Internet Fever Hits Global Executive Demand, According to Korn/Ferry Survey
Firm's International Index Registers Solid Third Quarter With 16 Percent Increase
NEW YORK--(BUSINESS WIRE)--Nov. 23, 1999-- Fuelled by the explosive growth of technology companies, global demand for senior executives continued at a fever pitch during the third quarter -- up 16 percent over the comparable 1998 quarter, according to the International Executive Demand Index released today by Korn/Ferry International (NYSE:KFY - news), the global executive search leader.
``The knowledge economy is responsible for the upswing in executive demand,'' said Windle B. Priem, president and chief executive officer of Korn/Ferry International. ``The insatiable need for intellectual capital to stay on top is not going to slow down anytime soon.''
Every sector of the globe recorded quarter-to-quarter double digit gains in demand for executives earning more than $150,000 annually, Priem noted. Both North America and Asia/Pacific were ahead by 20 percent, while Latin America showed a 13 percent increase and Europe climbed by 11 percent. Technology companies made strong showings in every market.
``As the Internet transforms businesses around the globe, we anticipate that technology companies will capture ever greater shares of worldwide executive demand,'' noted Priem.
North America: Technology/Internet Companies Dominate Executive Hiring
After moving into the lead in North American executive demand during the second quarter, advanced technology companies leaped ahead even further in the third quarter, seizing an 18 percent share. This was up considerably from their 10 percent position in the third quarter of 1998.
``Internet companies accounted for 34 percent of this demand,'' reported James Boone, president of Korn/Ferry in the Americas. ``And the cherry picking of top-flight executives from traditional industrial, consumer products and service industries has just begun,'' he predicted. ``The opportunity to create a new business category and gain a cyberspace fortune is an irresistible lure.''
Staking a claim for second place in North America were industrial and financial services companies, each with 14 percent. Industrial corporations moved up from 12 percent a year earlier, while financial services fell significantly from 18 percent to 14 percent. Health-care and pharmaceutical companies were third at 13 percent, rising only slightly from 12 percent in the similar 1998 quarter.
Among major functional positions, marketing and sales/advertising and public relations executives made gains during the third quarter, moving up to 22 percent of demand from 19 percent. ``The importance of branding and brand extension as companies enter the e-commerce space is driving this demand,'' said Boone.
``Today, even old-line businesses are establishing their own dot-com subsidiaries and repositioning to compete in the Internet world.''
Thirty-eight percent of demand in 1999's third quarter was for senior managers, with chief executive officers accounting for 14 percent and general managers for 24 percent. Information technology managers climbed to 10 percent of total demand vs. 6 percent last year.
Latin America: Back on Track with Expansions and Investments
Latin America experienced a strong quarter with industrial companies leading the way with 26 percent of demand, down marginally from 27 percent in the previous year. Consumer products companies were right behind, with 22 percent of demand in the 1999 third quarter. ``Most of Latin America's economies are back on track, encouraging expansions and attracting renewed investment,'' Boone said.
As in the rest of the world, advanced technology companies made strides in Latin America during the third quarter, rising to 13 percent of demand from 8 percent. ``Technology is an undeniable force throughout the globe,'' added Boone.
Financial services organizations, which have frequently topped the executive demand index in Latin America, decreased to 4 percent of overall demand, compared with 10 percent in the year-earlier quarter.
Marketing and sales/advertising and public relations executives continued to be the dominant force in the executive demand market in Latin America accounting for 28 percent. Finance and control also ranked high, at 21 percent, the same as one year ago. ``This is a signal that companies continue to be tightly focused on financial performance,'' Boone commented.
General managers registered a drop in the quarter to 17 percent from 21 percent, while manufacturing, engineering and R&D executives rebounded to 15 percent from 10 percent.
Europe: Industrial, Financial Services Still on Top But Technology Moves Up
Financial services not only stayed on top but increased its share of European executive demand during the third quarter, moving up to 25 percent, a gain over last year's third quarter with 23 percent.
According to Michael Bekins, president of Korn/Ferry Europe: ``There are several factors contributing to this surge, including continuing consolidation, the euro and the growing impact of technology. Moreover, the growth of Internet-based banking services has pushed demand up even further over the last 12 months.''
Industrial companies follow with 21 percent of demand.
Advanced technology more than doubled its share of market to 11 percent, up from 5 percent in the third quarter of 1998. ``The impact of technology across the business spectrum is fueling the need for technology-based services, in turn causing a surge in demand among software, telecommunications, electronics and IT services companies,'' Bekins believes.
Consumer products companies dipped to 11 percent of demand in the quarter from 14 percent in the similar 1998 period.
Marketing and sales/advertising and public relations executives continue to be the most sought after executives in Europe with 28 percent of demand, up from 26 percent in the year-earlier quarter. General managers held on to second place with 25 percent of demand, a drop from 26 percent in 1998's second quarter.
Chief executive officers moved up to 5 percent of demand, the highest level since 1996, while finance and control executives rose to 20 percent from 17 percent a year earlier.
Asia/Pacific: Recruiting Executives to Build for the Future
Asia/Pacific followed the second quarter's stunning 40 percent jump in executive demand with a solid 20 percent gain during the third quarter. With a 21 percent share of demand, advanced technology companies ranked first in Asia/Pacific, although down from 23 percent in the year-earlier period
``Japan's information technology services market is predicted to grow by 26 percent over the next five years, while the number of Internet users in China is potentially 27 million in two years,'' pointed out Stephen Romaine, president of Korn/Ferry in Asia/Pacific. ``Companies are already preparing for these enormous market opportunities.''
Industrial companies logged 19 percent of Asia/Pacific executive demand in third-quarter 1999, a sizable gain from 12 percent in the comparable 1998 period.
Demand from financial services organizations fell in the quarter to only 10 percent of demand, less than half the year-earlier share of 25 percent. ``Financial services organizations have been very active in Asia/Pacific executive demand in previous years, but they are now consolidating -- reducing the need for new hiring,'' observed Romaine.
Marketing and sales/advertising and public relations executives were also greatly sought after in Asia/Pacific with 24 percent of demand vs. 26 percent in 1998's third quarter.
General management retained second place but experienced a serious drop to 22 percent from 35 percent. However, demand for chief executive officers escalated, moving up to 7 percent from 5 percent.
Another major gain in functional demand came in the manufacturing/engineering/R&D sector, which climbed to 13 percent from only 5 percent in the similar 1998 quarter. Demand also doubled for human resource and administrative executives, soaring to 10 percent from 5 percent. ``These are all positive signs that Asia/Pacific is readying for growth and expansion in the upcoming year,'' commented Romaine.
The Korn/Ferry Index: More Than 4,000 Companies Surveyed
The International Executive Demand Index is based on a quarterly survey of more than 4,000 Korn/Ferry clients, which are among the world's largest corporations and non-profit organizations -- including government agencies, universities and cultural institutions.
