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The demand for executive search services has helped Los Angeles-based Korn/Ferry International reach $500 million in annual revenues, making it a leader in the industry. Five years ago, Korn/Ferry opened an office in Miami, through which it coordinates all of the firm’s work outside the United States. Its U.S. staff, meanwhile, has been involved in many South Florida executive searches. Most recently, Korn/Ferry worked with the University of Miami in the search for its new president, U.S. Health and Human Services Secretary Donna Shalala, and earlier, the firm helped Miami-Dade County recruit Bryan Finnie as president and CEO of the Miami-Dade Empowerment Trust. Miami Daily Business Review staff writer Alina Matas recently talked with Bonnie Crabtree, Korn/Ferry’s managing director in Miami, about matching executives with companies and trends in CEO recruitment. Q: How do you define leadership? A: We’ve spent a lot of time over the last couple of years talking about that, because what we’re asked to do is help companies attract leadership. Part of that is defined by the client — what is leadership in their organization. And then we search for that profile. So I don’t think there is just a black and white definition of leadership because it varies depending on the client need. But we believe leadership, the human piece, is so much more important today than it ever has been. Companies used to see success as the financial piece. Today they see success as their leadership piece. Q: How much of Korn/Ferry’s business involves searches for CEO positions? A: Forty-nine percent of our work is done at the CEO, board level and executive level. Although, if we break it out functionally, by marketing, finance, manufacturing, human resources and information technology, we also do very high-level searches in those functional areas. So Korn/Ferry works vice president and above. We have a company called Future Step, which works the mid-management level, which would be manager and director level. Q: What exactly do you do when a company comes to you and says, “I want to hire you to search for our new CEO”? A: We work with the client very quickly on a job specification, a confidential job specification, which outlines the criteria of what they’re looking for. This is critical in the success of a search, because the client, us and the candidate all have to be aligned in what we’re looking for in terms of talent and experience. We also develop a target list of industries or companies or people that we’re going to go after. For instance, an Office Depot might say, “We’ve heard good things about Joe Smith, who’s with Home Depot. We’d like for you to approach him.” Or, “We really respect Home Depot as an organization. We’d like to see if there’s someone in that organization that would be appropriate.” So we do kind of a multiple industry/company/person target development and those are the people we go after. Then we spend an intense two weeks or so, three weeks, depending on how easy it is to get to the candidates, approaching them on behalf of the client on the position. We spend a tremendous amount of time on the phone and in person with interested candidates to really qualify them, and we present their background in the form of a resume and a write-up with our thoughts and recommendations. So we go from a long list of potential candidates to a short list of very qualified candidates and then the client begins to interview. It’s a very orderly process. Q: What do you do when it’s the other way around: An executive comes to you and says “I’m looking for a new job”? A: In the old days, people would fax us a resume and say, “I’m interested.” Today, we’re more sophisticated. When we get a call from a potential candidate, we ask them to go to our Web site. We ask potential candidates to go and register there, they can drop their resume in. I can pull their resume up, call them and we can look at it together and discuss it. That’s how we invite candidates, by telling them about it. We also have an e-mail technique. If we already know that they’re in our database, we can send them an invitation to go to the site and register or to review a job spec. Let’s take the [hypothetical] Office Depot example back for a minute. So we’re doing the CEO of Office Depot and I see four people in our database that I think are qualified. I can send them an e-mail and invite them to go to the client site and review that job specification. If they’re interested, then we’ll talk about it. Q: Any confidentiality concerns with all these things being online? A: The only people who can access their information online is the candidate and me as the consultant. The client can’t access it. Other candidates can’t access it. The candidates set up their own password. Q: How common is it for executives in big corporations to put themselves in the market? A: Very. Today it is. It’s much different than it was even five years ago. Q: Why is that? A: The market has been vibrant. There’s been a tremendous amount of opportunities for candidates, so candidates step up to those opportunities before we call them, because the opportunities are out there. I think the loyalty that used to be, the days when you’d go to one company and stay there five to 10 