Egon Zehnder International Case Study

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Egon Zehnder International
IB 207

Dr. Neelankavil J.
Amit Khoje

Strategic Review at Egon Zehnder International
The Problem

Egon Zehnder International (EZI) has steadily developed its reputation over 36 years. In these years, the firm carried certain values which Zehnder – the founder of the firm – thought were the building blocks of the firm and should never be compromised. But as the search industry has undergone dramatic changes in recent years, and also internally the company leadership is being transferred to the new younger generation, there were voices raised that the firm needs to change its values, strategies and ultimately business model to advance further in the business. Members of the executive committee are thinking if strategic review would weaken the firm’s commitment to its successfully proven 36 years business model or the change is real necessary. Strengths

1) Clients First:
Considered as one of the corner pillars of the company’s distinguishing characters, is the importance to clients. Clients always came first before the firm’s interests. Hence unless clients’ interests are fulfilled, the firm would never look for its profit. To bolster clients' interest more than the firm’s, in contrast with the industry pricing policy, EZI adopted ‘fixed – fee policy’; usually 33% of the candidates expected annual compensation. This removed the conflict between the firm’s interests in hiring most expensive candidate versus the best fit candidate. Sometimes EZI feels that they are undercharging their clients. Clients also recognize that the flat fee encourages EZI to find the right candidates who will stay and benefit the clients in a long term. EZI hopes that this recognition will make the clients come back to EZI in future with other assignments.

2) Reputation for Quality:
EZI has built its reputation in the industry over 36 years. With its high brand value and trust in clients it has developed, EZI believes that even a single assignment done with below standard work can damage their reputation irreparably. So instead of worrying about the firm reputation, successfully completing client’s work is a better approach to sustain in the industry, the firm believes. A job well done is always its own greatest reward.

3) Going global:
Starting its operations in Europe, slowly the firm grew geographically. Accordingly it selected its consultants who were also multilingual, multicultural, and highly talented in their skills. In 1980, firm took an important decision of expanding in United States. EZI was already successful in Europe and wanted to expand its operations across the globe. Initially Egon faced some internal challenges but he was firm on his decisions which later proved to be fruitful. It also opened its offices into Asia and South America. In 1998, the firm had 58 offices in 39 countries.

4) One firm partnership concept:
EZI recognized that partnership means having positive attitude toward other members and toward group’s common goals. Being a partner, one always works to find a solution to the member’s problem and doesn’t make it his own opportunity. EZI has 122 partners, 200 non-partner consultants and 230 researchers who work from 58 offices in 39 countries; thus making it one of the most horizontal organizations for a global enterprise with minimum of coordination and leadership at the top. Since the firm is spread over 39 nationalities, managing with every cultural traditions is a big challenge the EZI has sustained this challenge through the spirit of partnership.

5) Compensation:
Following a partner compensation system, EZI distributes its profits on a lockstep basis which depends on the firm’s worldwide profits and seniority. It doesn’t pay an employee based on his/her individual performance and no commissions or performance based bonuses. This eliminates the competition in the employees themselves. Apart from salary, an employee receives equity...
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