Ask the experts: Recession recruitment

After months of turmoil in global financial markets the effects of the credit crisis on the economy are becoming painfully obvious.

According to Morgan McKinley, a recruitment firm, vacancies in the City of London are down 40 per cent on last year while the number of people looking for work in the financial services sector has jumped 42 per cent.

Unemployment rates are up, corporate profits are down and the outlook looks even worse.

In the UK, leading bankers and politicians have belatedly acknowledged the looming recession, in Europe forecasts for growth have been slashed and even emerging market economies are beginning to feel the pinch.

With such an uncertain outlook ahead, job security is a real concern for those who have work, while finding suitable employment is an uphill struggle for those who do not.

Will job losses in the financial services sector continue to accelerate? Does taking a business degree make sense in the current climate? Should job seekers look abroad for work? Is there any good news on the employment front?

Samuel Johar is the chairman of Buchanan Harvey, the headhunter, and has over fifteen years experience in advising the boards of FTSE 100 and FTSE 250 companies.

David Peters is the managing partner for Europe, Middle East and Africa at Heidrick & Struggles, the executive search company.

Here, Mr Johar and Mr Peters answer readers questions about finding and retaining work amid the global slowdown.

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What are the job prospects at the hedge funds, private equity firms, and asset management companies in the Middle East (particularly in Dubai), and Asia (ie. Hong Kong, Singapore etc.)? Are the chances of finding employment higher in these regions than they’re in the UK, Europe, and the US? If so, which companies in the UK specialize in finding opportunities in those regions? Thanks a lot. Cevahir Senol

Samuel Johar: Prospects in hedge funds and private equity are severely restricted around the world at present. In conventional asset management companies, there is long term growth in Asia and the Middle East. My co-panelist would be a good person to start with.

David Peters: All the major executive search companies will be handling assignments in these sectors and geographies: you need to talk to a specialist who knows you and your skills, and how these relate to the respective specialisations that you list above. Several of the leading search firms, including my own firm, have active practices in the Middle East.

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How do you rate the prospects of employment in financial services for new MBAs? I am graduating in December 2008 from a top b-school, and looking for opportunities in London within private banking or asset management. What about the switch to financial services consulting?Thanks. Richard

Samuel Johar: There will be opportunities for MBAs in private banking and asset management. However, they will be fewer in number and so the competition will be tougher. You should not be switching but simply broadening the areas that you are looking at.

David Peters: I would be cautiously optimistic about your prospects. Our Private Banking and Asset Management practices have been weathering the storm well over the past months and there are interesting opportunities in these areas. It is good that you have a second option of financial services consulting, as a back-up.

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What can graduates looking at going into financial services expect? After the dot-com boom many firms cut their graduate intake significantly and then suffered as a consequence. Will they make the same mistakes this time? Will Hodges, London

David Peters: I think you ask a very good question here Will. The issue here is whether companies can trade through whilst still recruiting and investing in people and bringing them up through their own development programmes internally. Many companies learnt from the aftermath of the dot.com experience that cutting back on graduate recruitment and also on identifying and importing the best talent generally, was a mistake. So, there is less likely to be a wholesale repetition of that trend.

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I am an attorney (commercial and bankruptcy litigation) currently employed by the US government, but have been considering for some time switching to a career in finance. For family reasons, I have been considering a MBA from European schools such as INSEAD (a 12 month program) and London Business School (a 24 month program). What advice could you give me about (i) the wisdom of enrolling in such a program beginning in 2009 and (ii) choosing between to the two programs - (ideally, I would like to end up in Frankfurt or, as a second choice London)? Thanks. John, Washington, DC

David Peters: I think the issue here is whether you want to take one or two years out of the job market, as either option of London Business School or INSEAD will give you the MBA as well as the experience of living in Europe. In many ways now is a good time to do your MBA to enable the markets to settle whilst you take time out to get your qualification. As for the final choice, there are so many other factors, only you can decide : they are both superb schools.

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I graduated from a university in the UK, and am currently looking for a job in UK. How will the recession affect recruitment of foreign graduates like me? Will UK-based companies be more likely to employ British candidates to be on the safe side? Kazuki Uemoto, London

David Peters: I really don’t think your nationality has any bearing on your ability to find a job in the UK at this time, unless you need sponsorship. Employers should welcome your diverse experience and background. Many employers are actively trying to ensure that they reap the benefits of a multi-cultural workforce.

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To what extent are the financial companies in the Asia region, particularly Hong Kong and Singapore, affected in comparison to the West? Sadir Ali Khan, India

David Peters: The financial system is so globally interconnected that everyone in financial services, wherever they are in the world, is being forced to look at their workforce and think about how they should respond to the current market crisis - this goes for Hong Kong and Singapore too.

