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The following paper is a brief text that SpenglerFox Executive Search has put together to provide background on doing business in Saudi Arabia and how it, as an
executive search consultancy, can help clients succeed on the Saudi market. The paper provides readers a quick overview of i) the current business environment in the country; ii) key profiles for highly-sought-after GMs and top executive talent in the country; and iii) how SpenglerFox services can help you launch, grow and sustain your business.
The top five facts to take away from this paper include:
Insights on the Saudi Market
Saudi Arabia is the largest economy among the Gulf States. With a total GDP of 778 billion USD in 2014, the Saudis accounted for 40% of the cumulative GDP of all the Gulf countries. The country’s GDP per capita figures at just over 24,000 USD. The Saudi economy grew at a rate of 5.1% in 2014, while inflation levels remained just below 4%. GDP growth is expected to slow to 4.5% in 2015, with an overall figure of 776 billion USD.
Saudi Arabia has the second largest volume of world oil reserves after Venezuela and is the second largest oil producer after Russia. The country’s economy is highly dependent on revenues from oil exports, with almost 88% of all export revenues going to the State coffers. In coming years though, dependence on oil money is expected to become a problem for the country: the country’s population is growing rapidly and domestic energy consumption will eat into supplies normally available for export. Lower exports will generate less oil revenue and thus limit the scope of funds available future government-financed public works projects.
In recent years the government has pursued an expansionist policy on investment into public works projects. Public expenditure outlays have grown by 12.7% since 2006. Overall larger public works projects do most to support diversification of the Saudi economy. Recent activities have sought to generate revenues from privatisation of State-owned shares in the mining and the petrochemical sectors. The Saudi banking sector is also quite strong, with the majority of banks
owned by local shareholders and a smaller number with stakes owned by foreign bank shareholders. There are only 8 foreign banks (with one branch each) in the
The country’s primary trading partners include the US and China (together representing 27% of all imports), followed by South Korea and Germany. The market has lots of potential for importers of consumer goods: the country has significant urban populations (66% of Saudis live in or around five major centres: Riyadh – 5.3 million; Jeddah – 3.4 million; Mecca – 1.6 million; Dammam – 903,000 and Khobar – 578,000) with an appetite for consumption of consumer goods and trendy articles from the West. The average Saudi spent 64% of his/her salary on credit-based consumption in 2013.
The current government faces a number of challenges; with youth unemployment being a key, problematic issue for the Saudi economy. Over 58% of the Saudi population is aged below 25 and the country produces more than 200,000 university graduates each year. However, almost 87% of private sector jobs are held by expatriates, while local unemployment rates (for Saudi job seekers) hover just under 12%.
Saudi Arabia has started to pursue interesting policies in economic diversity; specifically a programme focused on “economic cities.” This is an idea championed by the late King Abdullah that looks to develop new industries and wean the country, to a degree, from its dependency on oil. The project is also meant to provide new employment opportunities for the 13 million Saudis aged less than 25 years old. The new “cities” projects also look to promote reform and reduce existing bureaucracy.
Key changes include a) foreign ownership of companies, b) shorter turnaround time on visa issuance and customs procedures, c) greater rights for women and d) greater cultural diversity. The logic of the city set-up is that these new economic/trade areas will serve as islands for controlled change and reform but not impact the whole of the country. Each city will also have a specific business focus; for example, a site in Jazan (near the Yemen border) will concentrate on raw materials and manufacturing, while another one outside Medina will host “knowledge-based” companies in the fields of biotechnologies and higher education. Should these city projects take off and succeed, the OECD predicts they could lead to Saudi GDP growth of 50% by 2020.
However, King Salman’s new government appears to be focused on stability. Since his ascension to the throne in January 2015, the new king has left key ministers (for finance, oil and foreign affairs) in place, despite a number of cabinet shuffles and new appointments to head regional governorships. Current concerns among outside observers centre on how far and how fast King Salman pushes reforms and how the Saudi government will work to push for calm in a region of unstable neighbours.
Who is a GM on the Saudi market?
