Executive Search in Central Eastern Europe – basic overview of challenges
Executive search firm face a special situation in CEE: these markets don’t fit the classical search model. Below are 3+1 factors supporting this observation.
1. Markets here are fundamentally different from those in North America and Western Europe.
a. Multinationals that are present in the region are mostly managed by expacts, with a board outside of this region. These operations don’t create strategies, just execute them; at best they create regional strategies, in context of the overall corporate strategy established elsewhere.
b. Most mid-sized companies are based in Western Europe. This means that local managing directors or general managers mostly execute a particular function (running the manufacturing plant, or the sales function, rarely doing both).
c. Other potential mid-sized clients are owned by local families.
2. Searches are run on a lower level. Due to the above market characteristics,
- there is almost no need for board searches, or classical CEO searches. Part of the responsibilities of expats running multies in the CEE is to ensure efficient succession planning: to be replaced by a local when they leave. For more than 20 years, this objective is almost never achieved, so always a new expat is sent to continue running the business. It is still very common in multies, that a large percentage of direct reports of the CEO is also made up by expacts (this being a declining tendency).
- Most retained search assignments are focused on general manager and managing director roles and their direct reports in organziations that range 50-2000 people in size (small and mid-sized companies), as well as on senior manager and director level (belo VPs) searches at multies.
3. Markets are diluted. The gap that was left by the lack of classical executive search firms in this market were filled by recruiting companies essentially diluting the market (performing contingency based searches for higher level roles for a fee level that only fits recruiting services) and local search firms who lack global or international capabilities. Some of these managed to expand internationally, thus establishing themselves successfully. The overwhelming majority of new players trying to establish themselves in these markets, readily made price and business model compromises (e.g. working with inexperienced consultants facing the clients), which coupled with the resulting decline of service quality and credibility, further diluted the markets: a new generation of customers now have completely false expectations when it comes to executive search.
Dilution of players: while in North America and Western Europe it is not uncommon that ex chief executives of market leading companies are running search practices, in CEE this phenomena does not exist.
This dilution of the markets resulted in fee levels that are much lower than the classical search fees.
+1. This last observation concerns the executive search market globally. Due to a number of involutive factors that we have outlined elsewhere, the executive search field has lost considerable prestige globally. Players are increasingly opportunistic and the perceived value has been continuously declining. Since an appropriate vantage point is missing (or disappearing), elitism is almost non-existent.
5 practical leadership tips for managers
Everybody knows these, yet, the mistakes occur all too often.
1. Kill gossip culture.
Distance yourself but stay involved. Never listen to gossip. If somebody complaints about somebody, send them back to confront the person they have the problem with. Set a deadline to do this (the sooner the better of course) and make them report the results back to you.
Make everybody distance themselves but stay involved. Make sure it’s clear to everybody that this is the expected protocol. If this happens between two co-workers and one doesn’t want to do the confrontation, they must come to you.
Needless to say yourself should NEVER talk behind anybody’s back.
2. Know who’s who and treat them accordingly. Respect seniority both from the maturity and experience point of view. Don’t try to motivate senior people like you would junior ones. E.g. you don’t want to insult proven senior solutions sales leaders by telling them stories about successful shoe or car salesmen (this would not work with junior guys either, since intelligence is independent of experience) but I heard “managers” trying). In order to know who’s who, you must be interested, and dedicate time to finding out what they want.
3. Be transparent. Make sure everybody knows what you want. If you don’t know, make sure you spend time on this and figure out. There’s almost nothing more dangerous than an opportunistic manager, who’s shifting priorities without any framework.
4. Don’t reward the bullshitter. This is of course not that simple, but the basic rules are simple:
Don’t allow unnecessary talk, like making statements about things everybody knows. e.g. “if we don’t seriously increase revenues, we are in serious trouble”. Bullshitters are typically using catch phrases out of context: ” the best utilization of my/our time…”, etc. The point is that it’s out of context and opportunistic.
Don’t reward people for being busy; you should be acutely aware of those who obviously try to build a career on this, thus are crusading the “we must be busy” non-sense, making “busy” the framework for competition.
5. Cut the bullshit.
Don’t work with banalities, like “I build my teams based on my values, like integrity, honesty, etc.”; “I want us to be market leaders”, and many many more.
Be aware of your organization. This is mostly a problem for smaller teams, since managers of large organizations can’t “forget” the setting. If you run a small team, don’t try to act like you’re running a big one (the ego may magnify the size). Perform constant reality checks, read the symbology of what you’re doing.
See the point about transparence. Be honest with yourself. If you’re in business for yourself, don’t expect to draw world class teams, so don’t make statements about such goals. If you are in business based on ideological reasons, build a team around yourself which shares these ideals (see the point about knowing who’s who).
Quantity as sleeping pill
Let’s not forget: business success doesn’t automatically mean the presence of qualitative factors in the organization (creativity, intelligence, etc.)
In many industries it’s enough to stay in business long enough to do well. The market itself re-inforces this, since it appreciates “experience” (number of years being around). This way everybody continues in a comfortable state of sleep, dreaming about superiority.
This may not stay like this for long, but at this point, this is true.
Management teams, but especially the main guy must continuously perform reality checks in this context, asking the question: are we getting business because we show up, or because we are exceptional…?
…but to answer this, they must wake up; and this maybe a problem.
Service with a smile
Peope from North America expect the same smile in restaurants in Europe that they are used to at home. This expectation is problematic; especially in Eastern Europe.
The (North) American smile is the embodiment of the American culture. You can’t find it in its original form anywhere else.
Waiters in Eastern Europe work in a completely different context. Since this context is not any worse than the American, expecting them to exhibit North American behavior (or at least to produce a North American smile) would be the same as expecting them to change their culture for our sake… and this would be borderline arrogant.
So the conclusion is easy to draw: it’s not the waiter!!!
What’s the vangate point?
Especially in industries where differentiaton is almost impossible, it’s important to act from a vantage point that is much higher than the “system” in which we act.
For example: you can’t be a leader in marketing if you are just a marketing guy. Your differentiator is the perspective from which you view and do marketing; but this perspective must be higher than what marketing conventionally entails (indicators, mix, channels, etc.).
In other words this means that your perspective should stand above specialization.
What’s yours?
Eating style
For the past 13 years or so I spend a lot of time eating with others in a business setting. I’ve seen things. A little summary maybe interesting:
- don’t forget: you’re not eating alone! always follow the etiquette, even when you’re eating with colleagues
- typically the guy enjoying the highest rank orders first; the others align.
- don’t order alcohol when you’re selling or buying. leave it for after the deal
- don’t eat voraciously, no matter how hungry you are
- don’t shovel it in
- use the napkin! don’t leave stuff on your cheeks
- eat with closed mouth
- don’t eat when you’re confused or embarrassed.
- refrain from anything that turns the attention to the body (noise, etc.)
- once you used the toothpick (if you’re not a 100% sure that you do it right practise it in front of a mirror), don’t dedicate any more attention to it!!!