Common Threats and Managing Reputation in Executive Search Firms

2018, British Journal of Management

British Journal of Management, Vol. 00, 1–22 (2018) DOI: 10.1111/1467-8551.12312 Common Threats and Managing Reputation in Executive Search Firms William S. Harvey , Jonathan V. Beaverstock1 and Hongqin Li2 University of Exeter Business School, Rennes Drive, Exeter EX4 4PU, UK, 1 Department of Management, University of Bristol, Priory Road, Bristol BS8 1TU, UK, and 2 Faculty of Business, University of Portsmouth, Portland Street, Portsmouth PO1 3DE, UK Corresponding author email: william.harvey@exeter.ac.uk This paper provides important insights into how executive search ﬁrms can successfully manage their reputations to overcome major threats to their organizations. The paper focuses on three threats faced by executive search ﬁrms: the global ﬁnancial crisis; questions around the sector’s professional status; and the proliferation of social media for recruitment. Our data show that there was not a single coherent response from ﬁrms, but a piecemeal approach that focused on three forms of reputation management. First, diversifying service offerings; second, highlighting their symbolic capital; and third, connecting their ﬁrms to clients and candidates through partners. Building on our data and the theoretical literature, we provide a framework for understanding how professional service ﬁrms can manage their reputations in response to common threats, based on three categories from the English idiom ‘keep up with the Joneses’. First, moving away from the Joneses; second, fencing out the Joneses; third, networking more than the Joneses. We provide theoretical and practical insights around how organizations can manage their reputations in response to threats which are common across sectors. Introduction In July 2017, the Financial Times (2017) reported that HSBC plc instructed Russell Reynolds, one of the top three leading global executive search ﬁrms, to ﬁnd a new Chief Executive Officer (CEO). Whilst this was an unprecedented strategy for HSBC to ﬁll a senior role from outside its leadership pool, the bank was ﬁnally engaging with the industry norm of using one of the most highly reputable executive search ﬁrms to compete in the global ‘war for talent’. Since the 1990s, FSTE500 and S&P500 corporations, to public sector, education and not-for-proﬁt organizations have hired executive search ﬁrms to recruit leaders and functional specialists, rather than promoting talent from within (Faulconbridge et al., 2009). The leading global executive search ﬁrms have worked tirelessly to position themselves as highly professional A free video abstract to accompany this article can be found online at: https://www.youtube.com/watch?v= IziwDorbeGU organizations to fulﬁl the recruitment demands of clients worldwide. The success of executive search as a profession has been founded on its aptitude to enhance and successfully manage its reputation as an elite labour market intermediary, particularly during times of economic change. The sector has had to nurture its reputation as a new professional project offering a suite of search, advisory and consultancy functions underpinned by self-regulated professional standards outside of normal legal closure (Muzio et al., 2011). Executive search ﬁrms live and die by their reputation and ability to manage change (Beaverstock, Faulconbridge and Hall, 2015; Finlay and Coverdill, 2002; Hamori, 2010). While we are witnessing an era of declining public trust in ﬁrms (World Economic Forum, 2010), like many agents in a market, executive search ﬁrms rely on their professional reputation, buyer– seller trust relations and market intelligence to secure new business in a highly competitive environment (Byrne, 1986; Finlay and Coverdill, 2002; Garrison-Jenn, 2005). There is an extensive C 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes. 2 W. S. Harvey, J. V. Beaverstock and H. Li literature on reputation threats and crises (Elsbach and Kramer, 1996; Gioia, Schultz and Corley, 2000; Ravasi and Schultz, 2006; Rhee and Valdez, 2009) as well as important literature on the consequences of reputation damage (Fombrun, 2012; Graffin et al., 2013; Rindova et al., 2005). Research has also focused on how organizations respond to reputation challenges through impression management such as advertising and rebranding (Carter and Dukerich, 1998), which are considered ‘superﬁcial’; more ‘substantial’ responses (Rhee and Kim, 2012) that might involve centralizing control or selling assets are rarer. At the same time and following calls from Rhee and Kim (2012), there has been little exploration into more substantial responses, which are neither an organizational crisis nor a superﬁcial event, such that they cannot be simply ignored (Harvey, Morris and Müller Santos, 2017). This is an important context to explore because many organizations confront signiﬁcant political, economic and social shocks, which require careful reputation management. We suggest that the coupling of a common threat and a reputation management response is a signiﬁcant context requiring further exploration. We also argue that exploring this form of reputation management has valuable implications for our understanding of how organizations are perceived in relation to their competitors over time. This paper explores how leaders of executive search ﬁrms manage reputation in response to multiple common threats. Building on the concept of the ‘tragedy of the commons’ and King, Lenox and Barnett’s (2002) notion of organizations in a sector sharing a ‘reputation commons’, we refer to ‘common threats’ as those which are not exclusively reputation threats nor particular to a single individual or organization, but are either common to a sector (e.g. a tarnished sector’s status) or multiple sectors (e.g. the global ﬁnancial crisis (GFC)). This empirical context is not a standalone example, as is demonstrated by the uncertainties for organizations around the UK’s future relationship with the European Union. The empirical context of this study is retained executive search ﬁrms (hereafter referred to as executive search ﬁrms), which involve clients paying a non-refundable retainer fee to these ﬁrms for high-end searches of executives, irrespective of the success of the search (Garrison-Jenn, 2005). We analyse how they have responded to common C threats in Sydney, Australia through the GFC. The executive search ﬁrms have historically faced few common threats because of the powerful networks of their partners and consultants who matched the demands of clients with the supply of candidates in elite labour markets in a conﬁdential, professional and discrete manner (Britten, Doherty and Ball, 1997; Byrne, 1986; Garrison-Jenn, 2005; Jones, 1989). The Australian economy has also experienced several decades of growth because of the resource-rich economy, which has meant high demand for executive search ﬁrms owing to high demand for talent in the labour market. However, along with the GFC, other issues have emerged such as the trustworthiness of the sector and alternative forms of recruitment through technology. Our focus is on executive search ﬁrms during the GFC, which is an important empirical context because clients ﬁnd quality difficult to evaluate. Yet, in this sector as well as within professional service ﬁrms (PSFs) more broadly, it is not well understood how these organizations manage their reputation in response to common threats to their sector and to other organizations within the wider economy (Glückler and Armbrüster, 2003; Greenwood et al., 2005; Harvey and Mitchell, 2015; Sturdy, 2011). Based on in-depth face-toface interviews in 2009 and 2013 with managing partners and partners of executive search ﬁrms in Sydney, Australia, we explore these different threats and how executive search ﬁrms have sought to enhance and manage their reputations through focusing on three speciﬁc forms of reputation: functional, symbolic and individual. Our study provides rich insights, which have important theoretical and practical implications more broadly for PSFs seeking to manage their reputations in response to common threats. Managing reputation Reputation is the aggregated evaluations of different organizations compared to their competitors, based on the perceptions of various stakeholders. Reputation is considered particularly important across multiple types of PSFs, because service quality is hard to judge ex ante and ex post (Pollock et al., 2015; Sturdy, 2011). Given high levels of information asymmetry (Greenwood et al., 2005), reputation represents an important social signal for reducing client uncertainty 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. Threats and Reputation in Executive Search Firms 3 and enhancing client retention (Caminiti, 1992; Fombrun, 1996; Selnes, 1993; Walsh et al., 2009). In the context of executive search, which is one type of PSF, the rapid growth of the sector in the latter part of the twentieth century has been dominated by so-called ‘iconic individuals’, senior or managing partners employed in the ‘big six’ wholly owned ﬁrms1 (Hall et al., 2009), who have been ‘splintering . . . [these] . . . ﬁrms’ (Jones, 1989, p. 9) through establishing new start-up companies in the USA, Europe and Asia (Britten, Doherty and Ball, 1997). These iconic individuals relied on their personal reputations and ‘rolodex’ of personal contacts, both clients and candidates, to quickly solidify their reputation, which was cemented during their last employment (Beaverstock, Faulconbridge and Hall, 2015; Hall et al., 2009). This literature has important parallels with the work on celebrity CEOs (Hayward, Rindova and Pollock, 2004; Wade et al., 2006) when leaders receive heightened attention from a broad group of stakeholders. While there has been some research on the contagion effect between individual (micro-level) and ﬁrm (meso-level) reputation, as Barnett and Hoffman (2008) observe, there is