This report provides an insight into the activity of the retained search market in the UK. A broad range of operating and ownership models exist in this industry, encompassing publicly quoted international firms together with global partnerships and small highly specialised boutiques. The activity of all these firms is included in the analysis for this report. The key determinant for inclusion is the salary level at which search assignments are conducted.

The report analyses only those firms that exclusively focus on assignments for executive positions with guaranteed first year remuneration above £100k, and also non-executive roles. Some well-known recruitment companies, with specialist senior divisions, were unable to split out their work at senior levels and have therefore these companies have not been included.
The report also includes only those firms working on a retainer basis using a research methodology. This ensures that only firms of a similar profile are compared. It also captures the strategic aspects of senior search work in comparison to the more transactional approach taken for mid and junior level assignments. We believe the combination of assignment salary level, retained fee structure and research basis captures the vast majority of the market for UK senior level hires.

The report covers Executive and Non-Executive Roles, C-Suite and Director Levels. It also covers non-management roles where the salary levels permit the use of professional search.

To ensure all those included are compared on an equal basis firms are asked to provide their Net Fee Income (NFI) for the financial year 1st April 2013 to 31st March 2014. NFI includes only fees earned from retained executive search assignments billable, transacted or originated by consultants based in the UK. A portion of foreign earnings is included if it relates to work carried out by UK based consultants. Fees paid for any other value-added services e.g Leadership Consulting, Board Evaluation or Interim Management fees, advertising or expenses are excluded. The total figure is then split into two separate markets – those assignments with first year guaranteed compensation above £200k (we have also included NED roles in these tables) and those where the compensation is below this level. These figures are then expressed as a % share of the market. The total market is defined as those companies represented within the survey.

Due to the sensitive nature of this analysis, Executive Grapevine guarantees not to make public the source data provided. In the very small number of instances where firms choose not to reveal their NFI, an estimate has been used. Where estimates are listed, it is largely due to firms being unable to separately record the activity of their practice groups by industry sector. This year we received detailed disclosure from over 90% of the participants in the report, making it the most accurate map of the executive search industry ever produced. All submissions made by firms appearing in this report are pressure-tested against the Grapevine Industry Analyser™, a proprietary statistical model that has been developed over the last decade. This evaluates the information provided, and allows a consistency check with Executive Grapevine’s own predictions.

Net Fee Income Growth 2013/14

The increase in like-for-like (LFL) NFI 2013-14 of the search firms included in this report was 8.5%. This is only the second year of positive year on year NFI growth since 2009 and someway below the peak of 15% seen in 2011, but does however, represent the third year of continuous improvement in the recovery for the Search Market which began back in 2011-12.

These Net Fee Incomes of all the firms have been split into eight broad industry sectors; Global Banking & Markets incl. Asset Management, Retail Financial Services, Industrial, Consumer / Media and Healthcare, Technology & Telecoms, Professional Services, Pharmaceuticals & Life Sciences and Government & Not for Profit.

Where firms have specialist functional groups we have attempted to allocate these into an industry sector accordingly. The assignments have then been split into Board, NED & Leadership roles, with salary, or pro rata compensation at £200k plus, and a second group of Senior Management roles with compensation between £100k-£200k.

Net Fee Income By Sector

Financial Services continues to make up the bulk of the NFI covered in this report with 36.2%. The next largest sector by value is Industrial at 17.6% (down from 18.1% 2012/13) and Consumer at 17.3% (up from 16.4% last year) with Technology & Telecoms remaining unchanged at 10.5%. The smaller sectors are made up of Professional Services down 1% to 8%, Pharmaceuticals & Life Sciences down 0.3% to 5.8% and Government/NFP down 0.1% to 4.7%. While the share of each sector remains relatively static, the shift away from assignments at the Senior Management level towards the Board and Leadership level is pronounced. The graphs show how the revenue from the search firms in this report is growing fastest at the Board and Leadership Level, with the majority of assignments now being conducted here. Upwards movement in the very highest fee caps has been offset by some vigorous price based competition suggesting that the majority of Net Fee Income growth has come from the salary level (6.8%) of the assignment rather than fee margin (1.7%).

Number of Assignments

The total number of assignments covered in this report is 12,955(12,312 LFL). This represents a 15.5% (10% LFL) increase over 2012/13. The greatest proportion of these assignments continues to be found in Financial Services (4,869), closely followed by the Industrial (2,285) and Consumer (2,238) sectors. Only Professional Services and Life Sciences have seen a drop in total number of assignments in their sector, and then only at the Senior Management level.