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Is the market overly fearful due to the job loss numbers that are always published in the newspapers? What is the job market currently like in the UK and London? Denken Tan, London

Samuel Johar: Newspapers do sensationalise things because it gives them a good headline and sells papers. The job market in the UK and London, however, is weak and will continue to remain so for twelve months. The thing to remember is that there are jobs even in a weak market but you have to try a lot harder.

David Peters: This is about perception versus reality. Of course new positions are continuing to be created in sectors that remain buoyant, and that includes several segments of the professional services market such as outplacement services and consultancy. What we are finding is that searches are harder to complete because candidates are more reluctant to move in this market. What we haven’t seen, with the exception of financial services is much workforce reduction at senior levels.

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I was an equity trader for several years at a long/short hedge fund. I have faith in our financial system and am planning on going to graduate school and come back as a trader in a much more glorious role. Am I chasing a pipe dream or are my expectations realistic? What should I do? Have five years of toil gone down the drain? Sincerely, Scared as hell. Chad Perry, New York City

Samuel Johar: No, you are not chasing a pipe dream. Trading will always be with us. Volumes will be low for a while and so a good time to go to graduate school. There is no need to be scared because by the time you finish graduate school, volume will have picked up and organisations will be recruiting. They may be in a guise other than hedge funds but they will be trading and your experience will be relevant.

David Peters: Your instincts are right - the time you spend at grad school will not be wasted even if you find that you might need to be more flexible about the exact role you pursue when you graduate. My advice would be to continue on your present path.

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What are the prospects to make a decent living as head-hunter in Germany in the next year and what shall be our strategy in order to survive in the coming recession? I am partner in a small firm of executive recruiters based in Berlin. Our business is based on a number of personal contacts in two big firms in Berlin and proactive client acquisition. We specialise in IT and finance professionals. We have seen a significant slow down in the Q3 and we see no real prospects in next year. Thank you. Adriana Sayers, Berlin

David Peters: Times are going to be hard, there’s no use pretending otherwise. The key to coming through this downturn stronger than when you began is to use the time to build those existing relationships and cultivate new ones. Clients are going to be having an equally tough time so it’s more important than ever to be there offering counsel on talent issues and how to get the best from existing or even diminishing resources until the situation improves. People remember loyalty in times of hardship and generally reward it in better times.

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Over the medium to longer term, where are the world’s finance jobs going to be? Will Singapore, Dubai and Shanghai really be the new New York, London and Frankfurt? Kevin Keane, London

Samuel Johar: Over the medium to longer term, the world’s finance jobs will be in New York, London, Dubai, Shanghai and Mumbai. On a twenty year horizon, New York and London will have plenty of finance jobs - there will simply be a better balance with Dubai, Shanghai and Mumbai.

David Peters: Does anyone really know the answer to this? The industry is certainly undergoing a massive streamlining and some positions will cease to exist for sure. I suppose if you consider that the East is rising and the West diminishing generally in terms of economic power, then there is an argument that says that these countries will increase their influence as financial centres, but expect London, Frankfurt and New York to fight hard to keep their positions. The expertise that’s been built up around these cities will be hard to shift quickly.

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Do you think that the current financial environment is a worldwide theme and not a local one, something we haven’t experienced before and that employment market will be hit worldwide, so perhaps looking for a job elsewhere is not going to help much? Yas Jawad, Bristol

Samuel Johar: Yes, it is worldwide although some economies will be affected more than others. Certainly, the job markets in China and India are also tightening. One should be flexible and prepared to look at a larger geographical area in the current circumstances. It is not a case of looking in either or but a case of looking everywhere.

David Peters: Yes you are right, the financial problems are global because the banking system is globally interconnected so there are knock on effects in every country as we’ve heard just recently. Whilst this will impact the economies at a macro-level, and may lead to job losses in certain sectors such as financial services, there is still a real need for experienced managers in emerging markets who have both the local language skills and cultural fluency. If you are thinking about your long term employability, consider how spending some time abroad could improve your languages and international experience, even if it means taking a sideways step in the short term.

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What do you foresee for the compliance job market? Will the crisis result in more jobs in this area? Mustak, Barcelona

Samuel Johar: Yes, there will be more jobs in the compliance area particularly, with the regulators. The FSA has already announced that it will be strengthening its operations. Overall, however, there may not be such a rise in the numbers because when investment banks retrench their activities, it is unlikely that they will expand their compliance functions.

David Peters: All over the world, but particularly in emerging markets such as Eastern Europe we are seeing a huge demand for compliance professionals and general counsel but local language and cultural sensitivity limits the number of qualified candidates. More generally in this sector, we see that the people tasked with compliance are working at a higher level, with greater visibility at board level which will only intensify. We don’t necessarily think this will translate into more jobs, just higher profile for the roles that already exist.

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What kind of recruitment challenges / opportunities can companies expect / explore during executive recruitment process in time of recession? Viktor O. Ledenyov, Ukraine

Samuel Johar: The biggest recruitment challenge that companies face during a recession is demonstrating to a potential employee the stability and prospects of the organisation. Candidates are understandably nervous and are minded to stick with the devil that they know in a climate of uncertainty. The opportunity that companies have is that the current employers of many excellent candidates will be destabilised or have limited prospects. Therefore, if a company can offer demonstrably better prospects then there will be a lot of top calibre candidates who will be receptive to a approach now when they may not have been in the past.