less understanding around the interdependence between ﬁrm and sector (macro-level) reputation, which we explore in greater depth below. There has been a scarcity of research around how organizations manage their reputation in uncertain contexts such as a GFC, even though scholars have argued that reputation can be ‘sticky’ and hard to change (Ang and Wight, 2009; Greenwood et al., 2005; Schultz, Mouritsen and Gabrielsen, 2001). On the one hand, the literature shows the fragility of reputation destruction (Hall, 1992) and the time it takes to build up, given the complexity of the stakeholders involved (Helm, 2007), their geographic dispersity (Harvey et al., 2017) and the time it takes to have an impact on perceptions and organizational outcomes such as performance (Fombrun and Shanley, 1990; Roberts and Dowling, 2002). On the other hand, any change that an organization initiates requires going beyond the organization’s boundaries and therefore its direct control. Key stakeholders such as clients may not accept new claims uncritically (Harvey, Morris and Müller Santos, 2017). For instance, Davies and Chun (2002) show empirically how internal and external perceptions of organizations can vary because reputation involves the accumulation of different interactions, experiences and communication signals, which make it difficult to change. Indeed, this represents a common challenge across multiple types of PSFs, because assessing the quality of individuals and organizations is notoriously difficult and reputation provides reassurance to third parties by signalling a collective analysis of quality (Boivie, Graffin and Gentry, 2016). In extreme circumstances, poor management of reputation can have implications for the survival of PSFs (Greenwood et al., 2005). Despite the problems and risks associated with reputation change, PSFs are under great pressure from their leaders and clients to demonstrate innovation in the services they offer (Anand, Gardner and Morris, 2007). In some cases, demonstrating thought leadership has been used as a strategy to legitimize new service offerings and thus reduce the gap between a PSF’s identity and reputation (Harvey, Morris and Müller Santos, 2017). Nevertheless, managing reputation through change creates a potential tension between consolidating existing areas of expertise and creating new practice areas which stray away from historical areas of reputational strength. Given the ferocious competition between PSFs, including executive search ﬁrms, it is likely that such organizations face greater risk when seeking to change their reputations as change is difficult in saturated markets where there is less room to negotiate manoeuvre (Delgado-Garcı́a, Quevedo-Puente and Dı́ez-Esteban, 2013). David (2001) found that specialization can reduce the risk of failure in certain PSFs such as management consulting ﬁrms, whereas Greenwood, Suddaby and Hinings (2002) found that within another type of PSF, accounting ﬁrms, they need to offer clients new forms of services, particularly when the margins of existing services deplete. In both cases, PSFs need to carefully manage how they are perceived by clients, otherwise their reputations will be challenged. The effective management of reputation in executive search ﬁrms is a fundamental competency that ﬁrms must achieve if they wish to succeed in the market (Beaverstock, Faulconbridge and Hall, 2015; Finlay and Coverdill, 2002; Garrison-Jenn, 2005; Jones, 1989). These ﬁrms must be able to show clients a track record of successful placements to signal to them that their professionals (partners and search consultants) have the speciﬁc 1 Boyden International, Egon Zehnder, Heidrick & Struggles, Korn Ferry, Russell Reynolds, Spencer Stuart. 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 4 W. S. Harvey, J. V. Beaverstock and H. Li knowledge of the market, such as functional expertise (e.g. ﬁnancial services, energy, government, etc.), placement experience at senior levels (e.g. at CEO, CFO, COO, etc.) or ‘old boys network’ (Hall et al., 2009) to seek out the exact match for any client search project. In short, reputation lies at the heart of successful executive search ﬁrms with speciﬁc partners and search consultants needing to undertake searches in the utmost conﬁdence to protect the reputations of both candidates (the elite labour under search) and clients (the paymasters). Managing reputation in response to common threats Often, organizations are required and expected to change their reputations in response to reputation crises. Wartick (1992) argues that the salience and recentness of media exposure to organizations inﬂuences perceptions of their reputations. There is an established literature on how organizations may repair their reputation following damage at a macro-level (Dukerich and Carter, 2000; Rhee and Kim, 2012; Rhee and Valdez, 2009). Rhee and Kim (2012) suggest that there are three important processes of reputation repair: problem recognition, search for solutions and implementation of solutions. They suggest that one challenge is too much focus around superﬁcial rather than substantive problem solving. There is also an extensive literature on impression management solutions to reputation damage, which include restructuring and defensive rebuttals (Carroll, 2009; Fombrun, 1996). Other scholars, such as Marcus and Goodman (1991), argue that the response from organizations should depend on the causal attributions, with strong attributions such as corporate scandals requiring adaptive responses and weak attributions such as accidents requiring defensive responses. While this literature is important for understanding the management of reputation repair, it is focused on threats speciﬁc to an organization, when often threats may be common across multiple organizations within and beyond particular industries. The reputation commons literature argues that it is not only individual but multiple organizations who face threats. Barnett and King (2008) argue that many organizations can face reputation threats from the actions or attention of a single organization. Barnett and Hoffman (2008) question how organizations manage such threats, which are C common across many industries. They argue that an organization’s reputation depends not only on its own actions but also on the actions of competitor organizations, which they refer to as interdependence. Despite its signiﬁcance, this has been scantly addressed in the reputation literature: But reputation researchers have given little heed to the comparative context. Firms can look better, and often worse, by comparison with other ﬁrms, not just by comparison with their own histories. As the opening quotes point out, one ﬁrm’s poor behavior can taint the reputation of all ﬁrms in an industry. On the other hand, one ﬁrm’s exemplary behavior can ratchet up expectations, leading to a decline in the reputation of ﬁrms that do not keep pace. (Barnett and Hoffman, 2008, p. 2) As the authors argue, often stakeholders have little information on organizations and therefore use a ﬁrm’s reputation as a basis for how they perceive the organization and intend to interact with it. While Barnett and Hoffman (2008) rightly highlight that there are reputation commons threats across organizations, we suggest that the threats may not be exclusively reputation threats or particular to a single individual or organization, but common to a sector or multiple sectors, which we refer to as ‘common threats’. There are several means of managing organizational threats which affect organizations as well as sectors, according to Barnett and Hoffman (2008). One approach is ‘teaming up with the Joneses’2 when organizations cooperate with each other in their response, although this assumes that organizations are able and willing to collaborate. Another approach is what the authors term ‘keeping up with the Joneses’ when the actions of organizations are perceived to be behind those of their competitors. Finally, the authors suggest ‘fencing out the Joneses’ when organizations want to communicate to key stakeholders that their standards are distinct and higher than those of their competitors. The authors recognize that there is much more ﬁnegrained research needed ‘to identify the “breadth of the brush” in terms of determining how much an accident at one ﬁrm will lead to a “tarring by the same brush” of other ﬁrms within the same industry’ (Barnett and Hoffman, 2008, p. 8). As discussed above, we suggest that threats which cut 2 ‘Keep up with the Joneses’ is an English idiom referring to comparison with peers in relation to social class. 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. 5 Threats and Reputation in Executive Search Firms Table 1. Leading executive search ﬁrms in Australia, 2009–2013 No. of Australian consultants Firm Opened Network Australian offices 2009 2013 Asia Paciﬁc Management Alexander Hughes Boyden International Cordiner King1 Cornerstone Sydney Crown & Marks De Jager & Ass Douglas Walker International Egon Zehnder Int. PTY LTD EMA Partners Australia/Slade Geddes Parker & Partners Harvey Nash Heidrick & Struggles Horton International Jo Fisher Korn/Ferry Mode HR PTY LTD Odgers Berndtson Russell Reynolds Search International Spencer Stuart Stanton Chase Strategic Executive Search Walford Partnership Watermark Search 1990 N.A. 1966 1985 1989 2001 1990 1980 1973 1988 1989 N.A. 1989 1992 N.A. 1979 2005 1976 1984 N.A. 1970 1986 1986 19932 N.A. Taplow Group Alexander Hughes Integrated Amrop Hever Cornerstone Int. Signium International IIC Group World Search Group Integrated EMA Partners Int. IESF Integrated Integrated Horton International IMD International Integrated INAC Worldwide Integrated Integrated IESF Group Integrated Stanton Chase Alexander Hughes World Search Group Transearch North Balwyn Sydney Sydney, Melbourne Sydney, Melbourne Chatsworth (NSW) Sydney, Melbourne, Perth* Sydney, Melbourne Melbourne Sydney, Melbourne, Perth* Melbourne, Sydney Sydney Sydney Sydney, Melbourne Melbourne Melbourne, Sydney Sydney, Melbourne Sydney Sydney, Canberra* Sydney, Melbourne Sydney Melbourne, Sydney Sydney Sydney Sydney Sydney 3 N.A. 6 7 1 7 5 2 10 21 6 N.A. 22 2 N.A. 3 1 7 9 N.A. 7 5 1 3 1 N.A. 1 3 5 1 5 N.A. N.A. 10 N.A. N.A. 3 15 8 9 N.A. N.A. 7 5 N.A. 5 5 N.A. N.A. N.A. 1 Included in the 2013 survey, renamed as Amrop Cordiner King (Amrop Group). date of establishment. *New office opened since 2009. N.A. Information not available. Source: Firm websites; The Executive Grapevine (2009, 2013). 