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Boyden Leadership Series: A Discussion With Tatiana Kozhevnikova

February 16th, 2012

This article presents a fascinating discussion with the Human Resources Director of X5, the largest retailer in Russia and employer of 90,000 people.  In the course of this interview, she discusses workforce management trends in Russia, the experience needed to succeed in human resources, and how the the human resources function has evolved.  Dr. Kozhevnikova also presents her view on repatriation.  This interview was conducted by Boyden Global Executive Search, and it is presented as a part of their continuing Leadership Series.  Please visit www.boyden.com.  (John Gude serves as a Managing Director of Boyden through their  Chicago office).

 

Boyden: What drew you to an HR career?

Kozhevnikova: To be honest, it was completely by chance. In 1992, around the time I finished my postgraduate study in economics at the Moscow State University, Coca-Cola had just started their business in Russia. They were looking to recruit smart people from diverse backgrounds who could help them grow the company. They had a vacancy in the training department and since I had experience teaching?at university, I was considered a good candidate for teaching “selling skills” at the Coca-Cola school. That’s how I started to develop an interest in HR.

Boyden: You’ve had important roles at other major global companies – what stands out to you as X5’s mission vis-à-vis workforce management?

Kozhevnikova: In any company that services customers, the main mission of HR is to make sure employees are treated properly. It operates as a perpetual cycle – if employees are treated well they transfer the same positive attitude to customers, who in turn feel happy and comfortable, and bring in more business through increased sales.

In our company, we interact with 3.5 million customers on an average every day and each transaction involves face-to-face contact. So we basically need to create

this magic cycle where our employees feel satisfied and in turn treat customers well. We then re-invest this money back to our employees and the business. This is the main mission of HR – to make sure that happy employees serve customers in a good way.

Boyden: Are there unique challenges or opportunities in HR at X5?

Kozhevnikova: The main challenge at X5 right now is that the company is moving from a functional model to a multi-format one. X5 operates in three formats or store sizes: hyper markets, super markets and discounters, and HR plays a key role in shifting and decentralizing responsibility, power and decision making down to each individual format.

First, we need to go through the entire organizational structure to make sure all new business processes work well. We then need to review the role of people at every level and clarify all budgetary issues. A proper remuneration policy also needs to be in place.

In addition, when people get new responsibilities and more power they also need to be trained simultaneously. Basically it is our responsibility to strategically and effectively communicate all these changes. Besides overseeing this structural overhaul, the issue of management changes is another significant responsibility for HR to lead.

Boyden: How has HR changed in the last decade?

Kozhevnikova: That would be the most important and interesting question for?me since I’ve been in HR for the last 20 years. Over the course of the last decade, in Russia and in the world as well, the most important deliverables businesses are seeking from HR include better leadership, increased productivity and improved operational excellence through key performance indicators (KPIs). And all of these areas will influence compensation and the assessment of employee performance.

In several HR positions I’ve held over the years, I was responsible for developing KPIs. I had to help business units identify what indicators should be calculated

and how they should be put together in one system to make sure they assessed all areas of performance – almost like a scorecard approach. Now, the increasing involvement of HR into organizational design, productivity and development

of KPIs means that we really need to understand business on a deeper level. This also converges into another significant trend we’re seeing now. Business leaders from operations, sales and manufacturing are now moving into HR.

Boyden: What key recruiting and workforce management trends are you seeing in Russia? And how do they differ from the rest of Europe, U.S. and fast growing developing markets?

Kozhevnikova: There are two big differences in recruiting and workforce management in Russia versus Europe or other countries. First, in the US and Europe you have a lot of cities where businesses are developing simultaneously. For instance, Atlanta is the headquarters for multinationals such as Coca-Cola and CNN, whereas Silicon Valley is concentrated

with a lot of technology companies and Houston supports the oil companies. Basically, in the US people can live in any part of the country and work at a relatively large company. The same trend is in play in India and China, which have several major megalopolises. In contrast, Russia is a more centralized country, where huge part of the business is located in Moscow, which results in intensive migration of the top level talent to Moscow. Unfortunately, our reality is that there are not a lot of companies with positions at the federal level in the Russian cities.

As a consequence, one of the limitations for business growth in the other regions, even big ones, is that other cities possess a relatively small pool of candidates with the required scale of general management competencies. Thus, it’s a real challenge to attract people from Moscow to the other regions due to high salary expectations and big differences in lifestyle. Moreover, Russians are also not very mobile, so you need to pay them more to move.

One of the options, for example, is to?find very junior-level people outside of Moscow and start training them from scratch. The downside of this, however,?is that it takes several years to prepare a decent level manager. While Russians are often relatively immobile between cities, people in Russia are highly mobile between companies. The result is we have a very, very tight supply of talent in Russia and the workforce almost always has the privilege of moving.

Boyden: With Russia’s retail market up nine percent and among the healthiest in Europe, how has the economic downturn in the rest of Europe affected Russia and the retail space?

