TOP MANAGEMENT RECRUITMENT MARKET IS RECOVERING
Positive trends on the human resources market in 2010, including declining unemployment and stable increase in the number of open vacancies makes us hope that we have finally overcome the crisis and can be more optimistic about the future
We are glad to see that in 2010 the boldest forecasts in the sphere of executive search have come true. Recently, The Russian Business Newspaper compared 2010 to rehabilitation in a sanatorium of a heart surgery patient for recruiting agencies as the number of vacancies is approaching the 2008 level. Despite the fact that our growth forecast for the industry (12%) has proved true (although a lot of recruitment agencies suggested a lower figure), there are three main problems in the employment market I would like to mention.
First, during the crisis the number of talented and successful managers at all levels and in all spheres in company management has not increased.
A survey we conducted in 2010 among 200 companies demonstrates that the natural loss of managers on the market, which increased during the crisis by dozens percent, and fortunately, has stopped now, has two main reasons:
1. Healthy financial situation in the prosperous years together with the redundancy package gave top managers an opportunity to create a significant financial cushion and contributed to their so called early retirement.
2. Starting their own business, which, among other things, provides flexibility and better life-work balance is the second cause of managers’ outflow from the market of potential candidates. At the same time, while 41% of all respondents among executives from the ‘retirement’ group still consider returning to active job search depending on potential offers, those who started their own business can be called non-returnees.
Second, because of the decrease in the number of ‘free radicals’ today there is a strong competition for all and for each candidate across industries. In 2010, the time of redundancy, bonuses and social packages cuts and wages freeze is over. Businesses are looking at options for reviewing top managers’ compensation packages (therefore a growing demand for compensation and benefits specialists) and use more sophisticated incentive schemes to ensure that managers stay in the company. It is proposed to create long-term (at least 5 years) and short-term (with bonuses paid at least during three years) incentive funds, complex intangible non-financial reward systems, such as long-term career development and modelling, special training programs (e.g. EMBA), etc. Marina Oleshek, Senior Vice President and Head of HR Department at VTB, says, “I need to integrate a lot of top managers, and I have not yet met neither among candidates, nor among those offered a job, people who would talk about the option policy not from the point of view of the company, but from their own. Each of them speaking about benefits has mentioned the company performance during 2-3-5 years and that he would like his compensation to be linked to it.”
The third problem in the area of ??recruitment in the post-crisis period is that traditional methods of searching and attracting the best candidates have become outdated and recruitment specialists, both internal and external, need to do serious work to adapt HR policies and procedures to successfully compete for talent.
The idea that one cannot attract top managers only by financial motivation is not a new one. However, until recently, the financial component of the compensation package (salary, bonuses, commissions, etc.) has been the most important in hiring a top manager. We all know that where the horizontal promotion does not work, the army of top managers is traditionally built with the second-tier managers who have survived the crisis, which to a certain degree has changed their vision of their own career and expectations from a potential employer. Today the company’s stability, the history of its employer-employee relationship and its positive image in terms of human resources play a greater role. Company management need to focus on these aspects if they want to attract the best. Unfortunately, as shown by our survey, the majority of companies still think that the best motivation for changing a job is the compensation package – 62% called money the main instrument for attracting top managers.
Today companies need to fill vacancies, but how? According to our research, as a result of the crisis, human resources departments have suffered major losses (in some cases up to 60%). Due to internal recruiters’ redundancy a lot of companies have found themselves in a position where they have no experts in executive search.
According to the Association of Executive Search Consultants data, released at the Paris conference in November, to date 71% of all organizations interviewed find executives through personal and professional contacts of company management or shareholders.
If these connections do not bring results, there are two ways – either internal or external consultants (headhunters). As a rule, human resource departments responsible for recruitment, which were significantly cut during the crisis, have problems with top management recruitment. In such cases the only way is to ask a headhunter for help. Headhunters do not only have better search technology but also the necessary contacts, including personal, in the customers’ industry.
Judging by statistics and a growth trend in top management positions in 2010, there will be enough work for headhunters in the near future.
Although the International Labour Organization (ILO) is cautious with optimistic forecasts and expects in its recent report that the labour market will remain depressed till 2015, the Association of Executive Search Consultants has published research confirming the positive trend and general optimism in the market. Sixty-seven percent of the consultants expect a significant growth of the market in 2011. We can say that today we witness a renaissance of top management recruitment.
Russian Industrialist Magazine, Vyacheslav Konovalov, Business Development Director, 4Astra/IMD International Executive Search