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Placement Firms Are Again Employing Their Resources

After weathering a rough economic patch, companies such as National Search Associates and Newport Strategic Search Inc. on the San Diego Business Journal’s Permanent Placement Services list are experiencing a turn for the better.

(See Pages 18 and 19 for the entire list, which is ranked by 2011 local full-time recruiters.)

Philip Peluso, president of the No. 1 ranked National Search Associates in Carlsbad, said first-quarter 2011 revenues show an increase in excess of 50 percent over 2010 first-quarter revenues. He attributes the growth to gaining clients and to repeat business from existing clients, which are mainly pharmaceutical and medical device companies outside of San Diego.

“The bulk of our revenue comes from relationships we’ve had a long time with existing clients,” Peluso said, of the company founded in 1991.

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The growth spurt follows a decline in the number of placements by National Search Associates, which decreased from 190 placements in 2009 to 170 in 2010. Peluso says mergers and acquisitions have taken place in its areas in which in specializes — biotechnology and medical device companies — which means a reduction in staff at a lot of major pharmaceutical companies.

The Top Spots

“So these firms have not been recruiting as heavily as they have in the past,” Peluso said. “The good news is the recruiting that has been done has been at senior levels.”

National Search Associates found its niche of clients after about a dozen years of recruiting for software, computer technology and telecommunications companies in addition to its current core of specialties. The tech industries were abandoned four years ago after the dot-com bust because they didn’t fit the company’s business model any longer, Peluso says.

Current challenges include a longer gestation period of about five months for candidate searches, which is being influenced by the housing market. It has become difficult for candidates to relocate because of a loss of equity in their homes, he said.

“We’re really market driven and focused on responding to client needs,” he said, adding that the business prefers fewer but higher dollar value placements. “The number of placements we accomplish doesn’t mean as much as the revenue and growth of the revenue stream.

“Our business in general will follow the domestic economy,” he said. “If you look at a chart of our revenue it will almost parallel the GDP (gross domestic product) of the United States.”

Business is also picking up at Newport Strategic Search, the No. 4 ranked company on the Permanent Placement Services list, where the number of local full-time recruiters doubled to 12 this year from six in 2010. Although business activity still isn’t at the level of 2006 to 2007, according to President John Fitzpatrick, it has progressed beyond its worst year in 2009 and the year it spent rebuilding in 2010.

“There’s been a 100 (percent) to 150 percent increase in placements this year over last year,” said Fitzpatrick, explaining that the company is on track to double last year’s revenue. “We see it as a good time to deploy capital back into the business and start expanding.”

Established locally in 1995, the company recently purchased a 7,000-square-foot building, an upgrade from its 2,200-square-foot facility a couple of blocks away in Encinitas. The deal closed April 20, and the staff expects to move in after remodeling is completed in a couple of months.

Fitzpatrick said there are difficulties such as finding talented recruiters and in certain practices finding the candidates, especially technical candidates such as engineers, in the firm’s areas of specialty, energy, life sciences, construction and real estate. Fitzpatrick says its clients are everything from 100-person startups to Fortune 500 companies, but its preferred client is small to medium-size companies of about 90-plus employees.

“We like to help them grow,” Fitzpatrick said.

Playing a Bigger Role

At Arch-Stone International Limited of La Jolla, founding chairman S. Caitlin McCall-Baron says the company is involved in very heavy business development efforts. According to the Permanent Placement Services list, where Arch-Stone is ranked No. 7, the company increased its number of local full-time recruiters to 10 this year, up from seven in 2010. It also increased its number of placements from 21 in 2009 to 41 in 2010.

With a broad range of specialties, from green energy, health care, higher education, oil and gas to physician assistant, telecommunications and government, Arch-Stone keeps busy serving companies, universities, nonprofits and other organizations in search of recruits as well as serving candidates who are reaching out in search of a career transition.

McCall-Baron sees that the challenges aren’t just with finding candidates, but rather it’s selling the role of a new position.

“The hardest part is creating a value proposition to encourage candidates to make a move,” she said. “We have a very heavy lifting, high-touch approach. We reach out to companies and reach out to people who have their heads down and are working.”

Another challenge is ensuring the search firm stays involved throughout the entire process from introduction to relocation of the client to their arrival at work. The company wants to ensure the client stays at the job and is happy there, McCall-Baron says. She said that Arch-Stone, established locally in 2010, may interview 200 candidates before selecting five to present for a position. The company offers a two-year “warranty” on placements.

“The hardest thing is staying involved throughout the search because it can go off track in a heartbeat,” she said.

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