Kozhevnikova: When we talk about factors affecting the retail industry in Russia, there are only two. Oil price is the most important factor – for the Russian economy overall and for retail and all other industries as well. If oil prices go up then the country’s budget is well balanced, salaries increase and with it spending power and sales. The boom that Russian retail witnessed from 2002 to 2008 was primarily due to very high oil prices. On the other hand, if oil prices go down due to the global economic downturn, it will certainly affect the Russian economy and retail space as well.

The second factor is the exchange rate?of the euro to the dollar and ruble. The food retail industry is heavily dependent?on imports. More than 50% of goods?are either imported or produced locally?in Russia but based on foreign, imported components. Take the case of beef, for example – Russia doesn’t produce beef?so a majority of processed meats like sausages, hamburgers, etc. are made from imported beef. So basically, if the euro becomes more expensive, in turn all food prices go up.

Boyden: What key management skills are in demand right now in Russian retail?

Kozhevnikova: There are two groups of skills in demand right now in Russian retail. The first is everything product-related: sourcing the product, which includes buying the product either internationally

or locally, and managing complex supply chain logistics. The supply chain system in Russia is the most important aspect to deal with because it’s a large country with difficult climate conditions.

The second group of skills is everything related to operational excellence – increasing productivity, reducing cost, optimizing business processes and introducing new technology. In particular, people who can manage large projects related to the implementation of new technology and business processes are very much in demand.

Boyden: What are the current challenges to management recruitment in Russia?

Kozhevnikova: There are a few challenges related to management recruitment in Russia, particularly for certain professions. Generally speaking, we don’t have specialists, so for certain jobs our management is imported from either Europe or America. For example, when looking at X5 and retail in general, most

top management in buying and operations are non-Russian. Retail has been rapidly developing in Russia only for the past 10 years. The first large retailer, Metro, started business in 2001. This means that the most experienced Russian person in retail would have 10 years of experience, which is sometimes not enough to make the right decisions.

Boyden: What is your view on repatriation and do you expect to see more Russians coming back?

Kozhevnikova: I really support repatriation and I have recruited former expatriates when I’ve had the opportunity. They’re Russian natives, so they understand the culture here. They also speak the language. At the same time, they have training in new fields and technologies from abroad

which locals don’t possess, so it all adds up to a huge advantage. I witnessed this trend while working at ROSATOM and Metro, where we’d recruit Russians who’d left the country for 15-20 years, only to return. A lot of them spent time either in the US, or in Europe and, in many cases, even held foreign passports. Many were in their 40s or 50s, having spent 20 years of their life in Russia and the other half abroad, so they really had an advantage of two diverse world views.

Boyden: What do you think are the greatest executive challenges that X5 faces as a company?

Kozhevnikova: As I mentioned, in terms of recruiting candidates, finding talent locally in the retail space is always a challenge. We have to bring in people from abroad, but that also leads to the language barrier. The people we bring from abroad often don’t speak Russian, which is a

big problem since emails, meetings and phone conversations are communicated in Russian. Thus, translators are required at every stage. But, in most cases, there’s no choice because we simply cannot find expertise locally.

Secondly, we find that local talent is quite short-term thinking in terms of career planning and compensation. People want results today and they are not willing to wait. Everything is looked at from a shorter time horizon versus international, longer- term standards. This then leads to the challenge of employee retention due to the fact that people are always on the move, either within the company itself or on to other companies. So not only is it hard to retain good talent but also very difficult to organize career and succession planning initiatives.

Another challenge we face is that sometimes due to the fact that a company is expanding very fast, often people get promoted too quickly and before they have enough experience to handle a senior-level position. But one has to take a chance on making these promotions because of the lack of options. The downside is these new managers are often not mature enough?to coach and manage their subordinates and build the right relationships with colleagues.

Boyden: You’ve moved from the professional services to energy to retail?in your career – is it fairly easy to move around from one industry to another in the HR function?

Kozhevnikova: Basically it is easy, as long as a person is flexible and willing to accept the changes that come with every new industry. It’s not a workable approach if you come with a rigid set of principles and you just replicate them in every company. For example, if I tried to implement all

the principles I learned at Metro, which is in the retail space, over to ROSATOM in the energy sector, it would fail. You also really need to inform yourself about the industry as best you can – read literature, talk to people, be a part of the professional community, attend conferences etc. Personally, I really try to observe what’s going on within the industry and the outside world as well.

Boyden: Your educational background has had a strong focus on economics–in what ways has this specific concentration added value to your HR roles?

Kozhevnikova: Economics is the key to my understanding of HR. As HR has

evolved, it’s now all about calculating productivity, optimizing organizational structures, undergoing effective benchmarking and statistical analyses, and implementing compensation and benefits, budgets and cost control. Basically, everything I do is related to economic figures and some mathematical analyses.?I believe that every top HR professional must either have a concentration in economics or at least a business education.

Boyden: What has been your biggest career challenge?

