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GP Club Meeting (16/12/2016)

Guest article: Executive search in Luxembourg – a short guideline (2/3)

Gabriela Nguyen-Grozaby Gabriela Nguyen-Groza, Marlière and Gerstlauer executive search

 

As an executive head-hunter based in Luxembourg, I tried to explain in the last LPEA newsletter the specificities of the local executive market, which are mostly the result of its small size. These features (absolute need for trust and good reputation, non-specialization of the recruitment companies etc.) might have given you a better idea about how things go in Luxembourg while recruiting for top-level positions. But now, when the moment has come to recruit your high-level executives, how do you proceed?

Here are some thoughts that may help you make a decision:

  1. Should you be based in Luxembourg or coming from abroad, the best thing you can do is to use a local firm. They know the market.  They have dozens of clients in your field and they have gained a lot of valuable experience from dealing with your peers. This knowledge is inestimable for your company, as this is a market expertise you cannot have by yourself. They can help you benchmark with your competition, they have a local network and they can reach candidates who matter on the market, with whom they have built years-long strong trusted relationships.

 

  1. Client references are crucial in choosing your recruitment partner. You don’t want to waste your time and money, so you are looking for the best service available. The most efficient way to find it is to ask your contacts who have already worked with recruitment firms, either as clients or candidates. If you are coming from abroad and you think you do not know a lot of people to ask for references, talk with your accounting or legal services providers, they will certainly know several firms. Luxembourg is small, everybody knows everybody and, as a consequence, you will find very quickly who it is worth working with and who you should avoid.

 

  1. Last but not least, the essential key to your relationship with your executive recruiter company is one that you will not like at a first glance, but whose importance I cannot emphasize enough: exclusivity. In Luxembourg you usually have the choice between two approaches: Contingency (no exclusivity and paid by the client only if a candidate is hired) and Retained recruitment (exclusive contract with the client and retained fees). I insist: each of them is a perfectly good way of working. However, they are not usually used for the same kind of positions. For some clients contingency is the standard way to proceed, as they think that making several firms compete with each other will produce better results. This might be true for junior positions, with no strategic stakes for the company. For executives this might lead to a poor quality of service and a waste of time and money. The shift turns from quality to speed and the search turns into a race: the first who sends the right résumé to the client has the best chances to get paid. For the client, the perception of getting many candidates is very attractive in the beginning, but this will usually bring forward the candidates who are out of job or / and desperately looking for one. And we all know that, at a top-executive level, people who matter on the market are usually not easy to reach. These talented and rare candidates have to be convinced to look at a new position, to be talked into it and shown the ways they can project their future professional life into the new job. And this cannot be done in one week. It requires not only a database, but mostly time (usually several weeks), an extensive knowledge, screening and expertise of the market coupled with talent, time and dedication from the recruitment firm.

 

What is the key to avoid this? Exclusivity. If you want to have a good quality of service, do your “homework”, gather information about the recruitment firms, choose one you want to work with and show them your trust by working exclusively with them. Why? Because exclusivity brings you:

 

  • Undivided commitment

You will have the total attention and dedication of a team or a consultant who will invest their time and energy in your search. By giving them exclusivity, you made them make a steadfast commitment to address your needs and you showed them your trust. They will not want to let you down. You will not be just one of the potential clients being sent CVs to, but you will be “the” client they need to satisfy. Your search will not be a race to be finished first, but a clear, rational and strategic process of searching for the right person for the position. They will try to do a throughout screening of the market, they will talk to the key people who can recommend the best profiles and they will approach them directly. And most of all, they will make their best to find the right candidate, who will fit your organization as a whole, from all points of view: vision, values, strategy, culture, key stakeholders.

  • Accountability

When you work with several recruiters on a contingency basis, nobody is accountable for anything. They are not sure to get paid, so they are not responsible to you. Exclusivity puts the responsibility where it belongs: with the recruiter you have chosen to work with. He / she is accountable for the search and you can focus on what you do best: your business.

  • Unique brand representation

Brand representation is an important issue clients do not always take into consideration while working on a contingency basis. Nevertheless, this is a point of utmost importance, especially on a market the size of Luxembourg.  From a candidate’s point of view, any recruiter who calls him / her on your behalf represents your business. On a contingency basis, not only recruiters might poorly represent your brand (because they don’t really know you, your business, your values and corporate culture), but usually the same candidates are being approached by several firms for the same position. This creates a feeling of uncertainty and insecurity about your brand and a very poor experience for the candidates, who receive mixed signals from several sources about you. This reflects badly on your business, making you look disorganized or, worse still, desperate. The more desperate to fill the position you look, the more candidates will have doubts about you.

Exclusivity turns this uncontrolled and poor experience into a high-quality market representation by recruiters who know your business, your values and the recruitment context of the specific position they are working on. They strive to represent you faithfully on the market and they strive to offer a great experience to every candidate.

  • Long time relationship building

In any industry, working with a single supplier creates trust and allows a successful professional relationship to develop and to grow. The professionals who work with you learn your internal processes and understand the way your organization works. After a certain time, both parties will create a synergy together. The recruiter will “feel” what kind of candidate you are looking for and what kind of professional and personality profile fits you best.  They will be happy to serve you and they will do their best not to disappoint you.

