Hiring freeze thaws, challenges mount

Though last year brought something of a thaw to the hiring freeze, and although new jobs are now being created, a return to pre-crisis dynamics in the labour market remains a distant hope, according to human resources professionals. Even those firms which are hiring again are still under pressure to cut costs and are thus seeking the best match between their budgets and the need to source effective candidates capable of putting economic solutions on the table. But for many potential applicants existing job security can be more important than the risk of change.The Slovak Spectator spoke to Igor Šulík, managing partner of Amrop Slovakia, Peter Pelegrim, Area Manager of Manpower, Dana Blechová, country manager for Iventa Slovakia Management Consulting, Mariana Turanová, managing partner of Target Executive Search, Zuzana Weberová, branch manager for CPL jobs, and Peter Ulbrik, director of AuJob.

Companies’ expectations of candidates are still very high.Companies’ expectations of candidates are still very high. (Source: TASR/AP)

Though last year brought something of a thaw to the hiring freeze, and although new jobs are now being created, a return to pre-crisis dynamics in the labour market remains a distant hope, according to human resources professionals. Even those firms which are hiring again are still under pressure to cut costs and are thus seeking the best match between their budgets and the need to source effective candidates capable of putting economic solutions on the table. But for many potential applicants existing job security can be more important than the risk of change.
The Slovak Spectator spoke to Igor Šulík, managing partner of Amrop Slovakia, Peter Pelegrim, Area Manager of Manpower, Dana Blechová, country manager for Iventa Slovakia Management Consulting, Mariana Turanová, managing partner of Target Executive Search, Zuzana Weberová, branch manager for CPL jobs, and Peter Ulbrik, director of AuJob.

The Slovak Spectator (TSS): How has the economic revival been reflected in the labour market and in the human resources field? Has the structure of services provided changed, and what are the greatest challenges your field faces in the upcoming years?
Igor Šulík (IS):
Consultancy firms have recorded a significant increase in demand for their services. Firms have gradually started investing, while at the same time begun searching in order to reinforce their own teams, even though this year it is still not possible to talk about the kind of dynamics in the labour market that we experienced up to the middle of 2009. The expectations of applicants have changed as well. The ability to operate in a changing environment; facing unexpected events and foreseeing possible risks while eliminating them – these are only a few of the evaluation criteria that employers apply to applicants for managerial and leadership positions.
The past two years were demanding for personnel-consultancy firms. On one hand they had to adjust to changes in the labour market and on the other hand they were confronted with clients returning to the thinking from the end of the 1990s, when the quality of the consultancy firm and its professional approach were less important than the ability to offer almost immediately anyone who came close to the profile of the candidate the firm needed. Services with higher added value were less preferred, often at the expense of strategic long-term sustainable development.

The business of finding people for organisations faces two fundamental challenges: one of them is the fast spread of social media and social networks, where information on candidates is easily accessible. The other trend, which I believe will set the pace of the development of personnel consultancy, will be the growing interest for services with higher added value.

Peter Pelegrim (PP): Though there is a revival in the labour market it has not been reflected in falling unemployment. On web portals and personnel agencies the number of positions offered has been growing. This shows that people no longer worry about changing jobs as they did last year, and the process of changing employees has speeded up. But this does not mean that firms are creating new jobs.

Firms have increasing problems filling qualified posts even now, when unemployment is growing and theoretically the number of available people on the labour market is increasing. It is a frustrating paradox, both for employees and employers as well. Education is less flexible and is falling behind the needs of firms. The only solution for both sides is to change well-tested ways and processes. For example, for firms it means that they will have to put a stronger emphasis on educating their people to meet internal needs, and vice-versa. Also, for people of a productive age it will be even more important to undergo life-long education, and even changing professions several times during a lifetime will be a completely normal phenomenon.

