Korn Ferry

Korn/Ferry International
Public
Traded as NYSE: KFY
Industry Professional services
Founded November 14, 1969 (1969-11-14)
Founder Lester Korn
Richard Ferry
Headquarters 1900 Avenue of the Stars, Los Angeles, California, USA
Key people
 Gary Burnison (CEO)[1]
Robert P. Rozek (EVP, CFO and CCO)
Products Executive search
Employee retention
Revenue Increase US $1.346 billion (Q4 FY16)[2]
Increase US $30.913 million (Q4 FY16)[3]
Number of employees
 7,000 (2016)[4]
Website www.kornferry.com

Korn Ferry International, is an executive search and recruiting firm headquartered in Los Angeles.

History

1969-1972

The firm was founded in 1969 by Lester Korn and Richard Ferry. The two first met in 1962, when they worked for Los Angeles accounting firm—Peat, Marwick, Mitchell.[5] Before leaving to form Korn Ferry, the two made partner at the firm.[5]

Initial public offering in 1972

In 1972 the firm went public with an IPO and within two years (1974) had acquired all outstanding shares to become private again.[6]

Acquisitions (1973-1991)

In the 1970s Korn Ferry expanded internationally by a combination of acquiring small to medium-sized enterprises and setting up subsidiaries of Korn Ferry International. An example being the formation of Tokyo, Japan based Korn Ferry International Japan in 1973.[7]

With the opening in 1975 of Korn Ferry International Singapore the company had 41 offices in 20 countries.[8]

Two years later in 1977 acquired the Mexico City firm Hazzard & Associados. The next year in 1978 they opened offices in Malaysia[9] and Hong Kong and acquired the UK firm John Stork. In 1979 they acquired Australian-based Guy Pease Associates.

By 1981, the company was the largest executive search firm in the world, with Lester Korn serving as Chairman and CEO.[10]

In 1987 Korn Ferry opened an office in Bangkok, Thailand with a footprint of 37 offices in fifteen countries servicing around 1,250 client corporations and organizations.[11]

In 1989, the firm's revenues exceeded $100 million equivalent to ($193 million in 2015) for the first time.[12]

Change in leadership (1991)

On May 10, 1991 Lester Korn retired as chairman with Richard Ferry then president and CEO assuming the additional role of chairman.[12]

Reflective of 1991 executive-recruiting firms' economic outlook in the face of corporate clients successfully arrangements of lower fees, added services without cost, and industry trend of search firms being used less; Richard Ferry implemented cut costs through office closing and redundancies.[13]

Under Richard Ferry, Korn Ferry in 1993 acquired and merged its European operations into Carre Orban and Partners that was branded in Europe as Korn/Ferry Carre/Orban International.

Korn Ferry opened their first office in India (1994), China (1995), Indonesia (1996), and South Korea (1998).[14]

Beginning in 1992 Korn Ferry implemented a video-conferencing system to speed up the screening of job candidates.[15]

In what was reported as increased competition in the management-consulting industry in 1995 Korn Ferry sold its organizational-consulting practice and executive-pay consulting firm.[16]

In 1999 they acquired the German firm Hofman Herbold and separately the Australian firm Amrop International for $3.8M ($5.46 million in 2015)[17] In 2000 acquiring the London based PA Consulting Group for an estimated $35M ($48.7 million in 2015). In 2000 they purchased Boston-based search firm specializing in financial services Westgate Group.[18]

In May 2000 Korn Ferry acquired Pratzer & Partners Inc. a Canada based boutique executive recruiting firms.[19]

Redundancies in the 2001 contraction

Amongst an executive-search industry contraction during 2000 Korn Ferry's 2001 redundancies were "more dramatic than those of competitors who aren't publicly traded" such as Spencer Stuart and Russell Reynolds Associates. The greater reductions were reported and attributed to having "expanded so heavily during the technology boom" coupled with Korn Ferry's new CEO Paul C. Reilly choosing to "send a message to shareholders."[20]

Acquisitions and diversification (2001-2015)

In 2001 they purchased Levy Kerson, Helstrom Turner & Associates a search firm specializing in the retail and fashion industry, and Pearson, Caldwell, and Farnworth a search firm specializing in the financial services industry. In 2005 Korn Ferry moved their regional head office to Shanghai, China[14] with a footprint of 73 offices in forty countries. In 2006 Korn Ferry acquired leadership development tools firm Lominger International of Golden Valley for $24M ($28.5 million in 2015) in a move to diversify Korn Ferry's product offerings beyond recruitment.[1]

In 2007 Gary Burnison became CEO and continued the push to expand Korn Ferry from a recruitment centric into a retention-and-development firm that saw in the previous year the acquisition as Lominger International.[1][21][22] Burnison's first such purchase was LeaderSource in 2007; the privately held 25 employee Minneapolis based executive-coaching firm founded in 1986 by Kevin Cashman with 2006 revenues of USD $3.5M ($4.16 million in 2015).[21] In 2008 Korn Ferry acquired Lore International Institute. In June 2009, Korn Ferry acquired the London-based executive search firm Whitehead Mann.[23] In 2010 it acquired Sensa Solutions. In 2013 Korn Ferry completed its acquisition of Minneapolis-based PDI Ninth House, a leading, globally-recognized provider of leadership solutions for $80M.[24] In 2015 Korn Ferry also acquired Pivot Leadership.

