58 TheEconomistFebruary 8th 2020
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or a few months last year Matthieu
(not his real name) was on the most im-
portant team in finance. swift, a global
payments-messaging service owned by
11,000 banks, was looking for a new chief.
So was cls, an institution that settles four-
fifths of worldwide foreign-exchange turn-
over. Each had hired Matthieu’s firm to find
one. He was aware of the stakes. Both out-
comes were going to “impact everything”
that money touches, he told The Economist
at the time. His voice barely rose over the
mellow music of a Manhattan hotel’s bar
but nonetheless it carried a bass note of
self-importance.
The firm got the job done. Javier Pérez-
Tasso, swift’s former Americas head, took
over as boss in July. Marc Bayle de Jessé, an
official at the European Central Bank, start-
ed at cls in December. The placements tes-
tify to the brokering brawn of executive-
search firms. The industry’s top tier is busi-
er than ever. The bosses of 311 of America’s
3,600 listed firms left their jobs in 2019—the highest share on record. Someone
needs to find their replacements.
Like Matthieu, the search industry is se-
cretive, and numbers are hard to pin down.
Estimates from aesc, a trade body, suggest
that the business has enjoyed strong
growth for much of the past 30 years—with
the exception of slumps after the dotcom
bust in 2000 and the financial crisis of
2007-09 (see chart 1 on next page). aesc
reckons global executive-search revenues
grew by 12% in 2018 and that many firms
had their best year ever in 2019 (for which it
is still crunching the numbers).
Today, the biggest search firms hold
sway over who rules many of the world’s
most potent organisations. The best de-
serve their hefty fees, clients say. But the
industry is facing increased scrutiny, amid
suspicions that it may be holding back per-
formance and diversity at the top.
Executive search—headhunting, in the
vernacular—emerged in the post-war
boom, when fast-growing firms in Europeand America began fighting over experi-
enced leaders. The battle intensified in the
1970s as the internationalisation of busi-
ness turned a consulting backwater into a
mainstream profession. One recruiter’s ex-
boss recalls opening 30 outposts that de-
cade, from Singapore to Sydney.
Just as quickly, the business earned a
reputation for sloppiness. Recruiters were
“golf-course, back-slapping sales guys”, as
one veteran admits. Candidates in their Ro-
lodexes were lazily recycled. Criteria for
drawing up shortlists were often a mystery,
says Angeles Garcia-Poveda of Spencer Stu-
art, a search firm.
Fifty years later they have become tight-
ly woven into the fabric of corporate life,
and are seen by most multinationals as in-
dispensable. Five giants—Spencer Stuart,
Heidrick & Struggles, Russell Reynolds As-
sociates, Egon Zehnder and Korn Ferry—
dominate ceo search. This quintet, known
as the “Shrek” firms, earned fees of $4.8bn
in 2018, 14% more than the year before and
43% more than in 2014, according to Hunt
Scanlon Media, a trade publisher. Spencer
Stuart places an executive in a leadership
role or boardroom 11 times a day, says Ben
Williams, its boss. (The Economist Group
has recently employed Egon Zehnder and
Heidrick & Struggles to fill senior roles, in-
cluding ceoand chairman.)
Interviews with more than 50 insiders
suggest that 80-90% of Fortune250 or ftseTake me to a leader
GENEVA, LONDON, NEW YORK AND PARIS
The industry tasked with finding bosses is more powerful than ever, even though
the value it provides remains hard to measureBriefing Headhunters