Kozhevnikova: I spent almost 15 years working at western companies, and?then I moved to a Russian, state owned company. So my biggest challenge was to successfully implement all the international best practice approaches of HR I had learned over the years in the state-owned Russian company. I faced significant organizational resistance and it took me quite a long time and a lot of effort to succeed.

Boyden: If you could highlight one significant career achievement, what would it be and why?

Kozhevnikova: My biggest achievement was the successful turnaround of the HR function at ROSATOM, one of the world’s largest nuclear energy companies. We had to manage over 280,000 people and more than 200 subsidiary companies. When I joined the company, all the HR staff was very old fashioned and composed mostly of administrative clerks. In the two years that I led the company’s HR department, we changed 90% of the management, including most of the HR directors.

We introduced a new, systemic employeeselection procedure, including a thorough assessment and professional qualification checks, to make sure new recruits fit?the job requirement. We also introduced professional development sessions for HR personnel and we developed an internal school for our HR employees

to teach them new approaches to build effective compensation and performance management systems.

The company was geographically spread?all over Russia and many of its operations were placed in secret locations, far away from the city. In this case, it was not possible for us to employ an external workforce. The only option was to recruit local talent with high potential but no professional background and train them from scratch. We had to educate all these people in new HR methods and technology. Due to the HR overhaul, the on-boarding and training changes were completed more quickly and effectively.

What companies need to realize is that the agent of change needs to come from within the organization itself. Even if they belong to an HR or finance function, as many usually do, it’s important to have the ability to view the business as a whole.

Boyden: What key metrics do you incorporate for employee evaluation and performance?

Kozhevnikova: I believe that key performance indicators should be a combination of quantitative and qualitative metrics. If you evaluate performance only based on quantitative KPIs like company growth or sales, it constitutes a limited approach. For example, an employee may perform very well on project outcomes but may have poor teamwork skills or

behavioral issues. That’s why I think that 40-50 percent of employee evaluation metrics should be qualitative as well. Factors such as how a person well works on a team, how many people he/she successfully develops as successors, etc. are important assessment factors as well. Basically I believe in a balance between the two.

Boyden: What is a “day in the life” like for you at X5?

Kozhevnikova: Typically, my day usually starts at 8:30 a.m. and lasts about 12 hours, but often not all of it is in the office. My work is all about communication, so?I’d say that 80 percent of the time I’m interacting with people. Normally, I have?at least one candidate interview every day because I personally manage projects for the board level or level below. I deal with headhunters and interview candidates and my role also involves a lot of face-to-face communication with colleagues in different departments.

Every day I have at least one or two meetings, including formal ones as well?as informal five to 10 minute chats with coworkers to see what’s going on in their department. I also make a point to go to the purchasing department and speak to buyers for updates on what new products are moving onto the shelf. Then, I’d say that at least two to three hours per day?are spent interacting with my team, either individually or in group meetings. While there are 700 people in the HR department, I directly deal with 20-30 people on a daily basis. That said, the entire department needs to hear from me on a regular basis, and not just by email. I like to engage in regular face-to-face communication.

Boyden: What would be your one piece of career advice to individuals striving to move up in senior management?

Kozhevnikova: In moving toward a specific functional expertise, it’s very important?to understand the significance of other parallel business roles. For example, if

you want to be in HR then it makes sense to work in operations or sales for some time too. It gives you a good overall idea about the business and HR’s role in other departments. In other cases, if there’s an opportunity for people to work in a different region across the same function, that’s a good idea too.

Acknowledgement

We would like to thank Elena Surmeyko of Boyden Russia for making this edition of Boyden’s Leadership Series possible.

The views and opinions expressed here do not necessarily represent the views of Boyden; only those of Tatiana Kozhevnikova.

 

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Posted in Economy, General Business, Human Resources, Innovation, Media, Russia, Web 2.0

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Boyden: BRIC Growth Brings Back War For Talent In C-Suite

May 9th, 2011

NEW YORK, May 4, 2011—The boom in BRIC markets is driving both corporate growth and a global demand for leadership to manage the new market potential, according to the quarterly Boyden Executive Outlook, released today by Boyden Global Executive Search.

“The growth of the BRICs is driving the hiring of executives throughout the Americas, Europe and Asia/Pacific,” said Trina Gordon, President and CEO of Boyden World Corporation. “Boards are focused on appointing leaders who can adroitly manage the transformation of business as well as the challenges in both the emerging and developed markets.”

Consumer/Retail
“Until recently, strong global brands have always been prime movers in attracting the best executives, though ‘second tier’ companies can now land top talent by paying more and offering more upside and opportunity to grow a company,” said Dirk Friederich, a member of Boyden’s Global Consumer/Retail Practice and Managing Partner at Boyden Frankfurt.  “Additionally, big worldwide retailers are stepping up management hiring, especially in developing markets.”