Acquisition of Hay Group (2015)

In September 2015, Korn Ferry acquired Hay Group, one of the most renowned HR consultancies of the globe. As part of the deal, worth a reported $452 million in cash and stock, Korn Ferry will bundle its Leadership and Talent Consulting advisory business with Hay Group, creating a 7,000 man strong human capital advisor. The move to acquire Hay Group follows its ambitious growth strategy to be the preeminent global people and organisational advisory firm.

Corporate affairs

As of 2015, Korn Ferry employed 7,000 people worldwide.[4]

Litigation

In 2005 Korn Ferry accused one of its former star recruiters, David Nosal, stealing confidential client data to establish his own competing firm.[25] In 2008 Nolan was charged under the Computer Fraud and Abuse Act (CFAA) noting that he "acted "without authorization" in violation of the law."[26] In 2016 the US court of appeals from the ninth circuit ruled in United States v Nosal in Korn Ferry's favor that Nosal's "activity now constitutes a criminal act, under the Computer Fraud and Abuse Act (CFAA)."[26]

Current operations

Korn Ferry New York Headquarters on the 33rd floor of the MetLife Building, at 200 West Street, in Manhattan.

Korn Ferry assists organizations in attracting, engaging, developing, and retaining their people. Services range from executive recruitment to leadership development programs, enterprise learning, succession planning and recruitment outsourcing. Since the firm's inception, it has conducted over 100,000 senior-level searches,[27] and placed about seventy thousand managers.[28]

In addition to its search services, Korn Ferry publishes surveys of its clients and other employers regarding trends in hiring.[29]

Korn Ferry Hay Group

The September 2015 purchase of the privately held HR "global management consultancy"[30] Hay Group for $452M expanded the scope of services for clients.[4] The acquisition and expansion redefined the firm from one focused on recruitment to a retention and development firm.[4][30] The Hay Group purchase added 3000 employees on top of Korn Ferry 4,000 resulting in 7,000 headcount.[4]

Korn Ferry Futurestep

In August 1998,[31] Korn Ferry partnered with the Wall Street Journal to start the internet venture Futurestep.com, which was utilized to help candidates at the middle management level specifically find positions to advance their career.[32][33]

Korn Ferry went public in 1998 to finance Futurestep.com and its digital jobs initiatives to "maintain its industry dominance."[6]

Describing the largest executive search firm in the world as "latecomers are as green as the next start-up" Crain's New York Business reported on Korn Ferry's move into the "ultracompetitive market" of tech recruitment in 1999 with the Korn Ferry launch of the internet venture FuturestepAT.com specifically targeting "advanced technologists," to compete against small boutiques executive search firms such as Redwood Partners and Silicon Alley Connections that have "carved out niches and built strong reputations" focused on technology hires.[31] The nature of the tech field is one "where the skills needed can change dramatically from month to month".[31] Fee structure for FuturestepAT was reported as unchanged from its parent Korn Ferry's "one-third of the first year's salary."[31]

By 2001 Futurestep had been rolled out to 22 countries with worldwide losses of $60 million since beginning in May 1998 with $23M in the nine months to Jan 31, 2001.[34]

Korn Ferry is known for its "headhunting technology".[14]

Corporate structure

In February 1999 Korn Ferry IPOed on the New York Stock Exchange.

Gary Burnison, a former partner of KPMG, serves as the current CEO.

