular little bit of London has for some years now attracted executive search firms like bees to the proverbial honey-pot.

And that, I hope you’ll agree, is as good a place as any to start looking at an industry – I hesitate to dignify it with the word profession, that hasn’t always attracted universal admiration, that’s come a long, long way from its beginnings – but which, as I hope to illustrate this morning, still has an equally long way to go.

Jason has very kindly asked me to open the batting and to review the state of our industry – which I will try to do.

It’s not an easy task as although I can draw on more than 22 years experience in search, my perception will very much remain just that – my own and those of my immediate colleagues plus of course our clients. So I do stress – they are my views and as such they’re open to challenge.

We’ve never been a particularly cohesive business sector. We don’t meet particularly regularly, like those similarly engaged – as we would were we part of a single industry attending regular industry functions or were we linked to a single profession with all that entails in terms of contact, oversight and responsibility.

Arguably, that’s one of our failings, which makes events like today all the more important in providing the opportunity for us to meet one another – on neutral ground, for a free and open exchange of views. So at the very outset of the day we owe a debt of gratitude to Jason and his colleagues in Dillistone Systems for their work in getting so broad a group together. Thank you!

If I’m going to talk about where we are and where we’re going, it seems sensible to spend a little time reviewing where we’ve come from.

There’s a surprising amount of academic material around on recruitment as a whole, but what I soon found described as a ‘void’ in any proper analysis of – and wait for this, a great piece of jargon “the global elite labour recruitment sector” – I don’t know about you, but I quite like the thought of being part of that!

At least until the same papers go on to describe the growth of that sector as a ‘generally messy business’, devoid of otherwise natural comparisons and parallels with the worlds – for example, of accounting, advertising, finance, the law and management consulting.

I found the lack of those parallels a recurring theme – not bringing with it any sense of envy or sour grapes, but more in what the academics describe as a general failure to recognise the pivotal role of executive search within the highest echelons of business, a similar failure to recognise the influence and sheer impact of search – which is just as important in terms of that impact when we get it wrong as when we get it right. And lastly, little apparent and indeed published, understanding of our industry’s complexities.

As we go to work on a Monday morning and find a changed brief half-way through an assignment or as we get that dreaded telephone call telling us that the preferred candidate has changed his or her mind and is staying put – I suspect that you will have some sympathy with that assessment, conscious of the skills we have had to develop in either preventing or all too frequently countering such eventualities.

Today, I know we’ll examine some of those omissions – at least I hope we will. After all, I still have that cushion at home bearing the legend ‘Trust me – I’m a Headhunter …!’

Conventional wisdom suggests that search has a relatively short institutional history, traceable to the post-war economic boom in the United States. The first time that anyone actually ‘targeted’ people who weren’t looking for a job.

That’s not entirely correct – at least for the historical purist. Believe it or not, records indicate the existence of private recruitment firms in Germany in the 14th Century. Somewhat later, in the 1800s – the Napoleonic era, both Britain and France used private employment services to recruit talent and labour at all levels, for their growing Empires with payment for such services on a per capita basis. Probably not 33.3%!

In 1848, America’s first ‘Employment Exchange’ opened in Boston and in the First World War, employment services were retained to ‘screen’ people for war and munitions work.

So perhaps we have rather more heritage than we suspected – for what it’s worth.

But to my mind, our real starting point came in 1926 when a Company, generally regarded as the world’s first ‘proper’ headhunter – Thorndike Deland in New York, accepted retainers of $200 a go to seek buyers for the department store Bloomingdales – and in our terms, that’s when it all began.

The 50’s, 60’s and 70’s saw proliferation and with it, emergence of the first ‘big four’ – Heidrick & Struggles in 1953, Spencer Stuart in 1956, Russell Reynolds and Korn/Ferry in 1969 – all quickly becoming leaders in the US.

What happened afterwards – like so much else that characterises our industry, doesn’t reflect any steady pattern of strategic national and international growth – the sort of development one would expect in any industry dominated, for example, by the likes of a Ford Motor Company, a Procter & Gamble or by an IBM. With us, it happened differently and if we have residual problems today, I sometimes wonder whether they are of an inherited nature with their roots in years gone by. I’m not sure – but I pose the question.

