Window of opportunity for executives: French window or small vent?

15 Sep 2020

Window of opportunity for executives: French window or small vent?

As shown by the isolation, not only certain specialists like software developers and copyrighters can work out of office. Managers may work remotely too. This paradigm shift in HR opens up unique opportunities for executives. When opportunities come, we should find out how viable they are, what pitfalls they hide and, above all, what we should do to seize the moment.

Ever since shipping operations became cheaper after the invention of logistic containers, we lived in the world of global production and local labour. Companies manufactured their goods in one country to sell them elsewhere and hired professionals mainly from their office or plant localities. Today, this rule is becoming less relevant.

The COVID-19 pandemic entirely closed down China in mere weeks and exposed the risks of concentrating all factories in a single part of the world. The earlier trend of returning production facilities back to the “place of their residence” is gathering momentum today. It is also becoming distinctly clear that human is the weakest link in the manufacturing chain, and the capitalist economy takes it as the main driver for boosting robotic production. Just a while ago consulting companies estimated that the ratio of 1,000 robots per 1 human will be reached no sooner that in twenty years’ time. Now they say it will take four times less. When production machines replace humans, the low cost of labour will no longer be a shaping driver. After environmental regulations level off, companies will find it more expedient to place their factories closer to their markets, not in China or India.

Labour, on the contrary, will go global. Even now, emerging technologies help employees to deal with all of their tasks without physically attending the office. For some time now, remote work has become an established practice among copyrighters, designers and developers. Not necessarily all of them are freelancers, many work remotely at one company on a full-time basis. Other professions, such as accountants and sales managers, also begin to move from offices to their homes. Top managers do not lag behind too. Even before the pandemic, linkedin.com, glassdoor.com, flexjobs.com, simplyhired.com, remote.co and many other websites published dozens of vacancies for remote directors, even if mainly they covered the US and a little of Europe.

The organisational barriers that previously impeded the shift towards going remote have been brought down by the lockdown regime. Companies were plainly forced to readjust all of their infrastructure and internal processes to the new operational format, and only after they tailored everything from informational security to HR it became evident that the challenge was not as tough as it had seemed. Still, with all efforts and resources already put into organising remote work, it would be quite reckless to let go of such financial advantages as economy on office lease and maintenance fees, as well as reduced transport and business trip expenses.

Cognitive inertia (i.e. the “business-as-usual” attitude) will also back off under the weight of impending changes. Now when the transitional period of discomfort and frustration is over, businesses start finding benefits in the situation at hand and hold off on returning back to the status quo. In May and June, many global IT giants already announced that they will continue working remotely. Google extended their home office regime until mid-2021 for everyone who do not need to attend the office. Amazon allowed staff to stay at home at least until October, while Microsoft and Twitter permit people not to get back to their offices at all. (Source). As much as these short-term decisions may be explained by the remaining uncertainty, the same trend comes up in the strategic perspective too. For example, Facebook plan to increase the share of their remotely working personnel from the current 20% to 50% by 2030 and are already starting to get new home-based employees on board. (Source).

These trends shape up in the Russian market too. In June, executives of MAXIMA, a large advertising agency, announced that all company staff will switch to working remotely. Sberbank always keep a close eye on emerging trends. Starting from September, they plan to transfer up to 30% of employees to remote work, and this new flexible workspace arrangement will not be centred on the epidemiological outlook. (Source)Alfa Bank will keep their people at home by the end of the year, while employees at Mail.ru Group and Yandex will work remotely until autumn. Other companies either plan to sustain the mobile job regime for certain functions (PhosAgro, X5 Retail Group) or intend to introduce a flexible arrangement where people will work part-time at home and part-time in the office (Tinkoff, Gazprom Neft, Rostelekom). (Source and another source).

Many companies may talk about such measures off the record but are not prepared to make any official statements. TASS Russian News Agency held a survey among corporate representatives, which shows that 70% of Russian companies plan to use remote job arrangements. Finance, trading and metallurgy companies will be at least as active in telecommuting as the industries where this would be a natural and expected way to go (IT and telecom). (Source).

