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THE GLOBAL CRISIS BRINGS NEW CHALLENGES TO SEARCH FIRMS

Searching for talent

The global economic decline has changed the job market for middle and top managers as well as for executive search firms – pushing them to look for new ways to meet the needs of their clients. Some middle, or even top, managers have found themselves accepting job offers which they never would have considered in the past. The threat of unemployment has increased the loyalty of employees and executive search firms have needed to adopt their own cost-saving measures and to offer new types of services.

The global economic decline has changed the job market for middle and top managers as well as for executive search firms – pushing them to look for new ways to meet the needs of their clients. Some middle, or even top, managers have found themselves accepting job offers which they never would have considered in the past. The threat of unemployment has increased the loyalty of employees and executive search firms have needed to adopt their own cost-saving measures and to offer new types of services.

The Slovak Spectator spoke with Igor Šulík, managing partner of Amrop Hever Slovakia, Mariana Turanová, managing partner of Target Executive Search in Slovakia, Dana Blechová, country manager of Iventa Slovakia Management Consulting, Ľuboš Kováč, managing partner of Lugera & Makler, Lucia Malachovská, consultant of Accord Group ECE, Dalibor Jakuš, director of Profesia, and Marek Chrastina, CEO and sales and marketing manager at Trigon Consulting about the impacts of the economic crisis on the job market for management positions, how executive search companies are responding and the new challenges the firms are facing.

The Slovak Spectator (TSS): How has the crisis influenced turnover in managerial positions compared with the past? How has it generally affected middle management positions?

Igor Šulík (IŠ): The negative impact of the crisis on total employment is generally well-known. The situation in middle-management positions is similar. We can even call it a trend that ever more middle, and also top, managers are in the labour market, having lost their jobs and are having trouble finding an appropriate new position for their skills and knowledge. Depending on their life situations, this can lead them to be ready to make compromises and respond to job offers they had refused one-and-a-half years ago.

On the other hand, some organisations that have been less hit by the global crisis are now trying to use the situation to strengthen their managerial teams. This means going after talented individuals who have landed in an uncertain personal situation.

Mariana Turanová (MT): The crisis has stopped ‘job tourism’ between companies, when managers – even those in high positions – were able to swap employers almost as if intentionally, according to plan, once every year or two. Currently, there are people in the job market who had to leave due to cost-cutting or restructuring. Even managers who would like to change jobs are waiting for the situation to calm down. Generally, people are more loyal; we are hearing ‘no’ more often than we used to, even to very attractive offers.

Dana Blechová (DB): People are generally more careful so even middle-managers more thoughtfully consider any professional change. The voluntary turnover is certainly lower; on the other hand, some managers lost their jobs in organisational changes in case of strong pressure for ‘cost-savings’ or in some cases others have been promoted to a higher level during organisational changes – restructuring of companies, or mergers. We can also, of course, see so-called 'safer’ sectors where employees feel more secure from a long-term point of view, for instance in the energy or pharmaceutical sectors. On the other hand, the automotive sector is considered more risky but even there we can find some exceptions, companies which have stabilised in the last several months or have been hiring a few new people.

Ľuboš Kováč (ĽK): The changes in the global economy have influenced a cross-section of all positions in company structures. Some companies have adopted in-depth restructuring. They are centralising administration activities to a regional level. Thus, many managers have lost their jobs. At first companies dismissed the most expensive staff, those with low added value in their positions; they suddenly became a burden. Middle management positions are threatened to the same extent as all other jobs in a company’s structure.

Lucia Malachovská (LM): At Accord Group we have focused especially on searching for top managerial positions in Slovakia through direct contact and recruitment. Since about the beginning of 2009, we have recorded increased concern by top managers in the changes in the job market who are casting around for possible jobs stemming from perceived uncertainty. On the other hand, there is also some cautiousness in decision-making and carefully checking the stability and economic situation of any potential employer.

Dalibor Jakuš (DJ): Although it could be expected that the crisis would unmask those inefficient top managers who have so far ridden the wave of growth of the whole Slovak economy, sometimes quite the opposite is true. Mistakes of some managers are now hidden behind the economic crisis and while they previously declared the growth of revenues as their personal success, they now declare the decline to be the impact of external factors that they cannot influence.

In the middle-management area, the impacts are more visible. In many companies, reductions have been made at the leadership level and employees were laid off also at the lower and middle-management level. On the other hand, voluntary turnover has declined and employees prefer the security and confidence of their current job, and even though they may have some complaints, it is better than the uncertainty that they can encounter with a new job.