Dana Blechová (DB): Most firms have started hiring new employees and the time of the so-called hiring freeze, typical for 2009, is over. In certain sectors there is a visible boom; such as in the electro-technical or automotive industries. Firms have new projects and this is why they are hiring new employees. On the other hand, the firms are required to remain in cost-saving mode; they seek the most effective but also the most economical solutions. There is an effort to first find internal solutions, including in the area of hiring; companies frequently use job portals, and for higher positions they tend to hire internal candidates to a larger degree than before.
Also in some other areas of HR, to a large degree, resources within corporations are being used and budgets are lower than prior to the crisis. This trend will most probably continue and thus there will be pressure on the quality of external partners as well as on prices. Owing to these reasons most personnel-consultancy firms have been through substantial changes, be they personal or organisational, which might have an impact by reducing the quality of services, as well as for clients a certain inability to read these firms.

Mariana Turanová (MT): We see the revival mainly through the increased interest of clients in starting new competitive selection processes and hiring candidates for new positions. Hiring is no longer for replacement, as was the case last year, but is for completely new positions linked to clients’ new projects. What is interesting though is that our clients are interested in hiring larger numbers of new colleagues; even 20 to 50 people, and I am not talking about positions for operators in production processes. These are positions for experts, i.e. people who have 3 to 5 years of experience; people who have expertise but have not yet reached managerial level. They can achieve this level from positions as team leaders or project managers, while getting the chance to work for global clients.

I would list globalisation as the significant phenomenon which has been influencing our labour market. A large part of the positions which are being opened will be located in Slovakia, but the job will have a regional scope. It is a great challenge also for those of us who work in recruitment. It means tuning our conditions in such a way that we are able to work across markets, which means addressing suitable candidates in the wider region and exceeding the limits of the Slovak market. This is what our clients have done and we will have to do it as well. Candidates on the other hand, need to accept this requirement of globalisation. Knowledge of at least one or ideally two foreign languages, communication skills, an innovative approach as well as orientation towards clients and assertiveness have become important conditions. Here, we still need improvement.

Peter Ulbrik (PU): We have noticed a gradual revival of the labour market, which has been reflected mainly in the form of an increased number of filled work positions as well as a consistent increase in the interest of clients for services in the area of evaluation, training and further development of their employees. As a consequence of the global economic downturn many companies started being more interested in personnel audit, which is an analysis of human resources mainly in terms of increasing the effectiveness of their use.

Zuzana Weberová (ZW): Personnel agencies are increasingly focusing on providing outsourcing services. Personnel leasing is still for many firms a more favourable form of employing people for projects or a limited time period.

TSS: How have conditions changed in the Slovak labour market over the past two years? Have the expectations of applicants for working positions changed as well as the expectations of companies?
Structurally there hasn’t been much change in the labour market recently. The inflexible Labour Code, which the new government is now getting ready to fix, has not created an environment for significant job creation. I believe that more flexibility in this [parliamentary] term could lead to positive changes in the labour market.

The prevailing uncertainty in the labour market meant that employed people were less open to considering changes and were willing to accept less favourable contracts with employers. Job security became more important than the chance of a change, which always presents a certain risk. With applicants who for whatever reason were searching for jobs, there was a certain paradigm shift noticeable in their thinking and also a greater willingness to consider chances that they might not have wanted a couple of years ago.

DB: Fluctuations and litigation regarding wages have decreased. Employees in most cases are happy that they have jobs, since having stable, long-term employment is the most important thing for them. For this reason, wage expectations have become more realistic in the market, which in some cases is being used by employers who feel stronger in their positions than before and are pressing for lower salaries. There are firms which have cancelled bonuses and benefits, for example the 13th salary or year-end bonus.

MT: As for candidates, their expectations in terms of remuneration have become more realistic, which is a positive development. Those who have achieved top managerial levels are becoming more aware of the fact that the market is not offering them additional challenges. This is why they are searching for positions at a higher, regional level. This will be made easier by the easing of restrictions in the Austrian and German markets. First of all, Austria is a very important destination considering the large number of central European and international companies based in Vienna. Naturally, here our managers will have to be prepared to be compared to managers at international levels, not only at the local level or even the Czech-Slovak level as they have been until now.

The expectations of companies for candidates are still very high; the crisis and the assumed availability of free labour made companies’ positions easier, and they found themselves in a position where it was easier for them to pick and choose amongst candidates. Yet the reality is different: even though there are a lot of free people on the market, there are not the experts and people managers that firms really need. There is a fight for talent once again.