years, isn’t true anymore. Business changes too rapidly now and candidates are much more open to step up to opportunities, not wait for us to call them. Q: Other consultants have told us that demands on CEOs today are greater than ever. Do you agree? A: Yes. Two things have happened. Boards [of directors] have become much more involved. In the old model of a board, boards were usually friends or family or professors. Today, boards are other CEOs, and boards are put together differently, so they’re more demanding than the old model of a board. So, CEOs are under a lot more stringent expectations and the time to deliver is shorter. Q: What’s the biggest challenge in making a successful search? A: The biggest challenge when you begin the search is making sure that the search firm and the client are aligned on what the successful candidate should be like. If the client isn’t clear and they want some suggestions, we love to be part of their strategy in defining “What does this person look like?” And we will play a role with them in giving them suggestions on what current profiles of CEOs look like and who have been successful CEOs. Q: How do you deal with the issue of chemistry? For example, there’s a candidate who looks great on paper, but they meet in person with the board and it doesn’t click. A: We spend upfront time with the client [the hiring organization] and we develop a partnership and a relationship with the client. We don’t like to do one-off searches that are transactional. We like to meet everyone we can within the organization so that we understand the culture. We like to visit the company. Maybe we spend a day there with the executive team, so that we can match, when we go to interview the candidate, we can match that chemistry. Q: Do you have deliberations as to whether you will recommend a candidate or not? Will one of your staffers say, “My hunch is that it’s just not going to click”? A: If I have a hunch it’s not going to click, I don’t present [the candidate]. That’s what they’re paying us to do, to know them and know who’s going to fit. You’re never right 100 percent of the time, but again, the more time you spend with the client, the better feel you have for who’s going to fit in the environment, so when you bring your short list of candidates, you have a pretty good feel for who’s going to fit chemistrywise. Q: Any examples of how the chemistry issue comes into play? A: Yes, a most recent [South Florida] CEO assignment that I conducted. We met the candidate. His paperwork was perfect, matched for the job specification that we had. When I met him, I just had the instinct that this was the person to make it all happen. When the client met him, they agreed with our bet, except they were concerned that the candidate didn’t have boardroom presence. In the end, his qualifications overrode that, they brought him on board, and he’s been very successful. He’s made tremendous impact on the 90 days he’s been on board. Q: How frequently is compensation a sticking point in making a match? A: Not very, because when we start the assignment we agree with the client on what the target compensation will be. And we go to market knowing what the target compensation will be. So, let’s say, if it’s $300,000, we’re not going to look at people who’re already making $500,000. Compensation is higher than it’s ever been for CEOs, both on the cash side and on the stock-options side. The stock options piece is very significant today. Most CEOs will not go to either a private company or a public company without a fairly substantial equity piece. However, the board always makes sure that that equity is tied to results. The CEO then has to deliver. Q: How does your firm make money? A: We’re retained by the hiring company and we’re paid one-third of the first year’s cash compensation, as is the standard for retained executive search firms. Q: Is there a kind of firm or organization more likely than others to use an executive search firm? A: There are some firms that don’t use an executive search firm, and do the search entirely from within. We’ve been retained several times to present two to three external candidates that they benchmark the internal candidate against. In the end the internal candidate may get the position, but they know what’s out in the marketplace. But there are very few companies that groom totally from within. The old model would be that most CEOs grew up through the organization because they know the company better than anybody, but today companies are much more willing to go outside. I think one of the reasons is because the skills of the CEO today are different than a CEO’s skills were 10 years ago. They’re more entrepreneurial, they’re not as traditional. In the old profile, candidates would come up through finance to the CEO role. Today I think you see CEOs coming out of marketing, out of technology, there are no traditional backgrounds today. Q: More women? A: Unfortunately, no. We always, almost always, are asked by our clients to present a diversity of candidates, and we do that and we want to do that. But in the end, most corporate CEOs today are males. But, there are more opportunities today than ever for females and diversity candidates to move into that executive slot.

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