The Executive Grapevine's annual market share survey, which covers retained executive search firms working predominantly on mandates with fees of more than 30k, suggests international executive search firms are becoming a bigger force in the shrinking financial services search market.
The survey, which was undertaken in the year to March 2009, found that international firms were responsible for 29% of net fee income in financial services, compared to 22% in the 12 months previously.
In the months subsequent to March, larger firms are likely to have consolidated their grip on the financial services search market. Korn/Ferry, Whitehead Mann, Napier Scott, Hanover Search & Selection and Kinsey Allen were all trading as separate entities during the survey period and were thus recorded as such. However, Korn/Ferry acquired Whitehead Mann in June, GRS acquired Kinsey Allen in August, and Hanover Search & Selection acquired Napier Scott in July.
Executive Grapevine's survey also found that net fee income from financial services firms fell 26% year on year in the 12 months to March, more than in any other industrial sector.
The clampdown on guaranteed bonuses - which is gathering pace - was a contributory factor.
"Historically search fees have been based on the expected total compensation - basic plus guaranteed bonus. However, in many cases this was replaced with packages offering higher basics but lower or no guarantees, dramatically reducing the overall guaranteed compensation level and thus the fee income to the search firm", says Helen Barrett, Executive Grapevine's chief executive.
However, Anna Weston, Executive Grapevine's managing director, points out that firms have sought to mitigate the reduction in retained fees with creative and flexible fee structures. "Such is the critical nature of attracting the brightest stars even in a downturn, that financial institutions were still prepared to pay significant fees for the right people although at a lower level than in previous years," says Weston.