Economic confidence on the rise

Several economic key indicators point to an economic turnaround. The conference board in the US reported that consumer confidence jumped 14 percent between July and August. The Index has more than doubled since March and now stands at 54.1. The Wall Street Journal revised after another stare into its crystal ball its earlier pessimism about the economy as reported in July, when it wrote the economy would loose 70000 jobs a month next year. The figure is now revised to 27000. Go figure.

In my view, the number of search assignments in the region of 36 countries where we have offices, is rising steadily since March. Though some of those countries, notably the ones in Central Asia, can be described as "non-integrated" emerging markets and follow their own dynamics, the rise in assignments is evenly spread across the geography. US multinationals are one by one awaking from their nuclear winter slumber, realizing downsizing, terminating, reducing and reengineering cuts costs, but also the prospects for future revenue growth.

Shurely it won't be a nuclear autumn. Stay tuned.

Executive Search Emerging Markets 1: Client Companies

Emerging markets characterise themselves by a low degree of overall insitutionalization combined with high growth potential. Local companies in those markets pose by times particular challenges to the Executive Search Consultants. Low institutionalization correlates with high degrees of high political risk and/or high scores on the Corruption Perceptions Index. The higher those scores, the more  the traits pronounced below become.

1. Weak ethical frameworks render the provision of search service problematic, precisely because the commitment of the client is always in flux. By times there is a remarkable lack of the necessary implicit trust to make partnerships work, which implies no one will take advantage of the other, and that terms, conditions and time frames are fair. It happens more than often a client tries to re-negotiate fees after all services were succesfully delivered, according to, and as stipulated in the contract/proposal.

2. Weak legal frameworks that do not protect the service provider. A recruitment service is intangible and it is hard, or by times, impossible to prove it was properly delivered. Searches are "cancelled" but weeks later shortlisted candidates are contacted and hired. Courts are more than often not an option to settle a dispute.

3. An intangible deliverable such as a service is hard to sell. Because a service is invisible and can't be touched, its value is also deemed inferior to that of tangible products. I often hear technology companies selling ERP software solutions are asked to provide the necessary maintenance and consulting services "for free", as these are anyhow required when buying the software licences. The similarity with Search Service starts and ends when a physical person, like office furniture, a production machine or stationary, is brought in.

4. Though there are definitely exceptions, local companies are often structured in such manner that proper delegation is out of question, and "our people matter" is usually an empty slogan. Since there is a lack of trust towards a majority of key employees, the delegation processes required to generate and sustain seizable growth are not properly implemented. Value based retainer fees are therefore hard to come by as the companies who need talent the most, cannot recognize, develop neither integrate it.

The result is that more than 80% of searches in such markets are conducted for multinational firms entering or present in those markets; or go to the few local firms that have managed to succesfully establish themselves outside their home market.