This question will become more difficult to answer in coming months as changes to labour market regulation enter into force. In recent years the executive talent pool consisted primarily of long-term expats (i.e. persons having lived in the country for 20 years or more and very often Lebanese nationals) along with expats who arrived to complete shorter work terms of 3-4 years.
This labour market status quo has led to a number of problems/concerns relating to performance quality, i.e. a constant battle with practical impacts: experience yet stale ideas vs. younger generations with a mind toward innovation yet unwilling to commit for longer stays in the country. This creates a major talent gap, because companies on the market lack access to a mid-level pool of executive talent and senior managers, who embody both experience and innovation or enthusiasm toward their work assignments.
At the same time, companies seeking the right GM for their business also now have to work within stricter regulatory frameworks on preferred employment of Saudis over foreign nationals. We call this the Saudization of upper-level or senior management positions, which now affects 58 industry sectors in the country.
This process carries with it a number of issues and potential pitfalls that companies must look out for. These range from mismanaging the “sell” to attract and lock in top executive talent (i.e. persuading them to leave their current job) to unexpected, perhaps excessive, demands from candidates during negotiations on salary packages: in various cases we have monitored over the years, salary bumps have involved increases anywhere between 15-50%. Additionally, we also see local companies suffering from their wanting too much. This means that companies sometimes miss out on opportunities to secure potentially strong executive talent by unrealistically benchmarking against standards in more developed markets.
Generally, Saudization efforts are a government response to high levels of youth or post-university unemployment. But said efforts put companies in a dilemma: does young Saudi talent have the skills sets and experience needed to succeed in managerial positions. If we look at a typical, talented, young Saudi, they usually have studied abroad; have 3-5 years of work experience along with fluency in English and possibly another language like French. They tend to have an appetite for progress and improvement; both in the workplace and in society.
Bearing this situation in mind, we recommend that our clients and partners take a pragmatic approach to the executive recruitment process. Our first piece of advice is that companies sell themselves. Even if sought-after candidates do not immediately see a fit for themselves with your company during the first meeting, persuasive communications about your business and brand will likely stick with them. It’s also very likely that they may come knocking on your door when the labour market tightens.
Then prepare for the worst to settle for the best. Ultimately, you may find that you are paying a very high salary for someone with very low qualifications. This situation is, of course, not optimal, but when working on a market with limited executive talent resources, the recruitment process is more about managing expectations than always securing the best candidate. That said, by using this approach based on “low expectation” extremes, it is more likely you will find a candidate the fits nicely somewhere in the middle between the skills sets you were looking for and the price you wanted to pay. Finally, we recommend that you treat the executive search process strategically, i.e. pretend it’s a game of chess. This means that you can take a longer view of the search process and mix and match where to make Saudi placements vs. using expats. A classic example we dealt with involved a search for a Saudi CFO. Ultimately, we found that the best, most economical solution was to hire an expat CFO in tandem with a Saudi Risk Manager: the client still hit its target for employment of Saudi nationals.
Over time it will become important to assess whether government efforts to enforce employment quotas will achieve their desired effect. Both foreign companies/investors and expatriate talent benefit from the option of transferability to other regional markets. This means that should employment quotas make it harder to find and employ the right talent to run successful businesses on the Saudi market, foreign companies or multinationals can relocate to less regulated regional markets (i.e. Oman, Qatar and the United Arab Emirates (UAE)).
One small glimmer of hope, however, that runs contrary to current trends to regulate labour markets involves small steps to boost the role of women in Saudi business. Women currently make up only 13% of the Saudi workforce. Yet a new study by the Al-Sayedah Khadijah Bint Khawilid Centre of the Jeddah Chamber of Commerce and Industry and Strategy & (formerly Booz & Company) reports that increasingly family-owned businesses in Saudi Arabia offer opportunities for women to play a greater role in business management and development. This includes learning skills in the fields of financial management and personnel management. This evolution stems from the fact that family businesses often wish to keep their operations “in the family” and involving female family members has proven of late to be a more cost affordable option for doing so. In the process though, this is providing Saudi women access to new skills and access to
decision-making roles. Additionally, businesses are also involving female family members in succession planning processes. Although it may be strategically emporary, i.e. until another male family member can fill a departed patriarch’s spot, again it does help women learn about business. So it truly seems that there are small islands of labour openness in a market that is generally perceived as comparatively restrictive.