  • Time and money savings

Contingency means dealing with multiple suppliers and multiple profiles from several sources. It may mean to be thrown CVs at, sometimes with no connection whatsoever with the position, to have a very busy first week of the recruitment process and then total silence, a misrepresentation of your brand and a poor experience for potential candidates and for you as a client.  It also means a lot of administration work and follow-up with each of the recruitment firms, a lot of frustration on their side, the candidate’s side and yours. And who will be accountable for this? Nobody. And this will cost you time and it will cost you money.

My advice while recruiting top executives in Luxembourg: find a good recruiter, entrust him / her with your core positions and work together to create a long lasting valuable professional relationship. You might be surprised by the high quality of service you can get!

Guest article: How to Recruit PE/VC Executives in Luxembourg – Some Facts You Should Know (1/3)

Gabriela Nguyen-Groza by Gabriela Nguyen-Groza, Marlière and Gerstlauer executive search

 

If you are a PE/VC or RE player and you read the LPEA newsletter or magazine, you might have seriously thought of bringing your business to Luxembourg. With a record AUM of more than 3.000 billion euros and more than 13 800 managed investment fund units, Luxembourg is the largest European fund domicile. So if you think that more than 50 promoters from 19 countries have chosen Luxembourg as their international hub and that Luxembourg funds are distributed in more than 70 countries in Europe, Asia, the Middle East and The Americas, the choice of Luxembourg is quickly done. Especially as the country benefits from a very international, highly qualified and productive workforce, with a broad expertise in the fund industry. The geographical position, in the center of Europe, the high quality of life, the social security system, the infrastructure and the interesting career perspectives attract very highly skilled profiles from all over the world. 45 % of people living in the country are not from Luxembourg and 166.000 people from neighboring France, Belgium or Germany are commuting every single day. [1] The country has three official languages (Luxembourgish, French and German) and the people working here speak at least two languages (usually three or four).

 

Before coming to Luxembourg, you must know one major fact about the local executive market: it’s small. This leads to several consequences:

 

  • As a company, a good employer’s image is essential. International companies settling their offices in Luxembourg do not always realize how important is to have and to preserve a good image in Luxembourg. This is not only a mandatory condition to be respected by their competitors and business associates, but it is also a key element in attracting the best talents on the market. Good professionals in Luxembourg are well respected, well paid and their companies are doing the best they can to keep them happy. A new company on the local market needs a very good international image and interesting development perspectives in Luxembourg to attract top-level executives eager to face new challenges.
  • In Luxembourg, the salary is not the most important attractiveness factor in a company. Work conditions, meaning flexible hours, number of paid holidays, the pension scheme but also the size of the team compared to the workload and the reputation of the members of the team are very important factors when accepting a job offer. Before even taking a look at the job description, executive candidates check the company first. Unlike in other financial markets, a potential candidate can find relevant information about the internal organization and the teams’ composition in any company just by making a few phone calls.
  • At an executive level, everybody knows more or less everybody. Newcomers are easily accepted but, for a certain time, usually several years, they have to make the proof of their professional value in order to gain their peers’ confidence. Although unlike in other international financial centers (notably Switzerland), there is no national preference and although paperwork is not an obstacle in recruiting, most of the time companies will not hire for a high executive position someone who has just arrived in Luxembourg. One has to acquire the deep knowledge of the local market, to know the major players and the key people in the financial sector and to have a personal good image in order to be respected by the financial community.
  • Once one has acquired a good reputation, they’d better keep it. If one has a « cowboy » image, people will avoid him/her like plague by fear to be considered as such. Every misstep one does will be remembered at least for a few years and it is very difficult to fix a reputation in such a small community.
  • Luxembourg executive recruitment market may not seem very dynamic, compared to other financial centers. That’s because here everything is based on trust. Candidates at a certain level need to have confidence in the recruiter before sending out their resume, as they don’t want that the whole city to know that they are considering another job. They usually discreetly ask for references on the market both on the recruiter and the client before accepting a first meeting. This is the reason why, if you want your executive recruitment process to be a success, it is very important to use a Luxembourg-based executive search company. They know the market, they gained the confidence of interesting candidates and they can guide you on this very specific market.
  • Don’t look for recruitment companies ultra-specialized in PE. As the market is small, recruitment companies cannot specialize in one single field, as such a strategy would be too risky in case of a crisis. If you compare bigger markets (NY, London or even Paris) with Luxembourg, you will have a scale difference according to the size of the markets: in Luxembourg the recruitment company in itself is generalist, but consultants inside each firm are specialized. These are the people you should talk to.

 

So, all that being said, once you took the decision to bring your company here, how do you recruit? You can put out an announcement, but you will spend a huge amount of time treating the applications, especially because, as everywhere else, you will receive a lot of profiles unfitted to the position. Remember, in such a small market, executives who matter do not usually respond to announcements. So, to what kind of recruiter do you turn to? You have the choice between Contingent (no contract, no exclusivity and paid by the client only if a candidate is hired) and Retained recruitment (exclusive contract with the client and retained fees). If you want to make your own opinion, based on the Luxembourg market specific features, you can read in the next LPEA newsletter another article on the differences between the two approaches and their relevance to the local market.

[1] PwC, Asset Management, Luxembourg your location of choice, 2015