Human Capital & Careers

Job Cuts Hurt Headhunters, Too

Recruiting firm Korn/Ferry blames its declining results on the financial crisis.
Stephen TaubDecember 10, 2008

You might think that the higher jobless rates would mean more business for executive search firms, but it’s not so.

One of the biggest recruiters, Korn/Ferry International, announced that diluted earnings per share for its second fiscal quarter fell 19 percent, to $0.30 from to $0.37 a year ago. Fee revenue was $189.3 million, down from $195.9 million last year. The falloff was felt in geographies, the company said.

The company, though, indicated that it felt it dodged a bullet. “Given the difficult economic environment, we are relatively pleased with our results for the second quarter,” said CEO Gary Burnison.

In a press release, Korn/Ferry blamed the global financial crisis for a decline in executive search engagements. Making matters worse, the average fee billed per dropped by 4.5 percent. And the future is a question mark; the company warned that due to the current extraordinary economic conditions, its ability to predict new business “is more difficult than normal.”

Analysts who recently cut their earnings estimates for staffing firms said their results will continue to deteriorate until the employment environment bottoms out.

When that will be is anyone’s guess. Commenting to Reuters on the Labor Department’s November employment statistics, Robert W. Baird & Co. analyst Mark Marcon said, “As bad as the numbers were, the forward-looking elements indicate that the worst is yet to come.” He added, “We should also point out that employment numbers have been contracting on a global basis lately — this isn’t just a U.S. phenomenon.”

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