This coming year looks to be a tough one for many markets around the globe. Although GDP growth should be respectable this year for the US market, the IMF has revised its figures downward for Japan and EU countries. Emerging market economies like China and Russia tell a similar story, albeit based on different local conditions: market overreach now has China posting its lowest growth rates in a quarter-century and economic sanctions have crippled the Russian economy. At the other end of the globe, Argentina battles with inflation rates at 40%. Business managers in markets that were meant to drive global demand and economic expansion must come to terms with the reality of „follower economy“ status. They must work with their teams to find smart ways to generate new demand in developed markets and succeed in a global economy this is still partially overheated and still needs to deleverage.
Guidance during times of instability
A positive contribution that business leaders in emerging markets can make to their business is to keep calm and avoid causing economic panic. In recent months the concerns of financial institutions in developed markets about their exposure in emerging markets has led to noticeable weakening of many global currencies. We see this in parts of Eastern Europe, in South America and elsewhere. Moreover, the Institute of International Finance reported this month that capital inflows into emerging markets will fall again this year for the second time in a row. This is apparently fuelled by investors‘ worries over when the US Fed will raise interest rates along with political conflicts in parts of the world and fluctuating oil prices. All this uncertainty puts a new set of pressures on GMs in emerging countries, who increasingly have to do business while working with a broader set of unknowns.
Essentially, the key skill set that GMs in emerging markets have to continue to develop and refine, more than any time in the past, is contingency planning. For
many of them 2015 will likely be the year of strategic hedging against exchange rate/currency losses, smart HR planning that includes doing more with smaller
teams and new technologies and planning stable operations in politically volatile business environments. Watch out for shifts in tax structures, change in interest
rate policies and further slowdown in BRIC country markets.
The digital factor
Technology is one factor that can help GMs smooth out some of the bumps in the ride for this year’s global business cycle. Increasingly, mobile devices and broader internet connectivity have helped businesses meet the challenges of doing business in less-developed markets. Similarly, access to cloud-based computing solutions also provides more flexibility than classic office environments and cost less than investment in classic HW infrastructure. Focusing on digital/mobile schemes can benefit businesses in emerging markets in areas ranging from cost reduction (office space rental, SW licensing, paper supplies, etc.) to new market access (mobile sales apps, text message marketing and e-shop/online business models).
Focus on supply chain management Commentary from business leaders working out of Africa suggests that supply chain planning will be even more critical to success in emerging markets during 2015. The global economy, emerging markets included, increasingly faces cycles of positive disruption. We see the technologies mentioned above rapidly changing models for how businesses engage with consumers, how GMs manage their employees and how management teams plan for growth and avoiding risk. Seasoned GMs also point out that companies can benefit greatly from year-end reviews. As many of us start to roll out our business projects for 2015, it is important to look back and map key events that can help the business plan for possible contingencies. In standard business activity this may include anything from fuel price cost mapping (to plan shipping models) to monitoring sales trends and spikes (so as to plan for better staffing and marketing campaigns). Also, in line with supply chain planning, it is also wise for businesses and their leaders to think forward and anticipate potential market shocks: both economic and/or regulatory in nature. For example, if you know the market in which you operate will see elections in the coming year, why not plan for all possible business regulatory scenarios your business might face. The best way to survive revamped tax structures, interest rate hikes, etc. is being prepared that they might become reality.
Succession planning in environments captive to global politics
As mentioned above, one thing this year will likely teach a lot of us, particularly business leaders in developing markets, is to plan for all possibilities. Most of us running businesses in these markets are well versed in planning for shifting regulatory environments for business, for inflationary shocks and shortages of goods.
However, the increasingly tense atmosphere in global geopolitics has made a great number of business leaders concerned about what to expect in 2015. Take the findings of PwC’s CEO survey for this year, recently presented at the World Economic Forum in Davos: Russian CEOs, for example, went from being the most
confident in their economic outlook for 2014 to being least positive this year. This demonstrates how the specifics of regional economic struggles and political conflicts can impact business. It also underscores why business leaders need to have clearly-defined succession strategies for cases when management teams might need to change quickly, i.e. for reasons of conflict, decisions to return to home offices, unexpected family problems, etc. If 2015 appears to be a year of the unknown, then businesses need to know: who steps up to lead in case a GM has to leave, what does the centraloffice/advisory board do in such situations, which managers move to fill vacancies for colleagues that have been promoted. These are just a few aspects of succession planning that companies need to look at in constantly evolving regional economies.
2015 looks to be a challenging year for businesses around the globe. However, if you plan well and accept the new reality of having to work with sluggish growth and market volatility, good strategic planning should get you through relatively unscathed.