Due to expected retirements in the next few years, recruitment of CEOs is increasing in the consumer and manufacturing sectors. In addition, demand is increasing for Chief Marketing Officers and Senior VPs of Human Resources, much in part to help lead new business opportunities in China and other high potential regions, according to Pasi Koivusaari, Senior Partner at Boyden Finland. He added companies are also once again appointing management for Strategy and Research & Development.

“Our clients are looking for talent that is able to quickly assess the marketplace and how it has changed,” said Doug Ehrenkranz, a Managing Director at Boyden Houston. “In addition to changed economic conditions, the acceleration of digital technologies has changed how people shop and how companies manage their businesses.”

In the US, companies are pushing up priorities to recruit VP’s and Directors in the areas of Digital Marketing, and Social Media as well as Analytics and Consumer Behavior, Mr. Ehrenkranz added.

Some positive trends are being observed by retailers and their suppliers, though in the US there is continued reluctance to increase hiring due to great concern about the pressure on retail pricing from higher manufacturing costs and cautious consumers. Nonetheless, CEO appointments and numerous senior and mid-level executive assignments in Merchandizing, Product Development and E-Commerce are moving forward, according to Howard Gross, a Managing Director at Boyden New York.

Financial Services
“Strong and big offers are coming back in financial services,” said Jeanne Branthover, Leader of Boyden’s Global Financial Services and Managing Director at Boyden New York. “While companies are willing to go the distance for the right executive, they are taking as little risk as possible when looking at a candidate’s track record.”

Companies are investing in technology, new products and their own infrastructure to remain competitive. Organizations are also hiring top Financial, Compliance and HR Officers, added Ms. Branthover.
“Financial Services are strongly re-emerging, with a very positive outlook for profits, growth and expansion in all the sub-sectors, and particularly in the wealth management business,” said Armin Meier, Managing Director of Boyden Switzerland. “Firms are increasingly looking for financial advisors.”

In Asia/Pacific, Singapore is increasingly becoming a global hub for financial companies, triggering huge needs to build banking IT operations, trading floors and new teams of professionals to manage operations, according to Roger Wilson, Managing Director of Boyden Singapore.

In private banking, the increasing regulation involved in bringing over clients to new institutions is pushing up the threshold to recruit top Private Bankers to change firms, due to the trepidation that clients will not follow, added Mr. Wilson.

In China, financial services executive hiring remains robust in Shanghai, but is moderating in Hong Kong, according to Brian Renwick, a Board Member of Boyden World Corporation and Managing Director of Boyden China.

In Latin America, many major US banks are planning to gradually pull out of the region, due to tougher US government compliance. The opening is creating new opportunities to hire first-tier Private Bankers and for companies to up their expansion in the region including Morgan Stanley, UBS, HSBC and others, according to Manuel Corsino, a Managing Director at Boyden Miami. This includes adding top Wealth Managers, Compliance Officers, Product Managers and Finance Executives.

In the Middle East, despite social/political risks, 2011 has been a revival year in financial services, both in Private Banking and Investment Banking. Expectations are for continued increased hiring in the second quarter, though the third and fourth quarters cannot be predicted due to political uncertainty, according to Magdy El Zein, Managing Director of Boyden Middle East.

Technology
“Digital media and social networking companies continue to aggressively recruit seasoned digital marketing executives who can leverage social platforms to drive revenue,” said Daniel Grassi, Managing Director at Boyden Atlanta.  “Compensation for this type of executive has increased given the high demand.”

To scale more rapidly, companies are committing to higher premiums for senior executives in General Management, Sales, Marketing and Engineering, according to Dan Grosh, a Managing Director at Boyden San Francisco. He added there has been a substantial increase in hiring by emerging growth and cleantech companies.

“Indian software services giants like TCS and Infosys continued to make strong gains to start the year,” said Dinesh Mirchandani, Managing Director of Boyden India. “We are also seeing changes in leadership at top Indian IT companies such as Microsoft India, Mindtree and Wipro with the recent spate of C-level resignations in this sector.”

The UK technology market remained buoyant in the first quarter as most technology firms saw a positive start to the year, according to Mark Soden, Partner of Boyden UK. The overall forecast for the sector in 2011 remains cautiously optimistic though, as Chairmen and CEOs continue to live with some level of uncertainty. “The general consensus among management is often that an inadequately executed strategy is better than no strategy at all,” said Mr. Soden.
Specific sectors of technology that continue to thrive are those connected with Cloud, Data Centers and companies involved with SAAS (Software as a Service). European clients increasingly conduct global searches to occupy senior management roles for Senior Vice President and Sales Director positions, according to Mr. Soden.

Board Services
Risk assessment is a top priority for boards today.  “Many boards are making time to discuss inherent risk at every board and committee meeting,” says Sarah Stewart, a Principal at Boyden Pittsburgh and a board expert. However, identifying potential risk is only part of the job. “Boards also need to make sure the company has a well-constructed and rehearsed disaster response plan in place.  The planning includes deciding who are the members of the disaster response team, how the board will be kept informed and what external resources will be used,” she added.