2 Approximate across organizations often do not stem from an ‘accident at one ﬁrm’ but could be the result of the actions of multiple organizations or the result of a macroeconomic phenomenon such as a recession. We explore, empirically, whether and how these ‘common responses’ to common threats are deployed in the context of executive search ﬁrms. In summary, it is not well understood how executive search ﬁrms manage their reputations when facing common threats. This is an important oversight given that we know that reputation management is vital for organizational survival and success, particularly in executive search (and PSFs in general) given the esoteric, elusive, customized and co-produced nature of the sector during times of economic and institutional challenge. This leads us to ask the following research question: How do ﬁrms manage their reputation in response to common threats? Methodology The aim of this study was to collect data related to the common threats and management of reputation change among executive search ﬁrms in Sydney. The unique characteristic of retained executive search ﬁrms, which is the focus of this research, is that a retainer fee is paid (often 25–33% of the ﬁnal remuneration package) for high-end searches involving senior executives, irrespective of the success of the search, which highlights the importance of reputation for clients. Australia’s executive search sector has been established since the late 1960s (Table 1). We were particularly interested in studying this sector for two main reasons. First, at a theoretical level, there remains a dearth of knowledge and understanding of the strategic and reputational management of a professional service that does not have bounded, 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 6 W. S. Harvey, J. V. Beaverstock and H. Li legal closure (like accounting and law). Executive search has had to legitimize itself as a new professionalization project (Beaverstock, Faulconbridge and Hall, 2015; Muzio, Brock and Suddaby, 2013). As a knowledge-intensive organization with no legal closure, executive search has had to derive a demand and cultivate a reputation for its services in a new market, Australia, which has involved new forms of institutional work (Lawrence and Suddaby, 2006; Lawrence, Suddaby and Leca, 2011). Our main theoretical reason for investigating this sector, therefore, is that it provides a unique study of a new professional project, executive search, which enhances our understanding of the role of managing reputation in new forms of institutional work, particularly in a sector where reputation produces the aura of being ‘professional’ and ‘professionalized’. Second, at an empirical level, executive search has become the normalized intermediary for driving the mobility of talent. Executive search ﬁrms are now commonly used by clients across multiple sectors to recruit executives and functional specialists, including boards of directors, but they are not well understood in the context of reputation management. We chose Australia because, while there has been an established literature on key mature markets in North America and Europe (Byrne, 1986; Garrison-Jenn, 2005; Jones, 1989), there is a dearth of work on executive search in mature markets in the Asia Paciﬁc, which are signiﬁcant in size, growth and reputational clout, yet poorly understood (Beaverstock, Faulconbridge and Hall, 2015). We undertook face-to-face interviews in 2009 and 2013 with the managing or senior partners of executive search ﬁrms located in Sydney’s downtown central business district (CBD). We were keen to capture perceptions through two waves of interviews to avoid only capturing a snapshot of events through one round of interviews. Contacts were identiﬁed from websites and an analysis of The Executive Grapevine’s (2009, 2012) entries in 2008/9 and 2012/13, where named managing partners and consultants were listed. We interviewed 9 interviewees in 2009 and 18 interviewees in 2013, one of whom included the head of a major organization who represented the executive search sector, with ﬁve re-interviews from 2009. Overall, we interviewed 22 senior members of the executive search sector in elite, midtier and boutique ﬁrms in Sydney (see Table 1), C Table 2. List of interviewees Number Position Gender 2009 1 2 3 4 5 6 7 8 9 Partner Partner Partner Managing Partner Managing Partner Managing Partner Partner Partner Director Male Male Male Male Male Male Male Male Female 2013 10 11 12 13 14 15 16 17 18 19 20 21 22 Senior Manager Partner Managing Partner Managing Partner Managing Partner Partner Managing Partner Managing Partner Managing Partner Managing Partner Managing Partner Managing Partner Director Female Male Female Male Male Male Male Male Male Male Male Male Female generating over 30 hours of primary data (see Table 2). Deliberately undertaking interviews at these two different points in the market in the durée of a truly major global ﬁnancial crisis of unprecedented magnitude presented a unique and rich opportunity to gain new insights around how organizations manage their reputation in response to a common threat. The 2009 interviews coincided with the trough of the GFC in Europe and North America, which for the organizations interviewed in Sydney was an extremely challenging market for promoting their reputation and capturing new or repeat business from clients. During 2009 and beforehand, from the outset of the GFC, ﬁrms were experiencing low levels of client projects being commissioned, including internal referrals from other ﬁrm offices outside of Australia, and local candidates were very risk adverse to change employers. The execution of a second round of interviews in 2013, approximately 4 years after the ﬁrst round, focused on ﬁrms during a period of ascendency in the market for executive search. Firms could reﬂect on how they managed their reputation and diversiﬁed through the crisis, during the relative shift from a period of ﬂat-lining to growth in the market, post-2011/12. Thus, the ﬁrst round of interviews in 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. 7 Executive search CEO/Board services Executive assessment Executive search & HR Management assessment Compensation planning Interim management Executive search Management appraisal Talent management Board consulting Source: The Executive Grapevine (2007). Executive search M&A effectiveness Coaching Succession planning Executive assessment Executive search & recruitment Board services M&A consulting Succession planning Leadership assessment Board and CEO services Diversity HR IT Executive search Talent management Boyden International Egon Zehnder Heidrick & Struggles Spencer Stuart Korn Ferry Table 3. Executive search services offered by the leading executive search ﬁrms in Sydney pre-GFC 2009 focused on the reactive perceptions of interviewees of the common threats and how they were operationally managing in response to a major economic shock. In this light, the main thrust of the interview questions centred on how the ﬁrms were responding to the severe threat of the global economic crisis. For example, we asked ‘how are you exploring the viability of existing and new markets, how are you attracting new and retaining existing clients, how are you preserving the legitimacy of executive search and what are the current organization and reputation challenges of mustering and coordinating executive search briefs for clients?’ The second round of interviews in 2013 was more retrospective and focused on the effectiveness of the previous ‘reactive operational responses’ and ‘proactive strategies’ for managing the reputations of ﬁrms in the relative ascending post-GFC market. For example, some of the questions we asked were: ‘how would you describe the reputation of the executive search sector and the reputation of your ﬁrm since 2009, how has the GFC affected the way you present your business to clients over the past few years, how have you restructured your business to inﬂuence client perceptions and to distinguish yourselves from your competitors, and how have you changed the way you present to and network with your clients?’ As has been outlined in the literature on interviewing elites, we deliberately asked open and semi-structured questions rather than closed and structured questions because leaders tend to provide richer responses in a conversational style rather than through answering a narrow list of interview questions (Aberbach and Rockman, 2002). As noted above, the timing of interviews took place during and after the height of the GFC, which represented a major common threat to all executive search ﬁrms as there was a signiﬁcant fall in their clients making new appointments and candidates looking to move jobs. Our themes emerged via induction, with a preliminary structure which was identiﬁed from the reputation literature (Clarke and Holt, 2010; Langley, 1999). To supplement the interviews and provide greater contextualization, we drew on secondary sources (see Tables 1, 3 and 4) (Beaverstock, Faulconbridge and Hall, 2015; Byrne, 1986; Garrison-Jenn, 2005) and analysed data from The Executive Grapevine (2007, 2009, 2013) and the Association of Executive Search Consultants (AESC). The data in the tables include many of Russell Reynolds Threats and Reputation in Executive Search Firms 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 8 C Outsourcing Onboarding Employer brand & talent communication Intelligence CEO succession planning Leadership advisory Executive recruitment Professional recruitment Source: https://www.kornferry.com/; https://www.spencerstuart.com/what-we-do; https://www.heidrick.com/What-We-Do; https://www.egonzehnder.com/about-us.html; https://www. boyden.com/practice_areas/functional_practices/index.html; http://www.russellreynolds.com/our-services. Organizational culture Multicultural integration Cultural ﬁt Finance CFO placement Accelerated integration Cultural assessment Consulting Diversity & inclusion Leadership assessment and development Talent strategy Team alignment Board & CEO services Succession management Leadership development Workforce performance, inclusion & diversity Board recruitment Executive assessment CEO/Board advisory Succession planning Digital transformation Leadership & succession Board consulting Leadership strategy CEO succession Family business advisory Executive leadership Board effectiveness CEO succession planning Culture shaping Board services Director search Assessment CEO succession Executive search Executive search & HR Executive search Executive search Executive search & recruitment Board services Advisory Assessment Director recruitment Talent strategy Boyden International Egon Zehnder Heidrick & Struggles Spencer Stuart Korn Ferry Table 4. Executive search, talent management and leadership services offered by the leading executive search ﬁrms in Sydney, post-GFC Russell Reynolds W. S. Harvey, J. V. Beaverstock and H. Li the ﬁrms that we interviewed,3 which is important as there is a lack of published material on the sector (Bonet, Cappelli and Hamori, 2013). The data were transcribed and coded manually following template analysis (King, 2012). As coauthors, we followed a four-stage procedure. First, we read the transcripts independently and initially highlighted the data related to common threats and managing reputation. Second, we tentatively coded a long list of a priori themes based on our initial review of the reputation literature. Next, we adopted an inductive approach to narrow them to provide further insight into higher order categories (King, 2012). The main themes in the ﬁndings section under common threats (global ﬁnancial crisis, sector status and social media for recruitment) and managing reputation (diversifying service offerings, highlighting symbolic capital and connecting through individuals) stem from our process of data analysis. Lastly, we re-examined the data and discussed the empirical evidence through building upon the framework of ‘keeping up with the Joneses’, which we conceptualize as ‘common sector responses’. Table 5 provides an illustration which, building on Corley and Gioia’s (2004) data structure (see also Gioia, Corley and Hamilton, 2012), provides a column of terms from the data which were used by interviewees (ﬁrst-order concepts), theoretical concepts which were relevant at an organizational level (second-order themes) and a distillation of these theoretical concepts at sector level (aggregated dimensions). This forms the basis for answering our research question (how do ﬁrms manage their reputations in response to common threats?). The above analytical structure is how we develop our ‘keeping up with the Joneses’ framework, where the iteration between our data and the reputation literature enables us to identify common sector responses of: moving away from the Joneses, fencing out the Joneses and networking more than the Joneses. Findings The Australian executive search sector was exposed to the GFC. The slowdown in new and 3 We do not stipulate how many or which ﬁrms we interviewed to avoid disclosing their identities, which is particularly sensitive given that we interviewed managing partners and partners. 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. 9 Threats and Reputation in Executive Search Firms Table 5. Data structure First-order concepts (terms referenced at an individual level) Second-order themes (theoretical concepts at an organizational level) Severe economic crisis Fall in client demand Threats from lower prices Global Financial Crisis (GFC) Professionalization Sector status tarnished by ‘cowboys’ Price competition Sector status Business eroded from social media like LinkedIn Easy access to a large candidate database No major threat to the high-end segment of executive search Social media for recruitment Leadership development Succession planning Upstream and downstream Diversifying services (functional) Highlighting elite status Office location Proximity to clients Showing added value Highlighting symbolic capital (symbolic) Connecting through partners Individual reputation Informal networks Trust Connecting through individuals (individual) repeat business generated from clients, and the difficulty of securing candidates seeking new employment opportunities, reduced revenues per consultant. Many of these ﬁrms responded to the downturn by reducing their number of partners and consultants, or by opening up new offices to offer new services (see Table 1). Under these conditions of organizational restructuring and change, our data demonstrate three important common threats. First, the GFC and the consequent major reduction in demand from clients around placing talent. Second, sector status, where there was some disquiet around the opacity and general trustworthiness of the sector. Third, new technology and in particular the proliferation of online recruitment services which questioned the value of using executive search ﬁrms. We explore in more detail the nature of these common threats, which in this context are not exclusively reputation threats nor particular to a single individual or organization, but rather common to a sector (e.g. a tarnished industry’s status) or multiple sectors (e.g. the GFC). We then discuss some of the strategies that these executive search ﬁrms adopted to manage their reputation as a response to such threats. Aggregated dimensions (theoretical distillation at a sector level) Common threats Common sector responses to threats to manage reputation: - Moving away from the Joneses - Fencing out the Joneses - Networking more than the Joneses Common threats Global Financial Crisis. The ﬁrst common threat for all executive search ﬁrms was the GFC. While the sentiments in the 2009 interviews suggest that it was a similar scale of problem to previous global or regional economic crises, the interviews in 2013 suggest that the problem was more severe: The naked answer is I ﬁnd the market dreadful . . . I have been through ups and downs before . . . to me, this actually seems worse . . . I’ve talked with many senior executives . . . feeling . . . almost the same thing. (Managing Partner, 2013) In all cases, there was a clear fall in demand for placements from clients: From September 2008 to May 2009 it was very tough as client-demand dried-up. There was deep retrenchment in the market in almost all sectors. (Managing Partner, 2009) We’ve just ﬁnished our ﬁnancial year, which was, as a percentage down roughly 14% on the previous ﬁnancial year, and it was the worst year since 2009 for us. (Managing Partner, 2013) 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 10 W. S. Harvey, J. V. Beaverstock and H. Li In addition to a fall in demand, interviewees found themselves having to lower their prices to secure work with clients: They [clients] expect cheaper fees. There are always the same demands on service and quality and that has not changed . . . They are under cost pressures and they want to keep costs down . . . that’s what’s changed. (Director, 2013) Not only did the GFC put pressure on the ability of executive search ﬁrms to maintain their revenues, it also created concerns that it might erode the reputation of certain ﬁrms. In other words, if ﬁrms had to signiﬁcantly lower their prices then they were concerned that this could signal to their clients that their reputation was eroding: Who we’re competing against may want to win it simply on price . . . we have restrictions around those sorts of things . . . And then it’s a question of how do you get back up there if you cut your prices signiﬁcantly, when things turn around – it’s about holding your position in the market. (Director, 2013) Indeed, the GFC not only challenged the reputation of certain individual ﬁrms, but also brought the sector’s status into question. Sector status. The second common threat relates to many executive search ﬁrms seeking to professionalize, distinguish themselves from their competitors and compete on price. Interviewees typically said that they had very strong and trusted relationships with their clients and relied heavily on repeat business to reinforce their professionalization with prestigious clients. Hence, acting professionally was the foundation of success: All of our work is still retained. We get very high scores on our customer feedback after each search. We do about 60% repeat business. We’ve also worked quite hard at retaining the relationships we’ve got even though there is no work going on. (Managing Partner, 2009) Several interviewees were frustrated by a small number of ‘cowboys’ who were tarnishing the status of the sector or impacting upon those organizations who considered themselves as having an elite status among clients in the sector. ‘Cowboys’ was a term used by multiple managing partners and partners from elite, mid-tier and boutique ﬁrms to describe individuals who had quickly set up their own executive search practices and had been C successful at winning a signiﬁcant volume of executive search business. Many interviewees considered these individuals as threats to their ability to win work, both because they increased the competition and because they perceived that their working practices created disillusionment among candidates and clients, which could undermine the reputation of the sector. Some of the smaller boutique ﬁrms were relaxed because the feeling was that these ‘bad apples’ would go