I welcome you to the Fall Edition of The Market Intelligence Report.

As we move into the 4th Quarter we hope that you are enjoying, as we are, the positive energy in the executive talent market. We're seeing a sustained increase in activity at several different levels.

Preparing to go into the New Year more and more companies are refreshing their executive teams by bringing onboard new COOs, CIOs, and CTOs. There is a demand for executives who can transform their technology and operations organizations into a service delivery model and who can find ways to commoditize the services they provide. The focus is on forging a closer working partnership between these executives and their business counterparts and on creating a more customer centric culture.

At the next tier of management we are experiencing an increased demand for strong large project management skills as companies make significant investments in upgrading their infrastructure. The budgets allocated for technology and operations have expanded to support the initiatives being launched, balanced by a concern about controlling costs.

We hear from many of our candidates that they are experiencing the luxury of fielding multiple offers and that they are finding that they don't have to limit their search for greater opportunity to their current industry. The increased competitiveness in the marketplace is allowing them to leverage their skill sets into moving into many different industries ranging from financial services to consumer product. Companies are more focused on the scope of the candidate's previous responsibilities and global exposure than on direct industry experience.

Candidates are also experiencing being held to higher standards for their ability to deliver as well as to demonstrate a proven track record of past success. References that speak to these issues are no longer optional, they are mandatory before an offer will be extended.

When the market is as active as it is now companies should be starting to firm up executive teams they want to lead them through 2006 as early as possible.

The talent market for successful technology and operations executives has heated up rather dramatically in 2005. Companies are scrambling to fill new and existing executive positions in response to the rapidly changing business landscape and to improved business results.

Among these changes we can cite:

1. More stringent regulatory and reporting requirements brought on by Sarbanes-Oxley, the SEC, Basel II and other regulatory bodies.
2. The growing need for larger, mature corporations to replace their legacy systems with more robust, scalable technology solutions that are currently available
3. The need for companies that have grown by acquisition to break down the silos created by these mergers and move to an integrated shared services environment
4. The need to organize platforms, systems and data warehouses by logical customer driven records to facilitate cross-selling and better customer activity tracking capabilities.
5. All of the above dictates the today's technology and operations executives run their organizations like businesses and relate to their business partners with the understanding and responsiveness needed to provide business-enabling technologies and processes that will give them competitive advantages in their markets.

With all these pressing needs and the hiring budgets available to many companies to act quickly to fill their gaps with the right talent, you'd expect that the executive hiring process would be moving along at a brisk pace, right? Well, not exactly!

Although there has been a substantial increase in executive hiring this year, anywhere from 20% to 45% increases, depending on which surveys you look at, the hiring process has been moving slower this year than in the past several years. This makes it difficult to source, qualify and add new executives to organizations, because the rate of actually hiring new executives is often not keeping pace with the demand for this executive talent.

Reasons for this current dilemma include:

1. Because of the increasing need for technology and operations executives to be more business savvy and business focused than ever, the corporate interviewing process includes more players in the business and technology and operations arenas then in the past, which although more comprehensive tends to slow down the process.
2. Although executive hiring has increased, companies in many cases are proceeding much more cautiously than in the past because:
   1. They may have been burned during and after the dot com bust.
   2. Coming out of heavy downsizing and cost cutting experienced in the past several years, companies want more for their money and tend to evaluate candidates very deliberately.
   3. Many companies are in the throes of formalizing their executive screening and hiring processes with the leadership provided by their Human Resources organizations, including extensive candidates testing, which can have analytic, personality and business case proficiency elements included.
   4. Because of recent downsizing, followed by increased business activity, existing executives are more pressed for time than ever before, making it that much harder to schedule interviews with outside candidates. Their primary pressures come from delivering according to the internal demands of their day-to-day and long term business commitments.

How can the flow of human executive capital be increased without compromising the depth, comprehensiveness and integrity demanded by today's more stringent business standards? The answer lies within the realm of Human Resources, which in many organizations has taken on a stronger, more impactful role in the recruitment process than in the past.

For our executive search clients, we provide the Hiring Manager and the Human Resources Management involved, a weekly update of the candidate search status, which also includes market intelligence to help them keep very current with the competitive forces at work in the flow of human capital in the markets of interest to them.

As the coaches and mentors to the Hiring Executives within their organizations, the Human Resources professional has a bigger role than ever in getting their internal team of executives focused on the reality of the timing issues they face in order to attract, hire and retain highly sought after executives.

