AESC Member Login
FOR IMMEDIATE RELEASE
Contact:
Natasha Renton
+32 2 733 3631
nrenton@aesc.org
EXPATRIATE SENIOR EXECUTIVES AN ENDANGERED SPECIES,
SAY HEADHUNTERS IN EMERGING MARKETS
Executive search firms expect international expatriates to be edged out by locals, regional expatriates and returning nationals in China, India, Russia, the Middle East and Brazil.
Brussels, 30 May 2008 — A survey of trends in executive recruitment across emerging markets globally predicts that within 10 years, high-cost international expatriates will largely be superseded by locals, returning nationals and regional expatriates in filling senior executive roles.
This is according to a study by the Association of Executive Search Consultants (AESC), the worldwide association for retained executive search consulting firms, which highlights key trends in senior executive recruitment across China, India, Russia, the Middle East and Brazil.
The study suggests that the current global shortage of executive talent faced by multinational companies will become less acute over the next five to 10 years, although it shows no signs of easing for local firms in the near term. Fifty-four percent of respondents estimated that in 1998, most senior executive roles were filled by international expatriates, but only eight percent thought this group would still be filling the same roles in 2013.
Commenting on the results, Peter Felix, President of the AESC, said: "The market for international expatriates really took off when the major emerging economies started growing rapidly, but as these markets have begun to mature, so too has the pool of talent that can be hired locally.
"The global market for senior executives is not completely borderless though. The fact is that 'cultural fit' continues to be a barrier, both for multinationals hiring locals and for those returning to their home countries to work."
The AESC study, which was conducted in April 2008, solicited responses from 62 executive search professionals working for some of the world's leading retained executive search consulting companies. This included 29 consultants from China, 10 from India, 10 from Brazil, seven from the Middle East and six from Russia.
The key findings are as follows:
- International executive expats phased out in 10 years: Forty-four percent of respondents predict that it will take 10 years to achieve an optimal supply of executive talent, indicating that local talent will fill the gap in terms of demand. Thirty percent of respondents believed this change would occur in five years, and 22 percent in 20 years.
- International expatriates replaced by local talent and returning nationals in five years: Fifty-four percent of respondents say that 10 years ago the supply of senior executives in their market mainly comprised international expatriates. However, 72 percent predict that in five years from now international expatriates will constitute the least supply of talent, and that the greatest supply will come from the local market, and following this, from regional expatriates and returning nationals.
- Management lacks initiative: Initiative emerges as the management quality most lacking in these high-growth markets. When asked to choose between leadership/initiative/motivation; strategic vision; ability to execute; teambuilding/
- terpersonal/collaborative skills; and entrepreneurial risk-taking ability, 48 percent of search consultants say leadership/initiative/motivation is most needed in their market.
- Greatest demand for chief executives, manufacturing/natural resources: The greatest demand for senior executives is in manufacturing/natural resources, followed by financial services, and finally consumer products/retail. Organizationally, the biggest demand occurs for chief officers/C-suite executives, followed by presidents/CEOs, and finally directors. Functionally, the greatest need is in finance, followed by sales and then operations.
- Demand for talent continues to increase for both domestic and foreign firms: For local companies, demand for senior executives is expected to remain high for the foreseeable future, tapering off only slightly in 10 year's time. Similarly, respondents predict that foreign multinationals entering these markets will experience an increase in demand for talent in the future, with any decrease occurring in 10 years time.
- Salaries in these markets competitive: The majority of respondents feel that salaries in these markets are internationally competitive, if not "very competitive".
- Cultural fit and education/training: Multinational companies entering these markets report that local executives seem to lack cultural fit. From the candidates' point of view, it is nationals returning to these regions who find cultural fit the most challenging issue. Female candidates find it "slightly more difficult" to advance than men, while ethnic and social minorities find advancement "as difficult" as non-minority groups. Respondents feel that the university education in these regions is nearly up to international standards, but that it is more important to improve management education than the university system.
- Pay and responsibilities more important than benefits to top executives: Compensation and increased responsibility are overwhelmingly deemed the most important components of a company's employment proposition in these markets, and benefits such as health insurance the least important.
- State interference: Forty-two percent of respondents say that governments interfere somewhat with the free market for executive talent in these economies, while seven percent say they interfere greatly.
- Impact on the economy: Thirty-three percent feel that the dearth of executive talent is affecting the economy "significantly", while 62 percent feel it is affecting the economy "somewhat."
A full copy of the AESC Emerging Markets report is available upon request to AESC members and the press. Please contact Natasha Renton at nrenton@aesc.org.
About The Association of Executive Search Consultants
The Association of Executive Search Consultants is the worldwide professional association for the retained executive search industry. The AESC's mission is to promote the highest professional standards in retained executive search consulting, broaden public understanding of the search process, and serve as an advocate for the interests of its member firms. For more information, or to view the AESC Code of Ethics and Professional Practice Guidelines, go to www.aesc.org.