What do Eric Schmidt, former CEO of Google, Kåre Schultz, CEO of Teva, and Alfred Kelly, CEO of Visa Global, have in common? At first glance, not much, beyond the fact that all three are at the helm of major corporations. However, those behind the scenes could also say that all three would not have got the job if it were not for the American headhunting company Heidrick & Matches. Companies such as Heidrick & Battles often operate below the surface and do not want those who do not need to know about their existence and activities to be exposed to it. Over the past few months, Heidrick & Struggles has scoured the Israeli ecosystem and built a list of targets.
The “goals” are the Eric Schmidts and Kåre Schultz’s of the future, as Heidrick & Struggles can then recommend to technology, pharmaceutical and financial companies when they are looking for candidates to fill senior positions. Very quietly, the members of the company are putting together a list that already has several thousand names, and anyone who considers himself a successful career person should be on it.
Tim Lüdke, partner at Heidrick & Struggles’ offices in Milan and Tel Aviv and the regional manager of Heidrick & Struggles’ strategic growth markets.
(Photo: Heidrick & Struggles)
Before the current crisis in tech stocks, Heidrick & Struggles traded to a value of more than a billion dollars. However, it has since fallen with everyone else and today trades for around half a billion dollars. This despite the fact that 2021 was the peak year and revenues rose to a billion dollars compared to 621 million dollars in 2020. Net profit reached 72.6 million dollars. In an exclusive interview with Calcalist, Tim Lüdke, partner at Heidrick & Struggles’ offices in Milan and Tel Aviv and the regional manager of Heidrick & Struggles’ Strategic Growth Markets, explains how so much money is made by moving individuals from one workplace to another.
“We only work with people who earn more than $200,000 a year. These are people in senior management positions, and only if it is a large company will we also handle recruitment in the ranks of VP. Of course, there are areas of the world where the salary levels are a little lower and in the US it is usually higher, but this is important for our commissions because we charge a third of the annual income of the candidate we brought to the company, explains Lüdke. “If someone receives a base salary of $200,000 a year and another $100,000 bonus, we will receive $100,000 if we find a position for them with one of our clients. In Israel, the market is still new and unestablished, so initially we will receive less than a third, and we will start with a more flexible structure.”
If we apply Lüdke’s calculation method to the employment contract of Kåre Schultz, who joined Teva in 2017, the company earned a very significant sum just for his employment. Just for the three months of work that year, the CEO, who was brought from Denmark to Israel, received $333,000 and also received a signing bonus of $20 million. Heidrick declines to say exactly how much they received then, but it is likely to have been much more than $100,000. Heidrick & Struggle’s financial report reveals that executive placement is quite a productive business. The company, which as mentioned reached an annual turnover of one billion dollars last year, employs only 365 consultants, so that the output of each of them was 2.7 million dollars. The average income from the placement of each manager was $144,000.
Heidrick & Struggles, which operates almost everywhere in the world and unfortunately even acquired two companies in the field in Russia and Ukraine at the end of 2021, has set its sights on Israel’s hyperactive high-tech market. The same sector that lacks more than 10,000 skilled workers and today not a day goes by without a few dozen or even hundreds of workers being laid off.
“We have been looking at Israel for six years and we see on the one hand what is happening here in terms of development and the number of large local companies, and the high number of centers for multinational companies. On the other hand, you are a very small advisory market .Everyone thinks they know everything better on their own and there is no culture of using and paying for professional services.
This is true, because we are a small country and everyone is almost two or three WhatsApp messages away from each other. Those who did not study with me at university, were with me in the army, in high school or are parents at my child’s school. And so is LinkedIn, so why do you even need such an old-fashioned company?
“We don’t pretend it doesn’t exist, but even if everyone knows 70% of the people here, there’s still the remaining 30% you don’t know. They may be Israelis who left a long time ago and are thinking to return, they may be Jews who want to immigrate and are looking for the right position to take the plunge. This will help the Israeli economy take another leap forward, because now there is an opportunity to bring here experienced leaders from abroad. a large group of Israelis who came after the army to study at universities in the USA, got married and now their children are growing up and they want them to be Israelis Unlike before there are many interesting jobs in Israel and in On the other hand in the USA the pandemic was very difficult, the airports were closed. A lot of people, who you wouldn’t even think to contact, tell us they want to come back.”
“Of course, LinkedIn changed the industry because they made everything more transparent. In the 1990s, when I switched from running a computer company to working at Heidrick, clients also paid us to know the right people. Today, everyone knows everyone and my daughter can do it. a better job on LinkedIn than me, but how to choose the right person on LinkedIn is another matter. It’s not always clear if the person is really senior, because everyone has a lot of superlatives and titles there, or what exactly you do and where you live. Or where you are willing to move to. There are also positions where the number of candidates is literally at the level of counting on one hand. For example, we have now completed the process of finding a medical director for a large pharmaceutical company . It is something so complex and focused – there are only five people in the world who are suitable for the position, and we know them all. We know that of the five, two definitely will not have it. o move, and will not even answer the phone, the other two v il answer, but will not speak to the company itself, and if they want to bring a woman for the position, then there is only one candidate for that.”
What do you mean by “they won’t talk to the company”?
“This story is not as simple as it sounds, because we are talking about people, it is not about a phone call. In quite a few situations, the company itself has already contacted the candidate in question, but they have not even returned their calls. Why? Because you need to know how to handle candidates the right way When we call most of the managers call us back and not necessarily because they are looking for a job right now but because they know they should be on our top list Often they also use the phone from us for some form of career guidance, to find out which direction you should go in your next position, who are the strongest companies in their field and who are less… We receive our money from companies, but we are of course more objective than the company itself. Our job is not to sell the company to the candidate, but to find the right person who, in our opinion, fits the company at the right moment and make the match.”
Heidrick & Struggles’ leaderboards, which currently include several million leaders, are worth a lot of money. How do you build such a list in a new market like Israel?
“This is essentially intelligence work, of course we go through the social networks, but we also look in the market. Here we are linked to consulting and accounting firms and investment and venture capital funds.”
But it seems you missed the right timing to enter the market. Now there are mainly redundancies, everything is shaking and in such a situation people are in no rush to change jobs.
– To be honest, we already started the process of entering Israel a year ago, but we were surprised to find out how slowly everything happens in a country that is a technological powerhouse, laughs Lüdke. “It took us a long time to get everything going because of the bureaucracy, just opening a bank account took six months, which is very strange. My role in the company is to open new markets and a year ago I told people in my office. : ‘Israel is going to be easy,’ but it really wasn’t like that. Anyway, we had an opportunity in Israel because Maya Prestfelder, who heads the local department, had just moved to Israel from New York. But in general, a company like ours is not dependent on economic cycles and who knows how long it will last? Even during the 2008 financial crisis we continued to work. There are people who do not feel safe in their current company if it is less stable and would like to go to advantage for a more stable company, even if they are not actively looking for work.”
How big can your business be in the small Israeli market?
“In the next two months, two more employees will join and the ambition is to reach 6-8 employees. The focus in Israel is on technology and life science companies. There are many Israeli startups looking for managers abroad, and they tell us : “We need a CFO, and he can be in Israel, in the US or the UK, wherever the most suitable candidate will be found.” On the other hand, there are many development centers here for multinational companies that are also constantly looking for employees and don’t know the local market.”
And the layoffs in these companies that are happening more and more these days, don’t they bother you?
“We are not involved in these processes because we only deal with senior staff.”
How do you get on the list of candidates?
“Just contact me directly, but we know everything about everyone, and if a company is looking for someone who exactly meets your description, we will come to you.”