Search Firm Takes Unique Client: Itself
Headhunters aren’t the type to let others see them sweat, but Scott Kingdom admits now that the assignment he got at the start of the year had him “really wound up.”
The board of a leading professional services firm wanted Kingdom to find the best candidate to run the Los Angeles-based company. A recruiter for 13 years, Kingdom had successfully placed dozens of chief executives. But this was different.
The client was Los Angeles-based Korn/Ferry International, the world’s No. 1 executive search firm and Kingdom’s employer. As manager of Korn/Ferry’s Midwest practice out of Chicago, Kingdom would be hunting for his boss--a high-stakes test not only for him but for the 32-year-old company.
“Here is the largest search firm in the world doing its own search--a great target for criticism,” Kingdom said. “You screw this up, what are they going to say?”
While many searches are conducted in secret, Korn/Ferry added pressure to the effort by going public with its decision to seek a new chief executive, inviting the scrutiny not only of its intensely competitive rivals, but Wall Street analysts and, most important, clients.
“This was a search that we couldn’t fail on,” said Craig Dunlevie, who, as head of Korn/Ferry’s global professional services practice, played a key role.
“It was a high-visibility search,” Dunlevie said. “It was a very high-risk search.”
Defying speculation and tradition, Korn/Ferry chose industry outsider Paul C. Reilly, an executive of the accounting firm KPMG International. It was a move that was widely viewed as a shrewd step toward the diversification of the business.
Reilly, 47, who began with Korn/Ferry last month, is “the candidate we really wanted,” Dunlevie said.
While by no means an ordinary assignment for Kingdom and the global crew he handpicked for the job, the search is a study in modern corporate recruiting, a process that technological advancements have shifted into overdrive. The hunt for Reilly combined old-fashioned stealth meetings in airport conference rooms and instantaneous virtual meetings with colleagues and candidates around the globe.
It began almost as soon as Korn/Ferry’s then-Chief Executive Windle B. Priem announced at a board meeting in January that he was planning to return to recruiting full time. All eyes turned to Kingdom, who attended the meeting in Los Angeles as a member of the board. Flattered, but nervous about the assignment, Kingdom, 42, left the meeting and called his wife to say he wouldn’t be home much for a while.
“I probably have never been more stressed out,” he said. “There was just this overwhelming sense of obligation and responsibility.”
Kingdom began by putting together a group of 10 associates, including representatives from offices in Latin America, Europe and Asia. They met by telephone for a couple of weeks and came up with a five-page job description that he presented to the board. With its approval, the hunt was on.
While the board screened internal candidates, Kingdom pursued outsiders. Looking outside the industry may be novel for recruiting firms. But it was a necessity for new-economy companies and is growing more common in other sectors.
“You see less reliance on industry experience and more on horsepower,” Kingdom said.
Ten years ago, Kingdom might have initiated a search by telephoning individual colleagues for ideas. Today, he can e-mail job specifications to every Korn/Ferry recruiter whose expertise is in the desired field or job.
“It doesn’t matter where you sit,” Kingdom said. “We’ve got expertise all over the world. From the beginning, you have the entire muscle of the organization.”
Recruiters called people they knew and forwarded the names of those who were interested to Kingdom, who spent weeks talking to them by telephone and flying to a dozen cities for meetings.
Dunlevie, who manages Korn/Ferry’s regional office in Atlanta, had been developing a relationship with Reilly through calls over a couple of years, believed this might be the opportunity that would finally lure him away from KPMG.
“He was one of the first guys that I thought of,” said Dunlevie, who ultimately queried 25 candidates from professional consulting firms.
But, as Reilly recalled the conversation, Dunlevie was a bit coy at first, beginning by talking about an opening at another firm in Florida. Reilly wasn’t interested.
Dunlevie asked the pivotal follow-up: What would make him consider leaving KPMG?
“I said it would have to be in a global firm in the service industry and in an industry that was ripe for change,” Reilly said, adding that the company should have “a great brand” and offer an opportunity to “reposition it and create a clear industry leader.”
That’s when Dunlevie told Reilly he had just the job for him and described Korn/Ferry in general terms--a top-drawer, multinational public company in a hot industry--without identifying the firm. “You don’t name the company until you qualify some level of interest and some kind of fit,” Dunlevie said.
