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Headline: The Goldman Sachs of headhunting
Source: Euromoney
Date: February 2000
Editor: Peter Lee
Philippa Rose is about to be named in a poll by the Economist Intelligence Unit as the leading individual headhunter in financial services in Europe. The firm that she founded in 1981, The Rose Partnership, came out as the best overall search firm. The EIU contacted thousands of senior executives in European financial services, ranging from heads of corporate finance and M&A to private banking and forex. The EIU claims this constitutes unprecedented market research and analysis.
For good measure, The Rose Partnership was also named best search firm in corporate finance, reflecting Philippa Rose's personal status in the field that sustained her operation in its early years. The Rose Partnership was retained in the early 1980s by Goldman Sachs to help it build is premier franchise in Europe, attracting 40 key investment bankers.
In recent years, The Rose Partnership has expanded to cover private equity, structured finance, fixed income and derivatives and foreign exchange. Its most recent ventures will be in asset management and retail financial services. It remains small, with a staff of 34 and a strictly limited client list. Its approach has been to work for only a few banks - between four and eight - in each specialist field. That prevents conflicts of interest and enables the firm to become a full partner to each client bank, taking time to understand its strategy, strengths and weaknesses and then make a case for it to the best potential recruits. Rose mentions a well-known senior investment banker who recently spent several hours briefing consultants on his firm's business strategy at the Rose Partnership's offices on Copthall Avenue. Recruits from other leading search firms had never seen any senior banker take such time and effort to brief headhunters.
In return, Rose will provide extra services, related to a huge and exhaustive database of financial market professionals that everyone at the firm, including Rose herself, spends many hours each week updating. It has been built painstakingly over 13 years, with a system of codes to define the specialist skills of every candidate the firm has ever encountered. The firm's consultants are methodical and rigorous about report-writing. They always interview in pairs and write reports on every meeting and assessments of candidates, as well as separate reports relating to specific search assignments.
The database sounds somewhat clunky to use, partly because people are hard to code, partly because job definitions differ from firm to firm so markedly. "You have to know that a business called 'structured finance' might mean something very different at Chase and at DLJ. Our database coding is done by consultants, not researchers, because it wouldn't necessarily be obvious to a researcher that a knowledge of, say, derivatives is required to fill a particular position at a specific bank. Only intimate knowledge of the bank can give someone that level of understanding," says Rose. "That's why it can take two years to learn to use the database fluently."
But it can be incredibly useful. Rose recalls a client bank calling up to ask for information on a rival investment banker who was working across the table on a contested takeover. Rose was able to provide a few useful insights into the enemy's strengths and weaknesses from the pages of comments from industry sources that are attached to each person's file.
The database is the cornerstone of the firm and has pages of information on close to 75,000 people. "If you want to find someone between 38 and 43 years old who has an MBA, spent part of his life in Norway, several years at a US investment bank and has experience in marketing French derivative products to German accounts, it will instantly generate a list of names," boasts Rose. Not that the recruitment process is entirely automated. She adds: "The value we add is not so much in identifying people - at a senior level they are generally well known - it is in intermediating between the client firm and the candidates. We pursue a much more resource-intensive process than other headhunters and frankly we charge for it." She adds cheerfully: "Our clients tell us we are the most expensive search firm in the City by some margin, but they also tell us they really value our service."
Leading investment banks have squabbled for the firm's attention and its services. Rose earned the privilege of working only for top-ranked bulge-bracket firms. "In the late 1980s, I was tempted to work for some of the smaller firms, but I never did. I didn't want to be associated with second-tier business. It's extremely important to have a strong reputation with the candidates as well as with the client firms." The Rose Partnership has something of the exclusivity and mystique of the old Goldman Sachs partnership, though it ceased working for Goldman four years ago and took up JP Morgan as a client in its place. JP Morgan is more in building mode. It also works for DLJ and Lehman and, according to Philippa Rose, she and her staff have never been busier.
"We simply have no time to market to new clients. We're all wondering how to cope with the workload we already have. In corporate finance, for example, banks are going berserk and the appetite to recruit top-level staff is virtually insatiable." JP Morgan and Lehman have each made known their plans to recruit up to 100 investment banking professionals in Europe. That raises enormous challenges. Maria Wallace, head of the firm's corporate finance search practise says: "There's a huge dearth of good people. And the best people are already paid so much, it's hard to pay a premium. Some American and European firms will simply pay whatever it takes. The well-managed ones won't break their existing structures. The correct principle is that you should attract people into a firm on the basis of more than just money. The skill is in matching the person to the culture of the firm."
Headhunters are paid on the basis of fees earned and are always eager to recruit, but Rose will also pay people well for building future revenue streams.
Rose has just recruited David Potter, former chairman and chief executive of Guinness Mahon and before that managing director of Samuel Montagu and Midland Montagu. He was a client of the Rose Partnership at both and has joined to build its presence in retail financial services. Potter says: "We know we mustn't be greedy. It's a question of staying focused. To be credible in retail financial services we will have to build an e-commerce search capability. But how we then further leverage that capability is still up for discussion - perhaps we would then move into media, for example."
Rose herself is working on the principle that the database is a potential goldmine, or as she puts it an engine capable of powering a much more powerful car than The Rose Partnership in its present form. The firm has grown from 21 people to 34 in the past six months and is on target to reach 50 by June. "We're in growth mode for the next five years. I don't know where we will end up, but we get more ambitious every month as we grow more confident." She admits there's a risk in expanding too quickly into new areas. "It is vital that senior consultants should specialize so they can bring high-level market knowledge to meet a client's specific needs. I can spot a top corporate financier like that," she says, clicking her fingers. "But I'm the first to admit that retail financial services I don't know at all. That's why we recruited David."
So if it all goes wrong she could build herself a top investment bank with the best person in each position. Rose smiles, as if she'd thought of this possibility before. "In many ways, it would be a crowning achievement."
Peter Lee
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