We are delighted to announce the hire of Dr Eva Wuellner, Regional Practice Group Leader, MEA - Family Businesses and Technology “Based in Dubai, Eva will support our clients in both Executive Search assignments and Human Capital Services projects (Leadership Development, Assessment Centres, HR organization…). Having worked in multinational enterprises and family groups (Unilever, Amazon, FANUC, Lindab, Wadi Group), Eva has gained a broad cultural and professional expertise while working in Germany, Luxembourg, Russia, Czech Republic, Hungary, Egypt and Kuwait. Along her career, Eva grew her expertise in Talent, Change and Performance Management and Recruitment/Talent Acquisition. Eva holds a Master degree in Economics from the University of Passau, Germany, and an MBA General Management from the European University of Economics and Management in Luxembourg. She earned a Doctorate of Business Administration from Surrey Business School, UK, with the doctoral thesis titled “Talent Management in Luxembourg”. Eva is a fellow of the University Forum of Human Resource Development (UFHRD) and the European Institute for Advanced Studies in Management (EIASM). Eva speaks German, English, French, Italian, Spanish, Arabic, Russian, and Portuguese.” Says Cedric d'Halluin, Partner, Emerging Markets - Middle East, Africa, Russia, Turkey. “I am thrilled to join a multi-cultural team of Executive Searchers and HR professionals in a company that is grounded on high ethical values and family spirit with a strong customer-centric approach.” Says Dr Eva Wuellner, Regional Practice Group Leader, MEA - Family Businesses and Technology.
Xenia Becker and Cedric d'Halluin of SpenglerFox collaborate with GoINPHARMA to discuss compliance and globalization changing approach to leadership search in pharma and healthcare. Executive search and recruiting have changed rapidly over the past decade. Most of these changes stem from a deep restructuring of client needs. Whereas, some 10 years ago, businesses were asking executive search firms to fill top leadership and sales management roles, clients, in the past half-decade, started asking for placements in the fields of Market Access or Medical Affairs. The way larger pharma companies approached their business had changed. Many went from a commercial sales view of doing business to adopting a more scientific approach to bringing goods and services to market. Demand for leadership with deeper technical know-how grew. In emerging markets, the situation is not that different. Compliance issues have had a big impact on how corporate HR picks new leadership hires. The expat vs. local approach to hiring has come full circle. Initially, expats were brought in to emerging market countries to mentor and help with transition and economic restructuring, then local talent hires gradually replaced them. However, during the last five years or so, the environment in many emerging markets (i.e. Brazil, Russia and Turkey) has changed. Markets have become more regulated and subsequently ways of doing business have changed. Market buzzwords no longer include “expansion”and “adding headcounts”; instead, headquarters for multinationals in these markets now speak of “compliance” and “rational growth”. Because of new regulatory demands, company leadership teams are generally more cautious and calls for expat-influenced management have once again grown: due to their more extensive experience in handling compliance-related decision-making. Management and Leadership Skills Candidate skills have always been important. However, businesses (as our clients) have gone through significant evolution and this has changed their demands. If you go back a decade, it was very likely that a German company filling an executive post abroad preferred to, and did, hire a German candidate. This is no longer the case. Also, mobility is an increasingly important factor. More businesses seek people for leadership roles who are willing to relocate. This fact breaks with previous industry standards where business executives and upper-level managers focused primarily on career development. They took on a position expecting to advance within that specific worksite (geography). Today, however, markets like Germany are opening up to foreign talent: businesses are putting knowledge and skills at the top of their recruitment qualification wish lists. Key Skills in Demand Soft skills have grown in importance. This is particularly true for the pharma industry, and this stems from the fact that regulatory norms have changed a lot over the past twenty years. Previously, sales teams (and their leadership) had much more freedom in their approach to business. However, this has all been halted by regulations that look to curb potential corruption. This means that companies have had to look for new ways to build relationships with healthcare professionals. Businesses need leaders that keep an eye on compliance and work within the letter of the law and focus on sales team monitoring. Alongside that, pharma businesses now also place greater importance on executives’ ability to manage multicultural teams and to work within so-called matrix organizations. This means leading and providing guidance not only for local business units, but also therapeutic divisions, which can be a challenge. A further critical skill is executives’ ability to optimize production processes. Business leaders now look more at efficiency alongside improved production. This has been the case for the past few years: businesses are looking to minimize waste and focusing on lean management tools. The Great Recession did much to push this trend. Prior to the economic slowdown, there had not been such a big need to focus on efficiency. Now, this has all changed. Clients have excellence centers for lean management in pharma production. This, in turn, has changed pharma companies’ approach to talent sourcing. Previously, businesses had been more conservative, i.e. they hired talent with pharma backgrounds for pharma roles. Yet in recent years, they