ZW: Many companies have again started hiring staff but it still cannot be compared with the situation from two years ago. However, the expectations of candidates are more realistic and this is valid for graduates as well, who in the past often had inflated expectations.

TSS: How are companies handling the phenomenon of outsourcing versus in-sourcing in the area of human capital and what areas are still popular for outsourcing or, on the contrary, which activities are being in-sourced to a greater degree?
Outsourcing or in-sourcing are being applied in organisations depending on their strategies. Organisations with strategies focusing on their core business only are outsourcing everything in the area of human capital. The opposite strategy is when a firm decides to solve everything internally and adjusts the structure of its internal team covering the area of HR. When picking between these strategies, it depends on the individual ability of the manager who is in charge of this area so that he picks for his organisation the most suitable alternative in terms of quality of HR services and related expenses.

From the point of view of services, there is visible in-sourcing of recruitment services and the creation of internal recruitment teams, while for executive search, cooperation with a good-quality professional consultancy firm is preferred. Internal assessments of people are often managed by internal teams, while in the case of complex assessments where it is necessary to benchmark against the wider market, external advisory firms are being used. Wage structure advice, training or coaching is more frequently being solved in cooperation with advisers.

DB: Personnel leasing still remains popular mainly in the production sector, if companies are not certain that an increase in production or new projects are a permanent trend. Employers still use the services of headhunters for key or discrete positions, and training programmes and even coaching is frequently being outsourced. However, there is a trend mainly among large companies to strengthen the operation of their personnel departments and in-source a larger volume of HR activities.

MT: Traditionally, payroll and to a larger degree recruitment and training are being outsourced, which is quite natural. The area of HR systems is being increasingly in-sourced, which means that firms themselves write internal guidelines and tune performance management, rewards, car policies, etc. However, all this depends on the size of the firm. Larger companies have switched to a system of HR business partners and smaller ones have general HR staff who are multifunctional. In smaller companies managers unfortunately still understand HR only in terms of administration and wages. It is a pity that they aren’t ready to hear more about development programmes, etc.

TSS: Which professions are facing a lack of suitable candidates for available positions?
For several years, it has been more difficult for employers to seek out craftsmen, followed by sales representatives: their importance, as well as the demands placed on these positions, has significantly grown over the past couple of years. Cooks, drivers, physicians and IT workers too remain sought-after professions. Considering the concentration of the automotive industry, in Slovakia there is a lack of employees with technical qualifications and, in the same way, workers qualified as technical engineers, such as welders, locksmiths etc. Thus the current situation in the labour market is in the same way affected by the lack of labour; or rather this factor is even more pressing than it was in the past.

DB: These are still the highly specialised positions, for example, in the area of IT, production, engineering, as well as insurance.

MT: On the market there is a lack of candidates to fill so-called mid-level technical positions, for example process engineers and technologists. Primarily this affects the automotive and machine industry. The market could absorb more developers and system architects in the IT sector, as well as technicians and project managers in the energy sector.

PU: In connection with the permanent development in information, telecommunications and production technologies, employers still lack enough qualified specialists in the technical, IT and accounting areas. We expect this trend to prevail also in the near future.

TSS: Professionals say that there is still a lack of interconnection between education and practice. What steps, whether on the part of schools themselves or the state, could help to improve this situation?
Employers agree that graduates have a relatively high standard of theoretical knowledge; they have fewer qualities when it comes to practical skills. Cooperation between universities and the private sector, which is one of the key elements for boosting the quality of the academic environment, could bring improvements. On the other hand, more important is a systemic change in university education. The system would function much better if it stood on market principles.
The quality of university education in Slovakia is a long and complex problem. Just have a look at the recent findings about degrees being handed without [recipients] even studying [for them]. How can anybody then rely on what the person learned at university, knowing this? The lack of quality in teaching staff, the low demand from students for higher quality education, along with no higher demands on students from teachers leads to the rather mediocre quality of education that graduates have. The universities have almost renounced their role as centres of research and education, so they are not attracting researchers and scientists who could improve their rankings.

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