Opportunities abound in Central Asia

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David Mashuri - Principal, head of Central Asia, Pedersen & Partners
Hilola Suleimanova - Country manager Uzbekistan, Pedersen & Partners

Emerging trends in executive recruitment in a growth region

Central Asia most often conjures up images of vast landscapes, abundant mineral resources and rapid development, which is not far from the truth. The countries of Central Asia, even though also affected by the global economic downturn, have managed to get back on track and offer lucrative business opportunities for those willing to capitalise on them.

Pedersen & Partners covers Central Asia through three offices in Kazakhstan, Uzbekistan and Mongolia. These countries, with their strategic geographic positioning between Russia, China, India and the Middle East, as well as promising business opportunities, have been able to attract generous investments into the region ($12.6bn [£8bn] in 2009, according to the National Bank of the Republic of Kazakhstan).

Recently, these countries have been hosting some of the world’s largest mineral resources exploration and, increasingly, production projects: bold property developments and modernisation of the road, telecommunications and IT networks infrastructure. The GDP growth in Kazakhstan in the first half of 2010 was estimated at 7.9% (Statistics Agency of Kazakhstan), while that of Uzbekistan is forecasted at 8.5% (Asian Development Bank).

Managerial shortages
Nevertheless, one of the biggest challenges in the region is an acute shortage of qualified senior managers with operational background, international experience and market orientation.

Today the demand for skilled professionals in the upper-level management is still strong, but long gone are the days when a diploma from a Western MBA school could have a significant impact on the choice of employers, as now they seek more ’tangible’ results, for example, turnaround and/or restructuring experience.

The most active sectors in Central Asia in terms of hiring are pharmaceuticals, consumer goods, oil & gas, finance, IT and telecommunications

Additionally, due to the historic and cultural heritage of the region and its desire to integrate smoothly into the global economy, employers are seeking good knowledge of the local and international market in their candidates’ industry sector, good command of English, analytical and strategic skills, and the ability to find balance between the local post-Soviet mindset and management style and Western-style management.

Employers are also looking for managers with vision who can anticipate more than one scenario, and conceptual skills with the ability to translate strategic issues into simple operational processes. Therefore, most assignments Pedersen & Partners have recently completed are for chief executives, chief operating officers, chief financial officers or commercial directors, often bringing candidates in from outside the country.

Before the global crisis, the rapid economic growth and a shortage in supply of qualified executives tipped the balance of scales towards employees, driving the salaries up, often unfairly high for the proposed knowledge and experience of an employee.
In 2009/10 the increase in compensation for senior managers has been modest, however in Kazakhstan the base salaries are still higher than that of counterparts in many of the Commonwealth of Independent States (former Soviet republics) countries (see Powerpoints, right). Expatriate salaries are generally twice as high, and in the oil & gas sector, for salaries in the mid and upper-mid level the compensation is 1.5 times higher both for local and expat managers.

Popular sectors
The most active sectors in Central Asia in terms of hiring are pharmaceuticals, consumer goods, oil & gas, finance, IT and telecommunications. Since the staff shortage is felt in virtually all sectors, Pedersen & Partners had to consider expatriates with wider experience for some of the projects. However, the recent trend is to replace the foreign executives by the locals. This is usually done to achieve cost reductions, as well as due to tighter legislation on work permits and the desire to have local experts, who have ties to the local market and can build long-term relationships with partners.

There is also a growing demand for human resources professionals. Today businesses in the region are devoting more attention to the field of labour law; employers are assessing the effectiveness of HR policy in regard to business strategy, corporate communications and management performance assessment. Companies are trying to strengthen their managerial staff through these and other tools and, of course, retention is becoming a major challenge; the most frequent reason for an employee wanting to leave is a desire to raise their salary level. Other important factors include organisation environment, corporate culture, career opportunities and training.

Now, especially, employers in this region must pay closer attention to these and other factors to develop their management staff to global standards and thus increasing their competitiveness on the international scale.

www.pedersenandpartners.com

powerpoints

  • Monthly net salaries in Kazakhstan

General manager: $7,000-$10,000 (£4,500-£6,400)
Financial director: $5,000-$8,000
Sales & marketing director:$6,000-$9,000
HR manager: $4,000-$7,000

  • Uzbekistan – figures for local managers

Top level managers: $3,000-$8,000
Upper to mid-level: $1,200-$2,000
Mid-level: $800-$1,600

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