Reilly was interested.
“I said, ‘Paul, it’s actually Korn/Ferry International--my company,’ ” Dunlevie said. “ ‘I’m looking for my ultimate boss.’ ”
The two arranged a three-hour meeting in a private conference room at Atlanta’s Hartsfield Airport, and both men agreed Reilly should move forward. Dunlevie passed him to Kingdom, who opened a two-month courtship with a 45-minute meeting at La Guardia Airport.
They met again about a week later, and then talked by telephone, at first once a week, then twice a week, then almost daily. As Reilly’s appreciation for the recruiting business grew, he realized that Kingdom was screening him not only for his job skills but for how well he would fit into the Korn/Ferry culture.
By March, Reilly was one of three outside finalists whose names were presented to the board. The board’s search committee wanted to meet with all three--all “leaders in their firms with brutal schedules,” Kingdom said. “It was a pretty good logistical challenge.”
The Search Is Similar to Dating
Reilly, who was still circling the globe for KPMG, had interviews with six board members--three on the West Coast, one in Chicago, one in New York City and one in Pittsburgh. With three candidates in the running, Kingdom was fielding calls from board members each time an interview ended.
“Not unlike dating, you start to figure out who you are starting to get attracted to,” Kingdom said. “As the meetings went on, we got more and more interested in Paul.”
The board wanted Reilly, setting in motion the riskiest part of any recruitment effort--checking references. A finalist has been selected but no formal offer has been made--and now others must be let in on the secret. Time was of the essence as Kingdom began making telephone calls to build a sort of psychological profile of Reilly.
“It’s a very, very tricky part of the search,” Kingdom said. “You try to do it quickly and in such a way that you don’t jeopardize the candidate.”
Reilly took several colleagues, supervisors and subordinates into his confidence, giving them permission to answer Kingdom’s questions. As a rule, Kingdom said he moves fast but keeps talking to people until he hears the same stories over and over--and until he hears something negative.
“Everyone is going to make somebody angry along the way,” Kingdom said.
In this case, he said, the references made him nervous because he couldn’t find Reilly’s black mark. Within a week, Kingdom had talked to half a dozen people, developing the profile of an accomplished and high-energy leader with a unique command of global business strategies.
A special board meeting was called. Kingdom presented his findings, and the board told him to develop an offer that would get Reilly.
The problem was, Reilly, who oversaw international operations for KPMG, was again out of the country and scheduled to return just in time for a weeklong strategy session with KPMG top executives at New York’s Waldorf Astoria Hotel. Reilly was scheduled to make a series of presentations to key leadership groups--a situation Kingdom feared would jeopardize Korn/Ferry’s chances of getting their man.
“We didn’t think we could wait any longer,” Kingdom said. “We drove for finality before his meetings started.”
The effort culminated in a marathon bargaining session at the Waldorf on the Sunday before KPMG’s meetings were to start.
Like any executive, Reilly has been involved in hiring over the years at KPMG, but he said his experience as the target of a high-powered Korn/Ferry recruitment effort gave him new insights into the search business.
“My view was it was a good industry but just a lot of sales-oriented people who went out and made calls,” Reilly said. “What I didn’t realize was the depth of professionalism in the business and just how smart the people are.
“It’s what actually made it more interesting to me as I went through the process. It changed my view of the industry and gave me a vision of what it could be.”
The process ended with a flurry of faxes and telephone calls between Reilly and Kingdom in New York and Korn/Ferry officials in Los Angeles. A deal was struck at midnight--just in time for Reilly to begin what he called “the longest week of my life.”
Kingdom could have gone home the next morning. But, knowing Reilly would be a major loss for KPMG, he decided to stay on.
“I knew from experience this could be a battle,” he said.
Instead of making the presentations he had scheduled, Reilly spent the week giving resignation speeches. At the end of each day of meetings, Reilly found Kingdom waiting for him.
“Scott just kept coming back every morning and every evening, and making sure I was still coming,” Reilly said. “He just never left.”
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Looking for a Rebound
Korn/Ferry stock peaked at $40 but is now trading close to its initial offering price.
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Korn/Ferry, monthly closes and latest on the NYSE
IPO price in February 1999: $14.00
Friday: $14.37
Source: Bloomberg News
