EXECUTIVE search consulting will grow in importance in the years to come.
photo: File photo
According to human resources (HR) consulting firms, companies in the West, including Slovakia, will feel a shortage of talented managers in the near future.
A recent survey found that half the companies in the Fortune 500 list will lose 50 percent of their management in six to 10 years. Only 25 percent of these firms are confident of replacing those lost. HR experts therefore stress the need to plan ahead.
The reason for the potential manager shortage is that many current managers born during the post-war baby boom years are getting close to retirement age. The trend is accentuated by the low birth rate in the developed world. Also, companies have paid little attention to management succession. In Slovakia, the lack of managers is also connected to the transformation of the economy.
Another factor is that the qualities needed to be a top manager are changing, which makes the process of seeking and finding the right people even more difficult. A good top manager in today's business environment must not only be a good business professional but also have the personality of a leader.
Managers must be able to listen and be aware of the impact their behaviour has on a company, its employees, their families and its partners. Experts agree that although it is possible to train a good manager, natural talent is a prerequisite.
HR experts therefore anticipate that companies will lean heavily on executive search consultants to find them the right people: talented and experienced managers who have the right "cultural fit".
"Executive search consulting will grow above the demands of the current global economy," said executive search analyst Joseph Daniel McCool at a recent conference entitled The 2005 CEE Executive Search Forum in Bratislava, organized by the Amrop Jenewein Group.
The Slovak Spectator asked experts in the HR and executive search field if the situation is really critical and what sorts of personalities make good modern managers.
WHICH of these of little darlings will grow up to be a successful manager?
photo: TASR
The Slovak Spectator (TSS): Organizations in the area of human resources warn that the competition for highly qualified employees and good managers in companies will rise. Do you agree with that? Do you think that Slovakia will experience a lack of highly qualified people for executive positions? What are the reasons for the current state of things in Slovakia and developed countries in the West?
Radomír Mako (RM), managing partner in Amrop Jenewein Group: The war for leaders and talents will become more and more intense in the future. According to one study 50 percent of Fortune 500 companies anticipate losing half of their top management staff in the coming five to 10 years. The loss will be because the baby boom generation is moving towards retirement age.
This, coupled with the significant drop in the birth rate, will cause a great vacuum in human capital in many Western countries. It will have a tremendous impact on many organizations. The Fortune 500 study found that only a quarter of respondents were confident that their organizations would be able to fill the vacuum.
The intense demand for managers in Slovakia has been caused mainly by the transformation of the economy and accession into the EU, as well as global trends. Courageous reforms and foreign investments have created a vast demand for high quality human resources, which is reflected in the field of executive search. In response to the new dynamics of the private sector the demand for highly qualified and capable people has also increased in the public sector.
Paul Binder (PB), partner in Target International: Maintaining highly qualified professionals in a company is certainly one of the major challenges of companies anywhere in the world, not just Slovakia. It is a task not only for human resources management, but also for the entire management team of a company. HR can provide certain tools. In daily work, the entire management team's professional and human qualities play a crucial role in maintaining the right people in a company.
The term "human capital" is an expression often used today, but the costs of human capital are not so easy to quantify. First you have to attract the right people to a company. Then you have to invest in them (even the best managers need time to learn about the internal structures of a company). It is hard to estimate how much time is needed before a newly hired person starts performing at his or her full capacity. Other managers have to take time to explain things to the newcomer - time that could be spent developing their regular tasks. Also, people learn by their mistakes, and you have to allow for that with a new employee. The cost of formal training is low in comparison with these other elements that add to the costs of replacing an employee. When a person leaves a company the regular workflow of the company is interrupted and one has to find an interim solution until a new person is found, trained and settled. Recruitment costs are high, externally or internally, using an executive recruitment firm or not.
In today's world the requirements for outstanding leaders and managers is constantly changing. In Slovakia, the number of good managers and leaders is sufficient for current requirements. The main problem is the geographical distribution of supply and demand. People are available in Bratislava but needed in Eastern Slovakia, for example. Our clients look for outstanding leaders and managers. The challenge is to find and attract outstanding leaders and managers.
