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CEE Managers Battle Lack of Loyalty, Shortage of IT and Sales Specialists

Klemens Wersonig, the founder and CEO of Target Executive Search, does not fit the bluster on his company’s website. In person, the 56-year old Austrian, who founded Target Executive Search in Hungary in 1994, comes across as quietly spoken, almost diffident.

In contrast, his website boasts: “In CEE, almost every recruitment company calls itself a headhunting company, but just a handful really does headhunting, like Target. We are real headhunters. Full stop.”

Somehow the mix must work: Target now employs 30 staff across seven countries in the region, a feat often attempted, but rarely achieved, by entrepreneurs working in Central and Eastern Europe since 1990.

BBJ: So what does Target Executive Search actually do?

Klemens Wersonig: Senior recruitment. The definition in CEE I guess is a bit different from global search. It’s the recruitment for the top three levels in an organization. That’s managing director, then on the second level, sales manager, plant manager, HR manager. On the third level, account managers, controllers, chief accountants, quality managers.

But in today’s world, it can be an IT specialist, or some specialized position. In any organization, as soon as they can’t find people, they turn to a real headhunter and say: “Please, find this person.”

BBJ: I remember you were one of the first people that alerted me to the shortage of labor in Hungary back in 2015. How have things changed since then?

KW: Well, during the last three years there’s been an increasing trend of people moving out of Hungary, to Austria, Germany. People from all ages: I have friends in their 30s, 50s, even at that age, they’ve decided to move out. Many have moved for political reasons, they are just fed up.

BBJ: So, the market is getting ever tighter?

KW: Yes, definitely.

BBJ: Does that mean salaries have to go up?

KW: Yes, salaries must go up. I was recently having a conversation in the Czech Republic where salaries are already higher than Hungary, and there the general feeling, even from politicians, is to stop FDI. No more FDI! Because there is zero unemployment, so every new investor just raises salaries. In the medium and long run, this will just destroy the competitive advantage.

BBJ: I’m actually quite amazed that the government keeps announcing new investments, or expansion of existing facilities, considering the labor shortage.

KW: Yes. I’ve just heard a German automotive company here has been hiring workers from Mongolia! Companies are becoming ever more innovative and creative.

BBJ: The government says salaries rose some 13% last year. Would you agree with that?

KW: Well, as a statistical average, I guess that’s correct. Young people coming out of university earn substantially more than they did a few years ago. Young people today are very impatient. It’s like social media. They are so quick to move from one subject to another, from one relationship to another, and it’s the same in the workplace.

So, loyalty is gone. And that’s very heavy to digest for senior managers, who have [typically] been very loyal in their young days, to see young people come and go. There’s a cultural conflict between the generations within companies.

BBJ: How do you see the quality of graduates in Hungary today?

KW: I would think yes, the theoretical knowledge, the book knowledge is fine. Where there is a problem is the work attitude, the work ethic, workplace behavior.

BBJ: Really, in what way?

KW: Whenever we hire young graduates, we have to educate them about simple things: how to cope with the freedom that the workplace offers them, not to abuse it, like coming in on time, not playing on the internet at work.

BBJ: Is that more of a problem in Hungary than in the region?

KW: Well, I’ve experienced it in Hungary and Poland. Not in Czech [Republic] and Slovakia, they are more disciplined, maybe.

BBJ: Romania? Bulgaria?

KW: Romanians are very ambitious. I think Romania today is really the “hungry tiger” among all these countries. They want to prove [themselves], they want to be there. They put in a lot of energy. Bulgaria is very different. It has a lot of problems with emigration and corruption.

BBJ: What about language skills?

KW: I think the language capabilities are lower in Hungary than in the region, probably the lowest.… but it is getting better. In countries like Romania, for example, traditionally the language capabilities are very, very high.

BBJ: Are there enough graduates coming through in Hungary?

KW: No.

BBJ: So what’s missing?

KW: IT for sure. Demand for IT is going up. We have IT searches for young people, below 30, and for salaries of HUF 1 million, EUR 3,000 a month, and there is hardly anybody to find. Sales people, and technical sales in particular, are also difficult.

BBJ: So, the combinations of being able to sell, and understanding technical issues are difficult – it could be railway locomotives or …

KW: Or bath fittings! We had a project to find someone able to sell bath fittings, for homes and hotels. And the guy we could hire was not even 30, on EUR 3,000 a month!

BBJ: Is that across the region? Maybe the Czechs, with their technical background, are better?

KW: I think, again, the Romanians are more sales-, more commercially [minded], but sales and technical sales are issues all over.

BBJ: You have offices from Poland to Bulgaria. Which country stands out for you?

KW: For me, Slovakia has been a great success all along.

BBJ: Can you pinpoint a few reasons why?

KW: We’ve asked ourselves what’s different about Slovakia? It’s the only euro-zone country in CEE, this makes it very easy for foreign investors. It’s location, it’s a small nation, modest, hardworking.… it’s a combination [of factors].