The Association of Executive Search Consultants (AESC) recently sat down with CDS, an AESC member retained executive search firm from Japan, to discuss executive search industry changes and the outlook for executive job search.

AESC: Firstly, we’d like to offer congratulations to CDS from everyone at the AESC as you celebrate your 15th birthday this year. Can you tell us what the company did to mark this milestone?

Thank you! First we wanted to express our deep appreciation to our clients, so last month we held a cocktail reception at our recently renovated offices in Tokyo. About 70 key client contacts attended, along with our Asian regional management team, including CDS co-founders Simon Childs and Jason Dacaret. And of course we also wanted to celebrate with our employees, so the following night we had a black-tie dinner for staff and colleagues within the Recruit Group, our parent organization.

AESC: Can you tell us a little bit of the history of the firm? How did it start and how quickly have you grown?

CDS was established in 1998 as the first Japan-based boutique to offer a comprehensive retained search product. Search was a new concept for many clients then, and in order to position ourselves and compete with the global search firms we offered some variations on the classic retained search model, while maintaining an absolute focus on quality.  As well as working on the top positions, we also took on strategic mid-management positions where that made business sense. A good example would be Google Japan, where we completed their first C-level searches, including the Country Manager, as well as a number of key account executive roles. In fact, the majority of their first 20 hires in Japan were introduced by CDS. Through a combination of that kind of market-entry support and repeat business from established clients, we’ve been able to expand from our original focus in technology to cover all major industry areas – consumer, healthcare, manufacturing, financial services, and professional services – as well as functional specializations like legal and compliance. We also added an office in Osaka to support clients in the western part of Japan.

AESC: What are the major changes that you have noticed in the executive search industry in the past 15 years?

We see more variations of the search model. One that is popular in Japan – for searches that would probably be done on contingency in other markets, but are too difficult here – is a two-stage approach, with a relatively modest fee up-front and the balance on success. Clients find this an effective way to secure the necessary focus and resources for a search on mid-level roles.  We have seen many companies, particularly in finance and technology, build strong internal executive search teams. They are naturally motivated to use external search partners for only the most senior, sensitive, and hard-to-fill roles.  Finally, we see an increasing awareness among Japanese companies that retained search is an option to fill key roles and attract global talent to spearhead overseas growth, rather than relying solely on internal resources as in the past. The disappearance of the lifetime employment mentality and the need to become more competitive globally has helped drive this.

AESC: I’m interested to know what your outlook for Japan is as we head into the 2nd half of 2013?

This is a particularly challenging time to make predictions on the Japanese economy, as the Abe administration has embarked on an aggressive but untested campaign to shake things up after two decades in the doldrums. For our foreign clients, the recent plunge in the yen is a two-edged sword – painful for those who pay for their product or material imports, and translate their profits, in stronger dollars and euros, but a positive for new market entrants who pay start-up costs in Japan in weaker yen. In any case, the market for search services remains robust. The shortage of bilingual executive talent, in which we specialize, remains chronic. Meanwhile demand for that talent has expanded as many Japanese companies make a strategic shift toward globalization, meaning they need to recruit bilingual executives as well. Healthcare remains the strongest source of demand, where clients are offering large multi-position retainers to fill critical roles. Consumer goods, technology, manufacturing, and professional services all offer significant opportunities as well. We are even seeing signs of life in financial services, where retained mandates have been in extremely short supply since what Japanese call the Lehman Shock in 2008.

AESC: What do you think the outlook is for the broader Asia Pacific region for the remainder of 2013?

Although the Chinese economic juggernaut may be slowing somewhat, we continue to see Asia as a rich source of demand for quality search services, and with our partners in the Recruit Group we believe CDS is well positioned to support both Japanese companies and other MNCs across the region. Our roots lie in Asia, and through acquisitions and organic growth our Group has built strengths across the region. That said, competition is intensifying, fees are under downward pressure everywhere except Japan, and retained search is being eroded by the usual suspects: in-house recruiters, contingency firms, etc.  In response there is a flight to quality, which is a positive thing, and we are creating our own Group “search academy” to further train and develop talented consultants who can work in Asia at the highest levels.

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About the Association of Executive Search Consultants
The Association of Executive Search Consultants (AESC) is the worldwide professional association for the retained executive search and leadership consulting industry. The AESC promotes the highest professional standards in retained executive search and leadership consulting through its industry recognized Code of Ethics and Professional Practice Guidelines. The AESC also serves to broaden public understanding of the retained executive search and leadership consulting process and acts as an advocate for the interests of its member firms.

About BlueSteps
BlueSteps is the exclusive service of the AESC that puts senior executives on the radar screen of over 8,000 executive search professionals in more than 75 countries, including China. Be visible, and be considered for up to 75,000 opportunities handled by AESC search firms every year. Find out more at www.BlueSteps.com.