Our growth in the 1960’s was more of an organic nature, followed by mergers and acquisitions in the 70s and the creation thereafter of Alliances and Networks made up of independent firms, all driven by a growing need to match the more conventional international growth of clients – more push than pull, and it wasn’t always successful.

Some client relationships at senior levels in those days may have had more than a whiff of the country club and the golf course about them – but despite that, they probably demonstrated that close familiarity with client management, organisation and culture that – decades on, remains at the absolute core of our work. How could it quickly be transferred, usually across the Atlantic and reproduced – from New York to Paris, from Boston to Brussels? Frequently it wasn’t. And even today we see the same problems and resultant cracks in the edifice of client relationships.

There’s another odd, yet defining aspect of the search industry. If I go back to those three corporate examples, Ford, P&G and IBM, each really has dominated their sector in terms of global market share. Yes – we have some giant frogs in our pond – but they don’t take up so much room and as the pond gets bigger, we smaller frogs have proved ourselves more than capable of retaining, even expanding our aquatic territory!

Look at it this way – Hunt Scanlon figures indicated a global search market worth $3bn in 1993. That had grown to $8.3bn by the year 2000 and it’s now estimated at $10bn.

I looked at some other figures last week – that put combined revenues of the 20 largest firms at $2.5bn – around 25% global market share.

Then I found yet another source that attributed one-third of global search revenues, not to the top 20 – but to the top 10. Take your pick.

The message to me, and I suspect to many of you here today is that firms outside the top 20 – 5,000 of them alone in the US, thousands more in Europe and beyond, account for somewhere between 65% and 75% of a fast-growing world market. Those firms are generating revenues in excess of $6bn and that can’t be bad.

Except – and here comes what might be regarded as another fundamental flaw :

Anyone can set up a search firm – nowadays in the UK you don’t even need to secure the licence for which I had to apply to the Department of Employment in 1984. Historically, there are very few barriers to entry, virtually nothing in the way of regulation and arguably a low initial working capital need. But of course, there is the lure of giant pots of gold at the end of the search rainbow. For many, the reality within that rainbow falls drastically short of expectation – 75% - 80% of recruitment firms (admittedly all recruitment firms), fail within five years. The average consultants’ tenure is no more than two years.

Those aren’t particularly pleasant statistics and they don’t exactly contribute to the aura of professionalism with which we would wish our industry to be regarded. Very much the opposite.

I certainly didn’t find it easy setting up in the early 1980s and I’m sure I’m not alone here in remembering days when the phone never rang and the postman brought no mail. Slowly it dawned that things would stay that way unless I – me, me alone, gave people a valid reason to call and to write.

A few years on – and speaking as a veteran of at least two major economic downturns that left some hefty chunks of the hitherto lucrative search business in meltdown, I shed few tears for the ‘cowboys’ who hadn’t made it. For those who saw search as a route to easy pickings. Those who forgot – or never made themselves aware of the key qualities of resilience, tenacity and integrity – without which survival, let alone success, is impossible.

Let me now move to the world of 2006 and try to define the current ‘architecture’ of search.

It has many divisions and even more sub-divisions but I believe they fall into four clear categories – each with their own characteristics.

Firstly are the Wholly Owned Trans-National Companies – companies managed by an Executive Board or a Partnership whose role is to define strategies and priorities for the Group as a whole. Their offices – many of them around the world are ‘branches’ of the global firm sharing economic, social and cultural links. Egon-Zehnder is a good example, who have come a lot closer than many to addressing the issue of international cooperation set against inter-branch rivalry by working with a single profit centre. Such companies are characterised by their desire to seek nationally tailored hiring solutions.

Next, we have the Networked Trans-National Operator – certainly figuring nowadays in the top 20. Many may well be represented here today, as single offices, non-global in operation but in a strategic alliance. The network is not a ‘business’ as such. One good description I heard was ‘best friends’ for international activity. The advantages - a great deal of flexibility, the prospect of global reach and an international persona to clients, and of course the chance of making life a great deal easier where ‘off-limits’ problems raise their heads.

