Locals 'will replace high-cost expats in 10 years'.

Byline: Dubai 

(Image: expats.gif )

High-cost expatriates in senior executive roles in the region will largely be replaced by locals, returning nationals and regional expatriates in 10 years, according to a study.

The study by the Association of Executive Search Consultants (AESC), a worldwide association for retained executive search consulting firms, highlights key trends in senior executive recruitment across the Middle East, China, India, Russia 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 per cent of respondents said that 10 years ago the supply of senior executives in these markets mainly comprised international expatriates. However, 72 per cent predict that five years from now international expatriates will constitute the least supply of talent. The greatest supply will come from the local market, regional expatriates and returning nationals.

Commenting on the results, Peter Felix, president of the AESC, said: C[pounds sterling]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.'

C[pounds sterling]This trend notwithstanding, the global market for senior executives is not yet borderless. 'Cultural fitCO continues to be a barrier, both for multinationals hiring locals and for those returning to their home countries to work.C[yen]

The study also revealed that financial services, manufacturing and consumer products are seeing the greatest search activity and increased responsibility, cash compensation and equity are the most important elements of companiesCO employment propositions. Other key findings are as follows:

* International executive expats will be reduced significantly in 10 years: Forty-four percent of respondents predict that it will take 10 years to achieve an optimal supply of executive talent, therefore local talent will fill the gap in terms of demand. Thirty per cent of respondents believe this change will occur in five years, and 22 per cent in 20 years.

* 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/interpersonal/collaborative skills; and entrepreneurial risk-taking ability, 48 per cent of search consultants say leadership/initiative/motivation is most needed in their market.

* Greatest demand for chief executives, financial services, manufacturing/natural resources: The greatest demand for senior executives is in financial services and manufacturing/natural resources, then in consumer products/retail. Organisationally, the greatest demand occurs for chief officers/C-suite executives, followed by presidents/CEOs, followed by directors. Functionally, the greatest need is in finance, followed by sales and 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 yearCOs 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 competitive internationally, if not C[pounds sterling]very competitive.'

* Cultural fit and education/training: Multinational companies entering these markets report that local executives seem to lack cultural fit. From the candidatesCO point of view, it is nationals returning to these regions who find cultural fit the most challenging issue. Female candidates find it C[pounds sterling]slightly more difficultC[yen] to advance than men, while ethnic and social minorities find advancement C[pounds sterling]as difficultC[yen] 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 companyCOs 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 scarcity of executive talent is affecting the economy C[pounds sterling]significantlyC[yen], while 62 percent feel it is affecting the economy C[pounds sterling]somewhat.C[yen] Co TradeArabia News Service

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