GE engages Saudi universities to support female employment
GE recently announced that it is in discussions to build partnerships with Saudi universities. Of particular interest are its negotiations with the Princess Nora Bint Abdulrahman University (PNU). GE currently employs a number of Saudi women at its GE Manufacturing Technology Centre in Dammam. It also has a business process centre (exclusively for women) that it runs in cooperation with Saudi Aramco and Tata Consulting Services (TCS). The centre employs around 400 Saudi women and also provides them work training. Employees there work on back office activities including accounts reconciliation and payables and they support GE’s business both locally and in 37 countries around the globe.
GE vice chairman, John Rice, recently told the Arab News server that efforts to support employment of women go hand in hand with GE’s larger focus on supporting the Kingdom of Saudi Arabia in enhancing energy sector efficiency and promoting localization. GE has had a commercial presence in Saudi Arabia for nearly eight decades now.
Key areas of business that GE focuses on in the Saudi Kingdom include
- industrial internet along with big data and analytics solutions
- renewable energy
- oil and gas
- power generation
SpenglerFox services and how our opening of Saudi offices will benefit our clients
SpenglerFox has had been active in the region since 2003 with over 350 projects implemented on this market. In February this year, we decided to expand our operations to Jeddah. This expansion allows us to offer our core consultancy services to a broader market. These services include:
This is all about SpenglerFox using its vast experience, access to critical networks and industry expertise to help clients and partners find the executive talent hey need. Our executive search process is people-facing and we are committed to customer satisfaction; working hard to maintain a 90% client retention rate. We thrive on business challenges and thus work to find the right executive talent matches in both developed and emerging markets. Moreover, we have a top-level team of 40 researchers that informs the complete talent search and management process. These researchers, together with our executive search principals, work from a network of 19 hub offices around the globe. This ensures that we can recruit executive talent from the broadest pool possible and with qualified assessments provided by the leaders of our global Practice Groups (Consumer and Retail, Life Sciences, Human Capital Solutions, Industrial & Manufacturing and Business Services).
Executive Search in Saudi Consumer Goods Sector:
Commercial Director, FMCG
An international company operating in the entertainment industry intended to take greater control of its business in Saudi Arabia. After more than a decade of
remotely managing the business through a single distributor, they felt the model would not continue to generate sustainable growth. So they gave SpenglerFox a
mandate to scout out qualified potential candidates for a newly created Commercial Director role. The search came up with 73 potential candidates based primarily in Saudi Arabia. Given that the client operates in a niche industry, less than 4 candidates proved to have direct experience in their field of business. SpenglerFox had to source candidates from companies with comparable industry segments and corporate cultures; and with similar distribution channels.
Executive Search in the Saudi Pharma Sector: Plant Manager, Multinational Pharmaceutical Concern A major multinational pharmaceutical company needed to replace a production manager. At the same time it needed to evolve the role into a Plant Manager position. The current production manager (of Western nationality) had been with the company to complete a one-year assignment: to boost professionalism at the high-tech plant and put in place higher work standards overall. The company is looking for an Arabic-speaking candidate with strong leadership skills. Its long-term goal is to groom the candidate for the local GM position.
The search strategy looked to identify and source talent from the region: we thoroughly mapped markets such as Egypt, Jordan and Saudi Arabia. Meanwhile, we also engaged with Arab nationals abroad – typically in Europe, Canada and the US. Given that it can often be difficult to attract talent to the Saudi market, we used the position’s high level and prestige, the company reputation and career development opportunities to attract the best possible candidates. After 5 weeks of intensive search we had a strong shortlist for the position. An Arab national, with more than 10 years of experience in the US pharmaceutical production environment and with a wish to return to his roots, was offered the position.
Executive Search in Saudi Industrial Sector:
Full Management Team Replacement
An industrial multinational corporation that bought an asset in Saudi Arabia’s Eastern Province needed to replace its management team completely. A key role
that SpenglerFox had to find a suitable candidate for was that of HR Manager, which needed (per the client’s request) to be a Saudi national. After a tough search
and review to identify the ideal candidate, we managed to find a talented female Saudi national (an extremely rare profile for the industry sector), who worked well
with the company and its top management.
