After operating in the GCC Market for over the last 16+ years, we find continuously that our clients and candidates need clarification on what both are and why you would adopt one model over the other.
Mainly client leans towards contingency because of the following:
1. Price (of course)
2. A fee is only applicable if a candidate is recruited.
3. They believe it is a faster process (arguable)
As we want to educate on the benefits of an executive search model, let's start with the brief origin of the executive search.
In the United States
The executive search business began in the United States in 1926; Thorndike Deland (founder of and a partner in Thorndike Deland Associates) launched a company that charged a $200 retainer to find expert buyers for New York department stores, which then expanded across many of the nation's major retailing companies.
It was not until after the second world war that executive search gathered speed as part of the rapidly growing management consultancy business. It soon became evident to search for consultants at McKinsey and Booz Allen Hamilton that the service might best provide this as a separate business.
There was an inherent conflict of interest between recommending management change and then offering, for a fee, to fill the positions created. Furthermore, as large management consultancies took on more and more firms as clients, more firms became off-limits as headhunting grounds.
Like management consultancies, large accounting firms also built search practices. Still, they also faced potential conflicts with their audit services and suffered from many firms becoming off-limits for headhunting. Several of today's search firms have their roots in accountancy: Lester Korn and Richard Ferry left what is now KPMG to set up Korn/Ferry, and Russell Reynolds came from Price Waterhouse (now merged with Coopers & Lybrand as PricewaterhouseCoopers).
Executive search in Europe began some 15–20 years later. The first American search firm to arrive was Spencer Stuart, which opened an office in London in 1961 and Paris three years later. In the search business, it is often called the "Grandfather of Search" in Europe since it played the same "training ground" role as McKinsey and Booz Allen in the United States. Egon Zehnder left Spencer Stuart to found the first purely European search firm in Zurich in 1964, adding offices in Brussels, Paris, and London by the decade's end. London was the starting point for many firms, which many American corporations attracted with offices there.
This series aims to educate on the benefits of an executive search model and where it serves a real purpose to companies over a contingent model. So keep an eye on our blog page and LinkedIn page to get more information about the executive search and all of the work Binding Partnerships does within the financial markets in the GCC region.