“As boards place new emphasis on the issue of risk, many may want to add a familiarity with crisis management to the attributes they seek in new directors.  This has as much to do with tapping director candidates whose expertise comes from first-hand experience as it does their personal leadership skills,” according to Thomas Flannery, Leader of Boyden’s Board Services Practice in North America and Managing Director at Boyden Pittsburgh.  “Every board member needs at least one director (preferably more) whose wisdom and composure help keep the panic at bay.”

In the UK, compensation for Non-Executive Directors continues to rise, to ensure attracting the right board members, according to John Ellis, Managing Partner of Boyden UK.

Mr. Ellis added the renewed push to increase placement of women directors in FTSE 100 companies in the UK follows the recent report released, led by Lord Davies, which emphasizes that more women on boards will result in better diversity and ultimately better governance. In Switzerland, there is also a drive for more female board members in publicly traded companies. The goal is to implement diversity without having formal quotas, according to Mr. Meier of Boyden Switzerland.

Industrial/Energy
“In the oil and gas sector, there’s a demand for managers who are able to facilitate and close deals,” said Andy Baggus, a Partner of Boyden UK. “Position recruitment is picking up for Regional VPs, Commercial Planners and Business Developers.”

Leadership talent is also being aggressively pursued to develop in the Middle East and other challenging regions, Mr. Baggus added.

In South America, high commodity prices are driving growth and recruitment of management in Engineering, Construction and Infrastructure, throughout Brazil, Chile, Peru and other markets, according to John Byrne, Managing Director of Boyden Chile.

In South Africa, an influx of foreign multinational companies continues as the country is perceived as an excellent springboard for growth in Sub Saharan Africa and a location that’s relatively lower risk. Talent recruitment remains steady for roles including Managing Director, Country Manager, Chief Financial Officer and Chief Technology Officer, according to Jules Kieser, Managing Director of Boyden South Africa.

In the Aerospace and Defense sector, the effect of the pressure in the U.S. and other “allied” nations’ governments to cut defense spending will mean large scale programs are being reviewed and trimmed,” according to Tim McNamara, an aerospace/defense industry expert and Managing Director of Boyden Washington DC.

“This cut in defense spending has a carryover effect of less aggressive talent recruitment by defense contractors and management consulting firms, which have in recent years been the beneficiary of huge defense spending,” explained Mr. McNamara.  “However, programs dealing with cyber security and C4ISR issues continue to expand.”

Human Resources
In the Human Resources sector in Europe, companies are currently appointing fewer new senior executives in HR.

“There’s a dearth of qualified candidates and companies are reluctant to take risks,” said Lisa Gerhardt, Leader of Boyden’s Global HR Practice and Partner of Boyden UK. “Thus, at the moment, we are seeing more business people from other sectors and more internal candidates who are being considered for HR roles.”

In the US, executives are being recruited for roles including HR Business Partner, Internal Management Development and Talent Acquisition & Retention. These executives will be able to drive revenue results and create effective development programs, according to Greg Coleman, a Managing Director of Boyden New York with extensive experience placing global HR executives.

“We are seeing strong demand for HR executives who are able to build trust and morale again among employees who became angry and frustrated during the downturn,” said Mr. Coleman.  “Most important, companies are looking for executives in HR with a strong commercial orientation.”

Life Sciences
In the Life Sciences and Healthcare sectors, companies have a strong need for executives with both international management skills and regional understanding of Central and Eastern Europe, according to Kerstin Roubin, Director of Boyden’s CEE Life Sciences Practice.

“The number of expatriates being hired is shrinking as tax systems make it more attractive to hire local experts,” said Mrs. Roubin.

Professional Services
Demand for talent in professional services is building especially for specialists focusing in financial services, energy and infrastructure. Professional services tends to staff up six to 12 months ahead of other industries and currently organizations are reinforcing teams to be ready for economic growth and new projects, according to Miguel Zuil, Managing Director of Boyden Spain.

“Companies and their professional services providers are needing global teams to work in more complex situations and experience in South America, Africa and other growing markets is highly coveted,” said Mr. Zuil.

About Boyden World Corporation
Boyden is a global leader in the executive search industry with more than 70 offices in over 40 countries. Founded in 1946, Boyden specializes in high level executive search, Interim Management and Human Capital consulting across a broad spectrum of industries. For further information, visit the firm’s website at www.boyden.com.

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Brazil’s Time Has Come

May 28th, 2010

By John Gude

My firm, Boyden Global Executive Search, has operated in Brazil since 1968, and I would venture to say that we know this market very well.  We have just published The Boyden Report: Brazil for our friends and clients, and I just could not resist talking to you about the information that you can find in this extensive document. There has been a significant shift in Brazil’s global stature, and Boyden presents the views and insights of seven senior business executives to hear why they believe that this country is now walking on the ‘big stage’.