Interim Management Solutions
SpenglerFox focuses on finding the most talented senior executives and/or specialists to provide immediate, flexible, short-term injections of management skills,
which in the long-term add value to your business. SpenglerFox operates internationally with all industry sector and functions areas. Interim Managers can be
an excellent solution for businesses dealing with challenges, leading change or fulfilling a gap. Key tasks that Interim Managers can oversee include line function
management, leading transition, M&A process management, start up operations, filling an executive personnel gap and crisis management (i.e. helping turn around businesses in trouble).
Human Capital Solutions (HCS)
Our Human Capital Solutions (HCS) services draw from our passion for developing and nurturing talent. They include a comprehensive range of HR consultancy services that can be implemented individually or be used to complement our Executive Search work; these include namely counsel on leadership development, areer transitioning, competitor benchmarking and brand diagnostics. Each of our Human Capital Solutions is designed specifically to address the challenges that you face in your organisation. The SpenglerFox team of consultants has wide ranging and varied experience in multiple geographies and industry sectors. We provide analytical and advisory services in three key areas:
Leadership Assessment and Development:
this focuses on running diagnostic tests and evaluations to identify strengths and weaknesses in individuals’ leadership skills. Evaluation results are then used to set up special personal development programs to improve executives’ skills and make them better leaders in their corporate teams. In this area SpenglerFox collaborates with the best partners offering assessment solutions: Saville Consulting and A&DC.
Other services in this area include set up and running of development centres, succession planning and 360° feedback programmes.
Career Transition Services: in this area SpenglerFox offers support to companies that need to do corporate reorganisation or restructuring or who find they are facing employee redundancies. SpenglerFox consultants work with partners to help company teams transition into new jobs, identify career opportunities in different companies or industries and to provide executive counselling support to persons managing restructuring processes.
Competitor Benchmarking / Employer
Branding Diagnostic Enhancement: this service helps companies understand how their teams and talent are performing in comparison with industry competitors. Key evaluations and diagnostics include peer benchmarking, review of benefits and compensation packages, one-to-one industry comparisons and employer
SpenglerFox Case Studies – Samples of our HCS Activities in Saudi Arabia
Development Centre for Competencies
SpenglerFox was invited by an international client based in Jeddah to evaluate a team from one of the client’s business units. The evaluations focused on a range of competencies: Industry and Business Expertise, Problem Solving, Empowerment and Coaching. The project’s main goal was to assess the competencies in line with the client’s corporate values.
We put together a workshop for a leading company in the FMCG segment in Saudi Arabia. During the workshop we spent two days interacting with a group of seven people: the first day in group sessions, the second in one-to-one follow up exercises. The workshop addressed issues such as theories on leadership, group dynamics, interpersonal tensions and synergies across a group that included five different nationalities representing a range of business departments: sales, quality control, finance, IT, HR and production. Participants observed different leadership styles and learned how they and their colleagues work to raise awareness of company needs and to promote acceptance of themselves and others. Activities took place in the form of role-playing games (i.e. how to push forward difficult decisions in business OR working as a team to build Kingdom Tower). The workshop also taught participants how to develop their skills in giving feedback (using a simulation of a 360° feedback model).
We led a series of one-on-one sessions and a group discussion for a local client in the healthcare sector based out of Riyadh. The project involved three members of the company’s executive team who were dealing with issues of misunderstanding, lack of trust, confusion and problems bridging a cultural gap. A SpenglerFox consultant met with these executives to carry out a diagnostic review of their behaviour. The consultant then discussed the results of the review with the client and worked with them to resolve their differences.