References

  1. 1 2 3 Lublin, Joann S. (2 April 2015). "Suit Alleges Korn/Ferry Fired Official In Retaliation" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. B3. Retrieved 8 December 2016.
  2. ↑ "Korn/Ferry International Revenue & Earnings Per Share (EPS)". NASDAQ. EDGAROnline. Retrieved 9 December 2016.
  3. ↑ "Korn/Ferry International (KFY)". Yahoo Finance. Retrieved 9 December 2016.
  4. 1 2 3 4 5 McCann, David (24 September 2015). "Korn Ferry, Hay Group Join Forces". United States: CFO.com. Argyle Executive Forum. Retrieved 9 December 2016.
  5. 1 2 Hilder, David B. (16 July 1987). "Headhunter Gets Recruited for U.N. Post" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. N/A. Retrieved 8 December 2016.
  6. 1 2 Lublin, Joann S. (7 May 1998). "Korn/Ferry Mulls IPO for Search Firm As a Way to Remain Industry Leader" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. B20. Retrieved 12 December 2016.
  7. ↑ Kikuchiz, Seiichi (28 July 1981). "Japanese Enterprise Also Begin to Make Use of Executive Search Firms". Japan: The Japan Economic Journal. The Nihon Keizai Shimbun. p. 15.
  8. ↑ Adversario, Patricia (18 May 1992). "More S'pore Execs Becoming Expatriate Workers in Region". Singapore: The Straits Times. Singapore Press Holdings Ltd. Co.
  9. ↑ "Korn/Ferry Delighted With Appointment". Malaysia: The New Straits Times Press (M) Bhd. Media Prima. 14 January 1997.
  10. ↑ Barmash, Isadore (21 April 1981). "Talking Business with Nesbit of Korn/Ferry" (Late City Final Edition). New York, N.Y., United States: New York Times. Retrieved 9 December 2016.
  11. ↑ Stewart D. Friedman (January 1987). Leadership Succession. Transaction Publishers. pp. 146–. ISBN 978-0-88738-162-1.
  12. 1 2 "Korn/Ferry's Chief Adds Chairman Post" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. 13 May 1991. p. B10.
  13. ↑ Lublin, Joann S. (2 August 1991). "Headhunters Seek Solution to Slowdown by Adding Services, Expanding Abroad" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. B1.
  14. 1 2 3 Jonathan V. Beaverstock; James R. Faulconbridge; Sarah J.E. Hall (19 September 2014). The Globalization of Executive Search: Professional Services Strategy and Dynamics in the Contemporary World. Routledge. pp. 79–80, 243, 51, 189. ISBN 978-1-317-67535-8.
  15. ↑ Lublin, Joann S. (13 October 1992). "Search Firm Puts Prospects in Focus" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. B1.
  16. ↑ Lublin, Joann S. (21 December 2015). "Korn/Ferry, Facing Stiff Competition, Plans Partial Retreat From Consulting" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. A.
  17. ↑ Boreham, Tim (24 June 1999). "Korn Ferry Headhunts Amrop Arm" (Finance). The Australian. p. 22.
  18. ↑ "Korn/Ferry to buy Westgate Group". Atlanta, United States: The Atlanta Journal and Constitution. 14 June 2000. p. 2E.
  19. ↑ "Korn/Ferry International" (Appointment Notices-Adv't). The Globe and Mail (Canada). 19 January 2011. p. B10.
  20. ↑ Tkacik, Maureen (21 August 2001). "Korn/Ferry to Slash Work Force By 20% in New Round of Job" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. A4. Retrieved 12 December 2016.
  21. 1 2 St. Anthony, Neal (10 January 2007). "Korn/Ferry International to acquire LeaderSource; The purchase, in addition to one last year of Lominger International, broadens Korn/Ferry's areas of business." (Metro Edition). Star Tribune (Minneapolis, MN).
  22. ↑ Weber, Lauren (9 December 2014). "Here's What Boards Want in Executives" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. B5. Retrieved 20 December 2016.
  23. ↑ Andrews, Amanda (12 June 2009). "Recruitment firm Korn/Ferry acquires British headhunter Whitehead Mann". The Telegraph. Retrieved 7 December 2016.
  24. ↑ St. Anthony, Neal (28 July 2014). "Korn Ferry Division Grows in Mpls." (Metro Edition). Star Tribune (Minneapolis, MN).
  25. ↑ Lublin, Joann S. (16 August 2005). "A Company and Its Secrets; Korn/Ferry Alleges Theft Of Confidential Client Data By A Former Star Recruiter" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. p. B1. Retrieved 12 December 2016.
  26. 1 2 Smith, Nigel M (8 July 2016). "Court Ruling Could Make Sharing Netflix and Spotify Passwords a Federal crime". London: The Guardian. Guardian News and Media Limited. Retrieved 19 December 2016.
  27. ↑ Reese, John (31 January 2008). "KFY Is a Good Fit". TheStreet.com. Retrieved 9 February 2009.
  28. ↑ Laurence Ackerman (18 August 2011). Identity Is Destiny: Leadership and the Roots of Value Creation. ReadHowYouWant.com. pp. 93–. ISBN 978-1-4596-2616-4.
  29. ↑ Dapin, Mark (29 November 1996). "Agents of Influence; Headhunters". Australian Financial Review.
  30. 1 2 Schifman, Gerald (21 December 2015). "The Scoop" (Vol. 31 Issue 51/52). Crain's New York Business. Crain Communications Inc. p. 37.
  31. 1 2 3 4 Blake, Wendy E. (25 October 1999). "Big Recruiters Set Sites on High-Tech Job Hoppers" (Vol. 15 Issue 43). Crain's New York Business. Crain Communications Inc. p. 36. 2p.
  32. ↑ Richtel, Matt (8 June 1998). "A New Executive-Recruiting Service on the Web" (Business/Financial Desk). New York, N.Y., United States: New York Times. p. D6. Retrieved 9 December 2016.
  33. ↑ "Wall Street Journal, Korn/Ferry Form Job-Search Joint Venture" (Eastern edition). New York, N.Y., United States: Wall Street Journal. Dow Jones & Company Inc. 8 June 1998. p. B11. Retrieved 12 December 2016.
  34. ↑ Teo, Anna (15 May 2001). "Internet Recruitment Does Not Work : Russell Reynolds". Singapore: The Business Times Singapore. Singapore Press Holdings Limited. p. 1.
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