Gary Burnison: No, that’s a good question. First of all, the guide reflects what we would view as seasonality of 4% to 5% on the top line. So that’s number one. And then the second contributing factor is this moderation that we’ve seen for a long time that we’ve been living with around Executive Search and Perm Recruiting. Now the — you’re right that in terms of the impact on the margin and what we’ve been trying to really carefully look at is rebalancing the workforce and how we do that because this is not a situation where what I don’t want to do is going to make draconian changes that compromise our ability to see short and midterm opportunities. So we’ve wrestled with this how we can reallocate resources. And that reflects some of that carry — that we decided to carry longer as we really thoughtfully planned out how we could redeploy resources.
So that’s really the answer to your question. And we’ll execute on this plan and we’ll talk to you about it in the beginning of calendar 2023.
Tim Mulrooney: All right, great. That’s helpful color. And I would agree. I feel like your investor base are also long-term focused. I would rather see you make those long-term decisions than the short-term gains for sure. One more for me. on Executive Search. I’m curious what your expectations are for this business in the third quarter based on what you used to build up your total revenue guidance for this segment? And more specifically, what I’m really curious about is — how are you thinking about this business in the third quarter in terms of moderating engagements versus maybe executive compensation flattening or coming down from the really high levels we saw last year? I mean I remember last year, talking to some privately held executive search companies in the space and I’m talking about how comp was up 100%.
It was just huge and that was driving higher revenue for the search business. How much of that now if this Executive Search business is decelerating, how much of it is that versus actual volumes? Sorry for the long-winded question.
Gary Burnison: Well, I think, look, Bob and Gregg can give the real data behind that but there’s no question that over the last couple of years that there’s been significant wage pressure which has lifted our Executive Search fees. And when you look at it, in the guide, I think we’re planning on something like 13% or so, could be off a little bit, down in top line and that’s probably a little bit higher on the volume and more steady on the fee. I really do believe that this is a substantially different labor market which is a huge wildcard in what happens to these kinds of businesses. I think this labor participation rate is shockingly low. When I look back at the — great Recession as an example, in the United States, we lost 7.9 million jobs.
It is really hard for me with the labor participation rate of 62%, 164 million Americans in the workforce. It is hard for me to come to anywhere near that kind of number, even as companies are looking at costs and they’re doing all this stuff and waiting for what the Central Bank is going to do and if indeed are going to . But it is really hard for me to come to a conclusion that 8 million jobs in the United States are going to be lost like they were in the Great Recession.
Bob Rozek: Gary, it’s Bob. And Tim, just to add a bit more color. Gary spot on. It really is all unit count and volume related. We did see increases in our average search fees coming through the recovery but that’s pretty much plateaued at this point. Now we’re actually just dealing with volume.
Operator: Our next question comes from Marc Riddick with Sidoti.