For more information about SpenglerFox’s services and activities in Saudi Arabia, please contact:
Emerging Markets Director - MEA, Russia,
Sourcing Talent in in an Evolving Africa. A white paper on executive recruitment in African regions. Executive Summary The following document is the first in a series of white paper documents prepared by consultants at SpenglerFox Executive Search to provide our clients and business partners with insight into new developments on African markets. We focus primarily on changes taking place in four key regions on the continent: Northern and Maghreb Africa East Africa Southern Africa West Africa This issue of the comprehensive white paper looks in particular at the market in Southern Africa and addresses a number of key issues: growth markets in the region and how businesses plan the location of hubs and headquarters; the HR outlook and how talent sourcing occurs in the region; regional specificities related to finding talent that might not be obvious at first glance, and standard salary packages for executives and upper-level managers. Picking up on the regional specificities point mentioned above, we feel it is important to point out particular regulatory measures on hiring implemented in various countries in the region: namely, in South Africa. These countries have strict quota systems to equalize the hiring of both white and black citizens as well as men and women. Such quota systems, with their noble aim of trying to integrate historically-discriminated populations and afford new opportunities to disadvantaged groups, do have an impact on how businesses hire in the region and how they plan incentive and career advancement programs. To make the document more timely and relevant for readers, we have also included an interview with a business partner who has first-hand experience managing operations in the Southern Africa region. This testimony highlights what areas are most difficult for sourcing talent; what successes have been achieved with programmes for finding talent (best practice); what mistakes have been made and learnt from in recent years and what advice the interviewee has to offer on succession-planning. The interview provides added value and real-life examples of how a business has addressed issues that impact a number of organisations in the given region: sourcing expat vs. local talent; promoting worker mobility; setting up attractive remuneration packages and talent retention programmes; and managing long-term talent development programmes. We hope this text proves both informative and useful. Africa_Southern_Africa_2018.pdf Size: 3.35 MB
Sourcing Talent in an Evolving Africa. A white paper on executive recruitment in African regions. Executive Summary The following document is the first in a series of white paper documents prepared by consultants at SpenglerFox Executive Search to provide our clients and business partners with insight into new developments on African markets. We focus primarily on changes taking place in four key regions on the continent: Northern and Maghreb Africa East Africa Southern Africa West Africa This issue of the comprehensive white paper looks in particular at the market in Northern and Maghreb Africa and addresses a number of key issues: growth markets in the region; the HR outlook and how talent sourcing occurs in the region; regional specificities related to finding talent that might not be obvious at first glance, and standard salary packages for executives and upper-level managers. To make the document more timely and relevant for readers, we have also included interviews with business partners who have first-hand experience managing HR operations in all the Northern and Maghreb Africa region. Their testimonies highlight what areas are most difficult for sourcing talent; what successes they have had with programmes for finding talent (best practice); what mistakes they have made and learnt from in recent years and what advice they have to offer on succession-planning. The interviews provide added value and real-life examples of how businesses have addressed issues that impact a number of organisations in the given region: sourcing expat vs. local talent; promoting worker mobility; setting up attractive remuneration packages and talent retentionprogrammes; and managing long-term talent development programmes. We hope this text proves both informative and useful. Africa_NorthernAndMaghreb_2018.pdf Size: 3.65 MB
Mis Güleryüz, Regional Practice Group Leader of SpenglerFox, talks to Talentpolitan magazine about her career that brings new talents to the business world. In a few sentences, tell us about yourself and your business. I was born and raised in Istanbul where I studied to become an electrical and communications engineer. I ended up working in the executive search sector; most recently in the Industrial and Manufacturing Practice Group at SpenglerFox. When and how did you begin working in this field? How did you choose this profession? I worked in sales and business development for 25 years. I was eventually approached by the SpenglerFox executive search company to come work for them. Their contacting me happened at just the right time, for I was considering a career change and a role with less travel. It took two years and five rounds of intense meetings, but I ended up here. Is there a difference between headhunting and executive search? Generally, the processes are the same. In both roles, you are looking to find the right person for a specific role. “Headhunting” is more of marketing term that had been previously used to reflect the challenge of finding highly-skilled people for critical professional roles. That term tended to reflect the perceived aggressiveness of the process. In executive search, we tend to deal with C-suite level positions that focus on company strategy and leadership. How is the executive search process evolving? What are the critical points in the process for finding talent? And what methods do you use: from beginning to end? The process has evolved mainly based on how clients perceive the market. The market for placing new talent is now more