out of business during the recession: There are low barriers to entry. Regulation won’t stop or eliminate the cowboys. Many individuals and ﬁrms are in it for a quick return and they quickly gain a bad reputation from poor practice. (Managing Partner, 2009) Other ﬁrms who had strong global operations and reputations felt uncomfortable being categorized in the same sector as some of these small operators who could potentially compromise their reputation: Essentially . . . anyone can set up . . . a business and start conducting executive search. We feel that it can dilute the market and it really confuses the message about what executive search is. (Managing Partner, 2013) A couple of other ﬁrms complained that some of these smaller, less reputable executive search ﬁrms were undermining its status because they were signiﬁcantly cutting prices at a time when clients were highly price sensitive: The retained status is being severely questioned by clients. [ . . . We] recently lost out in pitching for a search with a client because they were under-cut by a lean-bid. (Managing Partner, 2009). While it is essential for executive search ﬁrms to be professional, their individual reputations were impacted by the unfavourable behaviour of ‘cowboys’, which compromised the professional status of the sector. The undercutting price tactics also compromised the sector’s elite labour market status. Moreover, the threats not only came from emergent competitors, but also from the proliferation of social media. Social media for recruitment. The third common threat was social media for recruitment, which challenged the previously taken-for-granted value of the executive search sector: 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. 11 Threats and Reputation in Executive Search Firms LinkedIn as an example . . . an immediate impact is that organizations would say, you know, ‘Well, why would we use an executive search ﬁrm when we could just ﬁnd them ourselves?’ (Director, 2013) Social media has been threatening in terms of its capacity to take business away from executive search as client ﬁrms use the site as a means of searching for candidates. Many interviewees found that social media sites were quite superﬁcial because candidates could self-select their proﬁles: I recruited a chief executive for a small organization. Embarrassingly, it didn’t work out. If I were to direct you to that person’s LinkedIn proﬁle, that nine months has vanished. (Managing Partner, 2013) Other interviewees recognized the value of having access to a large database on LinkedIn, but argued that this was not enough to succeed in a search: Enormous availability of data itself . . . will not produce an outcome for a search. So, what we get paid to do is value-add . . . to review the data, synthesize it, and then draw conclusions around that data. (Managing Partner, 2013) Other interviewees argued that social media was clearly prevalent, but less of a threat to the highend segment of executive search: Not the senior executive search industry, no . . . What it has changed is it’s opened up, I guess, new avenues of research for us because there’s a lot more information out there on the internet, in various forms. (Managing Partner, 2013) In short, there were deviant voices surrounding the inﬂuence of social media. While it had some negative impact, like taking away business, many interviewees recognized the value of social media and saw such services as complementary to their intermediary offering rather than as a substitute, although they recognized that they needed to educate their clients about this. Managing reputation in response to common threats The different common threats faced by ﬁrms brought into question the whole notion of executive search, where a fee is paid by clients regardless of the success of the search. This is a demonstration of a major leap of faith among clients in the reputation of the sector. We asked interviewees to explain how they were responding to the three common threats identiﬁed above, and found from the data that there were broadly three types of response that executive search ﬁrms were adopting, which were functional (diversifying service offerings), symbolic (highlighting symbolic capital) and individual (connecting through individuals) (see column 2 of Table 5). The ﬁrst response, diversifying service offerings, appeared new for most ﬁrms, whereas highlighting symbolic capital and connecting through individuals were something ﬁrms had previously engaged with in a limited away, but the sentiment from managing partners was that their ﬁrms needed to do this in a much more proactive and sophisticated manner. Diversifying service offerings. Many ﬁrms were making a distinct attempt to diversify their reputation, particularly into areas such as leadership development, succession planning and consulting, as a means of overcoming the shortfall in work on pure executive search and boardroom appointments. Tables 3 and 4 illustrate such diversiﬁcation in the six leading global US and European ﬁrms pre- and post-GFC, respectively.4 Some interviewees agreed that having a diverse portfolio of service offerings meant that the ﬁrm could have a wider range of conversations with clients around potential business opportunities, which was not possible previously when they were just focused on candidate search: It opens a number of doors . . . we can . . . talk to them about their business . . . getting a broader understanding of their business has been really, really important, and so we can represent a number of requirements a client might need. (Director, 2013) There was evidence of executive search ﬁrms branching out into service areas such as leadership development and succession planning, which were historically offered by human resource consulting and strategic management ﬁrms: So the whole sort of leadership and succession piece . . . I’ve talked to quite a lot of clients about this recently. The overriding view is clients are happy to engage with search ﬁrms on these exercises. (Managing Partner, 2013) 4 We do not stipulate which of these ﬁrms we interviewed to avoid disclosing their identity and the identity of the managing partners that we interviewed. 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 12 W. S. Harvey, J. V. Beaverstock and H. Li In Sydney, many ﬁrms found themselves advising clients on a much broader range of issues. Some interviewees argued that this was a proactive strategic decision rather than a reactive response to a crisis: The concept of leadership advisory services, which is really where a lot of search ﬁrms are moving their work into, and it makes sense, as the search market is going more upstream and the search ﬁrms are dealing with those higher end searches. (Managing Partner, 2013) Several interviewees suggested that while on the surface many ﬁrms portrayed their transition into related service areas as a measured diversiﬁcation from search, in reality they were forced to do so because of a major reduction in search work: There’s very much a trend by those listed companies, who are . . . driven by shareholders, and share price, to deviate from the core service of executive search . . . I think it’s dangerous for the profession. (Managing Partner, 2013) Other ﬁrms have sought to either move up or downstream to seek out new work. In terms of downstream: What you see with [ . . . two global executive search ﬁrms] is actually them taking their leadership consulting services downstream from CEO succession much more to large mass-market middle management, and they’ve bought [ . . . leadership management assessment tools] and that’s a product-based proposition for them. (Managing Partner, 2013) In terms of upstream: Clients will continue to see the executive search industry as profoundly relevant in the $300k and above category . . . You’ve got to be able to add more value . . . really act as a trusted advisor, consulting around succession and leadership issues. Search ﬁrms that operate in that $150–250k space have a probably pretty dim future . . . margins will be eroded. (Managing Partner, 2013) Many executive search ﬁrms found themselves forced to offer new types of services to clients to survive. Notwithstanding the different approaches that ﬁrms adopted to diversify either proactively or reactively, our data suggest that clients wanted to support them during this process of change. C Highlighting symbolic capital. Demonstrating an elite status was something that became more pronounced among these ﬁrms in response to the GFC, where the status of ﬁrms was coming under particular threat from a lack of business during the GFC, from new entrants, and because of the substitution of their services by social media recruitment. What was striking in all instances of our interviews was the ‘tangible’ symbolic capital demonstrated through the location of offices. Interviewees highlighted the signiﬁcance of being in a prestigious location (e.g. overlooking the iconic Harbour Bridge) to signal their elite global status. However, they were divided on the beneﬁts of being geographically proximate to potential and existing clients. Some interviewees argued that being in Sydney’s CBD was important both for access to high-quality clients and candidates, and for signalling to them their elite status. These ﬁrms sought the ‘Sydney CBD’ location to enhance their reputational and network capital: There is more commercial activity in Sydney than the rest of the country . . . with important sectors in ﬁnancial services, industry and government. (Managing Partner, 2009) Some other interviewees saw beneﬁts from being somewhat distant from the client: Being a ‘Sydney’-based ﬁrm is important . . . But, in reality, it isn’t critical to be located close to the client. [ . . . Our ﬁrm] beneﬁts from being outside of Canberra for government work as the government like to do business with a Sydney-based ﬁrm. (Managing Partner, 2009) The above interviewees clearly understood the