Like everything else in business, the right balance is essential for success. The challenge with keeping the executive recruitment process moving at the rate it needs to in order to avoid the risk of losing the desired candidate, is to make the search assignment as high a priority as the responsibility for deliverables to the business. Because without this commitment, driven by Human Resources, you may loose your future talent to organizations that are nimble enough to compete for scarce resources.

One of the hottest and most welcome trends we've experienced this year is a greater demand than ever for diversity on our short lists. The need to source a wide range of candidates who possess not only the required skills sets and background for a position but who also reflect diversity in ethnicity, gender and sexual orientation is no longer optional this is now a given. More and more companies have come to the realization that diversifying their executive ranks is a sound business practice and not just a politically correct decision.

Executives who bring a diversity of cultural backgrounds and experiences with them will better equip their firms for success in our global marketplace. For example, companies doing business in Asia or Latin America find that executives who understand both the languages and the cultural nuances of these regions afford them the ability to operate more effectively in these markets. Where an MBA was always an asset in climbing the corporate ladder, it is now a greater advantage to be bi or multi-lingual.

Respect for the ever expanding economic and political clout of women, minorities, and the gay community has also led to increased opportunities at the executive level. The more diverse a customer base a company seeks to attract the more economic sense it makes to leverage the diverse backgrounds and life experiences of its leaders to determine how to attract and retain these customers. Diversity in the executive ranks also gives companies the ability to gain wider acceptance and closer ties within their communities.

Another positive aspect of diversifying the executive team is an increased ability to retain and grow the careers of your future leaders. When employees are afforded the opportunity for career growth and success at their own firm and also see it reflected in their management, they are less susceptible to accepting offers outside of their own company.

The trend toward promoting diversity is one that enriches all of us.

You don't necessarily have to be an aggressive job hunter to get the position you want. Recruiters are also looking for the passive candidate (those receptive to move but not actively looking for a new job).

Passive job hunting comes in many forms. It can consist of letting your colleagues and friends know you would be interested in making a change, staying active in your industry by attending conferences and events or by keeping up with your education. The process of looking for a new position can be all about making connections, networking and strategically getting your name and/or resume out there to be uncovered and researched by search firms. Stay on good terms with present and past fellow employees who might become sources for referring you or helping you with a reference.

Recruiters find the passive job hunter by referrals, conferences, event lists of attendees, company directories, alumni sites as well as use the internet to make the most of search engine optimization. There are various search engines that provide professional summaries such as employer, former employer and education all based on public information gleaned from the Web.

Throughout your career you need to stay in the job hunting mode. Because the corporate marketplace can change at any time and force you to seek out a new position. If you have the knowledge beforehand of how to get to the next position you will be in a better place to shape your career goals.

As organizations have become increasingly dependent on their networks and the internet to provide the essential links of data and business intelligence, they have opened themselves to the potential risk of the invasion of cyber criminals. Network security and cyber crime has become a nightmare.

The number of companies that have experienced and been burned by hackers, viruses and worms is really unknown since as many as one third of the affected companies don't report the violations to the proper authorities. If they don't begin to come forward the likelihood of the correct statistics ever being known is unlikely. Companies are reluctant to report such crimes since they will appear vulnerable. They fear that negative publicity could lead to shareholder concern and have a negative impact on earnings. This attitude reinforces a perception in the cyber crime community that there are no serious consequences for their illegal actions.

Legislators should pass tougher laws to make the criminals suffer serious consequences for involvement in such corporate crime. Collaboration between businesses, universities and private individuals with law enforcement is essential in curbing cyber crime. We have witnessed how the FBI, working in conjunction with foreign countries, have arrested suspects for allegedly being involved with various worm viruses. Turkish, Moroccan, and British official have all collaborated with US officials in identifying and prosecuting criminals for internet crimes committed in the US.

Reporting these crimes is only one step in the attempt to curb cyber crime. A lot of cyber crime could be eliminated if software developers placed security higher on their list of development priorities. Security measures must be of highest priority for the CIO and CTO. In times of budgetary constraints security measures should always remain a top priority and not back shelved for another year. The cost of having the integrity of data bases compromised is enormous. We must all remember that criminals are becoming more effective in cracking passwords, taking over browsers, enabling encryption, and even logging keystrokes. All of us working together and sharing information with authorities will slow cyber crime and hopefully reduce its impact on our businesses.