Search firm seeks cultural advantage

Laurent de Meeûs, a financial services consultant at the search firm in London, says: 'There have been no cases on a worldwide basis of people being fired, and that goes for support staff too.'

It is not that the firm has found some magic formula to ward off the hiring downturn that has so badly affected Korn/Ferry, Heidrick & Struggles and others it has suffered too. Egon Zehnder's partners have decided to take less pay, de Meeûs says.

Instead, Egon Zehnder believes its unusual structure and approach to its work are enabling it to get through a difficult period relatively unscathed.

Jonathan Skan, another of the firm's London-based financial services consultants, says that Egon Zehnder has a policy of expanding only by hiring individuals, rather than by buying other companies, as do many of its rivals. As a result, it took on fewer staff than other firms in the boom conditions of last year and is now feeling less pain as demand contracts.

The firm's turnover reached $290m (€316m) in 2000, putting it in the global top five, according to the Economist Intelligence Unit. Financial services accounts for about 25% of Egon Zehnder's turnover.

Skan says that the firm has been reinforcing its financial services teams in a number of locations in the past year.

The main drive has been in New York and Boston, where the firm has traditionally not been at its strongest.

Founded in Switzerland in 1964, Egon Zehnder is the only non-American firm in the global top five. 'We come from behind in the US,' says de Meeûs.

Continental Europe is another strong area of focus. The firm has beefed up its Frankfurt office, opened one in Stuttgart and is planning to strengthen its activities in Lyon and Berlin.

Egon Zehnder makes much of what it regards as its unique culture. This fosters a collegiate approach through its unusual remuneration policy, by which staff are not paid any commission for placing a candidate.

Skan says: 'There is a huge emphasis on peer and client feedback in deciding remuneration of consultants. We are very much a team - there is no star culture.'

He adds that the biggest sin at Egon Zehnder is failing to respond to a call from a colleague in Munich, say, or seeking laurels where they are not deserved.

Nancy Garrison Jenn, a recruitment industry analyst, believes this approach is proving successful. She says that many other firms are hampered by their commission-based system, one which deters consultants in different offices from helping each other.

'As cross-border hiring is so common, firms simply have to find a way of persuading consultants to co-operate,' she says.

Egon Zehnder also likes to stress what it regards as the high calibre of its staff. The CVs of its consultants are studded with MBAs and blue-chip consulting backgrounds, and its financial services brochure states that every one of them has a postgraduate qualification. Skan adds that he went through 26 interviews before getting into the firm.

This aspect of Egon Zehnder does not endear it to everyone. A recruiter at another firm, who has less than illustrious academic qualifications, says: 'You do not need a huge brain to be a successful headhunter. It's more about gut feeling.'

Skan is unrepentant. 'We like people to be able to operate a wide variety of assignments. It is much easier to do this if you have an MBA and 10 years' business experience,' he says.

One area of work where Egon Zehnder consultants are increasingly busy is management appraisal, which provides about 15% of the firm's turnover. 'We have a robust methodology for appraising teams,' says Skan.

Projects include merger integration, helping new chief executives understand the teams around them quickly, and advising on cultural change. Many appraisals are done for private equity and venture capital firms during pre-acquisition due diligence.

Egon Zehnder is also unusual in the way it charges for its headhunting services. It has no time for the model followed by many firms, which bases remuneration on a percentage of the successful candidate's first-year pay package. Instead, Egon Zehnder charges a flat fee that is agreed in advance and is not contingent on the outcome.

'Our structure removes any ambiguity. We can sit in the middle of a long negotiation and be independent,' says Skan.

But de Meeûs adds that this policy puzzles some prospective clients, particularly US firms, which think it could reduce the incentive for a headhunter to close a deal.

The firm needs to get its message across that this fee structure actually increases its motivation, says Skan, as it is interested in long-term relationships with clients rather than one-off hirings.

Like other firms, Egon Zehnder has been focusing this year on areas of business that have been largely spared the economic downturn, such as asset management and retail financial services. Skan says that in some other areas, such as investment banking, there has been noticeable downward pressure on fees.

The firm must also regret the demise of the dot-coms, as it has built a particularly strong e-commerce practice.

But Skan says this area is alive and well, maintained by old economy companies which still see the long-term value of the internet.