value of being in Sydney and in the right part of the city, but this was not necessarily to be close to clients. In contrast, the interviewee below saw distinct beneﬁts for his ﬁrm from being geographically proximate to its clients for winning repeat business: Essential. We’ve always tended to be in the lowvolume end of the market and it is those client relationships that get the repeat business and the referrals. (Managing Partner, 2009) The expression of symbolic capital was also shown through how these ﬁrms marketed themselves on their websites and on their premises through images of Sydney, their professionals and commissioned art work. These examples show the 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. Threats and Reputation in Executive Search Firms 13 important value that was placed on symbolic capital as a means of signalling their elite identities and value to clients. Some other interviewees highlighted the importance of signalling ‘intangible’ social capital such as value and professionalism. For example, the interviewee below is trying to convey the added value of his ﬁrm without coming across as too frank: Connecting through individuals. Given the GFC and the fading sector status, the role of individuals, and particularly partners, informal contacts and personal reputation, was important for establishing long-term connections and helping to win new and retain existing work. This was not only about the networks of partners, but also of key organizational members who managed the company’s rolodex and its organizational networks over many years. In a sense, this seemingly non-professional knowledge or relationship could silently sustain a ﬁrm’s reputation. During the frantic chaos of the GFC, long-term individual connections and familiarity became an anchor that customers could rely on to reduce their uncertainties and enhance their stickiness: When I’m meeting with potential clients, people with whom I do not do business yet, I’m continually trying to – without being too overt about it – trying to demonstrate the value that I can bring to their business. (Managing Partner, 2013) A further strategy adopted by ﬁrms was metrication and demonstrating the sophistication of search, which the interviewee below clearly used as a means of showcasing his ﬁrm’s value compared to that of his competitors: We’re very metricated, so know what our average time to short-list and average time to ﬁll a search is . . . it’s materially better than our big competitors. We’re running at 88 days for average time to complete an assignment, which, if you look at industry norms, they’re sitting in the 150-plus day category. (Managing Partner, 2013). Another approach to demonstrating symbolic capital was highlighting the professionalism of the business: We became a lot more strategic in terms of nature and focus. A lot more corporatized I would think about how we go about doing business, whereas it was an old ﬁrm style when I joined. (Managing Partner, 2009) Part of professionalizing was showing that the ﬁrm was not unduly reliant on one person: I think the demands being placed on search ﬁrms in the mature state of the market is harder now for people who are purely one man [sic] bands to exist because clients want to see who’s being asked to demonstrate depth of capability, depth of experience and that you’ve got a level of capability. (Managing Partner, 2009) Although it was important to show that ﬁrms were not overly reliant on single individuals, we found that powerful individuals played a central role in convincing clients of their ﬁrm’s reputation. We had a farewell for somebody on Friday. She essentially was in a support role, but the role she played over those 19 years in the practice group she worked in was phenomenal in terms of, you know, who she knew and the client interaction, and the candidate care and those sorts of things. (Director, 2013) Second, some other interviewees reinforced the importance of informal networking for strengthening connections with clients and candidates, which was predicated on individuals: It’s really personal relationships having coffee, seeing how their business is going . . . and even if there’s no work from them, it’s still very important to maintain the relationship, that personal relationship. (Managing Partner, 2013) Lastly, our data also show that the role of key individuals was important for building up the ﬁrm’s reputation, particularly for ﬁrms where there was a close alignment between individual and corporate reputation: Personal reputation and organizational reputation deﬁnitely counts, absolutely. So, you know, sometimes that’s really in our favour . . . If we’re competing with a smaller ﬁrm or a newer ﬁrm, that’s really in our favour. (Managing Partner, 2013) The importance of individual reputation was also reinforced by the following partner, who recognized that a ﬁrm’s ‘brand’ could get you so far, but the team within a pitch was what won the work: We did a survey with a number of our clients and we asked that question and what came back was brand is important, brand gets you to the table, but it’s the 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 14 W. S. Harvey, J. V. Beaverstock and H. Li team that pushes you across the ﬁnish line. (Partner, 2013) Although individual reputation was important in some way, clients were mainly looking for more than a trusted partner with an extensive rolodex, particularly when faced with common threats such as the GFC: In the current environment, clients are somewhat risk-averse, and so choosing a ﬁrm that has a reputation, however you wish to deﬁne that, is seen as a way of minimizing that risk. (Managing Partner, 2013) In short, while facing common threats to reputation at a macro-level, individual forms of relationship management with clients enabled partners to reassure clients of their claimed expertise. Discussion This paper provides a rich illustration of how executive search ﬁrms manage reputation in response to multiple common threats. We began by identifying three distinct common threats to the executive search sector in Sydney: the GFC, sector status and social media for recruitment. The reputation literature has highlighted several challenges that PSFs can face in relation to threats, such as transactional uncertainty (Glückler and Armbrüster, 2003). When uncertainty exists, typically clients use reputation as a proxy for the perceived quality of service (Clark, 1993; Fombrun, 1996; Rindova et al., 2005). We ﬁnd that this uncertainty previously existed in the executive search sector because of the nature of clients paying a retainer fee to ﬁrms in advance of the search, regardless of the success of the search. However, this uncertainty became more pronounced given the severity of the common threats discussed above. It also became more salient as these ﬁrms shifted their business models and the types of work they offered clients, which required careful reputation management of how these ﬁrms were perceived by clients. The circumstances of this study have important implications for other contexts, because common threats such as ﬁnancial crises, concerns among clients and customers around sector practices and the power of social media are salient for many organizations, including but not limited to PSFs. Existing research has focused on the mesolevel when organizations face challenges to their C reputation. Responses, for example, can include impression management to re-categorize certain identity dimensions (Elsbach and Kramer, 1996), attempts to alter the ﬁrm’s identity (Gioia, Schultz and Corley, 2000; Ravasi and Schultz, 2006) or steps to align organizational identity and reputation (Harvey, Morris and Müller Santos, 2017). Our study shows that executive search ﬁrms managed reputation through functional, symbolic and individual responses to counteract the abovementioned common threats. First, they diversiﬁed service offerings (see Table 4); second, they highlighted symbolic capital; third, they strengthened their connections with clients and candidates through key partners. This stance pinpoints how these ﬁrms effectively respond to common threats by integrating individual-level with ﬁrmlevel responses. We suggest that general management alone does not adequately explain how ﬁrms manage common threats. For example, Tables 3 and 4 demonstrate the major transition of business activity among some of the elite executive search ﬁrms before and after the GFC. The strategic decision to change the services which are offered, and how they can become operational, are clearly broader management decisions. However, because of the above-mentioned transactional uncertainty for clients within PSFs, particularly during the GFC when there are additional economic and political uncertainties, this highlights the importance of reputation management because these ﬁrms need to build trust and credibility for multiple new areas of business, which requires major changes in how clients perceive them. Barnett and Hoffman (2008) argue that while the actions of individual ﬁrms are important, it is also signiﬁcant to understand the actions of other surrounding ﬁrms. We do not ﬁnd empirical support for ‘keeping up with the Joneses’ (ﬁrms trying to improve their activities to the same standard to keep pace with their competitors), although as we discuss below we do ﬁnd a group of elite ﬁrms unconsciously offering similar activities as they seek to ‘move away from the Joneses’. We also do not ﬁnd evidence of ‘teaming up with the Joneses’ (working with competitors to protect the sector’s reputation). However, we suggest two further categories which executive search ﬁrms adopt in response to common threats. First, ‘moving away from the Joneses’, which is when ﬁrms are doing very different activities to what they were doing previously that mean they may no longer be 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. 