Who are some of these people?  For the most part, they head Brazilian subsidiaries of global companies, and they are noted drivers of key businesses and other organizations that are prominent in Brazil.  They include people ranging from the Presidents of Abbott Laboratories and Caterpillar in Brazil to the Chairman of CleanStar Brazil Bioenergia.

Brazil is moving and growing fast on the world stage, and if you question this, look at some of these facts:

Brazil had the world’s best-performing major current against the US dollar last year, with a 36% advance according to Bloomberg.

Brazil was home to the worl’s largest IPO in 2009.  Santader Brazil’s IPO valued the bank’s Brazilian subsidiary was valued at more than the whole of Deutsche Bank worldwide.

Sao Paulo is among the world’s top five futures and options markets.

Brazil was home to the world’s fastest growing car market in 2007-2009.

Brazil was a major source of stability for many multinationals in the global recession that started in 2007.

32 out of the 50 largest companies in Brazil are foreign multinationals.  But there are also 5 fast growing, Brazilian companies that have achieved recognition as serious multinational competitors in markets ranging from food to aircraft.

The World Bank predicts that if Brazil continues on its current path, it will move from being the tenths largest economy in the world to the fifth largest by 2016. As such, Boyden reports that the FTSE Group  positions Brazil as an ‘Advanced Emerging Economy’ along a different level of the development curve than the other so-called BRIC countries.

Given its stage of development, the contributors to this report provide a compelling case for the solid foundations of the ‘new’ Brazil.  They point to the political system, where the country has apparently achieved stability in the form of a robust, established democratic republic.  In terms of infrastructure, they talk to the banking systems and financial markets as large, stable, and relatively mature.

Brazil, it is pointed out, has new opportunity drivers that are unique in Latin America.  One driver is the consumer market, with millions of people who suddenly have purchasing power.  This shift is said to be dramatic, as people are moving from Class D to Class C or Class C to Class B.  By some estimates, over 30 million people have been lifted out of poverty and given discretionary income.

A second energy driver is the country’s emergency as an energy superpower based on its oil production and reserves.  But it has also taken a lead in on the energy stage through its growing renewable energy credentials including hydro-electric power generation and its well-known investment in the production of ethanol fuels.

Our people ‘on the ground’ tell us that there is an optimism and a pulse of positive activity and growth that is pulsating throughout the country.  One of our long-term partners in Sao Paulo says “I have never before witnessed such optimism here as I do today.”  Another long-term Boyden partner states “Brazilians always used to joke that they lived in the ‘eternal country of the future’ but it seems that our ‘future’ has now arrived”.

Would you like to know more about Brazil? Would you like to know our view on hiring in Brazil as a major executive search firm? Simply download the entire Boyden report on Brazil by clicking here.

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Robert Reich Interview on Leadership

April 8th, 2010

In my professional life I serve as a Managing Director for Boyden Global Executive Search in Chicago.  As a part of a continuing series on leadership, our firm has just completed an interview with Robert Reich to obtain some of his thoughts and comments on best practices in the business community.  Professor Reich really doesn’t need much of an introduction.  Currently at UC Berkeley, he served as the 22nd Secretary of Labor under President Clinton.  Time named him one of the Ten Most Successful Cabinet Members of the Century, and the Wall Street Journal placed him among America’s Top Ten Business Thinkers.  I am so pleased with Boyden’s article based on his interview that I have reprinted it for your viewing in this blog.  I trust that you will enjoy it as much as I have.

Leadership Beyond the Crisis:

An interview with Professor Robert Reich

In this issue the legendary US cabinet member, Robert Reich, discusses best practices in corporate leadership, CEO compensation, motivating global teams, and the advantage of women in the corner office.

Robert B. Reich has served in three US national administrations, most recently as US Secretary of Labor under Bill Clinton. He also served President-Elect Obama’s Transition Advisory Board.

He has written twelve books, including The Work of Nations, which has been translated into 22 languages; the best sellers The Future of Success and Locked in the Cabinet; and his most recent book, Supercapitalism.

Interview with Robert Reich


Boyden: Professor Reich, what do you believe is most important for corporate leaders in the future?


Reich: Context. They need to understand the environment of the companies they’ll be working in. This means the structural changes that are going on in the US and global economy include the changing needs and wants of consumers and the changes in the political environment as well.

Boyden: In Supercapitalism you write that CEOs are not overpaid, but that their compensation is too far removed from pay of average workers. In addition to your suggestion for a more progressive tax structure, does executive compensation need further evaluation?


Reich: Yes, there should be a say on pay. Shareholders, including large institutional shareholders, should have much more input. I didn’t say, by the way, that CEOs are not overpaid. I said that there is a very ready economic explanation for why they earn what they do. But explanations are not justifications.

Boyden: How can better pay for average workers be fixed other than changing the tax structure? Is it just a matter of the companies understanding there’s a return on investment for paying workers more?