Reinhold Hoffman (RH), managing director of HIC Slovakia: This is certainly not a new phenomenon. I have been trying to answer this question (of how to find good managers) most of my professional life. It is the same across many industries and can be explained by a sporting analogy. For example, a football team consists of players with different skills and qualities. Highly skilled players are sought by the competition. If I let a player go, my team might win fewer matches than they did before. To replace the player who has left will cost time and money. For some time I may not be able to present the "goods" - attractive, elegant match-winning football that my customers expect and I might lose my good reputation. Consequently the customers may go to another club that can deliver the goods, brand loyalty apart.
What are the lessons to learn for today's executives? Keeping a highly qualified employee is cheaper than letting that person go. Another thing is that having just one person capable of doing a job without proper "backup" is very risky and could be very expensive.
It is important to point out that highly qualified people are not only motivated by power and money and there are different ways to be important to a company. In my previous company, senior consultants could make more money than most managers. Some soccer players make more money than their coaches.
Gerard Koolen (GK), managing partner in Lugera & Makler: There are good reasons to keep highly qualified workers. Ensuring quality of output and growth of the company, for example. Attracting and keeping key people is to be an outstanding company and to do that great managers are needed - managers with a focus on the needs of company employees. Most great people change employers because of their managers and bosses.
TSS: What role should an executive search consultancy play in this situation?
RM: The role should be a significant one. In Slovakia, doing an executive search is now known as the most effective way of identifying and attracting leaders and talents. It has been like that in other countries for some time. The proof is there: Many candidates chosen by this method are now successfully operating in top managerial positions. They have an optimal combination of personal and professional characteristics and they have significantly helped their companies to reach or maintain the best positions in various fields of the economy.
Executive search consultancy has a great future in Slovakia. Companies sometimes underestimate the complexity of the management succession process. Failure to identify and develop future leaders within the company and being unwilling to acknowledge the idea that one day the current managers will have to be replaced are the main factors why many organizations will be even more dependent on the professional advice of external executive search consultants.
PB: The role of an executive search company starts with fully understanding the client's needs and giving realistic advice to a company as to what kind of people they can attract and maintain. "Cultural fit" is a key criterion. Even the best professional can only perform outstandingly in an environment in which he or she fits. In other words the executive search company advises the firm first on what kind of person will best fit the specific culture of the client.
Secondly, the next step is the systematic screening of the market for the best suitably qualified and culturally fitting candidates. In reality it means identifying, approaching and evaluating those leaders and managers who have already proven that they can achieve what the client needs. After the hiring of the new person, a responsible executive search firm ensures a smooth transition of the newly hired person by providing so-called "after placement" services.
RH:An executive search should really differentiate with the client what the result of the successful placement will be: an executive position or a qualified worker position. These positions should then also have appropriate responsibilities and rights. There will be risks on both sides. Will the new person fit into the company - will the responsibilities be taken seriously? Will the company be interested in long-term employment or will they only try to exploit my know-how on a short-term basis?
If I am recruiting for executive positions, I believe that the placement of a highly qualified worker into a management position without appropriate managerial training is a highly risky game. This is probably where Western companies have a longer tradition of managerial development - they know about the issue and they react - through mandatory managerial training for their managers for example, or internal coaching schemes. This still is an area that can be further developed in Slovakia.
GK: Companies with management problems are an easy target for an executive search company. If a company has a focus on result management only, a company where results are all and everything, effective leadership decreases and many key people leave when they have the opportunity. In this respect an executive search helps great people to find a new employer that responds better to their individual management needs.
TSS: A good manager should also be a good leader. What characteristics should a leader in the 21st century have?
RM:International surveys and our long-term local experience shows that people who manage to create a balance between their personal talents, professional knowledge and professional managerial skills are the most effective personalities. A leader must also be a strategist, one who doesn't reduce the strategy to techniques and methods. Those are helpful but they can never replace intuition. The art of strategy includes an ability to anticipate developments. A manager must have a developed sense of risk to be a good strategist.
Leaders have to be able to take charge of an opportunity and have the courage to take advantage of the moment. They must also have other characteristics such as trustworthiness, an ability to listen and to motivate.
Recently the characteristics of a leader have changed slightly and a new definition of leadership is being mooted. For example, in the US, following the recent wave of scandals, many organizations do not want to rely on open charismatic managers with excellent communication skills. Today, emotional intelligence (EQ) is preferred. Thanks to EQ, top managers better understand the seriousness of their role and how their behaviour impacts not only the goodwill of an organization but also its value, its employees and their families, suppliers and so on.
