Slow times for executive recruiting: because the fishing hasn't been good for the executive search industry, HR is gaining leverage on fees and search results. (Employment & Staffing: Special Report).

The ongoing slump in the executive recruiting industry is helping human resource professionals leverage lower fees and better service from outside recruiters. Moreover, as the pace of executive recruiting has slowed in recent years along with the overall economy, HR is finding that in many instances it doesn't have to get outside help at all to fill such jobs, that it can cut the costs and improve the results of executive searches by conducting them in-house.

Those are just a few of the ways that changes in the recruiting business are affecting the industry's clients--the HR departments in companies looking for top-level talent "The industry has gone from one extreme to another in a relatively short time," says Brian Lee, chief market strategist at Hunt-Scanlon Advisors, an executive recruiting consulting and research firm in Stamford, Conn. "The result is that HR is firmly in the driver's seat in this market."

Indeed, the industry is hurting. Combined revenues for the 25 largest U.S. executive search firms, for example, sank 30 percent in 2001, and no significant rebound is in sight, according to research by Hunt-Scanlon. "It has been an across-the-board industry decline affecting both public and private firms, as well as generalist and boutique recruiters:' says Lee.

At its peak two years ago, Chicago-based Heidrick & Struggles International Inc., one of the nation's largest publicly held executive search firms, employed more than 500 executive recruiters, and annual sales reached $594 million. After a recession and three rounds of layoffs, the 50-year-old company has slimmed down to 325 recruiters and an estimated $351 million in 2002 revenue, according to analysts.

And Heidrick bas plenty of company. Few recruiting firms have emerged unscathed by current labor market conditions. Although publicly held search giants have been under severe pressure, it has been even worse for some privately held firms, many of which have been forced to shut their doors.

The reasons for the industry down-turn are clear: Because of the flat economy and their own financial constraints, companies are doing less hiring--if they're doing any at all. In fact, executive demand has plummeted, according to a series of surveys by ExecuNet, an Internet-based executive career management firm based in Norwalk, Conn. Demand for senior-level talent, which posted a double-digit drop in 2001 from the previous year, fell again last year, by …