Marek Chrastina (MCH): The biggest turnover, if it can really be called turnover, is in the engineering and automotive sector. In that sector, however, it is caused by the fact that producers go bankrupt, gradually reduce staff or close plants. If somebody is an engineer to the core, then he/she would never go and do anything else unless forced by existential problems. Other segments, I believe, where professional expertise is not as crucial, are in the same situation as before the crisis.

TSS: How has the economic crisis influenced executive search companies in Slovakia? Has the crisis brought new ways of finding and recruiting talent? Are there new challenges and positive aspects?

IŠ: According to statistics published by AESC [the Association of Executive Search Consultants], an international organisation, the revenues of executive search companies has fallen year-on-year by about 35 percent. Such a notable reduction in demand represents a grave challenge for the whole segment and its individual representatives. Executive search companies have to solve the dilemma of retaining quality rendered services while working under constant pressure to lower their reward and to speed up the process.

It is a certain acceptable level of flexibility that enables us to provide our services in a guaranteed, professional manner under conditions acceptable for both sides. There are companies which try to solve their dilemma by wandering into the segment of recruitment companies hoping that this will enable them to survive in these times. Through this trend, and also thanks to some companies that actually left the market, the number of surviving executive search firms has been gradually reduced.

MT: The executive search sphere, as well as the whole segment of external recruitment, has, of course, felt the decline in demand; it is assessed at 40 percent. Companies are simply not opening new positions, do not undertake big changes, and if they are doing so, they are focusing on their own resources. They reach out for an external partner only if necessary for a change in a managerial position or when the position they seek a candidate for is very demanding. I personally think that the classic job recruiters have suffered the most. Active executive head hunters, companies that do executive search and use the method of direct, systematic recruitment of people, can still find sufficient number of requests because their work is so specialised that even by using internal HR sources, it cannot be replaced. As for new ways in finding and recruiting talents, we increasingly use social networks when directly recruiting people; thus we can reach down not only to local experts, but also to foreign experts who are ready to relocate to Slovakia.

DB: Executive search companies have significantly felt the crisis; many companies classify our service only as ‘nice to have’. On the global market of executive search companies, we can see several important mergers and some kind of grouping or ‘cleaning’ of the market. The crisis has brought challenges to look for the most economical solutions, an effort to use internal sources most effectively, and a greater stress on good quality from the side of employees, suppliers, clients and services.

ĽK: There are fewer positions in the executive segment; companies strive to look for other ways than to just immediately search for a person from the external environment. Some vacancies are filled by people from sister or parent companies whose positions were threatened in their original country.

LM: I think the crisis motivates executive search companies to render high quality work and it pressures the so-called ‘garage’ agencies out of the market. It also gives space for creativity and use of business spirit to find new forms of solutions that the executive search company can use (for example, solutions to the so-called ‘frozen headcount’ problem, the incapability of clients to offer new jobs).

DJ: Executive search agencies have been – like other kinds of manpower agencies – very significantly affected by the decline in external recruitment by companies. The current crisis has not brought any big changes in the methods of searching for talent, but there are trends that began some time ago – for instance, using social networks for executive search. The key challenge of all HR consultancy companies is to survive, as the steep decline of revenues due to the limited recruitment can be replaced by alternative products such as outplacement, HR audits, salary audits, and the like which are focused on the current time with its big difficulties.

MCH: It has brought only one thing: there are more people on the labour market. It has influenced executive search in the sense that it is not as necessary as before because there are more available people in sectors and positions where they were lacking before the crisis began.

TSS: How has the behaviour of employees changed? Were employers ready – can they use changed employee behaviour to their benefit?

IŠ: Retention of employees is much less of a problem now than before the crisis. Those who are not forced to make a job change do not even think about it. Job stability and at least some confidence and reliability concerning one’s job is more important now than ever. Employees tend to understand that employers must take some unpopular measures (freezing or reduction of salaries, cancelled bonuses, fewer benefits, etc.) to save jobs. This gives employers a chance to optimise certain costs. Currently, the fact that someone has a job and a regular income has a role like various benefits had in the past.

MT: I have already mentioned employee loyalty and it has undoubtedly increased. From the point of view of an external consultant, it is hard for me to judge whether the companies were ready for this. From the point of view of HR departments, there are enough people on the market; our clients confirm that 200 and more candidates respond to a single position. However, as companies are usually looking for specialised positions rather than mass hiring because of limited HR budgets this year they are not always able to choose from the large number of CVs. The fact that there are many people in the labour market does not necessarily mean they are the best ones. On the other hand, an available candidate does not necessarily need to be someone with poor results or who was forced to leave because of a fault. This global crisis has brought some situations that we were not accustomed to.

