DAVID L. WEISS : A World of Opportunity : Growing Executive-Search Firm Has Global Aspirations

As the world economy heats up, a small Los Angeles executive-search firm with an office in Newport Beach is setting its sights across the ocean.

David L. Weiss is managing director of the Newport Beach office of Mitchell, Larsen & Zilliacus and one of four owners of the firm, which has made a name for itself as a consultant to some of the largest Japanese automobile manufacturers.

Founded in 1981, the company’s U.S. operations do about $3 million in business a year. In addition, the firm in December opened an office in Tokyo in a new joint venture with a Japanese search firm.

In an attempt to beef up its international presence with a minimum of financial investment, the company in August joined an international consortium of executive search firms called Transearch International, which has offices in 22 countries, including Hungary and the Soviet Union.

Weiss says the firm plans to tap a large pool of Eastern European refugees in the United States who have acquired entrepreneurial and management skills and now are willing to return to their homelands to lend a hand in their economic rebirth, Weiss said.

He said he also expects that, within the next five years, the aging of the Japanese population will create a severe shortage of middle managers, forcing more and more Japanese companies to turn to professionals in the executive search business.

In a recent interview with Times staff writer Leslie Berkman, Weiss talked about how overseas companies search for executives and how his company plans to take advantage of the push for economic growth in Eastern Europe.

Q. I understand that your international search business is expanding. Why is that?

A. It is part of a trend that started 10 years ago and has accelerated in the last five years. All of the major U.S. search firms are in Europe. In turn, there are a number of international firms based in Europe that have come into the United States. So there has been growth in both directions.

Q. How much of your firm’s business now is international?

A. More than half of our clients are international firms. We are either doing work in the United States for companies from Sweden, Finland, Switzerland or elsewhere that are establishing a presence here, or we are doing work for our American clients overseas.

Q. What is causing this trend?

A. The world is becoming globalized, as my Japanese clients call it. To be effective in business today, you have to be effective internationally. The events in Eastern Europe, for example, will create a tremendous demand for executives there.

Q. Why do you think so?

A. Well, I think that with the new governments there urging economic growth, the first thing they are going to discover is that they have no executives. The people who have been running their businesses are bureaucrats.

Q. Why would they want somebody from the United States to run their companies who might not know their business culture?

A. What you have is a great pool of immigrants here from Hungary, Poland and Czechoslovakia as a result of their suppressed revolutions over the last few years. And you have quite a few Russians here as well. They would be willing to return to their homelands for limited assignments now that immigration has opened up.

Q. Were these people educated in Eastern Europe?

A. Yes. Typically the ones that got out were the engineers, the scientists, the senior managers who were replaced by Communist bureaucrats. They have good entrepreneurial spirit and many have started their own businesses in the United States. Also, many have joined major corporations and moved up in the ranks. They have learned American management methods and technology and many have gone to graduate schools here. We believe they form a pool of talent that can he tapped, and we already have moved some of them from here to Europe.

Q. What will be their assignments?

A. They will be sent to Eastern Europe for three to five years. They will train their successors, who will be natives of those countries. We find that most people, even given the change in government, are not willing to go back there on a permanent basis.

Q. I understand that you have done a lot of work with Japan in the past.

A. Starting in 1979, I probably spent 60% of my time working with overseas clients, but mostly the Japanese. I help them to staff their U.S. subsidiaries with Americans. What the Japanese are looking for is an American search firm that understands enough about the Japanese culture that it can find Americans who will be able to work with them. I’ve staffed two of the Japanese auto assembly plants here with the first cadre of American executives. And I’ve helped staff four or five research and development organizations for them in the U.S.

Q. Why did you recently open an office in Tokyo?

A. First of all, we expect the executive search business to boom in Japan in the next five years because of the aging of the Japanese populace and the resulting shortage of middle-management people in a fast-diversifying economy.

Also, if you have an office in Tokyo, you simply are able to learn about what is going to happen in the United States a lot sooner that if you are here waiting for them to call you. We try to take a proactive stance. Also, having an office in Tokyo helps you to establish the long-term relationships that are necessary to do business with the Japanese. I called on one of the auto companies for five years before I received an assignment.

Q. What company was that?

A. Toyota.

Q. Do you also place executives in Tokyo?

A. Yes. In December, we established a joint venture in Tokyo with a Japanese search firm whose clients have included American, English, French and Dutch companies starting Japanese subsidiaries as well as start-up Japanese companies, especially in the field of electronics.

In staffing foreign subsidiaries in Japan, we mostly are looking for expatriates who have lived in Japan and speak Japanese. There is a relatively small but growing pool of non-Japanese managers in Japan who move from company to company. In the United States it is relatively easy to find job candidates. In Japan there are many more assignments than there are candidates.

Q. Is there a change occurring in the Japanese business culture? There was a time when Japanese workers stayed with one employer for life.