global. So, we address all projects from a global perspective working with all the experts in our team to provide input. The most critical aspect of search is communications. There has to be chemistry between ourselves and the client. A successful search process always starts with a very good brief: we sit down and talk to the client about what they want and what they need. The client has to trust us: they need to see that we understand their business, how leadership interacts with employees, and that we can deliver the right talent to execute the given role. The process is not just about one-off assignments: businesses grow and change and, for us, this means we need to monitor our clients' evolution and develop relationships and care programs that are responsive to their changing needs. Does successful recruitment require specific skills? Communication is critical. To be a good executive search consultant you need a strong level of social and emotional intelligence. You have to view assignments from a global perspective, sometimes taking a deeper look at what clients need just as much as what they want. Success in our industry involves having a superb network of contacts and knowing our clients’ businesses from back-to-front. What are your favorite questions used when interviewing candidates? Do you feel that any specific questions are either loved or hated? Do you have a favorite trick question? My favorite question to ask is “What makes you happy?" I ask this both generally (about life) and specifically (about career). Other questions I like to put to candidates include “Can you define an ideal leader?” and “What does success mean to you?” These questions usually give me good insight into the candidate and help me get an idea of their work process, what metrics they use to evaluate other employees’ success, as well as their ability to manage and delegate work. Have you ever experienced failure in life? When and how? For me, failure is a relative term. I think we all have different measures for where we think we “should” be at any given moment in our careers and this defines how we feel about success or failure. I can remember a time at a former company when I really wanted to move to a role at the company's offices in Switzerland. I had delivered on my work, executed well but, in the end, I didn't push hard enough. I later realized that perhaps I didn’t want the move as much as I thought. If I had, I would have pushed myself much harder. What defines your ability to succeed in your business? I think I’ve been successful because of my openness and my honesty. Plus, I am very eager to learn. I think my approach to our business as a positive, but analytical, thinker has helped a lot. So much of what we do is about how we speak, how we approach people and how we deliver on client requests. I think my biggest success has been learning how to engage with clients and deliver specific messages. This has helped develop trust and personal bonds over the years. Do you follow up with people after you’ve placed them in a job? How do you feel watching their personal development? The key thing here is that we’re not selling a product. We are changing peoples’ lives. That’s why we integrate follow-up tools into our placement support processes. We have a multi-phases review scheme to monitor how candidates are doing and to discuss their satisfaction. As a rule, I also make calls to candidates right on the first day. I want them to know that we care how they do in their new role and are willing to pass relevant information back to their bosses so that management can work to improve onboarding processes. Finally, follow-up with candidates is definitely an investment that pays off, because many times over we’ve received very good referrals from people we’ve successfully placed. They trust us and know their colleagues will be in good hands with us. Let’s talk about your customers? Why do, or should they, choose to work with SpenglerFox? I’d say because of our commitment to candidates and our thoroughness in managing the placement process. We do client feedback reviews and most often they compliment us on our communications process, our support programs, speed of response and our integration of coaching services into our search process. There are many other businesses out there that do what we do. However, we invest a lot in relationship-building. We place emphasis on our trusted advisor role. We also focus on a borderless approach to doing business, where we leverage the contacts and know-how of experts in our global practice groups to find clients the best talent available on the market. How does someone follow in your career path? How do they begin and how do they advance? Essentially, there are two routes. Either you join the business as an intern and then gradually move to a consultant role. Or, in other cases, people move to this business after having worked for several years in a specific industry segment. I think that, afterwards, to thrive in our business you have to have a strong interest in people: in building long-term relationships. People in our business advance and succeed because of a willingness to learn and take on new skills. Our business is constantly evolving and we increasingly see impact from sector overlap (i.e. integrating disciplines like tech and psychology) and the need to learn continually. How would you define a talented candidate? I think your best talent comes from people who are willing to engage. You want someone with people skills as well as emotional and social intelligence. It truly depends on the situation though. Some businesses may feel that the top talent is the executive that performs best; the one who meets quarterly targets. Others may define success as the manager who finds the best solutions to problems. At SpenglerFox, we do our best not to pigeon-hole talent or insist on working within the paradigm of traditional roles. In some cases, we help clients define and place candidates in jobs that hadn't existed in the past. Top talent is able to work across disciplines and inspire and motivate colleagues and teams with their problem-solving skills.