DB: Employees are more loyal, though this loyalty is not natural at all and is caused solely by the situation on the job market. It does not mean that employees are satisfied but rather that they want to have certainty and that they will wait until the situation improves and then maybe we will experience significant dynamics in the job market.

ĽK: The change in global economy has released unknown, or well-hidden, potential in some people, a greater loyalty towards their company. They think more highly of their current jobs and are not striving to push the salaries’ spiral into extremes.

For many people in top positions, these changes were completely new, unfamiliar, and they were not prepared to act ideally according to the textbooks. As for our company, we solved it correctly in some cases, and incorrectly in others. We are still learning.

LM: Generally, loyalty has been increased but it is really about fear of losing one’s job. The market has been flooded with relatively good-quality people, especially in middle-management positions. Many employers reacted to this situation primarily with the aim of acquiring good and ‘cheap’ people. But that is often not a solution, however, with top-management positions, and regardless, our clients have decided for direct recruitment anyway.

DJ: The motivation to voluntarily change jobs has decreased markedly. However, this is not due to loyalty towards the company; the main reason is the lack of good job offers and the reduced certainty when changing to a new job.

But the situation has been complicated for companies when trying to oust inefficient employees. Because the procedure of dismissal is complicated, companies very often in the past solved this through layoffs of unfit employees through mutual agreements. Currently, it is harder to reach such agreements, as employees, too, are well aware of the fact that there is less chance to find a good job now than a year ago.

Of course, some employers use the situation to their advantage – they increase the workload, cut salaries or benefits, even though the financial situation of the company may not require this to such a large extent. In these cases, however, it is likely that after the job market revives, these kinds of measures will turn against employers through mass turnover of their employees.

MCH: In this case, loyalty stems from the individual situation of each employer and also from the sector in which the company operates. If the company is doing well and takes care of its people, they do not leave. But if people feel that their position could be in danger, they actively search for some safety net – a new job.

TSS: How has the crisis influenced your company in Slovakia? Have you reacted with new products? Has the crisis brought new challenges and some positive things for your company?

IŠ: Like our whole segment, our company has also been influenced by changes. We had to undertake some rationalisation measures to optimise our cost structure without our clients having to feel any changes in the quality of services that they have been accustomed to from our side.

As our portfolio of services was purposefully built in a wider way, we have been offering for some time already services related to the assessment of managerial competencies in the form of assessment centres or analyses, coaching services, and also management auditing and consultancy during post-merger integration. It is this wider portfolio that enables us to adjust to the decline in the executive search market through increased assessment and coaching services.

MT: The crisis has hit us, of course. We have prepared three new products for clients through which we have flexibly reacted to their requirements. Some clients prefer classical direct recruitment but others believe in networking and the subsequent assessment. Target Executive Search works through a so-called ‘boutique’ business model and we operate in the long term by tailoring every service specifically for each client. This model has proved itself in the current market situation and attested to the fact that in the executive search sphere, there are no schemes, no price-lists, and the like.

DB: We try to react to the market’s needs. We are in contact more with companies and we have lots of meetings with existing, or potential, clients. We have organised a first workshop for HR managers in which we jointly analysed new tasks for HR departments, as well placing a stress on internal communications. We want to be linked more closely with companies and to offer them what they really need – thus we more often offer HR development services, as companies are tending to work more with internal employees than they used to. We plan to continue with this workshop, as participants showed an interest to meet regularly and to have a chance to react together to changes.

ĽK: As the biggest personnel company in Slovakia, we noticed the decline in orders one year ago, mainly in the search for employees. We also released some people who would otherwise still sit here; some of them went to work for clients on their own will, as they feel safer there. It is important that they have all gotten new jobs. We analysed some of the products that were not our key products and we decided to give them more space and this has proved to be a good decision.

LM: We have responded successfully to the changed situation and through our AGIM service we have given space for our clients to use the pool of experienced interim managers and consultants when solving projects of a limited duration. As well, we are involved in frequent restructurings and the execution of unpopular measures which a client tends to use when it is impossible to solve a situation from within the company.

DJ: Due to the limitation of recruitment throughout Slovakia, we have seen the decline of revenues as well as a marked decline in job vacancies offered in ads. At the same time, the number of job applicants has soared, so in a brief period of time, the situation in the job market has changed completely. Thus, we have focused on preparing tools for companies to make their work simpler when there are a larger number of applicants competing for vacancies. We have also prepared new forms of credit packages that enable a more flexible drawing of necessary services. For applicants, we are concentrating mainly on the effort to give information and advice that can help them in their current situation. For us, the crisis is an important learning experience after the continuous growth in recent years and it has prepared us to handle more standard behaviour in the future, knowing that the market can grow as well as decline.

Topic: Career and HR


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