In Search of...
International Search - Things Look Different There
By Frank Moscow - fmoscow@brentwoodgroup.com
President, The Brentwood Group, Ltd.
North American firms continue to make very expensive mistakes as they expand in Europe and Asia. In the August edition of the High-Tech Advisor we explored two suggestions made by international operating executives and our executive-search colleagues: "Assume everything is different and be pleasantly surprised when a few things are the same," and "Don't put too much of a premium on English-speaking skills." Their wisdom yields three additional suggestions:
Avoid headquarters-based compensation packages that don't take local market conditions and practices into account. "The remuneration package comprises more benefits than in the States. A company car is common to middle and senior management, no matter what functional responsibility they have, and is not seen as purely a method of transportation for the sales representative to meet the customers. Company cars are very emotive and status objects in Europe," states Mark Rowley, managing director of Regent Consulting in London.
Anca Poll, managing director of Nassau Recruitment in the Netherlands, says, "U.S. managers always try to negotiate down from the 26 holidays (the norm in the Netherlands) by offering extra money instead of the holidays. They are always very surprised when the employee then refuses and says that he or she prefers the holidays above the extra money. Spending time with the family is a higher priority here than it is in the United States." Also, North American firms typically overpay in central and eastern European countries, a situation that is easily avoided with competent local search counsel.
According to Simon Childs, managing director of CDS Consulting in Japan, shifting perks and benefits such as company cars and club memberships generally apply only to Japanese who head larger foreign capital subsidiaries in Japan, not to line managers. Cash packages, however, tend to be much higher in Japan than in the United States and Europe, reflecting a very high cost of living. As mentioned in last quarter's article, while putting too high an importance on the candidate's ability to speak English can be counterproductive, Mr. Childs states that a premium is typically paid for English-speaking Japanese professionals who also exceed the other qualifications.
If you partner with an executive search firm, choose the firm that has the best local reputation, not the best global reputation. The largest search firms in the world have offices in all the major markets, and it is convenient to ask for their assistance on your search. Such a firm, however, may not be strong in the country or the market in which you are searching.
One of our clients, Integrated Measurement Systems ("IMS"), was looking for a director of engineering at a division based in Dresden, Germany. The search was originally awarded to a firm with a very good global reputation. Unfortunately, after six months, it was determined that the search firm had neither the correct technology contacts nor the direct recruiting methods necessary to successfully conclude the search. We were able, through our international network, to refer IMS to a boutique search firm that was based in Germany, worked exclusively for technology clients and had a great reputation for success. The search was successfully concluded in less than three months (very fast by German standards). Gwyn Harvey, vice president of human resources at IMS, stated, "The German partner you referred us to did a great job. The search moved more quickly than we expected, and we hired a great candidate who is doing exceptionally well."
Mr. Childs reports that similar situations are common in Japan. This is particularly true if companies are seeking younger, more dynamic managers with experience in new technologies. Many of the old-line search firms in Tokyo are staffed with hierarchical, traditional business recruiters who have limited "new economy or technology" contacts.
Ask questions about different languages, cultures, business norms, tax rates, and employment laws to ensure better hiring and operating decisions.For example:
In Europe, legislation regarding work contracts, salary packages, etc., differs in each country. Annual vacation quotas vary and range from two to six weeks mandatory.
In Germany and the Netherlands, recruitment is extremely local to each city because many candidates refuse to move, even to another town.
In France, there is more geographical mobilityÐÐbut candidates in the south of France often refuse to move to Paris.
In France and many other European countries, legislation is very protective with regard to employees. To fire an employee is a long and difficult process, which reduces flexibility.
In Belgium, the country is split into two distinct communities, French-speaking and Dutch-speaking. To capture all of the market, it is important to have both languages represented on the management team, as well as some understanding of the two cultures. Often companies underestimate this concept's importance and capture only 50 percent of the market.
In Belgium and other European countries, taxes on salaries are high. This leads to complex salary legislation and extremely complex salary packages. For example, Belgium workers are paid a monthly (as opposed to annual) salary. The monthly salary is multiplied by 13.89 months because a one-month bonus and a one-month paid vacation are compulsory.
In Japan, summer and winter bonuses are still common and may amount to as much as six months' salary. These bonuses are seen as being part of the overall package and are effectively guaranteed to be paid out regardless of company performance. There are numerous advantages and disadvantages for new companies adopting this system. Your search partner and accountant should be able to help you navigate these issues.
These are just a few of the many unique aspects in hiring internationally. Universally, however, everyone we spoke to agreed on one point: Expect differences in each geographic region; by learning and respecting those unique attributes, you will make better hiring decisions and avoid the likelihood of a highly expensive restart or replacement.
About the Author:
The Brentwood Group is a boutique search firm exclusively retained on senior-executive-level search projects for the most promising and exciting technology companies. With significant experience completing demanding national searches, they truly understand what it takes to build successful technology firms.
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