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.
SpenglerFox wraps up the summer with discussions on talent motivation and agility with clients in the Czech Republic On Thursday, 30 August, SpenglerFox consultants led by Michal Vajskebr met with between 20-30 of the firm’s top clients in Prague to wrap up the summer holidays with some good food and drink and exciting discussions. The event took place in the Černá labuť (Black Swan) Gallery with its splendid view of parts of Prague's Old Town and Letná Hill. The main draw for the event was two very successful and interesting speakers, who came to share their experiences in executive leadership teams throughout the region. The topic of the evening was how to inspire and motivate good talent with a focus on retention. The expert discussion panel, moderated by Michal Vajskebr, included Martin Horčička, COO at Wüstenrot and Ján Čarný, managing director at COFACE. Comments by the panelists led to some interesting discussions and delivery of insights on what attendees’ personal leadership experiences and challenges they faced in the past taught them about team-building and motivating managers to perform. Martin Horčička (Wüstenrot): Martin’s experience is specific in that he has done a lot of interim management consultancy and worked in teams where he was brought in to manage a business turn around. His biggest challenges related to building and nurturing trust among members of the teams he managed. He pointed out in his remarks that the best first step, when new to a leadership situation, is to find the commonalities that you have with your team; specifically, when working in multicultural environments. One issue that Martin pointed out is that many managers, workers, team leaders, etc. are looking for a higher purpose in their day-to-day jobs. They want to be part of something bigger. He noted that when discussing difficult operational changes with teams he led in Western Europe, there was greater comprehension and respect from his employees once he convinced them he shared their concerns and passion for the future of the company. He noted that during his time in Belgium, the workers in the team he led had a personal investment, feeling-wise, in the company they worked for and wanted to ensure its viable future. Martin pointed out that one way to involve team members and secure their commitment to business plans was to seek their input in defining the company's business strategy. On the executive leadership side, he recommended taking the time to evaluate managerial talent and measure their personal investment in or commitment to the company vision or strategy. He noted that team members are more likely to deliver better results when they know they are trusted and company leadership is willing to give them the freedom to be creative. He underscored the need for executive leaders to foster constant dialogue with their managers and team members: help your talent understand there is no shame in asking question or seeking assistance. You'll be surprised at the results you can achieve when you set talent free to be creative and engage. Ján Čárny (COFACE): in his opening remarks, Ján reiterated Martin's comments that people really should like their work. He noted that local and regional markets have evolved quite a lot since his first years working in the Czech Republic in the investment banking industry. He pointed out that during that time most business leaders in Central Europe had yet to come across the concepts of corporate vision or company mission. Ján mentioned that, for him personally, one of the key motivators for excelling at work is the challenge that a given job or assignment poses. He had worked on finance-related projects on the Czech market, but then moved on to take on regional roles in Poland and later Ukraine. He noted that managing teams in diverse markets in the CEE region was fulfilling for him, because he got to see how corporate structures function in other regional markets. He also had the opportunity to contrast leadership roles in corporate vs. more family-style businesses. Over the years and across various national teams, Ján has come to see understanding of a company's business model as being mission-critical. He is constantly speaking with managers and their team members to find out what they do and why. He noted that problems most often arise when people do not understand their role in the business. It is important that executive leadership support teams in the creative aspects of defining and implementing business plans: executives should empower their teams by saying what to do, the team then says how to do it. Remarks from the two main speakers were followed by contributions from local and regional business leaders contributing to an open discussion forum. Some key points raised included the following: it’s important for executives to assess and define what existing operational systems work and not just pursue slash-and-burn policies (what to keep vs. what to discard); executive leadership increasingly appreciates how value for the company was achieved over the mere creation of value (teams should achieve results based on honest, transparent business plans); observe your talent, especially among younger generations, and find a way to balance their need to create and achieve with the results your company needs to deliver; focus on inter-personal relationships and building trust and mutual respect among your employees (corporate life produces a lot of unforeseen and sometimes unpleasant situations; you may perhaps have to fire your colleagues but, with politeness and respect, you can nurture those relationships and build new ties in the future); foster an environment that supports openness, honesty and authenticity (even regional cultures that have a tradition of operating based on 1:1 or closed-door meetings can be rebuilt). For further information please contact Michal Vajskebr. Image : Pixabay
Even though the Middle East emerged much later than Europe and the US on the international business scene, numerous conglomerates and multinational companies have established some kind of a set-up in the region. Attracted by the promising growth potential, many multinationals have built large local and regional teams in the main cities such as Istanbul, Cairo, Dubai, Casablanca or Riyadh. Just like anywhere else on the planet, the progress of telecommunication, the increasing interconnectivity of cities by plane and the hiring of the first millennials, have shaken the established organizations to their core. Working space is expected to be friendly of modern design and even a place where you can have fun in. Permanent email and phone connectivity blurs the boundaries between home and work space. Businesses in the region are now challenging the traditional office space, where employees worked a rigid 9am to 6pm shift sitting at their desk. Video conferencing, informal meetings, and work on a project-basis require additional facilities. One of the growing trends in the Middle East, which is gaining popularity day by day, is the flexibility for employees to work from home. Some of the cities in the region, more particularly Istanbul and Cairo, face horrendous traffic. It is not unusual for employees to spend 3 to 4 hours a day commuting. It is thus no surprise that home-office flexibility becomes as important as remuneration, benefits and job content, when it comes to attracting or retaining talent. In the recent years, multinationals have started to adopt an open space set-up to reflect their values of transparency and teamwork. Directors and Managers are now invited to join their teams in an open space. Meeting rooms offer the required confidentiality for conferences and sensitive conversations. This is sometimes hard to digest in a region where a private office stands for position and status. An even more advanced form of this trend is desk-sharing. The idea came as a solution to reducing office costs, which may well be the second largest expenditure after payroll, while desks are often underutilised. Consultancy firms whose teams often spend most of their time at client sites, lead that initiative, which enabled them to improve their P&L significantly. Newly-founded businesses are early adopters of nomadic work habits. Co-working is booming in cities like Dubai, a hub for regional start-ups. Flexible desks and meeting areas are offered by well-known global players in flexible workspace solutions, however independent co-working spaces are flourishing. Even the government-managed free-zones are now offering workspace to newly registered companies. This whitepaper attempts to highlight trends on the workspace evolution in the Middle East region, and how the latter impacts on international businesses. We believe the best way to explore these trends would be through testimonies of people that have led and/or coordinated their implementation in their business environment. We selected key note speakers, each one representing one of four key markets in the region: Dubai, Egypt, Turkey and the Kingdom of Saudi Arabia(KSA) and asked them the same questions for consistency. We hope that our exercise will provide you with interesting insights and perhaps some food for thought. Africa_MiddleEast_FLEXIBLE_WAYS_OF_WORKING.pdf Size: 2.98 MB
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.