A. The tradition of lifetime employment is rapidly decaying in Japan. Some of the new companies have no tradition of lifetime employment. The use of search companies is just beginning in Japan, starting with the new electronics firms. I’d say today a third of the business of our Tokyo office involves working for Japanese companies that are looking to hire Japanese executives. Five years ago that would have been 2%.

Q. Do Japanese recruit Americans for their companies in Japan?

A. Japanese companies have looked for Americans in Japan who can help interpret our culture for them before they do a venture here or to act as a kind of liaison between them and Americans. Japanese also are looking to groom their own American managers. The Japanese banks are actively recruiting from graduate schools in the United States people with degrees in international business.

Q. If the aging of the Japanese population creates a management shortage in that country, what will be the result?

A. They will begin to do just what we do in the United States. They will begin to use search services routinely.

Q. And rob executives from each other?

A. Rob from each other. Exactly.

Q. How do you do business in other countries?

A. We are part of a group called Transearch International, a corporation owned by search firms based in 22 countries. It provides a mechanism for us to make referrals to member firms who can help our clients find executives in other countries. We have a fee-splitting arrangement among the member firms. Tokyo is the only foreign office in which our firm has an ownership interest.

But Transearch is growing. To take advantage of potential business in Eastern Europe, it recently opened an office in Budapest and soon will be opening others in Prague and Warsaw. In fact, because of the international reputation of the alliance, we are considering changing the name of our own company to Transearch America.

Q. How much international business do you do for the U.S. subsidiaries of foreign companies?

A. In the United States, we serve Japanese, Dutch, Finnish, English, French and Mexican companies--you name it. For a long time the United States has been a great place for foreign countries to invest. And that is going to continue. We are still the most secure and the largest market in the world.

Q. Do you get criticism that you are draining talent away from U.S. companies to all of these international firms?

A. That used to bother me a lot. But I quickly concluded that foreign companies were moving ahead in technology and providing products at a higher quality level and at a superior price. It helps the world and it helps us really. For instance, I staffed a Nissan auto plant in Tennessee in 1980 with Americans. Since then a lot of supplier companies have moved to the area, including American suppliers. Ultimately, probably 30,000 jobs were created because that plant exists in the United States. Otherwise, all of those jobs would have been in Japan.

Q. Does your firm need any special expertise to deal in an international market?

A. I think one needs a certain degree of sensitivity. We haven’t been trained in college for this job. Most of us have spent 15 to 20 years in industry, often serving as chief operating officer for at least a medium-size company before going into this business. And most of us had some sort of exposure to international activities before we came here. One of the things you need in this business is an ability to understand different cultural requirements.

Q. What would be an example of such a cultural difference?

A. The Japanese business culture requires someone who can be relied upon to make decisions within certain policy limits. But the Dutch look for an executive who is more willing to accept specific direction.

Q. So when you are looking for Americans to man foreign subsidiaries in the United States, you have to find executives who will get along with their culture?

A. You look for something in the individual, or in his experience or his education, or something that makes you believe the person can survive in that culture. There is no point bringing someone into a situation where he or she cannot succeed.

Q. Do you ever work for foreign companies that want to hire people who can teach them the U.S. approach to management?

A. The Japanese are trying to hire Americans who can help them develop products that will be attractive to the U.S. consumer. With our company’s help, Nissan recently hired an American with a doctorate in cultural anthropology to direct its product development strategy in the United States.

Q. How long did it take you to find him for the job?

A. That search took nearly a year. I looked in universities, consulting companies and other auto companies. I also looked in advertising agencies, in market research organizations, anywhere there was someone you could loosely describe as a consumerist or an expert in human behavior. It was a very long and difficult assignment.

Q. When you recruit Americans to positions in foreign-owned subsidiaries, do they express concern that they may not have equal opportunity for career advancement?

A. Well, there is some concern about that. It depends upon the company you are working with. For instance, any American who would go to work for Honda would find his horizons severely limited. Basically, all of Honda’s senior management is Japanese.

Q. Do firms in other countries try to prevent discrimination against minorities and women in hiring practices?

A. It varies by country. But in most countries there is much less concern about those things than in the United States. Certainly in Japan you can ask applicants anything you want and it is quite clear that the client has very specific criteria.

In most Pacific Rim countries, women are definitely discriminated against in employment. But discrimination against older workers is unheard of. Usually the companies there are looking for someone who is older. It is generally not an issue of finding somebody who is 40 years old. Rather, they say, “don’t bring me anyone who is under 50.” It is sort of a reverse problem there.

Q. Is it difficult then for a black or female American to land one of these overseas jobs?

A. Yes.

Q. Is it also difficult for such people to work for a foreign subsidiary here in the U.S.?

A. Any search firm carefully explains to its overseas clients that the rules in the United States are the way they are and you have to live with those rules. Discrimination against women and minorities until recently has been a major issue among the Japanese business people in the United States. I think Japanese have become sophisticated enough to appreciate today that they can’t apply their rules; for instance, that all women serve tea. That doesn’t work in the United States. Today they understand that. Five years ago they didn’t.