I’m in Buenos Aires on vacation, the second time in 8 years, and the country is quite different this time around. The economy, while not fantastic in 2005, is even worse today. The Argentine peso has been devalued again, and the President has decreed, among other things, that foreign companies cannot repatriate their Argentine earnings to their own country. All money made here must stay here. Apparently, the thinking is that will force companies to invest here. In reality, companies are reducing their current investments here and are not making many new ones. While Brazil is the darling of Latin America, and Mexico is gaining some splendor, Argentina is going the way of Venezuela and they are comparing President Fernandez de Kirchner to Hugo Chavez.
Things really have changed!
When meeting with a fantastic search firm in Argentina that is part of the Agilium network of firms that McDermott & Bull recently joined, the partners shared with me that social programs have abounded, that unemployment benefits have reduced the incentive for people to work, that the business climate is increasingly hostile to businesses, and the uncertainty of future business proclamations has made business leaders wary about making investments and growing their enterprises in this environment.
Sound familiar? I mentioned that similar things are taking place in the U.S. and especially in California, which makes it challenging for businesses to invest in expansion, with high costs of permits, taxes, unemployment costs, etc. So what is a company to do?
The firm in Argentina has seen their competitors contracting and even leaving the market. Other firms have come into the market very aggressively, but not very professionally serving the corporate world, which is making a bad name for executive search. They are focused on providing very high quality services and outcomes for their clients, and in an effort to expand their business, have joined Agilium and are partnering with affiliated firms throughout Latin America, and even in Europe. Search is still needed, and Argentine companies still need it, but maybe just not in Argentina.
I’ve also seen the “man on the street” become innovative to battle the 30% inflation rate per year (BTW – the official government measurement says it’s 5% but nobody believes that). The official exchange rate for dollars to Argentine pesos is a little more than 5 to 1. However, the unofficial rate on the street is between 7 and 8 to 1. Everybody will take dollars instead of pesos, and apparently they hold them in their “mattresses” and in a few months or even a year, they are way richer than they would have been if they took pesos. In times of crisis, people become innovative.
McDermott & Bull Executive Search, through the McDermott & Bull Executive Network, witnessed the time it takes people to find jobs at the executive level increase significantly, even after the “great recession” was officially over. In fact, out of need, or out of pure boredom, executives opened up to the idea of taking their skills and experience and “renting” themselves out for interim assignments. Consulting, formerly a four letter word to execs wanting to land another senior seat, now is commonplace while looking for the next great job.
Companies, at the same time, were struggling with executing their business plans, but were so gun shy about hiring after laying off 10-20% of their workforces, they didn’t want to be saddled with a new FTE. How could they solve their problems and challenges, without having the right talent in the right seats?
We started MB Interim Leaders to address this desire of senior executives and companies to get together on projects, but maybe not get married. In fact, this has been taking place in Europe for quite some time, where by some estimates, as many as 5% of executive positions are held by interim execs that aren’t “employed” by the company. In countries where it is very difficult to terminate the wrong employee, the staffing model, even at the executive levels, is growing and becoming much more commonplace. In the U.S., interim executives still comprise less than 1% of the total, however we see this growing, for the same reasons Europe has over the last decade.
We’ll see if we’re right, but so far, the demand for MB Interim Leaders’ services is growing. Another factoid: approximately 60% of our senior interim leaders have been converted to permanent employees by our clients. Apparently, people on both sides, like to try before they buy.
Good luck and stay innovative!