Strategic Review at

Egon Zehnder
International (A)
Presented by Group 2
ABHAY SINGH 2018IPM001
HIMANSHI GUPTA 2021PGP146
BIPRADIP CHATTERJEE 2021PGP088
SWAPNIL ARUN 2021PGP401
SOMYA GUPTA 2021PGP379
 Introduction
• Egon Zehnder, the owner of Egon Zehnder International graduated from Harvard
Business School in 1956.
• In one of the leading organization in search industry, Spencer Stuart recruited him as
an international MD with a directive for expansion of organizations practices in
Europe in 1959.
• Later in 1964, he developed his own executive search firm which worked privately
throughout the world
• By 2000, EZI was renowned among the top five organization for executive search. It
had grown into a leading organization at global level with about 300 consultants of
management in 58 offices
• The strength of the organization primarily revolved around their professional
foundation of considering their clients as their first priority and their quality work and
unique spirit of partnership.
• In comparison to its competitors, the fees of EZI was usually higher but
intermittently in searching of top rated executives were expected to be lower
• Every consultant had an average of 12 searches a year. For each search, the
average billing varied from $60 K to $120 K
• EZI'S rigourous screening process allowed it to find the right employees
• EZI entire global network works as a single unit, increasing the likelihood that
the best candidate will be found.
 Strength of EZI
• Zehnder focussed on 3 core pillars that differentiated EZI from other
firms.
• The first was "clients first" policy which motivated professionals to
always put clients' well-being over that of the firm and the
individuals.
• The second pillar was the firms' reputation for good quality. As a
result professionals got satisfaction in superior client engagement
over other materialistic rewards.
• The third strength of the firm was it's partnership which helped in
instilling a sense of belonging among the professionals.
 Various challenges faced by EZI
Penetration in US
The penetration of EZI in the United
States had been significantly more
as compared to that of the executive
search market in Europe. Therefore,
the average revenue of each
consultant (Exhibit 1) in Europe is
$0.79 in millions and $1.28 in
millions in the United States.
Increased rate of
Employee turnover:
The hiring rate of consultants from
1996 to 2000 has increased from 20 to
40 with increase in the turnover rate of
consultants i.e. 1 to 5 percent. This is
due to dissection of senior and young
consultants affecting the interest of
young consultants at work.
Increase in Variable
Cost:
The leverage ratio among the
researchers and support staff has
increased from 1996-2000. This has
also increased the variable cost of the
organization in 1996 and 2000 i.e. 1.77
and 2.05 respectively.
Lack of investment
knowledge
As the organizations growth completely relies
on the organic growth which lacks merges and
acquisitions. Therefore, the present
organizational structure of partnership is
serving as a barrier in the massive growth which
reduced the organizations capability to invest in
potential areas for the benefit and effective
performance of organization.
Increased Competition:
Lack of investment in the improving the
services of organization, EZI has been running
at a step back position in the market.. The
pricing strategy of the organization does not
match the level of searches organizations in
the search market.
Follow-up of organic growth strategy is not a
smart move as other competitors in the search
industry surely follow inorganic growth
approach assisting them in going public rather
operate at national level.
Generation Gap
The division of senior consultants from young
consultants has created a communication
and generation gap among all the
consultants. This has affected the culture of
organization hindering its growth by
increasing the employees turnover.
Firm's relation with partners and consultants
• Zehnder always looked for the sense of integrity and warmth in
the employees
• EZI was a collaborative partnership and most of the
professionals used to spend a large part if not the entire career
in the firm.
• Every consultant had the scope of career growth upto the role of
partner and annual turnover was below 2% for over 33 years.
• With growing competition and agressive expansion policy of
competitors, partners of ESI started feeling the heat. As a
partnership firm, EZI's growth was slower than the competitors.
• The requirement of 1oo consultants in the US practice put
extensive investment demand on the firm.
 Insights from exhibit
• From exhibit 3, we can see that the revenue share of ESI is very high (58%) in
the European market but pretty low (23%) in North American market
• The percentage of consultant working in US was as low as 20% for EZI
• Exhibit 8 shows that the turnover rate is constantly increasing from 0% in 1995
to 5% in 2000.
• According to exhibit 1, the total revenue has increased by 18% from 1996 to
2000.
But at the same time span, revenue per professional has increased by 33% (from
1000 to 1500) [exhibit-7]
• From exhibit 6, we can see that the compensation of 15 year partner is almost
double of 1 year partner as the 40% of the revenue after reinvestment of 10% is
allocated based on the seniority years. This approach motivates people to stay
longer with the firm according to Zehnder.
Evaluation of EZI w.r.t recruitment, compensation &
promotion of its professionals
The resources had to take a total of 25-40 interviews at 5 of the firms international sites. No
offer would be made if any 2 interviewers expressed doubts about a particular candidate,
which resulted in only 10% candidates successfully clearing the interviews.

The evaluation process had 4 main dimensions

• Cognitive abilities
• Building working relations
• Getting things done
• Personal fit

Overall the firms approach to recruitment. promotion and compensation is positive in that it
stresses providing a stable environment for highly-qualified individuals to work together as
a team over a long period of time. The fact that highly qualified team players are
thorougly screened also reduces the amount of training time that is required
Evaluation of the idea of conducting strategic view
Strategic review would:
• Help us in gauging if we are doing the right things or we need to change
• Create an opportunity for young employees of the company to ask questions and
find the answers
• Encourage the equality in enquiry and debate
It should be participatory, bottom-up approach. All the processes should be
questioned if needed be and any topic should not be off-limits for discussion.
A major factor of concern is what if the review is just a waste of money, time and
resources and the groups emerge with completely different ideas.

The core values and culture is non-questionable and non-alterable

The core values can guide people with diverse opinions to have a open
debate, interchange of ideas and a recommitment to the objective of
the firm
 Strategic Review
Current Recommendation/Comments

Communication Open and Transparent Reflects ideals of partnership

SOP Collegial and collaborative approach Aligned with strategy of business first

Strategy Approval Approved by partners Follow bottom to top approch in strategy review

Resource Cognitive abilities, building work relations, get things done War of talent, formalize and review CPDR, use internet to complement
and personal fit

Monitor Team of two consultants reports to partner Hierarchial organizational structure

Rewards Not performance based & no commision Organizational wide implementation of BSC, formal appraisal and
review mechanism

Knowledge Silos Underscored the investment in knowledge in management Separate docu ment repository and management team

Strategy Communication No proper channel Open enquiry and debate, open cubicle meet by senior partners