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Realities and Challenges Facing Executive Recruitment in 2010

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The Brazilian Association of Human Resources (ABRH) Interviews Peter Felix, President of the Association of Executive Search Consultants (AESC), to discover the realities and challenges of the Human Resources function and executive recruiting in 2010.

ABRH - Many companies have frozen hiring because of the economic crisis. What was the real impact of the crisis in executive search business around the world? What are the expectations for 2010?

Peter Felix - 2009 was one of the worst years for executive search in living memory.  Many of our member firms experienced reductions in revenue of between 30-40%. However, the rebound in demand began to show itself in the fall of 2009 and expectations for 2010 are now much stronger, although there is still uncertainty about how sustainable the recovery is. From my view point I expect the demand for executive talent around the world to resume its very strong pre financial crisis levels within 2-3 years. The industry peaked in 2008 and I see no reason why these former levels cannot eventually be reached, although the distribution of demand around the world may well change.

ABRH - In your opinion, are the social networking sites a threat to executive search companies or are they indeed a good tool to help these companies to find good professionals?

PF - If they are a threat to search firms then it will because search consultants have failed to communicate the real added value of their service. The key value add of executive search is not only proactively reaching out to the bet talent in the market but in motivating executives to consider opportunities that they may not otherwise have become aware of. Although social networking can help identify candidates someone still has to perform the critical role of assessment, communication and negotiation that is essential for top management recruitment and  it must be done confidentially. It is rare that client organizations can achieve the level of expertise or objectivity required to perform these functions without professional help.

ABRH - Usually when we talk about social networking websites we talk about generation Y too. A recent research concludes that they already occupy about 20% of management positions in companies worldwide. Is there some different method to hire members of this generation? What do they most expect from a company? Do you have some interesting case to share about this generation?

PF - Generation Y are more mobile, more networked and more unconventional about work/life decisions. However, they still need to work and organizations still need to select the best talent among them. I think that informal networks will contribute to finding opportunities for Generation Y perhaps more than previous generations, but, at the most senior management level, organizations, especially public companies, will still need to conduct more formal, objective selection processes.

ABRH - You are a person who has a broad view of the executive search companies. So, what are the secrets of excellent recruitment?

PF - Good recruiting involves careful analysis and agreement about the needs of the organization and the position in question. There is no point in fishing in a pond without a clear idea of what it is that you are fishing for. A targeted search will unveil the best talent in the market for the identified need and then provide options to the organization based upon fit, cost and potential. At the end of the process the organization should feel that it has carefully reviewed its best options, including internal candidates, and feel satisfied that it did the best it could within the constraints of the organization and the market.

ABRH - Is it possible to observe an evolution in Human Resources? In your point of view, what HR has evolved the most and what still has to evolve?

PF - Human Resource functions around the world have been challenged to become a driving force in management rather than a maintenance and processing function.  In the best run organizations they have succeeded and the Head of HR is seen as a crucial member of the top management team with a seat on the Board or Operating Committee. There has been evolution but there is still a long way to go. In some organizations Talent Management has been divided from HR in order to provide it with amore independent role in serving the strategic needs of the organization.

ABRH - What key skills do companies expect from HR directors in 2010?

PF - Above all strategic - a keen understanding of the drivers of the organization and the market within which it operates. A creative, opinionated but also conciliatory person who can be trusted by the CEO to produce sensible but practical solutions. An excellent communicator.

ABRH - What kinds of problems can HR divisions cause in the process of searching and hiring an executive?

PF - HR must avoid acting as a bureaucratic block in the recruitment of key executives. They will need to be involved in some measure and may even be the instigator of a search but they must act efficiently, diplomatically and with a keen sense of helping the process. I have seen searches derailed because HR did not communicate effectively with the parties involved and produced an offer letter unrelated to the nuances of the discussions between the parties.

ABRH - You worked in the marketing sector of IBM in the UK and achieved an MBA from INSEAD, and after that you were VP of Human Resources at Bendix in Paris. What kind of lessons did you learn in each area and What was has the HR executive in you taught the Marketing executive?

PF - I learned from IBM and INSEAD the realties and constraints of human organizations. I learned that it is essential to ‘see the wood for the trees’ and bring a clear perspective and realistic solutions. It comes down to leadership and having the confidence to express one’s views.

ABRH - Planning the future workforce is part of the many functions of Human Resources, which means that HR has to be connected to the business core of the company, as well as having long-term and strategic vision. Is this planning an actual concern of companies and their respective HR divisions?

PF - Not as much as it should be. Most HR functions are under resourced and focusing on the here and now rather than the future. The majority of organizations around the world have not developed succession plans, even at the most senior levels.

ABRH - In the international scenario people are talking about the “BRICs”, the emerging markets. Is there a flow of talent from these markets to “developed” markets, or is it the opposite?

PF - There is a clear flow of “returning nationals” talent from developed countries to the emerging markets. Many Indians and Chinese, for example, are returning home now that their home country offers more opportunity and competitive compensation. This reverse brain drain is of great concern to business leaders in the United States and parts of Europe. It is exacerbated by obstacles such as visa availability and cost which are discouraging international students from studying in the West.

HR professionals should visit Corporate Connect to stay connected to the senior executive recruitment market and locate best-in-class executive search consulting firms.

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