Recruitment Market Eases, but Executive Search as Tough as Ever
As in so many sectors of the economy, executive search and recruitment companies suffered a hit with the onset of the COVID pandemic last spring. However, by the last quarter of 2020, demand had largely recovered, although both clients and targets had subtly tweaked their requirements.
Two months into 2020, and Judit Enczi was looking forward to a good business year. Within a fortnight, the beginning of the pandemic changed all that.
“Almost all of our clients stopped their ongoing searches, training [courses] and everything, 90% were stopped,” Enczi, managing partner at executive search company Hill International in Budapest, told the Budapest Business Journal.
The freeze lasted for two months before business began to pick up, and by summer things got busy. “I had the feeling that fewer people went on a proper holiday [than normal]. It was only mid-August when people disappeared, otherwise it was a busy summer,” she says.
The story was similar for Máté Seres, managing partner for manufacturing and automotive with Arthur Hunt in Hungary.
“We had very tough second and third quarters. 2020 started well, but of course, after March, it was quite tough. After September, the market was good,” he says, although the recruitment segment was hit harder over the entire 12 months “by probably around 15-20%” compared to executive search, which took a hit closer to 10%.
“We were above 90% of our target for 2020, so we did a great year. You know, when there is a manager’s position [vacant], you need it, so, even if there is a crisis, you have to fill these positions. But when you are looking at recruitment, if you need 15 development engineers, in 2020 maybe it was enough to have 12-13 engineers. So they were probably hit harder than we were,” he reasons.
However, with the upswing in demand came new, sometimes subtle changes to client requirements. “We have much more financial manager-related searches. The majority of companies are cost-cutting focused, and traditional finance workers are not good enough now. You need more business-oriented finance people, not only number-oriented. They have to understand the business much better,” says Enczi.
While Seres’ also experienced an upturn in demand for smart financial managers, he notes in addition a growing requirement for business leaders to have crisis management skills.
“For sure, we were searching for lots of number one, GM positions, [people] who could better handle the crisis situation, and also lead the company over the long term,” he says.
In addition he notes changes in the requirements for human resource managers, not so much for recruitment but “more for the retention of the people, so that they [employees] feel better, so they feel that the companies care about them, even if they can’t go to the office”.
But, considering the continual complaints about labor shortages prior to the pandemic, this begs the question: can such people be found “off the shelf”? At lower levels, things have improved, but at the top, “not easily,” is the common response.
“Two years ago, when a company put out an advertisement, they had maybe five applicants, even no applicants. Really the market was good. This has changed. HR managers have told me that they have maybe 100 or even more applicants for advertised positions. This is a characteristic of a crisis,” says Seres.
But for specific, highly skilled managerial positions, the head hunter’s job remains tough. “If you put out an ad, you will not find the person qualified for your position, because the best guys, and especially the best managers, are in a position. Even during a crisis, probably more than 95% of good managers have a job,” says Seres. “So, the approach is the same, you have to call them, because they will not apply for a position.”
Indeed, in some ways, the challenge of finding top people has got even harder, Enczi argues, since potential targets have become risk averse.
“We can [still fill positions], but we have to contact double or triple as many people as we did two years ago. The willingness to change is low. They don’t want to take the risk. They don’t know how to start at a new company if they are already working from home office,” she says.
Moreover, one of the factors driving people to change jobs in the past, a dislike of colleagues or the boss, has to a large extent disappeared because of home working.
“Even if you don’t like your [current] place, you don’t meet your colleagues that frequently. You are at home, and it’s OK like that at the moment. This is how people think,” she says.
And even the factor of last resort, money, seems unable to trump the current mood in Enczi’s experience. “It’s not about salary. Some people just say: This is the third wave of COVID, please don’t even contact me. They are just not taking any risk.”
Does this mean the executive search market is set to remain permanently sluggish? Not at all, Enczi opines. “It’s a temporary thing. There will be people available in the future. I hope we can stay at this level, as we started this first quarter. But next year, definitely, I could even expect 20% growth.”
Prepare for the Future now: Labor Shortages set to Return
Thirteen months into the coronavirus crisis, many employers are in “standby mode,” waiting for developments in the pandemic situation, for government decisions on reopening, or for their markets to pick up, Csongor Juhász, chief executive of Prohuman, a recruitment company with offices across the region, tells the BBJ.
However, more courageous companies have decided to move early and hire early to capture “the best talent in advance of the market picking up,” he says.
It is, naturally, difficult to find a balance; hire too early and a company risks having labor standing underutilized. But the current situation in industries such as hotels and catering is liable to turn suddenly for the better as the effects of vaccination take hold, and many Hungarians who have returned home as a result of the downturn will likely up sticks once more when Western Europe recovers, Juhász argues.
“Employment opportunities in Western European countries, including hotel and catering, remain highly attractive for Hungarians. We expect these countries to welcome them back with open arms as they are rushing to rebuild their economies,” he says.
And, as vaccination levels reach a threshold level, the Hungarian market could once again “quickly face a labor shortage situation,” he warns.
This article was first published in the Budapest Business Journal print issue of April 23, 2021.
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