Modesty, humility and a global perspective are important characteristics for 21st century leaders. From this point of view it is expected that the future will belong to Europeans and Asians. American leaders will be disadvantaged on the market because they speak only English, they usually lack experience of work outside the US and they have gender or cultural prejudices.
PB: A very good education is the basis for all successful professionals. Today's universities and business schools "produce" a large number of such people. Personality and emotional intelligence differentiate the average from the top performers.
Emotional intelligence is a key concept in today's complex world. People orientate themselves on the leader and the leader gives them confidence so that the entire team can achieve the given tasks. An emotionally intelligent professional easily understands whether he or she is a "cultural fit" for a certain position. Very successful people do only those things that they like and they work hard to achieve their goals.
They are full of energy, have visions and are able to communicate in such a way that others will follow them. Last but not least outstanding leaders and managers have the aura of success around them and people are motivated to work with them.
RH: Let us first define what a leader is: It is someone who takes decisions about the future at a stage of uncertainty and ensuring followers follow without using force.
There are a few characteristics we need to see in today's leaders: being a good communicator, knowing foreign languages, and being a good listener. These are just some of the qualities.
The principle that I like best is "situational leadership". Understand the situation you are in and act accordingly, adapting your leadership style and behaviour to suit the situation.
GK: A 21st century leader should master situational leadership. Being able to lead and manage his or her subordinates according to their needs. There are four basic ways of managing: directing, coaching, supporting and delegating. An effective leader is able to feel and understand the needs of his/her people and wants to help them.
TSS: Do you think it is possible to train a good manager or do you have to be born with such characteristics?
RM: Everybody has a certain amount of innate natural talent. However, no one is perfect and thus in the process of identification and assessment of managers some weaknesses and areas that need improvement are revealed. That makes it necessary to choose appropriate further training for the individual.
For example, mentoring or coaching is a proven technique. The process of management coaching is a form of expert consultancy to achieve ambitious goals, implement new strategic plans with the aim of increasing the effectiveness and competitiveness of an organization.
Coaching is realized in the form of individual interaction between a qualified and experienced coach and a manager in a confidential atmosphere through open discussion, mutual professional inspiration, case studies, concrete tasks, direct constructive feedback and assistance in proposing and setting up concrete plans.
PB:Good managers can be trained - leaders are born. The difference between them is that "Managers do things right. Leaders do the right things." It goes without saying that there are more managers than leaders in this world. Excellent managers and leaders have to have the inner drive and desire to do things in an outstanding way and become better every day. No matter in which category a person fits, there are no reluctant leaders in this world.
A leader is a leader because he or she wants to be a leader and thinks and acts as a real leader. And other people like to follow leaders. If somebody thinks he leads and nobody follows, he is just going for a walk.
RH: Of course it is possible to train to managers. Western companies, for many years, spent a lot of money on training programmes, which, very importantly, are designed to reflect the specific corporate culture the company is maintaining. I do not believe "open" or "off the shelf" management seminars are very helpful. Good companies will also heavily involve their established managers in actively participating in their junior management development programmes. This is time wisely invested.
There is no "best" manager. Management training needs to allow for the fact that different people will use different approaches to solve problems or critical situations.
The training will help to understand human behaviour, give a quick introduction to psychology and discuss various tools and techniques that managers can use to achieve their objectives.
But training is also about doing and receiving feedback. Consequently, good managerial training needs to involve a lot of practical exercises and assure that participants are receiving personal feedback from the trainer as well as from their peers. That means a maximum of 12 participants (eight is better), a minimum of three days (five is better) and incremental learning over the first three years (at least three seminars). If the company is also able to assess managerial development, with an internal coaching programme for example, in the end you will have a high quality and very balanced managerial development programme. Of course, not all of these developmental activities should be offered in Slovak. Some have to be in another EU language, to develop the managerial skills for the EU market.
This will cost a lot of money and take a lot of time. If the company is not prepared to spend it, it will cost them even more money and time. Actually, these programmes might keep highly qualified workers within the company to give you that additional competitive advantage.
GK: Training is easy and we are all born with the necessary characteristics. Just most managers and most companies are lazy and do not want to invest in real effective management. Ten out of 100 companies invest, the other companies just think they cannot spare the time or money. And this is why you only have a couple of very successful companies in each branch and a large percentage of companies struggling. And those companies blame the strong competitive environment - is that sad or what?
