That the market for jobs has improved is fairly well known by now. What is perhaps not so well known is that the improvement has been good enough for headhunters (they like to call themselves executive search firms) to get back in business. Some of them say business has rebounded to the pre-crash levels of 2008. Most of them are hiring at senior levels — people who can get business. Korn/Ferry has restored salary cuts for all partners. EMA Partners is in the process of opening an office in Hong Kong.
It would be tempting to conclude from all of this that senior managers are in demand once again. Before Lehman Brothers happened in September last year, most of them had multiple offers in hand. Million-dollar salaries had become the norm. Once the financial crisis hit, companies put a total freeze on hiring. There were no takers for talent. The news now is that companies have begun to hire once again at the top but it is nothing like 2007 or the first half of 2008.
Headhunters will tell you that the economic slowdown has made people more loyal to their jobs. Very few want to give up the comfort zone of a secure work environment. While people would switch jobs every two years earlier, the time horizon has now stretched to five years or more. One meeting, headhunters know, is no longer enough to grab a catch. Every offer is being put under the microscope — will the company survive in the long run? How strong are its fundamentals? Could another slowdown make the job redundant?
More important, the slowdown has made most companies put a ring fence around their key people. They have been given financial incentives, elevations, added responsibilities etc. It is now more difficult than ever to poach good people. Companies are prepared to let go off only the second-best. This has made the job of headhunters that much more difficult. Afghans play the game of Buzkashi in which a score of horsemen vie for a goat’s carcass. A similar game could be played for really good managers in India.
Orders have started to trickle in for headhunters. The lead here has been taken by infrastructure companies, especially those in the telecommunication, power and construction sectors. Headhunters expect the telecom honeymoon to last at least two or three years. Most people who are out in the market for senior managers are new licence holders. They are expected to remain in investment mode for at least two years and are likely to take stock of the situation (losses) later. There is a good possibility that many of them may review their senior positions if the hugely competitive market begins to hurt.
While the demand for people to execute power projects is strong because of several projects being put up across the country, the supply is weak — there is only the public sector NTPC to draw from. This has taken executive search firms to countries like the US, Australia and even South Africa. You could see a lot of people from these countries at key positions in power companies in the near future.
A sector that has thrown a surprise at headhunters is education. The stakes in technical education have assumed very large proportions. There are, for instance, over 1,500 business schools in the country! A key differentiator for any business schools is the faculty. Several of them have mandated headhunters to find them teachers from prestigious business schools in the West, especially Indians. Many of them also want to raise money in the near future. And for this, it is essential that they should have a proper corporate structure in place.
The sector which is still slow is financial services. The overall picture may be subdued but parts of it have begun to move. Specialists in mergers and acquisitions still have few takers, but the demand for experts in fund-raising has begun to grow. Companies are looking at augmenting their financial resources and need people to do that in a challenging environment. Globally, headhunters have also seen traction in private equity. These funds have been sitting on a lot of money for quite some time. Now that stock market volatility is down, many of them are ready to invest. Hence, the demand for senior fund managers has picked up momentum in the US.
The improvement in the stock markets is likely to bring back into fashion stock options. Variable compensation, it is interesting to note, did not come down to zero in the economic meltdown. As profitability of companies takes a beating, one would have expected senior executives to be happy with a fixed salary, though it might be slightly lower. But variable compensation is still 25 to 30 per cent at the top — the same as in the pre-crash days.
Though the business sentiment has improved, headhunters’ fees are under pressure. A part of it is dependent on the salary of the person hired; and since that has come down slightly, the remuneration of headhunters is also down. They have also been forced to cut the administrative fees. Globally, most headhunters are down 40-50 per cent in revenue. But India, it seems, is ahead of the curve.
