UAE still remains most active employment market in region

The UAE is still probably the most active employment market in the region even amid the current economic downturn, believes the head of a top global executive search firm.

In an interview with Emirates Business, Steve B Watson, International Chairman and Managing Director of Stanton Chase, said most Western companies are setting up their regional offices in the UAE as it remains an active place in terms of businesses for global corporations.

Watson said Stanton Chase's Dubai operations were down by 22 to 30 per cent, but saw an uptick by the end of this year.

"By the last quarter of 2009, we believe a talent shortage will emerge and companies will be aggressively hiring senior talent. When the economy turns around we are going to have rapid business activities," he said.


Human resources experts say talent doesn't come cheap but is it true in the current environment?

Good talent doesn't come cheap. I think finding top talent is harder today than it was before. The reason is with the economic crisis, there are greater demands from boards of directors and CEOs to find talented people with unquestionable ethics, integrity, business judgment and the ability to strategically grow a company the right way and in the right manner.

So, this economic crisis has put more complexity into the leadership and management skills of major corporations. It makes our job harder to find out diamond from the rough, or what we call the 'A' talent that is skilled in dealing with uncertainty and ambiguity.

You are talking about people who had been through previous downturns. But how many such people do we have?

We do have some people who had been through the technology crash that fostered recession in many parts of world in 2001-02. What makes this downturn different is that this one has happened simultaneously around the world, across industries. This is unprecedented, but we've had downturns in the past.

We had real estate downturns; we had it in oil and energy sectors; there had been a technology downturn. But we never witnessed anything so severe that has impacted all industries and affected the world at the same time. Our global economy is so interconnected that it just happened at the same time.

Yes, there are some people who had been through downturns in some industries. In emerging markets, you may not have that many people with that kind of experience because they have a young talent base and the Middle East would fall in that category. Sometimes that requires a company to bring in Western leadership who have 20 years of experience and have managed in downturns.

But it's been witnessed that more and more companies here now prefer local talent. People coming from foreign countries may not necessarily be familiar with the problems here.

That's true for most corporations in the world. They ideally want local talent. It is their choice. The reason that expatriates are hired in most cases is to make sure that new business operations are integrated into the corporate cultures in the right way. Mainly, they are used to develop and nurture local talent and teach them the culture of the company and the business and then turn it over to them. Expatriates are very expensive and most companies want to get rid of that expense.

How important is localisation in the GCC? With the knowledge and cultural gap narrowing in the GCC, do you think localisation is only a simple matter of economics?

Localisation is very important, as people need to understand the Arabic culture and the ways of doing business here. Dubai is a global centre of commerce and the local talent needs to understand the global momentum that's taking place around the world and understand how the Middle East is related to the world in terms of trade, commerce, and business and supply chains. If the local talent has that skill set, then the answer would be: Absolutely.

What's your outlook as far as the job market in the GCC is concerned?

I do not have an exact figure right now but I think our global business is down by 30 per cent. As far as our Dubai operations are concerned, I believe it is down by 22-30 per cent. We believe business will be down for the next two quarters but I expect an uptick by the end of this year. By the last quarter of 2009, we believe talent shortage will emerge and companies will start aggressively hiring senior talent. When the economy turns around, we are going to have rapid businesss activities.

Which market is the strongest within the region?

I think the UAE is still probably the most active market. Saudi Arabia and Bahrain are strong in terms of financial services. Most Western companies are setting up their regional operation in the UAE. So for global corporations, I think the UAE is a very active market. Locally, it's Saudi, Bahrain, Qatar and UAE. All are growing markets in this region.

What are the new strategies that HR managers should employ while recruiting people? Do strategies differ from one region to another? What is best for the GCC market?

I think HR managers today are looking for people who are a lot more flexible and adaptive to changing markets. Companies need people who can get into the details of the business, focus on cost control and understand how to build and grow a company. Revenue driving and sales position are really important today, as is anything close to the customer. Employees should be good at such things.

When the economy was good, HR managers were less concerned than they should have been. Now they need talent that has business judgment, critical thinking and analytical skills in order to assess how the business is operating and functioning.

As far as strategies are concerned, we've not seen a different mindset from a global perspective. We can see similar compensation ranges in this region compared to Western markets because a lot of companies are bringing people for career opportunities to go back to. Compensation needs to be aligned and I think that's good for this region.

Do you think the small-to-medium-sized firms in the UAE should take the opportunity to grab whatever talent they can get? Do you think if the financial crisis had not happened, the smaller companies would never have been able to compete with big corporations for top managers?

Oh absolutely! This is a very good time for companies to assess their management teams. Now is the time for small and medium-sized companies to get very good talent, which can strategically help run the company when the economy rebounds. We are advising clients to assess their management teams and determine gaps that need to be filled in and get talent replaced as soon as the confidence level returns and the economy looks like if it's going to bounce back.

In which sectors do you see maximum recruitment activity happening in the region?

Healthcare is a very good sector and has seen a lot of demand. It is probably the strongest sector globally. In the last six months, healthcare services have increased in revenue, whereas as all other sectors have seen a decline.

I think energy will continue to be strong. Eventually, engineering and construction will be strong. Consumer products – especially infrastructure products such as furniture and fixtures – will also see demand. Financial services will rebound and demand will increase in this sector as well.

What is more costly – unemployment or inflation?

Inflation is a big concern to a lot of companies today. I think it's important that corporations and governments work together to keep inflation low as high inflation is going to hurt business in the future. High inflation is probably a greater risk to corporate growth than unemployment.

Unemployment is tougher on individuals. I know people who have been unemployed for three to four months. However, there is light at the end of the tunnel and we will come out of this. Individuals can expect to return to the income levels they were used to. I think it'll be more difficult for them if inflation is high, as their compensation levels will not have the buying power they were used to.

Currently, employers are hiring staff at lower salaries given the market conditions. But what are the drawbacks of under paying people? How detrimental is it to the company in the long run?

There is a risk when companies hire people at lower salary levels than what the position deserves. Our experience is that compensation is a bit less today but base salaries are not necessarily decreasing.

Most of the cuts have happened in incentive portions – bonuses and commissions – that are tied to pay-for-performance with stricter and tighter metrics. Total cash compensation might be less today but the smart companies are not cutting base salaries. They may be a little low with the great supply of talent in the market and companies are getting some people at lower salaries. But I think these companies face the risk of losing them to other companies if they don't increase their salaries when the economy revives.

How do you downsize a company without downsizing morale?

I think HR managers have to do it in the right way. They have to do it with respect and dignity. Companies need to be generous with outplacement services, counselling, offering additional health benefits and by giving a fair severance pay.

Employers and HR managers need to be sensitive to the individuals as tables will turn and companies will have a hiring need in the future. They should not cultivate a difficult culture or carry a perception in the market that they were a difficult company to work for.


PROFILE: Steve B Watson International Chairman and Managing Director, Stanton Chase

Watson had a management career in the technology industry before joining executive search in 1995.

His experience includes being chairman and CEO of a security products company, serving as regional director for Tandem Computers, holding senior management positions at Burroughs Corporation and serving on the board of Micronyx.

He now focuses on serving domestic and international clients in all technology sectors and recruits for board members and executive positions, as well as chief information officers across industries. Watson has a Bachelor of Science degree in electrical engineering.

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