A shocking number of senior managers across emerging markets have suddenly found themselves unemployed. In regions where top talent is so scarce, it is amazing to find so many candidates who are struggling to find another job despite having impressive resumes and experience in leading companies. These candidates seem to be caught in the Top Talent Trap

Fat at the top?

One of the main causes of the lack of opportunity for senior managers is the withdrawal or downsizing of many multinationals from the region. Multinationals entered the market and quickly created a bonanza for employees as they poached candidates from local organisations and bid up salaries. With multiple employment offers, candidates found themselves attracting higher and higher salaries as companies struggled to hang on to their hard won talent. Despite the resulting cost pressures, companies accepted the impact on profitability, by convincing themselves that it would all be worth it in the long run.
Unfortunately, the recent economic downturn has led to a further deterioration in performance and a rapid rethink of prospects in the region. Faced with strong local competition, which is often owner managed and leaner, multinationals have quickly realised the need to rationalise their cost structures in order to compete.

The war for talent has quickly turned into a bloodbath as entire layers of the organisation are cut. Gone are the regional level managers, and companies have returned to country level management reporting directly to their head offices in an effort to stem losses by cutting costs.

Overpaid senior managers?

A number of senior managers with good experience still find themselves out of a job months after being retrenched or resigning. This is due to the mismatch between their last compensation package and the current market opportunities. When the multinationals entered new markets such as Africa in the early part of the decade, salaries for the lucky few ballooned as they were headhunted and offered substantial increments to switch jobs. As the need for talent intensified, salaries were bid up and soon reached stratospheric levels. Unfortunately, when the tide turned these very same stars found themselves left high and dry, as the jobs disappeared and the companies left behind found their packages to be unaffordable.  With salaries having been bid up in the past, companies have also realised that cutting a handful of senior managers from the organisation has a much greater impact on costs than trying to reduce workers at lower levels.

Many of the affected managers that we have recently spoken to, have expressed a willingness to take a reduction in compensation.  However employers are naturally cautious, fearing that anyone taking a cut will likely continue to be on the look out for better opportunities and therefore unlikely to be a stable hire. 

There are clearly ways to mitigate these risks and in our view this is the time for employers to take advantage of the availability of so much talent.

If you are looking for some great candidates, then feel free to reach out and we can help work with you to bridge the gap in expectations to find a win-win solution for both parties. 

This article was written by Nikunj Shah, the former founder and CEO of Datum Recruitment Services, and now founder and leader at Select Global Solutions in Executive Search and Recruitment solutions across Africa, India and other Emerging Markets. To speak to Nikunj about your talent requirements, get in touch at [email protected]