How long before the likes of Korn/Ferry International and Heidrick & Struggles start cutting staff? Both firms slashed headcount drastically in 2002 and 2003, but have resisted reductions so far this time around. Rumour has it that some consultants are starting to feel a bit twitchy.
Heidrick looks like a particular candidate for trimming in its financial services arm.
Its third-quarter results were favourable and Heidrick has reduced fixed costs by lowering the proportion of compensation devoted to salaries (in favour of performance related bonuses). However, it has invested heavily in financial services over the past year, acquiring US hedge fund recruiter Schwab Enterprise in April, 75 Search Partners in August, and various former employees of the Whitney Group and Akamai in Asia Pac (allegedly for big guarantees).
Korn/Ferry has also bulked up, adding two new consultants from the Whitney Group in October to cover capital markets and asset management.
In September, Reuters predicted meltdown for the big US headhunting groups.
Along with the financial services sector, the share prices of both Heidrick and Korn/Ferry have plummeted since their highs of 2007, with Heidrick down to $19.29 from a peak of $51.71 in August 2007 and Korn/Ferry off its peak of $26.03 in June 2007, to $13.11.