Reich: Basically, the [US] tax structure does have to be altered, but beyond that workers need more opportunities for continuously upgrading their skills. And companies need to get beyond the quarter-by-quarter mentality that makes it so difficult for them to invest in their workers long-term.

Boyden: Today, if CEOs do not bring results in four or five quarters, in many cases they may believe they and their executive teams will be shown the door. Is there too much pressure too soon for results, which could alter better long-term corporate strategy?


Reich: This has been going on for 25 to 30 years. The stock market and investors are extremely myopic. One way to change that would be to change tax laws, and particularly, as they apply to capital gains so that the longer a share of stock is held, the lower the capital gains rate.

Boyden: Speaking of gains, what do you think of Goldman Sachs awarding CEO Lloyd Blankfein a 2009 bonus of “only” $9 million in stock? Was it just a smart PR move or was there more to it?


Reich: There is nothing more to it. It was public relations pure and simple. As soon as the American public calms down, Goldman will be back to awarding much larger compensation.

Boyden: What was your view of Britain’s move to heavily tax bonuses of financial company executives?


Reich: It’s completely justifiable if taxpayers are going to bear the burden of bailing out these companies. These measures are often necessary until we get the tough financial reforms that prevent a repeat of the kind of risky behavior that we saw leading up to the 2007 and 2008 crash. It’s entirely justifiable for governments to take a whack at the pay of the big bank CEOs.

Boyden: Many observers believe that in the case of the UK bonus tax, companies are just going to move their operations or transfer their executives to New York, Singapore or wherever to avoid the extra taxes. Does it just come down to responsibility?


Reich: There has to be international coordination. The most important players are the UK and the United States. If a big bank wants to move its executives to Singapore, and executives are willing to effectively lose their citizenship with the UK or the United States for the sake of some more bucks, then, let them lose their citizenship.

Boyden: You once said pay is usually not the most important motivator for employees. Does that still hold true and what’s changed?


Reich: It still holds true by and large. Employees want to feel a degree of autonomy and power over their work. They want to be part of a team and a company that is doing something meaningful, that they can feel proud of. And employees want to learn on the job and they also want a job that allows them to be good parents and good spouses. These are all vitally important, and employees, especially talented employees, are willing to sacrifice some pay at the margin for the sake of these other qualities.

Boyden: Is motivation different for CEOs?


Reich: It’s different for CEOs and top executives in the sense that they are competing for power and prestige with other CEOs. You know, it’s a testosterone contest.

Boyden: And that includes women as well.


Reich: Yes, but, interestingly, less so.

Boyden: Is that because female executives, by and large, are better suited to face today’s economic challenges?


Reich: The new economy depends upon relational skills and empathy. I hate to generalize, but women clearly have the edge.

Boyden: Would you say women have an advantage because of their empathy, relationship skills, and better instincts?


Reich: Absolutely.

Boyden: And sometimes not letting testosterone get in the way?


Reich: Well, you know, testosterone is a poison. And men are (pausing) . . . you only have to look at foreign policy. Much of the history of the world and much of the bloodshed in the world is due to testosterone poisoning.

Boyden: So like a politician that puts his personal interest ahead of the city or state; in the corporate world, men often prioritize their egos instead of the best interests of the company?


Reich: Right. Women are not immune to this kind of small-minded competitiveness but if you look at the bell curve with regards to the qualities that women and men both possess, clearly the median executive woman is better able to put the company, the workforce and the shareholders ahead of her own individual ambition. And a woman is probably also better able to understand the motives and the drive behind many of the people who work for her and around her.

Boyden: What do you think of corporate rating systems for executives and employees?


Reich: Well, 360 degree rating systems in which feedback comes from everyone who deals with a particular employee can be very helpful. Also, managers have got to look at the help that employees provide to their colleagues, what I call the “relational capital” that employees build up with suppliers and with customers. All of these may not show in the bottom line but they are critically important. And should, and deserve, an acknowledgment.

Boyden: Many believe that board members are at least partially culpable, and in many cases, very culpable for the financial crisis and companies’ underperformance. Do you agree?

Reich: I agree. The only reason for having a board is to look over CEOs’, top executives’ and managers’ shoulders and prevent the kind of short-sightedness that we saw on Wall Street. Boards need to be headed by chairmen who are different from CEOs. Boards need to have an opportunity to meet without CEOs. And boards need an opportunity to get the information they want, not just the information that CEOs are willing to give them. Most important, boards need to develop their own metrics of success, corporate success and analyze those metrics for themselves.

Boyden: A number of experts believe the best corporate leadership opportunities even for Western executives will be in the developing world. What can Western executives learn from the emerging markets?

Reich: First of all, “developing” is a misnomer. India and China are rapidly joining the ranks of the developed. And the main thing that Western leaders can learn is the narrowness of Western thinking. Boards as well as executive teams need to be comprised of some people who are Asian, Latin American, perhaps African, who see the world in different ways.

Boyden: So while many US multinational companies are diverse within US ranks, are we not seeing enough directors who are Asian or Latin American or African nationals?


