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In hard times, headhunters shift their focus

Finding executive talent when a company is struggling is a different challenge when the economy is bad.

Back in early October, retail giant Target Corp. said goodbye to Michael Francis, its chief marketing officer. More than five months later, as the U.S. discount chain tries to find an identity that combines the new grocery products it sells with its old touch for cheap chic, it has yet to say a public "hello" to his successor.

Although Target's sales are still relatively strong in a tough retail environment, it is not alone in struggling to make a smooth progression in executive appointments.

"There is a succession issue in retail in the U.S. and it's pretty significant," says Mary Saxon, a partner in the retail and consumer practice at Heidrick & Struggles. "There's a great deal of external recruiting and a new emphasis on leadership."

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Headhunters say that finding senior recruits for companies facing challenges is a different matter from identifying executive talent when times are good.

Bertrand Richard, head of European board practice at Spencer Stuart, says that if the company has a chance of improving, it is not a problem to find suitable candidates, but the right sort of person is different from those who would consider joining a healthier group. The sort of candidate intrigued by this role is, he says, "people who are interested in private equity-type deals."

According to Mr. Richard: "Turnaround guys are much more interested in an assignment than in a career. They take the job for three to four years, sure that in one way or another, they won't be there in five years' time: Either they'll be out or they'll have turned the business around and quit."

By contrast, someone considering joining a multinational company in normal circumstances is more interested in the chance to climb to the top of the organization, he says.

Beyond the general talk about how companies seek leadership rather than management when times are hard lie specific issues about the qualities sought in prospective recruits to a company in trouble.

Simon Hayes, head of the financial services board practice at Odgers Berndtson, says that in difficult times, companies focus on resilience. "In a market where the stresses and strains have to be greater, the ability to cope with those pressures goes up the scale," he says.

Mr. Hayes is clear that clients are looking for executives prepared to take difficult decisions. "It's relatively easy to be Mr. Nice Guy in good times but in tough times, when you have to go through the business with a red pen – well, not so many people enjoy that part of the job."

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But the idea that difficulties require someone wielding a hatchet at the top of a company is challenged by Nigel Nicholson, professor of organizational behaviour at London Business School.

"In difficult times, managers can be quite brutal. That is very counterproductive, as people won't tell them the truth and people will find hiding places to keep themselves safe," he says.

Instead, he says that the time for new executives to challenge a company and take a forceful approach is when business is going well. That is when a company should seek executives "who can make sure people do not get too cozy or complacent".

Hard times, say headhunters, change the search process as well as the qualities businesses are looking for. Both candidates and companies carry out more due diligence and are more cautious.

"Five years ago there was a view that it didn't really matter where you went in terms of financial services – compensation outweighed corporate future," Mr. Hayes says. "Now you have to be a genius or a fortune teller to see how markets will go and, more importantly, what prospective employers might look like."

Against the background of relatively high U.S. unemployment, one would think everyone would like a call from a headhunter. But Ms. Saxon says the reality is that "people are receptive to listening, but when it comes to making a commitment, the drop in home values and investment plans help create a heightened caution about making the right choice in terms of a move."

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Increased thoughtfulness among candidates and companies should, in theory, produce better appointments than those made in good times when rising tides lift all boats. Mr. Francis's successor has not been named yet, but the recruitment environment should mean that he or she is worth the wait.

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