The research was conducted in December 2011 by Business Management Technologies, which manages online consultancy platform Manageranticriza.ro, is the first survey of its kind on the Romanian market.
The job of headhunters is to “steal” the top manager from a company and place them in a rival company. The headhunter gets on average between EUR10,000 and EUR30,000 to recruit a CEO, i.e. a third of the recruited executive’s salary in their first year.
For a headhunting job an executive search company invests at least EUR3,000, with the money being used for phone calls (sometimes over 250 prospective candidates are called), web recruitment ads, keeping the networking going (they take the candidates out to dinner or concerts, for instance, testing the candidates (at the client’s request), administrative costs with the office and with consultants’ salaries.
“Each company has its own business model and strategy to maximize value in a given period of time. However, cutting prices, orders and implicitly the level of activity lead to a lower profit rate, considering that there are a set of fixed costs that obviously don’t follow the same trend,” said Cristian Bisa, author of the survey. He is the owner of the company that manages consultancy platform Manageranticriza.ro, which operates in business consultancy, production and selling financial and management software.
The fee charged by an executive search company ranges depending on the package of the recruited manager, usually between 28% and 33% of the manager’s net salary in their first year. Although the average fee ranges between EUR10,000 and EUR30,000 for each job, it can sometimes be higher.
The Government could soon become one of the biggest clients of headhunters, given that in its arrangement with the IMF it has committed to introduce private management at state-run companies, with the help of headhunters.
ADVANTAGES AND RISKS OF THE TOP THREE PLAYERS
*ZF estimate
(English version by Daniela Stoican)
1. Pedersen & Partners, focus on profit and liquidity
The local subsidiary of Danish company Pedersen & Partners, locally run by Mona Neagoe, is the most liquid and profitable executive search company. Cash stability, high profit per employee, the large number of clients and the focus on steady growth of the business and of the market share are the strong suits of this player. But the focus on generating the best-possible financial results could have a negative impact in terms of client satisfaction and of client loyalty over the medium and long term, according to the survey’s results. The company has low operating results, and recruitment activities (for top, senior and middle management) are conducted by the same consultants, the research shows.2. Leadership Development Solutions, emphasis on expertise
Leadership Development Solutions, which has for 15 years (up to 2010) been the representative of international giant Korn/Ferry, is headed by Radu Furnica, one of the oldest headhunters on the Romanian market, who is also known for his quite high fees, as well as for the solid network he has built over time. LDS has good financial results, is profitable, has had a steady approach, but the company’s future performance could be negatively affected by the rather high personnel fluctuation among the company’s consultants.3. K.M. Trust & Partners focus on innovation, clients and team consolidation
K.M.Trust & Partners is run by Radu Manolescu, who decided in 2009 to separate his middle management recruitment business from his executive search one, creating Key2Success firm (which currently handles recruitment of middle and senior management and has a different management from K.M.Trust&Partners). The company’s advantages include its attention to clients and to consultant teams, as well as the fact that it has had a consistent approach to fees. But the biggest risk of this business model has been the low profit margins recorded in the past few years because it invested in client loyalty and employee retention, which could bring it losses in 2012 if the market doesn’t recover. Evolution of executive search market in last six years| Year | Market value (million lei) |
| 2006 | 13 |
| 2007 | 26 |
| 2008 | 29 |
| 2009 | 20 |
| 2010 | 25 |
| 2011 | 25* |