Economic Cycles - Catching the next BIG wave
Be mindful of cycles
- My recruiting experience in Russia demonstrates that a need for professionals in various functions depends on a phase of the economic cycle, which is 3-5 years in Russia. I see such pattern in our search portfolio and requests we receive from our clients to find managers for different types of functions.
- Economic growth fluctuation rate is much stronger in Russia compared to other countries and it is clear that demand for human resources in our country is more sensitive for economic cycle phase change.
- If in addition to rate of jobs cuts/increase (usually there is staff reduction in recession and staff expansion at the economic growth) you analyze the roles people are being hired on or dismissed from, you can notice other patterns too. For example, we witness that demand for various function specializations differs depending on economic cycle phases.
Industrial lags and drops
- Pace of economic drops differ from industry to industry. For instance, the construction industry drops lower than the food industry.
- We can also note industrial lags – automotive manufacturers are normally among first to drop, next there is automotive suppliers who enter the recession and etc. These “rules” similarly apply to the economic growth.
- Business size and maturity level of an organization also influence increased demand for particular specialists.
What is the deal for employers?
- Attracting and adapting a required professional right before the demand increase for a function is top of the line for an employer. In this case you have “the best candidate for a reasonable price”.
- In the time of a stable economic growth, most companies concentrate their attention on the sales function when recruiting. Even when it is evident that the economy becomes “overheated” and it is not long before another downturn, business strives to sell more and further strengthen the sales function. This need drags a big number of customers to the market along with a rush for candidates, including those at executive level. When demand peaks the clients become more expensive, although they're not always the best people.
- When the market enters a decline phase their focus moves to a finance function. There is a need for new business models and risk management improvement, the regularity and detail of reporting increases. Tightening of a company’s financial discipline leads to new higher requirements desired from financial professionals. Standards increase and unfortunately not all specialists can comply. Thus we see fast increasing demand for professionals of a higher level on the market.
- Having more freedom, financial officers strive to sharply minimize costs, which triggers another focus change, this time on procurement, logistics, HR. As a resultit bringsdemand that exceeds supply for these roles significantly.
- At the dawn of economic recovery companies begin eagerly focusing on marketing and new product development. Demand for specialists in these fields on the market becomes explosive.
Rare species – grab them before they flee
- Companies that had a good fortune to acquire brilliant employees within the most high in demand specialization in this long-term cycle must take additional effort to retain them, as these talents may become required by another business in no time.
- I still remember fivefold demand increase for risk management executives in the fourth quarter of 2008, and how salaries doubled for several months for these roles. People made substantial progress in their careers within their companies and held excellent positions on the market. They were appointed on high level roles with a big, and in some cases huge potential and a belief that they will manage successfully.
Who is in demand these days on the Russian market?
- Where are we now on the economic cycle and what functions are in demand? In our opinion it is now the time when demand for marketing and new product development areas is fading, and interest and needs in sales functions starts rising.
Get the ride
- Understanding the cycles can assist a particular professional in better career planning.
- Recently one of the candidates asked me about situation on the market and was really frustrated to hear that production professionals were highly valued and their incomes increased substantially. He told me: “Now I realize that career wise it was a strategic mistake to re-qualify from production to marketing several years ago, because at that time this function was highly in demand. And now when I trained and obtained a distinct experience we entered the phase of production demand. But it has been many years and I lost most of my production experience."
- Is it worth to seek the new trend and change one’s specialization immediately? In our opinion the answer is rather “Yes”, or alternatively to develop a longer term strategy in planning your career. There are various options to choose from, but it is still up to every individual to decide which paths to take.
A decision on who and when to hire needs to be made with consideration of many factors. However as one of our clients say, a General Director of one of the biggest companies in the market with revenue of 500 million Euros in Russia: “There is nothing new. An old proverb comes to mind: Make provision for a rainy day, but in good time”.
Article credit : Andrey Philippov