401 N. Michigan Avenue
Chicago, Illinois 60611
Telephone: (312) 822-0080
Fax: (312) 822-0116
Sales: $50 million
SIC: 7361 Employment Agencies
Spencer Stuart & Associates, Inc. is one of the world's most famous executive search and consulting firms. The company is based in Chicago and has offices located around the globe in order to meet the burgeoning demand for management talent. Spencer Stuart & Associates is justifiably famous for the introduction of a new method for finding and placing managers. The modus operandi of the firm is to combine a management talent search with management consulting. Since the relationship between executive recruiting and management consulting is so close, Spencer Stuart & Associates combine the two well beyond the actual time of an executive's placement. This strategy, according to the company, helps both the executive and the client company form a closer, more satisfactory, working partnership and union.
On April 1, 1956, Spencer Stuart opened an executive search consulting firm on Michigan Avenue in Chicago, Illinois. Stuart had worked for many years at the well-known management consulting firm of Booz, Allen & Hamilton, also in Chicago. When he journeyed out on his own, Stuart was convinced that a new kind of executive search firm was needed, one that wasn't just a recruitment agency, but an executive search consulting firm. Executive search firms were a new kind of service during the late 1950s, and the changes that American corporations were experiencing at that time demanded a comprehensive, systematic, and thoroughly disciplined approach.
Listening very closely to his clients, Stuart profiled the company's organizational structure and corporate culture, prepared written descriptions of the required personnel so that there was no misunderstanding as to what kind of person was needed, developed a highly sophisticated search tailored to the specific client's industry, analyzed and appraised candidates for the management position, and designed a plan to assimilate the new executive within the client company so that the individual would become an effective participant in the firm's management structure as soon as possible.
Stuart's first assignment was to find an executive to manage a pharmaceutical firm in Caracas, Venezuela. The firm needed an individual who was fluent in Spanish, conversant with the methods of doing business in South America, familiar with the pharmaceutical industry, and whose family would be able to adapt to living in Venezuela. Stuart immediately hopped on a plane and found the right person for the job, one who was already living in Caracas. By 1958, business was booming and Stuart had spent more time on international assignments than working in the United States. Over 35 flights were taken to Europe and South America during that year, and the demand for his consulting services was growing so rapidly that Stuart established offices both in Mexico City and in Zurich, Switzerland.
By 1960, the company had completed executive search assignments in over 25 countries, including Denmark, Switzerland, Germany, England, France, Italy, Brazil, Venezuela, and other countries throughout Europe and South America. Client companies included firms from the food, machinery, construction equipment, cosmetics, banking, and pharmaceutical industries. Over 12 presidents of companies around the world had been found by Stuart's executive search firm. By 1961, new offices in London and New York were opened to meet the rapidly growing demand for the company's services. As new offices were opened in Paris, Brussels, Frankfurt, and Sydney, Australia, Spencer Stuart established a company policy that all the offices would be managed and operated by nationals.
Throughout the 1960s, Spencer Stuart pursued a long-range strategy of growth through expansion. The internal structure and decision-making process of the company was relaxed and informal, and management personnel would meet face-to-face in various locations around the world in order to discuss and refine policy and procedures, while also addressing problems and future opportunities. The company benefited through its association with larger corporations by drawing on different management philosophies to more clearly define the one most suitable for Spencer Stuart & Associates. Near the end of 1969, Stuart implemented an international management group within the company to improve worldwide communications among satellite offices and, at the same time, to prepare for his own departure.
By 1973, the company had nine offices in the United States, Europe, and Australia, staffed with approximately 55 full-time executive search consultants. At this point, Spencer Stuart decided to retire from his position as chief executive officer. The two partners who were chosen to replace Stuart included an Englishman by the name of Peter Brooke, and a Frenchman named Jean-Michel Beigbeder, both graduates of Harvard University's Business School. Stuart also decided to sell the entire share of his ownership in the company to the new managing partners.
The transition from one-man leadership to a professional management team took place smoothly, and Spencer Stuart & Associates began to grow both in size and in revenues. More importantly, the team of Brooke and Beigbeder began to capitalize on the new opportunities within the executive search industry. During the mid-1970s, management recruiting firms entered a period where the demand for their services grew rapidly. Corporations expressed a need for management talent that came from the outside. The idea of promoting executives from within a company was still in common practice, but not enough to meet the complex and stringent conditions of the business world demanded by management. Thus, rather than always promoting from within the organization, a company's needs could be met by hiring senior executives from the outside who brought experience and a novel perspective to the issues confronting the company. This new development in executive hiring went hand-in-hand with the idea that management mobility was a valid strategy to enhance one's career.
In addition to the increasing demand for external executive searches, there was a growing acceptance of management recruiting firms. Presidents and comptrollers of companies were just too busy to spend hours and hours reviewing and interviewing candidates for executive positions. As the demand for services provided by executive search firms grew, there was a sudden boom within the industry. By the mid-1970s, there were more than 900 executive search firms in the United States, many of them concentrating on providing services for a particular industry, geographical location, or function. Even though the majority of search firms were small, with between one and three consultants, there emerged six major executive recruiting firms based on annual revenues. Spencer Stuart was one of these firms. Without hesitating, management at Spencer Stuart had taken advantage of all the industry developments occurring during the 1970s and had built a reputation as one of the pre-eminent executive search consulting firms in the world.