Employees do not rush back to their offices too. The University of Phoenix, USA, held a survey showing that many people changed the way they perceive their jobs. As much as 51% of those surveyed said they will look for remote jobs in the future. (Source). IBM’s research report only reinforces these data: over 75% of Americans would like to work remotely at least occasionally, while 54% want a permanently remote job. (Source). According to a survey by Colliers International, 75% of Russian respondents want to work at home at least one day per week. Over a half of those surveyed say their work performance did not change at home. As for the remaining survey participants, approximately a half of them say their performance dropped, while the other half claim that it improved.

In fact, an office is not as much important for managing your team. There are such cloud services as Notion, Basecamp or Slack where you can manage projects, or virtual dashboards like Trello or Mirro that help to track down task solution progress. Team meetings, face-to-face talks and staff appraisals migrated quite cleanly into Skype and Zoom. Often managers find it easier to arrange remote communication, because employees feel much more comfortable at home rather than in their boss’ office and can give full attention to the topic. Executives had to make first steps in the terra incognita spread before them. They began finding their feet there by learning how to work with scattered teams, give clear tasks and detailed KPI to employees, motivate people and maintain emotional bond over distance. Now they continue to sharpen their skills as work goes along.

Against this background, it is small wonder that global companies started hiring top managers on a fully remote basis. Here are just a few examples of US vacancies found at www.flexjobs.com: Chief Client Officer at Mastercard, Senior Executive Partner at Gartner consulting company, E-Commerce Director at Nielsen research firm, Executive Director at Slack. Glassdoor.com has over a thousand of vacancies for home-based top-managers in the US and approximately the same number of such vacancies in Europe. Importantly, it is not just marketing or web design directors, the spectre of operational areas is very varied.

As big as it may seem today, this trend is clearly only beginning unfold. Most companies are just taking their first steps on this long road. Local vacancies still dominate the market, while 90% of remote vacancies are filled only with those who physically reside in the employer’s country. Only 10% of companies are prepared to hire a top-manager who may live anywhere in the world. Partly this may be caused by the difficulties of establishing and properly documenting remote employment. In many countries, remote employees have to obtain work permits because they become subject to protectionist national quotas for foreign workforce which are becoming more stringent, especially in the US. So, it is much easier and cheaper for most employers to sign service contracts with foreign workers instead of employment agreements.

Still, the mere fact that the remote vacancies start to emerge demonstrates that companies become open towards the global labour market and are ready to compete for talents. Employers no longer consider it important that a top manager would be connected to a certain office, city or even a country.

Organisational barriers for mass-scale remote work and global employment have been relaxed or completely eliminated. The experience of working in new conditions has been received and is not as bad as pessimists had painted it, while the benefits of the current situation are now discovered and evaluated. All this helped to open many doors to the changes that may noticeably change the world’s labour market. The window of opportunity will usually fling open for a short time during the “calm before the storm” when intensive processes do not break out only because of the cognitive inertia. Let us try to look through and analyse the most critical of these opportunities for Russian executives and businesses.

  1. Global employment: Employment and work in a different city or country without re-locating

Previously, complete re-location was practically the only way for executives to get an offer from a company in a different city or country. At the same time, many companies from Russian regions for quite a while have been interested in attracting managers with metropolitan experience, ambitions and scope of resolved tasks. Before now, all they could do to engage these executives was to increase their financial motivation, often by adding a 20-50% mark-up over the income proposed in Moscow.  It was a sort of “career roaming” when hiring a candidate from another region was more expensive than getting a local executive. Among other things, companies could have additional internal tensions because of a significant difference in the level of income at similar managerial layers. Finally, this led to a paradox when the habitual way of doing things triggered expenses for both parties.

These roaming implications may be mitigated, if not completely removed, by relaxing geographical requirements. A company from city N can attract a strong candidate from Moscow by offering Moscow-level salary without incurring any relocation expenditures. The executive will continue to live in a comfort zone without re-locating their family or centre of life. This removes main personal restrictions for accepting job offers from regions. Only in April-June 2020, our firm filled 6 similar executive positions. Companies from different regions were ready to work with their new top managers remotely, where the managers made periodic business trips, and the companies did not expect that they would re-locate to the headquarters.

In case of international hiring, the remote work arrangements give even more opportunities and, in some instances, additionally help to go around government restrictions on working visas, which, in turn, makes it possible to hire even more global specialists.

