TO BUILD A CAREER YOU MUST ALWAYS STEP OUT OF YOUR COMFORT ZONE
E-xecutive.ru spoke to Anna Ryzhkova, Managing Partner of 4Astra ES / IMD International Executive Search Group and CEO of 3R Recruitment Company about the behind-the-scenes of executive search, top managers employment market, their packages and building a career
Many managers dream about executive positions and want to get to the top in their career. Only few can achieve this, because not everyone is ready to put almost all his life on the altar of career dreams. Otherwise it is difficult to climb to the top and stay there. Although companies are willing to offer bonuses and high salaries, in return they want nothing less. To find a professional top manager today is not an easy task for the company. E-xecutive.ru asked Anna Ryzhkova, Managing Partner of 4Astra ES / IMD International Executive Search Group and CEO of 3R Recruitment Company, about the behind-the-scenes of executive search, tops managers employment market, their packages and building a career.
E-xecutive.ru: What is the situation today in the top management recruitment market? Which professionals are in demand and which can be found relatively easily and in what industries?
Anna Ryzhkova:The main thing today is not so much the specialization of senior managers, as their qualifications and management competence. Despite the revival of the job market and competition among top managers (ten resumes per vacancy according to headhunter.ru), there is still a shortage of talented and effective leaders in the Russian market. As a result of the recent global economic crisis companies prefer to attract people who are capable of solving specific problems and know the industry thoroughly. In addition, the attitude to various functions of top managers has changed. Assessing candidates for leadership positions, employers pay more attention to educational requirements, track record and experience, because most companies today need not only to maintain a successful business, but also to create opportunities for further growth. There is no more quick money in Russia, so the main focus for the coming years will be an increase in productivity. The potential for improving performance in Russian companies is huge. Business owners will expect from managers not only efficiency improvement but also a permanent reduction of costs and time to achieve business objectives. The fact that a major factor in selection of a leader is his competence as a professional manager is supported by recent increase in cross-industry moves among top managers. Currently they account for 20-30% of the market. Owing to infrastructure development a manager with leadership potential can understand a new business. People begin thinking globally since all processes, including economic, have become interconnected.
As for specialization commercial, general and financial directors with experience from five to ten years are in high demand among employers. The highest competition – 18-19 candidates – is for executive director positions. And directors of production are in the highest demand. This suggests that there is a growing shortage of professionals who can be good managers in the real sector (that has a potential for growth and economic development in Russia), and implies that forecast for the sustainable growth of the Russian labour market against the backdrop of volatility in international should be more conservative.
E-xecutive.ru: How is executive search different from recruitment?
A.R.: The techniques are completely different, although in principle a set of tools is the same, but with a different degree of responsibility, as well as the depth of understanding of the process. One cannot approach a professional with leadership experience and begin speaking about his functions, responsibilities and projects. This will put a consultant in an awkward position. Here you need to take a different approach, to look at a candidate’s combination of personal characteristics, potential, completed projects and the environment, where he worked. The main difference between executive search consultant and the recruiter is primarily the outlook, global understanding of the market, thorough knowledge of who is doing what, as the more the consultant says about details the more trust he has and leading a top manager to a frank conversation about the situation on the market and about his personal plans. Today 25-30-year-olds start in executive search agencies at the positions of analysts, consultant assistants, and in 5-7 years of extensive research on the market they become executive search consultants.
E-xecutive.ru: Are there many agencies providing executive search services?
A.R.: In Russia, the market is not yet established, so than agency can look for, say, a financial director and financial department team for a regular customer. However the gap between the two markets – executive search and traditional recruitment – is growing. In Europe, for example, there is a strict differentiation. It is not just that the agency is working with middle management position, it also deals only with specific positions, and the market is so developed that it allows regularly having vacancies from clients. We have partners in the United States and Canada working only on projects in marketing but across their countries. And this company does not have five or ten people, they have 40-50 consultants. We will also come to this if we continue to develop in the same direction as today.