15 Threats and Reputation in Executive Search Firms Common threats Different reputation management responses deployed by organizations Symbolic response Individual response Functional response Common sector responses to reputation management • Moving away from the Joneses • Fencing out the Joneses • Networking more than the Joneses Figure 1. Theoretical model of how ﬁrms manage reputation in response to common threats comparable to their competitors. The outcome of this is both moving away from and moving closer to competitors, where a set of elite ﬁrms end up doing similar activities to each other (moving closer) but a distinct set of activities from their mid-tier and boutique ﬁrm counterparts (moving away). Second, ‘networking more than the Joneses’, which is when ﬁrms are relying on informal communication channels to convince clients about the value of their work. In addition, we ﬁnd empirical evidence of ‘fencing out the Joneses’ (demonstrating distinctiveness from the poor behaviour of other competing ﬁrms). We argue that these activities constitute reputation management because they require careful communication and interaction with their clients to convince them that their claims are credible. We now discuss these in more depth and summarize our argument by providing a theoretical model of how ﬁrms can manage reputation in response to common threats (see Figure 1). Moving away from the Joneses. Our results show that executive search ﬁrms were forced to engage in tangible changes to their business models, including diversifying service offerings and often upscaling the business, which were an important means of meeting client demand and reducing uncertainty (Sturdy, Wylie and Wright, 2013). These initiatives enabled ﬁrms to develop competitive advantage through building a unique and elite reputation (Wæraas and Sataøen, 2015), which effectively responded to common threats. The literature around business change demonstrates the ability of partners to craft new business through understanding the ﬁeld and carefully deploying rhetoric to persuade different stakeholders of the value of their new areas of expertise (Suddaby and Viale, 2011). This is a similar line of argument to the literature on ﬁrms who have faced reputation damage and need to signal capability and positive intent to a broad group of stakeholders (Rhee and Valdez, 2009). We ﬁnd that the elite ﬁrms moved away from their midtier and boutique counterparts through offering a suite of new services to their clients, such as leadership development and succession planning. This reputation management strategy by the elite ﬁrms was effective because the mid-tier and boutique ﬁrms did not have the capacity or scale to offer such diverse services. This meant that the elite ﬁrms had signiﬁcantly fewer competitors to build their reputation in new areas of business among their clients. Although these offerings were claimed to be unique, as Table 4 illustrates, there was in fact a lot of clustering of activity among elite ﬁrms. Theoretically, this is important in terms of how organizations can manage their reputation because it can entail both moving away from and moving towards their competitors, which is at the heart of the relational nature of reputation as a construct (Fombrun, 2012). We argue that reputation management can have major implications for inﬂuencing client perceptions of which organizations they consider credible and elite. 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 16 W. S. Harvey, J. V. Beaverstock and H. Li Furthermore, although the literature suggests that managing reputation is difficult (Ang and Wight, 2009) and extensive time is needed to build reputation (Delgado-Garcı́a, Quevedo-Puente and Dı́ez-Esteban, 2013), we suggest that clients may not be the buffer but the enablers of reputation management. While executive search ﬁrms had to compromise somewhat on the source of their revenue streams during the GFC, they continued to seek out prestigious clients upstream (i.e. those looking to place board members or senior managers) to achieve or maintain (in the case of established global ﬁrms) their elite status. Part of this process included working in new areas of business which veered away from what was considered core work in the executive search sector and required careful consultation with clients to be credible. Within PSFs, partners are expected to establish new practice areas (Anand, Gardner and Morris, 2007), despite problems with ‘reputational stickiness’ (Greenwood et al., 2005, p. 664). Our ﬁndings suggest that clients were supportive of executive search ﬁrms, with whom they held close professional relationships, diversifying their service offerings during a difficult ﬁnancial period when they were offering them little work in the search business. The regular face-to-face contact between partners and clients was important for helping to achieve client support. This is important because, when PSFs make new claims around their identities without close consultation with clients, the latter will challenge those claims, which may compromise the ability of ﬁrms to win new business (Harvey, Morris and Müller Santos, 2017) as reputation is perceived by stakeholders based on their experiences and observations, which is inextricably linked to attitudes, emotions or behaviours (e.g. Fombrun, Ponzi and Newburry, 2015; Money et al., 2012). Hence, working closely with clients on potential new areas of business is an important and effective strategy for PSFs to manage their reputation among clients in response to common threats. Fencing out the Joneses. Fencing out the Joneses is one strategy for ﬁrms to distinguish themselves from their discreditable competitors (Barnett and Hoffman, 2008), such as the ‘cowboy’ ﬁrms some interviewees felt could undermine the reputation of the executive search sector. We ﬁnd evidence of this through ﬁrms emphasizing symbolic capital, which was used as a persuasive tool to signal particular elite qualities (Bourdieu, 1990; Kipping, C 2011) to clients and to inﬂuence the behaviour of their staff to reinforce this high status, which enabled ﬁrms to justify charging premium prices to clients (e.g. Dowling, 2006; Obloj and Obloj, 2006; Rindova et al., 2005) and also reduced employee turnover (Fombrun, 1996; Fombrun and van Riel, 2004; Roberts and Dowling, 2002). This is particularly important in the context of PSFs, where professionals play an important relational role with clients and candidates (O’Mahoney and Sturdy, 2016). We found that one way that symbolic capital was demonstrated by executive search ﬁrms was through location. In terms of symbolic capital and location, to date reputation has been under-researched (Newburry, 2012). Given that reputation is derived from the direct experience of external stakeholders (Rindova, Petkova and Kotha, 2007), we found mixed responses in terms of the importance of proximity to clients. Interviewees recognized the beneﬁts of proximity, but also realized that in certain markets outside of major global cities proximity could be perceived as parochial and therefore negative in terms of reputation. In contrast, being distant in a prominent city sometimes signalled global in perspective, less partisan to local politics and therefore more reputable, which is an important element of competitive advantage (Fombrun and Shanley, 1990; Zyglidopoulos, 2005). That said, regular discussions with clients, even when there were no speciﬁc business transactions involved, were important for managing reputation among this stakeholder group. We also found that architecture served as an important artefact (Hawkins, 2015) in terms of demonstrating symbolic capital, which is particularly salient during common threats because it is a means of signalling quality in relation to competitors, which is a key dimension and building block of reputation (Frandsen et al., 2013; Lange, Lee and Dai, 2011). Our data enrich the existing literature on impression management through consultants (Glückler and Armbrüster, 2003) and through the materiality of buildings and location, which were not simply ‘material constitution’ (Bloomﬁeld, Latham and Vurdubakis, 2010, p. 415) but generated affordances linking to ‘action possibilities’ (Gibson, 1979, p. 133) when clients and candidates visited the premises. All of this may appear superﬁcial, but it was an important reputation management strategy by organizations to 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. Threats and Reputation in Executive Search Firms 17 counteract threats (Rhee and Kim, 2012). The implication is on the one hand that ﬁrms are seeking to demonstrate their elite status and openness through hosting meetings in prestigious locations, but on the other hand these sites are not visible to all and there is some degree of closure because PSFs are only open to the most prestigious clients and candidates. In both cases, this is a strategy to decouple from competitors, particularly those ‘cowboys’ at the lower end of the executive search market. Inevitably, deploying symbolic capital to manage reputation means winners and losers, particularly given the common threats of the sector, because the same organizational stimuli might lead to various perceptions held by different stakeholders related to demographic, geographic and cultural dimensions (Bhattacharya and Sen, 2004; Walker, 2010). The executive search ﬁrms in this study were notoriously unregulated, which provided ﬁrms with unlicensed opportunities to express symbolic capital to legitimize their existence to clients in relation to the ‘cowboy’ ﬁrms who were tarnishing the sector with the same brush and compromising some of the elite reputation claims of other ﬁrms. This supports Kipping’s (2011) argument, in the context of management consulting, that this model of impression management is increasingly hollow and also relates to the reputation commons argument of Barnett and King (2008) that all ﬁrms suffer in a sector when the actions of one ﬁrm negatively impact upon the reputation of the entire