Futurestep was born out of a strategic review conducted five years ago at Korn/Ferry, the world's largest executive search business, explains Anat Arkin
People Management (article updated June 2002), 28 Oct 1999
Futurestep was born out of a strategic review conducted five years ago at Korn/Ferry, the world's largest executive search business. The review, which aimed to identify long-term trends affecting the industry, found a major business opportunity: there was a market for executives earning between £50,000 and £100,000, which clients said was poorly served.
Traditional executive search is too expensive and time-consuming for this group of managers. According to Ken Brotherston, UK managing director of Futurestep, it doesn't make commercial sense for either the client or for executive search firms such as Korn/Ferry to use standard methods to find these people.
Yet there was clearly a gap in the market. It was also predicted that recruitment in this salary bracket would be even tougher in future as demographic trends and tightening labour markets on both sides of the Atlantic were leading to fewer candidates aged between 25 and 40.
Korn/Ferry's strategic review team was starting to look at the Internet, which presented some real threats to the executive search industry. Brotherston points out that because employers could find candidates more easily, they valued the people-finding services of recruitment consultancies less. On the other hand, he says, clients still valued Korn/Ferry's abilities in assessing people and "bringing them to the table". And so Futurestep was born.
Regular updates
Unlike traditional databases of jobseekers, Internet-based systems such as Futurestep are able to overcome the persistent problem of obsolescence by drawing candidates back to the site regularly to update their details. Futurestep also offers users a range of services, from advice on career management through to articles from the Wall Street Journal and other publications. Executives who are changing jobs and are offered stock options for the first time, for example, can obtain information from Futurestep that will help them to decide whether or not they are being offered a good deal.
First-time visitors to the site are drawn in by a questionnaire that gives feedback on traits such as communication style and decision-making. And, at the end of a fairly lengthy registration process, jobseekers are advised on the kind of package they should expect in their next job.
This isn't simply a gimmick to attract more registrations - the information that is captured about executives' styles of management goes to the heart of Futurestep's approach. "People fail at senior and middle management levels not because they can't do the job, but because they don't fit in," Brotherston argues. So every time a vacancy is placed with Futurestep, the database is searched for "fit" with the culture of the client company, as well as with the skills and experience required by the job in question.
Assessing the shortlist
Futurestep's software will then produce a list of 20 to 30 names. This is passed to a traditional executive search consultant, who will go through the usual processes to produce a shortlist of candidates. As a result, Futurestep has reduced the time it takes to fill a typical vacancy through search and selection from an average of three months down to one.
Korn/Ferry's investment in Futurestep has been massive - tens of millions of dollars have been spent on marketing alone. It might seem strange, therefore, that the service has been set up as a separate business, at times competing with Korn/Ferry both in the US (where it was launched a year ago) and in this country.
Brotherston believes that this was inevitable given the different growth patterns of the two enterprises. Futurestep is hoping for exponential growth in year one and 80 or 90 per cent over the next few years, while Korn/Ferry is expecting to grow by 10 to 20 per cent, which would be in line with the executive search market overall.
In practice, the two firms do work closely together, each marketing the other's services and often making joint presentations to clients. Although a certain amount of "cannibalism" is taking place, Brotherston admits, the market is large enough for it not to matter too much.
Realising the possibilities
So far, Futurestep's greatest difficulties have been internal. There is no big rival in the UK yet, and only a couple of US executive search firms are offering a similar product. Ironically, the biggest problem that Brotherston admits to is in recruiting its own consultants. "A lot of traditional consultants simply don't 'get' [the Internet]. Frankly, it's been a little disappointing," he says.
Another problem that has dogged Futurestep since its UK launch is inertia. Plenty of clients say they like the sound of what's on offer, but persuading them to switch to an Internet-based service is proving tough. Brotherston concedes that it takes nerve to keep "sticking in there" while waiting for the market to catch up.
Despite the doubts expressed about the strength of this market, Brotherston is bullish. The company is set to expand into a range of new markets in the next few years, including Australia, continental Europe, Hong Kong and Singapore. In five years' time, he believes, Futurestep could "conceivably" grow into a $1 billion business worldwide.
"The executive search industry is fat, dumb and happy," he says. "It needs a bit of a shake-up."
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