Thirdly we have the Hybrid. This time, a formalised global alliance trading under one corporate name but operating as an independent business. Much tighter integration than the Networked Trans-National Group, only one office in each country as a rule and a great deal of effort to implant shared standards and shared methods of operation. Closer to the Wholly Owned Trans-National but not quite as integrated across borders.

Fourthly, that vast sector of our market to which I have already referred – the independents, whose influence and importance can be grossly underrated – purely by virtue of the sector’s diversity and its fragmented nature. Usually lacking a single voice – and maybe the Associations here today will prove me wrong, the perception accorded to the independent is so often defined by the perception created within that 25% - 30% market-share of the top 10 or top 20.

Perhaps this is inevitable. Since very early days large organisations spawned the early independents – right back to the time that Henry Wardwell Howell left McKinsey in 1951 when he saw that the ever-increasing demand for executives was out-stripping readily available supply. Ward Howell International was the result.

Since then, search has offered a ‘virtuous circle’ where that increasing demand has continued to provide the impetus for specialist and boutique start-ups invariably splitting from the large groups – until they themselves grow and the process begins all over again.

I’ve tried to illustrate – in a simplified form, the current structure of our industry and its patently not part of my brief or my intention to comment at length on the manner in which each element approaches its work. But I do have some worries, which I will mention in passing and which I hope will be explored in greater detail throughout today.

One can well understand why a search firm goes public – but to me, listing could have two key drawbacks. The first goes to the very heart of that which we try to do – serve our client to the very best of our ability, working on the principle that sheer excellence and the highest standards will be rewarded by a sustained relationship and a continued assignment flow. Surely that objective can cause inevitable conflict between what’s actually best for the client and what’s best for our own investors, who may put accelerated revenues ahead of that excellence. Just fill the slot and move on …!

The next drawback is perhaps a bit more complicated. Listed companies must work on a calendar year and I can’t believe that lots of us here today find our lives defined by the peaks and troughs that characterise our business on a month to month basis. Listed companies need scale and there is of course a clear cycle for a listed company’s financial reporting. Yet you cannot – it would be unethical anyway, force search progress against any fiscal calendar. In many ways, cashflow remains independent – sometimes outside our control certainly to an extent that it would be extremely difficult to match any cycle of search against the cycle of financial reporting. I don’t know about you, but my own accountants claim nightmares over my definition of ‘work in progress’!

I was discussing this point with a colleague recently. He pointed out another couple of parallels for the search consultant. A Barrister is hired to argue a specific case in just the same way as we are hired to undertake an assignment. They’re not public and they’re not listed. Neither for that matter is the average dentist – who certainly can’t sub-contract the work.

I’m delighted that our hosts today have focused this conference solely on the search industry – on search practitioners. Yes, we welcome those other opportunities where search goes head to head with the HR function, and arguably that offers certain benefits in terms of face to face contact and networking. But I’d like to think that today gives us the opportunity – not exactly in private, but with like-minded people, to explore the strengths and weaknesses of our business. Of course, one cannot do that without reference to the HR function.

Around two or three years ago I chaired an HR conference – truly the poacher among all the game-keepers. I suggested then – and I see little reason for changing matters now, that HR faced both a problem and an opportunity.

Both are completely interlinked. Recent years have seen unprecedented growth in the power and influence of the HR function. We know all about PSL’s and the fact that whether or not we get on them can have little to do with the senior line management with whom we are engaged. I suggested that such a rise in influence and power had in fact been achieved through default. Market downturns – especially that of financial services over past years saw a situation where quite drastic action had to be taken, in circumstances where operating management was either unwilling or unable to wield the axe. Quite rightly, HR stepped up to the mark and understandably hasn’t stepped down. The problem? Far too often, and purely as a generalisation – as this certainly doesn’t apply to everybody, one sees insufficient links between search needs as defined at operating levels and the manifestation of those needs when delivered by HR.

