In a surprising turnaround for Korn/Ferry International, the Century City-based executive search firm announced last week that it had swung to a profit after steep losses the previous year.
What happened? After all, unemployment numbers are high and staying that way.
Korn/Ferry explained that the kind of work it does – upper-end consulting work and executive headhunting – is picking up among major corporations across the nation and world.
Chief Executive Gary Burnison isn’t ready to declare victory over the economic downturn yet. But, he said, attitudes are improving.
“The jobs market is difficult. Just about any CEO is trying to figure out what the new normal is,” Burnison said. “But the mood of CEOs is much better than it was a year ago.”
Korn/Ferry last week reported net income of $7.9 million for the third quarter, compared with a net loss of $22.4 million a year earlier – a better performance than analysts expected. Total revenue rose 6 percent to $153 million, with revenue from recruiting fees up 8 percent. That shows corporations are stepping up searches for top executives.
More corporate boards are calling for consultation on issues such as corporate governance, executive compensation and succession planning. Burnison said the company’s leadership consultancy business grew fourfold during the last year.
In terms of recruiting, Korn/Ferry has seen strength in the life sciences, health care and industrial markets, while the company’s Asia Pacific business has been growing.
Analysts said Korn/Ferry is likely to see a boost in business from the increase in turnover among chief executives. Now that companies have weathered what they perceive as the worst of the storm, they’re ready to change captains and head in new directions. Also, mergers and acquisitions activity is picking up, another factor that may lead to more CEO searches.
According to Chicago outplacement consultancy Challenger Gray & Christmas Inc., 132 chief executives left office in February, a 48 percent increase from January’s 89 departures. February’s number was the highest since September 2008.
“Boards don’t make those changes when business is bad,” said Tobey Sommer, a director at Atlanta corporate and investment banking firm Suntrust Robinson Humphrey. “The first half of last year, and the back half of 2008, was horrible because boards stopped making changes.”
The trends point to a stronger job market. A survey of more than 18,000 U.S. employers released last week by Milwaukee staffing firm Manpower Inc. predicts employers will increase hiring by a seasonally adjusted 5 percent.
Korn/Ferry stock jumped slightly from $18 to about $18.25 after the company announced earnings.