E-xecutive.ru: They say that recruitment is a dying industry…
A.R.: Winston Churchill said, “Success is the ability to go from one failure to another with no loss of enthusiasm”, and frankly speaking, the recruitment market is, indeed, decreasing, and recruitment services are in lower demand around the world. There was a strong growth 5-7 years ago, but now there is some decline. Of course, recruitment will not disappear completely, but it will change. The survey among HR managers conducted by 3R Recruitment Company in August 2011 shows that traditional methods of searching and attracting the best talent are out of date and recruitment professionals, both internal and external, need to do serious work on the adaptation of the internal HR policies and procedures for successful competition for talent. This was noted by 78% of respondents. At the same time, 79% HR specialists believe that classic recruitment will not lose its positions with rising popularity of Internet recruitment. Also, sometimes companies prefer to pay for better quality and speed of personnel search than do these projects on their own. Another factor is competition, where an employer cannot approach a person he is interested in and make him an offer directly. This could lead to a conflict and cause a negative reaction in the market. Therefore, there will always be demand for those people who can do it gently and professionally. As for the decline in recruitment, it is caused, first of all, by development of society and communication technology. Today information has become available to companies and candidates, while lack of information has always been our advantage. If we take the history of executive search, twenty years ago the industry was built by grey-haired men who worked in any industry for thirty or more years, and worked on the basis of their knowledge and connections in this business. Today it is not that necessary: the average age of executive search consultants in Russia is 35-42, and often these people have no relation to the area in which they look for candidates, but still know it well and have communication skills and logical thinking for successful closing of projects.
Personal relationships are important and will, most likely, remain important on this market. Without networking today it is almost impossible to find clients. According to the Association of Executive Search Consultants, IMD International Search Group, today 71% of surveyed organizations find top managers through personal connections and professional contacts of company executives or shareholders. Executive search projects can be compared to private banking – you have some capital, you want to invest it and be assured that you will get good dividends. You will not bring your money to a bank around the corner, as the risk is too high. The same with executive search. Executive search providers never advertise, as it makes no sense. A lot of decisions are made at the personal relations level. Therefore, it is quite difficult to establish such business, and stay on the market.
E-xecutive.ru: Taking this into account, how do western companies enter the Russian market?
A.R.:Many companies come to the market only to quickly leave. Generally western players come to agencies already operating on the Russian market, and offer them synergetic relationship. They offer their brand, training, expertise, coverage of the attractive Russian market in exchange for understanding of Russian realities, knowledge and networking. There are examples of such cooperation. For example, our partnership with IMD International Search. A lot of people asked me, “Why do you need this, everything is going well in your business”. But, believe it or not, I was curious to try something new, outside the Russian market, to go into the big world not just to see what they are doing but also to do the same myself. Yes, it's a risk, but without such risk life is not interesting for me. If you want to grow and develop you need to take risks and look for new opportunities.
E-xecutive.ru: What are the differences of working in the middle management selection and in executive search? You have had experience in both markets.
A.R.:Let us compare stages. First, a request from client. Normally if you “sell” middle management you can arrange the first meeting or offer services by calling a client after seeing vacancies on the company’s website or having heard about them elsewhere. Then it depends on you as a professional whether you get a vacancy or not. To do the same in executive search is impossible. In this sphere either your clients recommend you or upon learning about an open position you should find a person who can recommend you. Let me emphasize that executive search market is still very much based on personal contacts. It is impossible to get a contract by cold calling; no employer will speak to you even if he has open positions.
The second stage is discussion of a project. When a position in recruitment is discussed we do not speak about the market, as it is clear that people from the same positions in a similar industry will be considered. While in executive search 30% of the time is taken up by discussion of the position: it is necessary to understand the area of search, where the same players operate, if the client company and its shareholder are interested in what they are responsible for, maybe they will look at people from a similar industry. An executive search consultant is more active and takes on more responsibility.
Contract. In recruitment there is a standard service contract that includes responsibilities of parties to provide and pay for the services with a three month guarantee period after employing a candidate. In executive search each stage of work is discussed in detail. A project is divided into three parts: signing a contract, i.e. discussed the search plan on the market with a detailed assessment, then an invoice is issued; further we meet potential candidates and conducted negotiations with them, selected 3-5 people and provided a short list, then issued a second invoice; when the final candidate is selected and negotiations are held with him, a third invoice is issued. All these stages are significant in the framework of the project. At each stage service is provided to the client. At the first stage the client receives information about the market, consultations and market data, at the second stage the client meets people with specific competencies and also receives information and, finally, at the third stage the main goal is reached with finding the right person for the position. While in recruitment a client can meet candidates without selecting anyone for free, here it is different.