If we are to serve our clients to the best of our ability we must seek a seamless relationship between ourselves, operating management and HR – three integrated parts of a triangle if you like. I recognise that companies have priorities but far, far too often – over many years, have I found myself in the position of apologising profusely to candidates for seemingly cavalier treatment – so often avoidable.

The opportunity – I suggested to that HR conference that the position of the HR Director was unique. If the CFO sits at the Chief Executive’s right-hand then the Group HR Director should be at the left. No-one else is in so unique and privileged a position, hopefully devoid of company politics at Board and senior management levels, to guard, to guide and advise. It’s a lonely business being a Chairman or Chief Executive – we all know that from the confidences with which we are so frequently entrusted. But from my viewpoint, I believe that the HR function - not just in FTSE 100 companies but well beyond, has an ideal opportunity, part of which rests in developing closer relationships with and closer understanding of our world. My heart always leaps when I come across an HR Director who’s had a spell as a headhunter …!

As far as that HR Director – any HR Director, is concerned, we are and will remain an intermediary. The breadth of the intermediary role depends to a great extent on us – and of course on the degree to which the client is prepared to involve us. I have never been, nor wanted to be, just a provider of ‘warm bodies’. We could and should all do so much more if we’re allowed to – in assisting the formulation of candidate profiles, in building job descriptions, in delivering to our clients the benefits of an objective view from outside their organisation.

We should seek no less involvement when our successful candidate arrives on day one to take up his or her new role. We all know – too well, from that moment on reality doesn’t always match expectation. Those who can prove so assiduous in the search process so often seem to have a blind spot in forgetting the pitfalls of induction and assimilation. With our guidance, many of those pitfalls can be averted.

In comparative terms, there are two massive differences between search now and search of years gone by. First – and entirely appropriate given the nature of our host today, we all continue to benefit from a vast increase in available database technology, in the instruments we can now use for research, in assignment management, in database recording and retrieval. Never before has the search industry enjoyed such broad and cost-effective access to corporate information via the web. But I did have certain qualms recently in reading that the sophisticated researcher is now able to access non-public intranets – which could worry me and which, if such practices really did become widespread, would put a sizeable dent in the reputation of our industry.

Secondly, as technology makes the job easier, it’s a sad fact to report that today’s world of regulation shows every sign of making it considerably more difficult.

Twelve days ago we faced a new raft of employment regulations. Their motivation is laudable – none of us can support age discrimination in general terms. But we have every reason for concern over the interpretation of such legislation and we look forward to the specific and informed views that will follow later today.

Meanwhile – my own concerns were very quickly justified in the recent receipt from a major client of ‘words we may no longer use …’ I think you know them as well as I do – words like ‘senior, mature, dynamic, energetic …!’ Enough of them to completely dilute the type of senior profiles one has worked with over the years!

I permitted myself a smile last week – having heard the responsible Government Minister defending the new regulations on our early morning ‘Today’ radio programme, claiming that their interpretation would cause employers no problems …

Last week’s Times ‘Business News’ reported exactly the same Minister describing our Government’s need for a ‘senior and seasoned’ British businessman for a particular role …! Enough said.

Finally, and the most important point of all – people. One could go on for a long time about the characteristics, merits or otherwise of different sections of our market and of the individuals within it. But there’s only one thing that remains paramount – the individual consultant and the importance of the relationships that he or she builds with the client. The skill of the individual consultant transcends the name of their firm. It is the individual in whom the client places that trust and it is the individual who is ultimately responsible for delivery against that trust. Those who deliver not only do themselves, their clients and their firms a great service – their efforts reflect on our industry as a whole. We need that reflection if we are to cast aside some of the less attractive baggage attaching to our trade.

I began with history – so perhaps I can conclude in the same vein with the words of Alexander Solzhenitsyn :

“Dwell on the past and you’ll lose an eye … Forget the past and you’ll lose both eyes”.

And one parting shot – back to the bordellos of Queen Anne’s Gate. At least their clients always, always paid on time …! Wish ours did.”

Speech as delivered to open the Search Practioner Conference hosted by Dillistone Systems Ltd on 12th October, 2006.