Reich: Exactly. Given the size of the Asian markets and Brazil as well as other Latin American countries, executive teams need to be much, much more broadly-based than merely European and US-based teams.

Boyden: Are there companies that stand out and have it right in the leadership department and the people management department?

Reich: At different times, different companies have done it right. For example, ten years ago I would have said Starbucks, fifteen years ago I would have included Levi Strauss, but times change. Companies that at one time were leading the pack in terms of leadership skills have stopped paying attention maybe because they’ve had so much success that they feel it’s no longer necessary.

Boyden: Are there other companies that are interesting to watch in management?


Reich: IBM right now is doing some interesting things. Eaton is doing some interesting things. And Google is enormously interesting, but only time will tell.

Boyden: Are these companies that are simply a little more aggressive to try new areas, or what makes them interesting?

Reich: The one benefit from this terrible recession is that it gives top managers the opportunity to try fundamentally new things. The biggest barrier to innovation when it comes to leadership in management is past success. Now that almost everybody is being stressed, it’s possible to exert a different kind of leadership that says essentially, ‘Let’s at least try this . . . we don’t have to be bound by the past.”

Boyden: If you had just a few minutes to give advice to a first-time CEO, Country Manager or Division Head, what would you tell him or her?


Reich: Listen, listen, listen, listen. And then evaluate what you are hearing instead of cramming your calendar full of meetings in which you tell people things. Calm down, take some time, and learn as much as you can.

Boyden: What would be your final thoughts on leadership?


Reich: Just this: We still tend to think of leaders as lone individuals, kind of “cowboy types,” who come in to situations and rough up everyone and push everyone into shape – a kind of John Wayne or Jack Welch. That is not real leadership. Leadership is the art of creating a fabulous team of people who can come up with innovative solutions and spot new problems and opportunities quickly, and no individual can do this alone.

To learn more from Robert Reich’s public commentary, visit his blog atrobertreich.org.

The views and opinions expressed here do not necessarily represent the views of Boyden: only those of Professor Reich.

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Posted in Economy, General Business, Innovation, Leadership

Has The Jobless Rate Peaked? Could Any Recovery From This Recession Be Different?

December 6th, 2009

JohnGude1a

By  John Gude

Wise people would probably respond to either of these questions with caution and with the objective of providing no real answer.  Or at least no answer for which they might be held accountable.  This recession has been a tough one for most businesses and many people, and as defined by a whole host of measures. After all, the Bureau of Labor Statistics (BLS) reported an unemployment rate of 10.2% for October, the highest such measurement in 26 years.

My gut tells me that this recession will be remembered a little differently than most of the others since World War II.  This one will be remembered more for the pain that it has created for people–those who lost their jobs, those who couldn’t find any reasonable job, and those who just stopped looking. I also have come to feel that the effects of this recession have been internalized by a large segment of our population, and that all traditional socio-economic groups and geographies are well represented here.

This past July, I came across a Commentary by Susan Estrich that addressed the unemployment situation, and I was struck by the emotion that dwelled in her words.  You can read it here, but listen her closing thoughts:

“The point is, I have always had a job, usually more than one, had no sympathy for those who couldn’t find one.

“Until now.

“I have never seen or lived through anything quite like this.  There are no            jobs for lawyers or laborers, for painters or waitresses, for secretaries or              salespeople.  There are literally no jobs to be had.”

Get my point?

It is now early December, and there are two, maybe three indications of better news.  Last Friday (December 4), the BLS posted a news release to tell us that the unemployment rate had “edged down” to 10.0% from 10.2%.  This is a very modest movement, but at least it is in the right direction.

But before the BLS released their report, the Institute for Supply Management (ISM) issued a report that could be much more telling.  In the December 5 New York Times, Floyd Norris tells us that “The Jobless Rate May Have Hit Its Peak.”

Mr. Norris presents a very interesting analysis and commentary based largely on the release of one key economic indicator by the ISM.  If this indicator is accurate, the unemployment rate for October will have been high rate for the business cycle. He points out that this indicator has proved to be reliable in all 10 previous recessions since World War II.

But look at this:  Mr. Norris states that if other ISM data prove correct, the recovery from this recession will be very different from the “jobless” recoveries after the recessions of 1990-91 and 2001. In both instances, the unemployment rates rose for months after the official end of the recession.

As a part of their survey the ISM asks employers whether they would be adding to or reducing their workforce.  The report showed that more companies were hiring than reducing employment in both October and November.  In the past, Mr. Norris states, two such months of gains in the employment component always came after the recession was later determined to have ended, and after the unemployment rate had begun to decline, with only one exception.

So just maybe the jobless rate has peaked, and there could be something other than a “jobless” recovery to this recession.  If so, this recession will be called the Recession of 2007-2009 and not the Recession of 2007-2010.  And maybe the pain created by the unemployment associated with this recession will begin to fade.

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Posted in Economy, General Business

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