In fact, an executive search project involves a lot of negotiating. To find a person and present him to the company is the first step, which is 10% of success. Here we speak about major changes for a candidate, about the company reputation, where people move from one global brand to another, and the consultant needs to know how to control the negotiations process. At any moment all the work done can go down the drain. While this can be a unique candidate on the market. There is a very high level of responsibility. At the same time we should not forget that even after a thorough selection a candidate might not suit the company or its shareholders. I can give an example from my own experience, when we were looking for a director general for our client. In terms of job functions the candidate was great but the owner and the candidate just did not hit it off. So, for top management positions it is necessary not only to find high level professionals but also psychologically compatible applicants, who are able to listen to shareholders, communicate well, take in their ideas and aspirations. It should be noted that owners and top managers as a rule have strong personalities and similar level of ambitions. That is why we should not just find a strong leader; we need to find a person who has similar vision in terms of business values shared by the company management.
E-xecutive.ru: What is the current level of top managers’ compensation?
A.R.:Let us start with director general’s compensation. In international midsize companies with 30-40 headcount it amounts to US$10-12 thousand plus a bonus calculated on a different basis depending on a company. As a rule it depends on the company performance. In well-known midsize companies salaries range from US$15 to 22 thousand, while in big companies with 200-500 employees the compensation can reach US$25-33 thousand. Here we take an average market level. We should not forget that there are industries and companies where this level of compensation is offered to heads of department. I mean oil&gas sector and banking sector before the recession, which is not the case now.
Executive search companies do not like February and December, as these are the months when top managers receive their bonuses. All projects started in November are normally completed by April because everyone is waiting for a bonus. However in some cases companies pay off a compensation for leaving the company during this period. As for the notorious ‘golden parachute’ schemes, they are connected with the company’s inability to comply with its obligations. It is assumed that the company is going to the market with a certain amount of investments, but it may further review its strategy and reduce spending, or, maybe, no longer need to have this top manager on the team.
E-xecutive.ru: What is the level of competence of top executives today? Are there any gaps in expertise and skills?
A.R.:A famous business guru Peter Drucker said, “The better a man is, the more mistakes will he make for the more new things he will try. I would never promote a man into a top level job who had not made mistakes, and big ones at that. Otherwise he is sure to be mediocre.” There is no one-size-fits-all approach here. A company looks for a person to integrate into its structure, to suit its goals and challenges. Therefore different organizations need people with different competencies. It may sound odd, but not all companies want to be leaders on the market. About 70% come to conquer the market, grow and develop their employees and they need a leader, while other companies have different goals, e.g. they need a good manager who will not oppose the owners’ views. You will agree that top managers for these companies will differ in terms of professional profile and personal characteristics. One will not be better or worse than the other, as each of them will perform the tasks for the benefit of the company. If everything is organized well in the company, all business processes run like clockwork, they do not need a top manager with revolutionary ideas of reorganizing everything, such company rather needs a supervisor. And this kind of person will be in the right place here.
E-xecutive.ru: Do top managers need МВА?
A.R.:This is a difficult question. I used to think that Executive МВА is not necessary, but then I changed my opinion and enrolled in the Skolkovo School of Management programme myself. Of course, MBA will not solve all problems. At the same time, especially after the global recession, it has become clear that the economy needs professionals who know well the global practices and innovations in order to ensure control and effective corporate governance, risk management and accurate allocation of human and natural resources. In the CEE Talent Leadership Study analysts tried to answer the question if Russian top-managers are ready to compete with their western colleagues and what is the potential of executives from Central and Eastern Europe in international business management. According to the results of the survey, managers from countries that used to have state-planned economy have a higher leadership potential and can in near future lead major international companies not only in their countries but also abroad. Among disadvantages of Russian managers the analysts name insufficient knowledge of modern management skills and instruments, authoritarianism, lack of constructive thinking. It is clear that the first disadvantage can be dealt with only through acquiring management skills, learning about management techniques well-known in the west. I personally think that a combination of western business style and know-how and national characteristics including Russian enthusiasm, creative approach, quick adjustment to new circumstances, leadership ambitions and knowledge of the Russian market can work very well for Russian executives.
E-xecutive.ru: Are there more men or women among top managers?