By the late 1970s, as competition began to increase, Spencer Stuart & Associates embarked upon a strategy to expand its international practice. More offices were opened throughout Europe, but an intense effort was also made to develop the company's services in Canada, South America, Australia, and Southeast Asia. From 1974 to the end of the decade, the company expanded its offices from ten to over 25, most of these located in Europe and Asia. New markets, such as Africa, China, and the Middle East, also provided the company with opportunities to expand its executive search services. Noting also the growing opportunities in the American market, the company opened new offices in Dallas, Houston, Los Angeles, San Francisco, Cleveland, Atlanta, and Stamford, Connecticut. These offices were designed to provide more localized services to the regions within which they were located. With over 100 consultants and 35 research associates, Spencer Stuart & Associates had one of the largest staffs of executive search consulting firms in the world. Not surprisingly, from 1974 to 1981, the company's revenues grew annually by a margin of 25 percent, amounting to over 400 percent by the end of fiscal 1981.
By the early 1980s, a new president and managing partner had assumed the reins of Spencer Stuart & Associates. Thomas J. Neff began working at the company in 1976 and three years later was named its president. A graduate of Lafayette College, and having earned an MBA from Lehigh University, Neff completed a short stint in the U.S. Army as a first lieutenant and then joined the famous Chicago firm of Booz, Allen & Hamilton. After a number of years at Booz, Allen, Neff joined the management consulting firm of MicKinsey & Company and worked at the firm's offices both in New York City and in Australia. By the time he arrived at Spencer Stuart & Associates, Neff had also gained valuable experience at the senior management level in the airline, packaged goods, and health care industries.
Under Neff's leadership, the company developed its international practice as well as its highly localized domestic executive search services. Spencer Stuart & Associates grew to include nine offices from coast to coast within the United States, and 11 offices in Europe, located in Amsterdam, Brussels, Dusseldorf, Frankfurt, Geneva, London, Madrid, Manchester, Milan, Paris, and Zurich. Offices were also located in Calgary and Toronto, Canada, Melbourne and Sydney, Australia, Sao Paulo, Brazil, and Hong Kong. Neff also supervised the addition of partners to the firm, from eight in 1974 to 27 by 1982. Most importantly, Neff emphasized the importance of developing the company's international practice by ensuring that the managing partners were an international mix of Americans, French, and British. This was true as well for the representation on the firm's Board of Directors, which drew people from Canada, France, Belgium, Australia, The Netherlands, the United Kingdom, and the United States.
The most important of Neff's contributions to the company during the 1980s, however, involved his development of executive search and management consulting ideas. As companies became more and more demanding in their expectations of what constituted a solution to a problem in management, Neff developed and refined the notion of management consulting in the executive search. Neff believed that it was important to focus on what happened during the period previous to and following the recruitment process, and the company began focusing on succession planning, preparing the Board of Directors for the new executive, designing compensation packages for executives that resolved all the issues surrounding economic security and job attraction, and the general problems involved in introducing a new executive into an organization. These concerns were intrinsic to the management consulting process, according to Neff, and contributed toward the success of the executive search. This detailed and thoroughgoing approach also helped Spencer Stuart & Associates become one of the most sought-after executive search firms in the nation during the 1980s. When a Fortune 500 company needed a new president or chief executive officer, they turned to Spencer Stuart.
By the late 1980s and early 1990s, the two preeminent headhunting firms within the industry were Spencer Stuart & Associates and Heidrick & Struggles. Heidrick & Struggles was headed by Gerard R. Roche, and Roche had found such high-profile candidates as John Scully for Apple Computer Inc., Lawrence A. Bossidy for AlliedSignal Inc., and Stephen Wolf for UAL Corporation, the parent firm of United Airlines. Neff had also placed his share of top-notch candidates, including Louis V. Gerstner at R.J. Reynolds, Michael H. Walsh at Tenneco, and David W. Johnson at Campbell Soup. Both companies had set up divisions within which executive searches were conducted. Spencer Stuart & Associates' most active division included the investment management search practice and the entertainment search practice.
In 1992, both Spencer Stuart & Associates and Heidrick & Struggles were asked to find a successor for John Akers, the head of International Business Machines Corp. (IBM). This search caused a significant amount of controversy within the industry. Knowing that placement firms were bound by certain limitations (including the general agreement that prohibited headhunters from pursuing the executives they have already placed, and the restriction that such firms were not supposed to recruit from a company for two years after a placement had been made), IBM management hired both companies so that they could steal high-level executives from each other's previous clients. The strategy, according to IBM, was to purchase as broad a coverage of the market as possible. Thus Roche was able to pursue candidates off-limits to Neff, while Neff was able to pursue candidates off-limits to Roche. Although the new IBM executive, Louis V. Gerstner, Jr., was eventually found by Roche, both companies benefited by the enormous amount of publicity that the search generated in such popular business magazines as Business Week, Fortune, Forbes, and The Economist.
During the mid-1990s, Spencer Stuart & Associates was still considered one of the top two executive search consulting firms in the industry. The company's client list not only included American firms, but both large and small businesses around the world. With such an enviable placement record, and a client list that kept on growing, Spencer Stuart & Associates was carrying on the successful tradition started by Spencer Stuart in 1956.
Byrne, John A., "Can Tom and Gerry Find a Big Cheese for Big Blue?", Business Week, February 22, 1993, p. 39.
Crawford, Kim, "The Rough Guide To Recruitment," Marketing, May 25, 1995, p. 28.
Fleming, Charles, "Hollywood Hunt is on for Executive," Variety, March 23, 1992, pp. 125--126.
"IBM Hires Two Firms to Help Search for a Chief," The New York Times, January 30, 1993, p. 37.
Sasseen, Jane, "Brief Encounters Management," International Management, September 1992, pp. 44--46.
Scism, Leslie, "Prudential May Seek Outsider to Succeed Chairman Winters When He Retires," The Wall Street Journal, September 28, 1994, p. B10.
"Spencer Stuart Launches Money Management Group," Pensions & Investments, July 11, 1994, p. 28.
Stuart, Spencer R., and Neff, Thomas J., Spencer Stuart & Associates, Newcomen Society: New York, 1981.
Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.