Over the past several years, Korn Ferry, the big executive recruiter, has acquired several independent Twin Cities area shops that focused on leadership consulting and assessment.
The last and largest deal occurred in 2013, when Korn Ferry acquired Minneapolis-based PDI Ninth House, founded in 1967 as Personnel Decisions Inc. by industrial psychologists from the University of Minnesota.
The locals must have been doing something right because Korn Ferry has consolidated its “leadership and talent consulting” business into a downtown Minneapolis-based division of about 1,000 employees and consultants. The division posted $255 million in revenue last year from a globe-spanning list of clients.
That division, if it was a public company, would rank by revenues in the middle of the Star Tribune 100 ranking of the state’s biggest public companies.
Meanwhile, Korn Ferry’s flagship executive-recruiting business of $570 million in revenue is run from the corporate headquarters in Los Angeles.
“PDI was the tipping point that really put leadership and talent consulting on the map for Korn Ferry,” said R.J. Heckman, Korn Ferry’s Minneapolis-based division president, who was the last CEO of PDI. “We don’t recruit in my division. We do all the leadership and consulting and strategy, including succession planning for the board [of directors] on down. It can be as simple as one-on-one consulting and as complex as driving change for a global organization of hundreds of thousands. We’re profitable, and we’re growing.”
From 2006 to 2010, Korn Ferry acquired talent-consulting businesses, including Twin Cities-based Kevin Cashman’s LeaderSource.
The acquisitions helped Korn Ferry diversify away from its cornerstone management headhunter business. Korn Ferry also operates Futurestep, an outsourcing division.
Heckman, who grew up in Hopkins and worked his way through school making pizza and working at the Renaissance Festival, started his career about 25 years ago as a personnel representative at Graco. He worked 20 years ago at Larry Bossidy’s Allied Signal, including the fateful merger that had Allied Signal assuming the Honeywell name and control and moving the headquarters.
Heckman returned to the Twin Cities a seasoned personnel consultant and to a job at PDI more than a decade ago.
“We are a Minnesota-grown company today that provides talent strategies all over the world,” Heckman said. “There are about 50,000 people who experience our leadership-talent products or services every month.”
That may range from Internet-based assessments or simulation exercises from their workplaces to job assessments and role-playing exercises in the classrooms at Korn Ferry’s comfortable offices.
It’s also cheaper to run a headquarters and back office from downtown Minneapolis than from Los Angeles or New York.
PDI was started by the late Marvin Dunnette, a University of Minnesota psychology professor. His second hire was Lowell Hellervik, who became the CEO and majority owner, and who drove the growth of PDI over 35 years. PDI worked with dozens of companies in the Twin Cities area and across the country.
The Great Recession of 2008-09 was a scary time for privately held PDI amid corporate-spending cutbacks. The $80 million-plus sale of PDI to Korn Ferry in 2013 has allowed for investment and scale.
That PDI client list was assumed and expanded by Korn Ferry, which uses the Minnesota-based tools and mantra that hiring the right leaders and developing talent properly leads to better people, institutions and financial performance.
From an art to a science
Heckman, who made about $600,000 in total compensation last year, has long said that the PDI approach has moved human resource hiring and development from mostly art to more of a science.
Korn Ferry’s big-name competitors include the likes of Heidrick & Struggles International and Robert Half International.
There are boutique competitors around the country and globe that include MDA Leadership Consulting, founded by PDI veteran Sandra Davis in 1981.
“Korn Ferry is big, and they deliver large-scale leadership development all over the world,” Davis said. “We also have worked with 60 to 70 percent of the Fortune 500 companies” in town.
Davis said her firm competes successfully with the likes of huge Korn Ferry with “tailored, flexible solutions” on a smaller scale.
Neal St. Anthony • firstname.lastname@example.org • 612-673-7144