have switched up their search approach in the quest for efficiency. Now, it is common that a pharma company will look, for example, to the automotive sector to find the efficient leaders it needs. In emerging markets, retention and development of executive talent is just as important as the search process. Businesses increasingly focus on leadership development and use of assessment centers. Executive HR teams have moved from mass recruitment of new employees to intense development of existing teams; businesses are moving away from operational approaches and focusing more on strategy. They put more effort into strengthening the teams they have in place, rather than running external searches. One could say that companies have moved from an expansionist view of doing business to a strategist one. Impact of Technologies and External Influences Businesses increasingly talk of pushing forward with technological advancement; for example, as part of phenomena like Industry 4.0. However, the key ask organizations now have for their leadership at present is greater creativity. Businesses want their executives to be more flexible. You also see a greater push for a bottom-up approach to leadership versus traditional top-down models. Company leadership increasingly feels that customer-facing team members have a more direct relationship to the consumer: they have direct feedback on what the market wants. A specific reality impacting emerging markets involves local manufacturing. This is the case in Brazil, Russia, Saudi Arabia, South Africa and Turkey. Governments now have requirements that businesses invest in local manufacturing in order to get approval for price reimbursement for medicines and medical devices. Essentially, companies must localize production or they get booted from the market. This creates a further dilemma for multinationals as the talent for managing production is not always readily available on local markets. Overall, this is part of a broader cycle involving the expat/local/expat-hybrid recruitment cycle mentioned earlier. Some businesses have looked to bridge the expat-local talent gap by recruiting via national diasporas. They put together special packages to bring their countries’ expats back to their home markets. This has been a preferred recruitment strategy for emerging markets in recent years: businesses search among talent that has relevant, important cultural ties but who have also worked in different cultural environments and can offer a fresh perspective. The Future Executive Executive talent must increasingly be people-oriented. Businesses are shifting away from hierarchical leadership; these days, the focus is more on the team. This also stems from generational changes within businesses where younger leaders place greater importance on meaningful work assignments. Meeting this need has also become critical due to a lack of talent in many areas: need for retention is a key motivator. Leaders also need to focus on the needs of their teams and what younger generations now expect of work environments. For example, perks like home office have become standard. Whereas, a decade ago this was rare or unthinkable, most businesses now offer a mix of on-site (workplace) presence coupled with home office days. On-site vs. home office arrangements also place a new set of demands on executive leadership. Directors need better communication skills and they have to invest in developing trust across teams that may not be physically present on a daily basis. Executives have to check in regularly with their managers and lower-level teams and agree on reporting schemes that satisfy both sides. In emerging markets, executives increasingly expected to focus on effectiveness and efficiency. For example, you see pharma companies moving to an FMCG mindset. As the market for OTC products begins to grow more rapidly, sales demands a more aggressive approach. Pharma companies are looking for consumer-empathetic (consumer-minded) talent to drive and manage operations. Moving Forward: Take-aways As has been summarized in the text above, global economic forces are rapidly changing what businesses need from their top executive management. Our view at SpenglerFox is that clients must consider leadership placements within the framework of ever-changing business environments. Top executives will need to put together teams that can work within new regulatory structures, run flexible organizations that react quickly to new production needs, and introduce management styles that accommodate multi-generational employee teams. Investment in the development of forward-thinking and strategy-focused executive talent will ensure that your business succeeds on global markets in the coming decade. For more information please contact Xenia Becker Image credit : rawpixel
We are delighted to announce the appointment of Maciej Kotowicz, Country Manager - Poland. “It is with great pleasure that I announce our latest addition to the SpengerFox Group, Maciej Kotowicz, who will assume the role of Country Manager – Poland. Maciej will be based in Warsaw, one of our firms strategic hub locations and drive further growth in Central Europe as part of our overall business strategy.” Says Jens Friedrich, CEO of SpenglerFox Before joining SpenglerFox, Maciek spent the past 12 years as a Partner at Heidrick & Struggles in Poland. His focus has been on Executive Search and Leadership Advisory mainly within the Consumer and Industrial space in CEE. Prior to that Maciek gained substantial experience in General Management as the MD of Tate & Lyle as well as in strategic HR as the HRD of Ahold. “I am delighted to have joined SpenglerFox during this exciting chapter in the companies history and bring my experience to grow and develop the business and team in Poland as well as across wider geographies of SpenglerFox. To succeed in this industry you have to be a true expert and that is the minimum requirement of our clients, the generalist era is over” Says Maciej Kotowicz, Country Manager - Poland of SpenglerFox