• Home
• /
• Local business

Portrait of a Downturn: An
Era of Corrective Actions

DUBAI - Panos Manolopoulos is managing director of Stanton Chase International in Middle East, and global practice leader of consumer products and services.

His company — one of the top international executive search firms in the world — recently conducted the GCC’s first-ever CEOs survey, whereby 302 top executives were questioned on the health and outlook of the region. In an exclusive interview with Khaleej Times, Manolopoulos talks about how the recession can impact the market, the leadership crisis in the corporate sector - and how human capital is still the strongest asset any company can hope to have.

Q: Which are the sectors that have been affected the most by the slowdown? How will this play out in the coming months?

A: The GCC is just witnessing the first impact of the slowdown; it’s happening mostly in Dubai, so it would be rather a bit premature to draw final conclusions. At first glance, the construction sector is suffering the most, followed by the banking sector, while retailing and tourism are experiencing a significant slowdown in their business. Many companies are laying off people, or closing down. But we should keep in mind that many of the small companies that decided to close down were offices of European or US companies that decreased their international investments mainly due to liquidity problems in their headquarters.

Additionally, Dubai had been experiencing such a fast-paced growth over the past years that many companies of questionable quality were created, just to take advantage of the booming era. I would characterise this current period as the “era of corrective actions”. The market is moving towards a new balance that will emphasise quality in people and in services rendered. This could even present a unique opportunity for the GCC region, and especially Dubai, to reposition itself on the international business arena and become even more competitive and promising than before.

Q: This is a trying time for all human resources departments. How can one still emphasise that human capital is the biggest asset amid layoffs and the general mood of despondency/insecurity?

A: Successful companies treat people as assets. But many financially orientated corporations treat people as costs and overhead expenses, much like any other expense that can be reduced or eliminated for short term gain. Investment in people will pay off like investments in other assets. It’s a long-term strategy. The last thing a company should do for short-term gain is asset-dumping. Indeed, that’s the time to get the assets working extra hard. Everyone knows that without good people, good products cannot be developed, or good services delivered, or good customer relationships maintained. But when times get tough, people are often viewed as expendable. And sadly, the lower down the chain a person is the more expendable they become.Treating people as if they are costs demoralises and disenfranchises them.

A company’s competitive advantage erodes whenever investment in people is cut back - when layoffs occur.

Q: A manpower talent crunch — especially top quality leadership - is now a global phenomenon, and also afflicts the Middle East. Your comments.

A: The demographics in the western economies only prove that in a few years, when the existing top executives will move to retirement, there will not be enough talented professionals to replace them, while the economies that are currently growing have not yet developed a respectively large pool of skilled professionals. This has led to the frequent phenomenon of young people, in their early thirties, getting top positions in companies, without necessarily having acquired the needed experience to competently manage the company, especially in times of crisis.

This creates a loop of negative results, as the implementation of poor managerial examples is multiplied and best practices of the past are disregarded as “old fashioned”, while the economic downturn demands for even more drastic solutions.There is no quick answer or immediate solution to the above. A pool of skilled professionals cannot be developed overnight. However, a shift in the managerial mentality is something that can be achieved much faster,and this is probably where we should focus our attention. Constant training and personal growth should be part of the daily agenda of every top executive.

Q: One finding that your survey threw up was that it is difficult to ‘retain’ talent in the top management in the Middle East.

A: The UAE, once regarded as the “gold mine” of the East, is moving fast towards the establishment of different balance as far as working conditions are concerned. Rising inflation, mainly due to very high accommodation costs and high food prices, quickly consume the biggest part of the salaries offered. This, coupled with relocation costs and challenges, family needs, schooling expenses and cultural diversities, often hinder good talent from moving to the UAE.

On the same note, companies cannot afford to keep up with the escalating salaries needed to attract and retain talent. Thanks to the economic crisis, an increasing number of high-level western professionals that are looking towards the Middle East market; however,the balance still remains to be determined as higher supply of talent will lead to lower - if any - increases in salaries that, in turn, will not manage to match with the increasing cost of life.

Moreover, it would be unwise to limit all analysis on the salary level. Retaining talent is not based on payroll. Team spirit and team work, emphasis on quality and growth opportunities within the same company seem to be lacking from the market as it currently operates — possibly due to the extremely fast pace of growth.

Q: Given that most companies are currently undergoing financial constraints, what kind of retention packages can be worked out for valuable employees that could factor in non-monetary benefits?

A: Besides the monetary package and the fringe benefits — that have been quite excessive in the region — there should be an emphasis on training and on setting up an organisational culture. People want to feel that they belong somewhere and, that, in this environment, they grow along with the company. A long-term vision for the company should be created and constantly communicated to the employees — regardless of the level they belong to.Joint events outside working hours should be part of the agenda.

A plan for constant investment on people should be developed and implemented. Motivated people with high moral and emphasis on quality represent the best — if not unique – answer to any turbulence.

· sushmita@khaleejtimes.com