David Peters: The biggest challenge is that the volume of candidates increases as people begin to work their professional networks looking for opportunities. This is both an opportunity and a threat. There will undoubtedly be greater access to talent, but it will take more time to sift through who is out there and who is best suited for a role. Conversely as a potential employee, it’s harder to stand out. We have seen tools like VisualCV.com coming through in response so that candidates can stand out in the first round of the selection process and network passively in background.

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You know you can do the job, you can see what is required as expressed in the ad and through your initial discussion with the HH, but you know your CV doesn’t quite fit. What is your view on enhancement (or lying) at this stage of the process if in the end it is the right answers to questions and personality fit that will secure the role? If it is as common as we are led to believe, does not lying put the honest applicant at a disadvantage? Richard Horton, Sydney

Samuel Johar: My grandmother used to say that you must not look too carefully at a criminal enjoying the spoils of his crimes but look very carefully at him when he is being sentenced for them. Sure, in the short term somebody who cheats can have an advantage but the risk of being caught is very high and the penalty is to become unemployable for the rest of your life. In certain circumstances it can even lead to a criminal prosecution. Of course, you must design your CV in order to present yourself in the best possible light but you must never lie.

David Peters: If the statistics are to be believed, you are right that 25 per cent of CVs do contain some kind of embellishment. Our advice is never mislead, even by omission or half truth, this kind of behaviour is completely unacceptable. It will always come back to haunt you and even if you land your dream job, you will have to wave goodbye to it very quickly when your references don’t check out. What you should always do is think about your experience from the point of view of the person doing the hiring and organise your CV to put the most relevant information first. This can be an introductory paragraph or even a covering letter.

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With a significant change of stakeholders and curbs on executive rewards, is there real danger of a severe exodus of talent to the East? If so will the UK be left at permanent disadvantage even as the world economy recovers? Gary Spokes, London

David Peters: I agree that if people believe they cannot get the salaries, bonuses or positions that they used to be able to in the West they might look to the East (be that Asia, or the Middle East).

My question would be – can they actually find this dream position?

We are living in an era of hard globalisation – companies can no longer open a few subsidiaries in far flung locations and send Western talent to staff them: successful global companies are now looking for executives with high-levels of cultural empathy and understanding who can run their local and regional operations – the best way to get this talent is to tempt nationals back to their home countries. And we have found evidence that the many Eastern ex-pats are now ready to return home.

Recently we have been exploring the Middle East diaspora; we conducted a survey of candidates in the Heidrick & Struggles database who had a Middle East connection: 94% of respondents indicated that they would like to relocate to the region with the UAE the most desirable country to move to (followed by Bahrain and Qatar) if there was a suitable job opportunity at an acceptable compensation level.

Talented Executives in the West will be competing with highly educated, highly experienced Eastern nationals - they cannot take it for granted that the competition for these jobs will be any less intense.

Samuel Johar: I do not believe that the recent change of stakeholders and proposed curbs on executive rewards present a real danger of a severe exodus of talent to the East. There was an unhealthy bubble in remuneration in the financial services sector and a correction would be good for both the industry and the economy as a whole. Commentators often forget that the economies of the East are more and not less regulated than that of the UK.

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I am a final year undergraduate Economics student at University. I understand the implication’s of this financial rupture in the labour market. Would it be better for me to pursue further studies or are there any employment options for me in the current climate? Regards. Farhaz Miah, Preston

David Peters: Of course there will be a wide range of employment options - graduate recruitment has not come to an end! But some sectors will have more demand than others. For those with the scope to do so, post-graduate qualifications, especially those with strong commercial content, such as an MBA, are always likely to enhance a graduate’s employment prospects. but practically, experience of ”real work” from which an applicant can demonstrate some tangible business ”savvy” is very valuable also, particularly if you are able to gain this experience abroad - at least two or three years worth.

Samuel Johar: There are employment opportunities for good graduates. However, the number of opportunities is fewer and therefore, the competition is tougher. My advice would be that to try the employment market if that is what you want to do and if you do not find a suitable opportunity then pursue further studies.

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I am IT graduate and interested in an IT career. Can you tell me about the situation in that sector in UK? Syed Uddin, Leeds

David Peters: There continues to be a considerable demand for IT professionals especially in the functional/ applications space, where companies are continually focusing on IT applications as a means of enhancing competitive advantage. Again, a quantum of business ”literacy” is as important as pure IT theory. So once again, where the scope exists for graduates to gain further business-rooted qualifications and/or experience, these are well worth pursuing.

Samuel Johar: IT opportunities will reduce as in most other sectors. There will still be opportunities but the competition will be tougher.