sector. We found, because of the unregulated nature of the sector and the risk of damaging new entrants, that there is a clear stratiﬁcation between different ﬁrms, or ‘dis-identiﬁcation’ with other Joneses. This was not so much in terms of their social class, as Bourdieu (1990) would suggest, but in terms of their reputation among clients and candidates. press around headhunters (Forbes, 2014). Hence the ﬁrms sought a variety of discursive channels through their partners to signal their elite qualities in the marketplace (Lange, Lee and Dai, 2011; Walsh and Beatty, 2007). Our results suggest that partners of executive search ﬁrms tried to network with both clients and candidates, not only as a means of winning work during a highly difficult and extended ﬁnancial period, but also to be more persuasive around their ‘value add’ reputation, which according to interviewees required initiatives beyond the standardized candidate offerings via social media websites. This strategy has important implications for how employees of PSFs can convince clients of their value, not only in areas of existing strength (e.g. candidate search), but also in new business areas (e.g. leadership development, consulting and succession planning). Pratt, Rockmann and Kaufmann (2006) suggest that individuals who pitch themselves as sector experts can bolster their professional identity, which impacts on reputation given that reputation is considered an external reﬂection of identity (Foreman, Whetten and Mackey, 2012). We found that, despite a trend towards professionalization and institutionalization in PSFs (Muzio, Brock and Suddaby, 2013; Nikolova, Möllering and Reihlen, 2015), executive search ﬁrms sometimes adopted ‘unprofessional’ or informal approaches (i.e. personal connections and networking) as well as professional approaches (i.e. greater use of metrics) to build trust at an individual level and to buffer and reinforce organizational reputation. This supports the argument that experiencedbased trust and networked reputation between consultants and clients at the individual level play a pivotal role in enabling ﬁrms to manage their reputation in ways which clients accept (Glückler and Armbrüster, 2003). The implication of our ﬁndings is that there is an important interplay at an individual, organizational and sector level associated with managing reputation in the process of responding to common threats. While there has been an extensive literature examining the role of celebrity CEOs and reputation (Graffin et al., 2013; Zavyalova, Pfarrer and Reger, 2017), our study expands this remit by demonstrating the role of other leaders such as partners, and how their regular interactions with clients and candidates is an important part of managing their own individual reputations Networking more than the Joneses. Our data show that many executive search ﬁrms sought to connect even more with their clients and candidates. In part, this was a response to issues experienced across PSFs around information asymmetries (Clark, 1993; Clark and Salaman, 1998), as clients do not have access to complete information or the same information as employees of PSFs (Walsh et al., 2016). The problem seemed to be particularly acute given the challenges of the common threat of the GFC, in addition to the negative 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. C 18 W. S. Harvey, J. V. Beaverstock and H. Li as well as the reputations of their organizations, which also has wider implications for how the sector is perceived. Finally, reputation management requires an understanding and awareness of sector and market trends outside of the organization, where external threats and activities from other ﬁrms and institutions can impact on the organization’s reputation. Conclusions This paper provides a rich empirical illustration of how PSFs, particularly a new profession, can manage reputation in response to multiple common threats to the sector. We suggest that the combination of a common threat and a reputation management response is an important context requiring further understanding. We explore the case of common threats faced by executive search ﬁrms: the GFC, questions around the sector’s status and the proliferation of social media for recruitment. We ﬁnd that executive search ﬁrms who were facing common threats were able to successfully manage their reputation when they diversiﬁed their service offerings, highlighted their symbolic capital and connected their ﬁrms to clients through key individuals. Building on these three insights from our case study and building on the literature on managing reputation and professional service ﬁrms, we identify a series of theoretical insights around how organizations can manage their reputation in response to common threats, which we brieﬂy summarize below. Building on the work of Barnett and Hoffman (2008) and based on the English idiom ‘Keep up with the Joneses’, when ﬁrms respond to multiple common threats, we do not ﬁnd empirical support for a deliberate attempt at keeping up with the Joneses (ﬁrms attempting to improve to the same standards as their competitors), although many of the elite ﬁrms in our study did appear to offer similar business alternatives. We also did not ﬁnd evidence of teaming up with the Joneses (ﬁrms working with competitors to protect the sector’s reputation). We identify two alternative categories that explain how PSFs manage their reputation in response to common threats. First, moving away from the Joneses (doing very different economic activities, which means ﬁrms may no longer be compared to their competitors), when ﬁrms seek to upscale and maintain their C professional ties with clients. Second, networking more than the Joneses (when individuals seek to build trust and convince clients about the value of their work), through more informal processes. In addition, we ﬁnd support for Barnett and Hoffman’s (2008) fencing out the Joneses (demonstrating distinctiveness from the poor behaviour of other competing ﬁrms), through ﬁrms reinforcing their elite status. These are challenges that are likely to be salient not just for PSFs but also for other types of ﬁrm, particularly when entry and legal barriers are relatively low, meaning that organizational reputation is used by clients and customers as a signal of likely quality. Theoretically, this paper provides an important and timely explanatory framework for how PSFs (and potentially other types of ﬁrm) can successfully respond to common threats and manage their reputation to survive by intersecting individual, organizational and sector approaches. We argue that reputation management is particularly important as part of a wider management response to common threats. We ﬁnd that reputation management can lead to organizations becoming simultaneously closer to and more distant from their competitors, which highlights the relational nature of reputation as a construct, and has signiﬁcant implications for how organizations are perceived and who they are compared with over time. Limitations and further research There are several limitations and opportunities for further research. We focus on the speciﬁc context of the GFC, which, while empirically important, needs to be placed in the context of other events. Therefore, we encourage studies to investigate how executive search and other PSFs manage reputation to counteract common threats in other macroeconomic contexts. This paper has focused on the perceptions and experiences of a group of partners and senior partners. While the perceptions of this group of senior managers are valuable, there are likely to be wider perceptions both within and between stakeholder groups. Therefore, we need to explore how other internal and external actors at various levels and in different geographic and temporal contexts perceive an organization’s reputation as it responds to common threats. 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management. 19 Threats and Reputation in Executive Search Firms Practical implications This paper has several important practical implications. First, we show that when faced with threats that are common to a sector, PSFs can adopt three responses: functional responses, which entail a diversiﬁcation of the services that they offer; symbolic responses, which signal the value and status for their clients; and individual responses, which require greater levels of connection, trust-building and reputation management at the partner level. Second, reputation is inherently relational, meaning that PSFs need to demonstrate to their clients how and why they are distinct from their competitors. We identify three important practical steps to achieve this: moving away from the Joneses, which involves offering unique services to clients compared to competitors; fencing out the Joneses, which is showing how the ﬁrm is morally and ethically distinct from any negative practices of other ﬁrms; and networking more than the Joneses, which entails a greater level of individual engagement with clients to build trust and signal value. 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His research focuses on reputation and talent management and he has published in Journal of Management Studies, Human Relations and Harvard Business Review. Jonathan V. Beaverstock is Professor of International Management at the University of Bristol’s School of Economics, Finance and Management. His research focuses on the internationalization of professional services and the global mobility of talent, and he has published in Environment & Planning A, Journal of Economic Geography, Global Networks and Regional Studies. Jonathan is a Fellow of the Academy of Social Sciences. Hongqin Li is a Lecturer in Organization Studies at the University of Portsmouth Business School. Her research focuses on leadership, reputation and identity. C 2018 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management.

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