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Korn/Ferry expands beyond recruiting into worker development programs

"We have been in business for 45 years. Most of that time we did one thing: finding talent," says Korn/Ferry Chief Executive Gary D. Burnison. "Today, 41% of our business is in development programs."
(Anne Cusack / Los Angeles Times)
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When the pension plan that serves more than 40,000 actors and their dependents needed a new chief executive this year, Korn/Ferry International got the call.

Korn/Ferry’s people conducted a broad national search for the Screen Actors Guild-Producers Pension & Health Plans, then determined that the best person for the job already worked there: Michael Estrada, executive director of investments and finances.

Such searches are routine for the Los Angeles company, which bills itself as the world’s largest executive search firm, with more than 3,300 employees in 40 countries. But Korn/Ferry Chief Executive Gary D. Burnison said the company has sought to move beyond its traditional niche.

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“We have been in business for 45 years. Most of that time we did one thing: finding talent,” Burnison said. “Today, 41% of our business is in development programs. How do you motivate, get people engaged? How do you align them to the mission of an organization?”

One such offering, FYI for Teams, is described on the company website as including “200 easy-to-implement development tips for improving team effectiveness.”

Burnison said that another example of the company’s broadened reach is the Korn/Ferry Institute, which produces reports on timely business issues.

One recent example of the Institute’s work was “The Seven CEOs: The essential purpose of succession management.” It advises companies on ways to develop an internal succession by grooming six executives talented enough to eventually rise to the top post.

“It’s one thing to find great people,” Burnison said. “But it’s a whole different thing to motivate them to get up at 4:30 a.m. without an alarm clock, to row in the same direction.”

The company was founded in 1969 by Lester B. Korn, who went on to become U.S. ambassador to the Economic and Social Council of the United Nations, and Richard M. Ferry, who had been a partner at the international accounting firm of Peat, Marwick, Mitchell & Co.

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Korn Ferry went public in 1999.

The latest

Korn/Ferry recently reported on its fiscal first-quarter performance, which beat the expectations of analysts surveyed by Thomson Reuters.

Revenue rose to $260.3 million, up 9.6% compared with a year earlier. Net income rose 27.3% to $14.5 million.

The company also released the results of a global executive survey that found fewer than one-third of chief executives felt that their company’s organizational culture was aligned with their actual business strategy.

Accomplishments

Korn/Ferry says that, on average, it places someone in a new job every seven minutes.

In California, Korn/Ferry has been involved in searches for the chief executive for the Motion Picture Assn. of America, two leadership posts for the Getty Trust, a federal overseer for the state prison healthcare system and CEO for the Orange County Performing Arts Center.

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Burnison said that an average of 49,000 people a month participate in one of Korn/Ferry’s employee development programs.

Challenges

Korn/Ferry’s business is dependent on a sound economy. During the economic woes of the early 2000s, for example, Korn/Ferry slashed its workforce by about half, to 1,400. The company’s ranks have rebounded since to nearly 3,400.

Burnison said that recasting the Korn/Ferry brand was an ongoing goal.

“The challenge is to make the brand elastic, to make it more representative of our capabilities today,” Burnison said. “That doesn’t happen overnight.”

Analysts

Of five analysts covering Korn/Ferry, three have it rated as a strong buy. One rates it a buy and another suggests holding the stock.

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“We believe that the stock remains attractive because of the potential for double-digit earnings growth,” said Timothy McHugh, an analyst with William Blair & Co., who rates the stock “outperform.”

ron.white@latimes.com

Twitter: @RonWLATimes

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