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4/10/05 EXECUTIVE SUITE After three years of cutbacks, headhunters around the world are reporting an increase in demand that has caused revenue from search fees to increase by nearly 20 percent from 2003 to 2004, according to the Association of Executive Search Consultants. "Clearly, the recession is over and companies are restaffing at fairly aggressive rates and that is having an affect on the search industry," said Chris Hunt, the president of Hunt Scanlon Advisors, a publishing and market research firm in Stamford, Conn., that tracks the search industry. According to the association, which represents 1,200 executive search consultants in 42 countries, 2004 marked the first year of positive growth for the search profession since 2000. In addition, the amount of revenue earned per consultant was up 26.1 percent over 2003. The upbeat report comes three years after Executive Recruiter News warned the industry could see losses of $1 billion in 2002 due to an economic downturn. Back then, Joseph Daniel McCool, the editor of the New Hampshire newsletter, characterized the executive search industry's tale of woe as a "rags-to-riches-back-to-rags story." "The years 1998, 1999 and 2000 were the golden age of executive search, the best times in the history of the business - even better than the 80's," McCool said in a 2002 interview with The Boston Globe. "Now, it's a struggle." Not any more. According to the search consultants group, worldwide revenue from search fees rose 19.7 percent last year. In addition, North American recruiters reported that demand was up 42 percent last year. European search consultants said they experienced a 36 percent hike, and firms in Asia said demand for recruiting consultants was up 14 percent. In Central and South America, by contrast, demand increased 8 percent. In his latest report, McCool said the biggest international firms that retained executive search firms garnered double-digit increases last year, reinforcing the belief that hiring is up again. According to the report, the largest 20 firms worldwide saw a 25 percent rise in revenue from professional fees in 2004. By contrast, the biggest search firms in this country experienced a 21 percent hike in revenue, McCool reported. According to the newsletter, Korn/Ferry International topped global and national rankings. It reported total worldwide fees of $438.1 million for the year ended Jan. 1, 2005, up more than 30 percent over last year. The Association of Executive Recruiters said all industries reported increased search activity between the third and fourth quarters of 2004. But life sciences, which saw demand for search consultants rise 13 percent between 2003 and 2004, experienced a surge toward the end of last year. "Corporations are starting to open the floodgates again," said Hunt. "They're beginning to put their hiring plans into motion." LAW A Supreme Court ruling last week that could make it easier for older workers to sue their employers for age bias prompted much reaction from lawyers, labor groups and the AARP. Released on March 31, the 5-to-3 decision said employees can sue if they feel that their employers' corporate practices have had a "disparate impact" on aging workers even if the firm did not intend to discriminate against employees over 40, who are protected by federal law. Companies might be able to win by showing that reasonable factors, aside from the age of the employees, governed their actions, the high court ruled. Groups like the American Association for Retired Persons hailed the ruling, noting that the court decision opens the doors to litigation more widely and will give older workers another weapon in the battle against age-related workplace bias. Others weren't sure. "It is not clear what this will mean with respect to a company's day-to-day operations," said Arthur Telegen, chairman of labor and employment at Foley Hoag in Boston. "The result the court reached was unexpected. It means that all courts must now rethink the issue. They will have to decide what sort of unintentional discrimination is unreasonable. But the question of what is unreasonable might be left up to juries." Novations/J. Howard & Associates, a consulting and training firm, said some firms could face more lawsuits as baby boomers fight to hold onto their jobs. "Unlike preceding generations, employees now in their 50s won't go quietly and employers are going to run into big problems if they don't wake up to the impending confrontation," said Gerry Lupacchino, a vice president at Novations. He maintains that baby boomers are not expected to conform to traditional retirement patterns. One reason is their size. Born between 1946 and 1964, this generation is the largest in the country's history, making up an estimated 77 million of the nation's 285 million population. They also represent 60 percent of the overall workforce between 25 and 64. With the first baby boomers scheduled to retire in 2010, firms need to plan for their exodus and any problems that could arise as a result of forced retirement policies or provisions, according to Novations. "Since the 1930s, the customary retirement age has been 65 and organizations have operated on that basis," Lupacchino said. "Boomers don't want to retire, at least in the conventional sense. Not only will many try to postpone retirement, but they're also apt to fight to keep their place in the organization." Lupacchino has a point. 44 percent of nearly 2000 international executives surveyed by Korn/Ferry International said they planned to continue working past the age of 64, and 15 percent said they want to work past 70. One reason: less retirement savings. "The economic downturn of the past several years has clearly put strains on the retirement savings of all types of employees," said Charles W. B. Wardell III, managing director of Korn/Ferry and head of the northeast region. "But there are additional reasons for wanting to postpone retirement beyond the traditional age . . . many are simply not ready to slow down." Lupacchino said firms can avoid potential lawsuits and workplace conflicts by rehiring senior tenured workers in advance of their retirements, thereby diminishing the threat of increased litigation." Employment lawyers say the issue stems from corporate policies that, on their face, do not appear to discriminate against older workers, but when applied broadly to a firm's staff negatively impact those over 40. The ruling, written by Justice John Paul Stevens, stemmed from a Mississippi case involving 30 police officers and dispatchers who claimed their bosses had given young recruits with five years or less on the job bigger raises. Diane E. Lewis can be reached at .
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