A.R.:Certainly, there are more men. Per twenty top managers there are two or even fewer women. When I ask clients who they prefer as candidates – in Russia we can still ask about it – they always say they need men or even ask if there are women candidates for this position at all. It is very rarely that women go to the highest level in the company. Due to a number of objective reasons it is more difficult for them. First of all there are not many leaders among women. These would be women with a different upbringing and thinking, while in Russia women are still brought up mainly with traditional conservative values, we do not have a strong feminist movement, neither a focus on gender equality, as in the US. That is why women-leaders are an exception. Another thing is that not all women want to be leaders, as this means that they will have less time to spend with their family and keep a good home, while this is what a lot of women want. I think it makes no sense to try to achieve absolute equality between men and women top managers. There is no place for any gender competition here. However if a women feels that she has a potential, ambitions and, maybe, authority no one should prevent her from becoming a leader.
By the way, there is a difference between male and female candidates. For instance, men think more about figures, risks, try to make a forecast, often better than women. Women tend to be less aggressive and pushing in negotiations about benefits and bonuses. We are more focused on processes, are more flexible, use the management styles that are more effective depending on the situation and are not committed to any particular style. Margaret Thatcher said, “If you want something said, ask a man...if you want something done, ask a woman.”
E-xecutive.ru: What are the stages of a top manager’s career? How can you reach the top?
A.R.:If you want to build a career you must always step out of your comfort zone. If a person wants to develop and tries to take on more responsibility and more functions, it will be noted and he will be trusted with more tasks.
You can work in one company for a long time and go up the career ladder, as a lot of companies develop their own people without attracting external specialists. An important condition is to work well and show interest. I know that today an opposite opinion is popular, but I think that working in one company one can make a career quicker. If you work in a company for a long time and understand that you like what you are doing and if you succeed in going further and developing and your work is appreciated you should not go to the market looking for a better place. At the new job it will take a year to show the results you speak about when you are hired. At the same time, if a person has worked for ten years in a company and has become a top manager he will have a somewhat narrow view of the market compared to a top manager who has worked, say, in three companies. So each career building strategy has its advantages and disadvantages.
As for leaders’ adaptation there are, of course, certain difficulties. Even for an ordinary employee changing a job is stressful, adapting to the new team may take a month or two, while senior managers have a much more difficult adaptation process, and the responsibility is higher, as quite often there is no one they can turn to with questions due to various reasons. The first six months or a year are particularly stressful. It is not just my opinion. We can see a high demand for adaptation programmes for managers after getting a new position (this service is known as ‘on-boarding’). Our company offers these services and we can see how the process works in reality. We meet with our former candidates, get feedback, try to remove risks and facilitate a dialogue with the client to solve problems, to the extent possible. And there are quite a few of them, even purely psychological.
E-xecutive.ru: How long is it considered normal for a top manager to work in one company?
A.R.:From three to five years. Three is a minimum, five is a good term. It practically does not depend on an industry, the only exception is when a person can leave a company sooner – and it will be considered normal – to join a start-up or upon completion of a specific project. If the company and the candidate part quickly, it is usually not known on the market and scandals are rare. Typically, when you ask a candidate why he left the company in less than a year’s time the standard answer is, “I came to work on a project, it was necessary to establish business processes, and then I was no longer interested.” This does not mean that the candidate is incompetent. We have had experience presenting candidates with opposite references at our own risk, and they were successful in their new jobs. It is necessary to take a comprehensive look at a candidate, as even references do not always reflect the reality. We must take into account many components, including the human factor.
From our candidates’ we hear a lot of stories from “the battlefield” about conflicts between hired top managers and company owners that sometimes turn into a war for leadership in the organization. Business owners are afraid of losing part or all of their business, while top managers are dissatisfied with the requirements, violations of agreements, insufficient powers for effective management and assessment of their work by business owners. As a result, top managers are forced to look for new opportunities.
Despite all this, references are essential. This rule has been recently extended to middle management as well. It is not a problem and not something to be afraid of, as references are collected from several people. Each company has its own market, its clients and competitors, and I am sure that the best reference can be given by partners and customers.
E-xecutive.ru: Is it widespread and justified to fill executive level positions by buying specialists from competitors?
A.R.:It is 80% of the market and it is justified. The demand for qualified executives is growing and there is still a shortage. To find a ‘free’ top manager on the market is not easy, as high level professionals do not have any problems with employment. That is why we look for top managers in other companies.
Leaders who can work independently and solve non-standard tasks are most appreciated on the market. There are not many top managers who can build a business from scratch, lift a company from stagnation, and restructure it effectively. In short, we speak about people with strong leadership qualities. These professionals are closely watched by recruiters and competitors.
Alexandra Sycheva, E-xecutive.ru