Still, this sword cuts both ways. On the one hand, both businesses and candidates have a wider choice. On the other hand, the geographical advantage used by some companies and professionals will be neutralised. Metropolitan executives will have to compete for vacancies with candidates from regions who have smaller demands. In mono-cities, companies will leverage the traditional approach that sounds like “you will work here, there is no other place where you can go”. We see the window of opportunity that enables competitive mechanisms which will contribute to levelling off conditions for comparable positions within one country and, to take it broader, in the whole world. The thing is whether people start using this window.

The current course of events shows that the talent globalisation window has been opening, though quite slowly yet. We see from the above that the first pioneers have emerged, but there are still many factors that restrain the process. These include the residual cognitive inertia, lack of established practices for properly documenting such employment, general development slowdown and oversaturation of local labour markets due to layoffs and bankruptcies.

Some corporations at once turn down candidates located in other places or having no work permit in the country. Others gladly held isolation webcam interviews with candidates from all over the world. They managed to pick out the best irrespectively of the nationality, onboarded the newcomers remotely but... eventually planned to re-locate them after the borders open. There are many conventialists even in the IT industry. For example, Facebook in the first place plan to hire US-based remote workers. (Source).

Another matter here is that the global employment possibility is closely linked to the industrial and functional specifics. It would be easiest to describe this in terms of a global and local component. Local skills are tied to a certain market, while global expertise is similar for all cities and countries. Various professional have different global/local component mix.  For example, a journalist or a PR specialist have a prominent local component. The success of their work largely depends on people connections, knowledge of a certain subject area or locality. When they re-locate, they have to rebuild their career from scratch. A profession based on the native language and native social and cultural specifics will be much less popular abroad. This is a local profession for this country. Software developers, on the contrary, have a strong global component. Programming languages are universal, and English is by far the most dominating language for technology description. All this improves employment mobility of IT specialists who can work almost everywhere and from any location.

These ideas shape two simple recommendations, one for candidates, the other for the business.

  • Candidates should estimate the local/global mix in their professional and personal environment and try to shift it towards the global component. Digital skills, which could be treated as global, are now coming to the forefront of many professional activities from financial analysis to targeted marketing. Those who competently wield them will be able to sell these skills to companies all over the world.
  • Companies should also consider their open vacancies in terms of the local/global mix in order to articulate clear-cut rules and hiring strategies.

Employers could use all these opportunities to boost the return on their investments in human capital and start hiring the best people not only from the local, but also from the global market. So, it is unlikely they will waste the chance. Other prospects and advantages detailed below result, in a sense, from the employment globalisation.

  1. Cost efficiency and comfort. A way to increase income, reduce costs and select the right lifestyle

Currently, business operations concentrate in big cities where people forge their career and earn a lot but at the same time spend a lot too and may feel uncomfortable. In some countries, this gap is especially prominent.

When you have a remote job, you can work where they pay well (e.g. in New-York) and avoid the urban strain by living on a Portuguese coast or in the forest nearby Pskov. If financial gains are your priority, you can get your salary in a country with a growing economy (e.g. in the Arab Emirates) and live in a low-cost region. One way or another, the mode of life no longer depends on the place where your work, and you can have more freedom for implementing your personal plans.

Some governments have already embraced this trend. For example, Georgia has recently introduced special visas granting the right to live in the country for more than 6 months if you have a remote employment. By doing this, Georgia positions itself as a comfortable and budget-friendly place to live for remote professionals from all over the world.

Businesses now have a financial incentive too. They can reduce their payroll simultaneously with improving the quality of specialists and managers. The oversupply of candidates in the market due to the global economy crisis developments will additionally speed up this process.

I would like to use this example in order to emphasize how important the current situation is. The new opportunities are attractive and benefit both employers and employees. As compared to a painful process of seeking a trade-off between the employee and employer, this is a win-win case by itself that radically increases both the chance of the changes to occur and the tempo of such changes.

  • When looking for vacancies like this, candidates should take account of the employer’s policies for remunerating remote employees. Some companies (like Basecamp) do not consider the geographical factor at all. They assess everyone under the same criteria and parameters and provide candidates with a salary that fits the candidate’s professional level and the company's financial capacity. Others think that office employees’ salaries are high because of the high living costs in the region where the company office is located. This means that remote employees can and should be paid less. This is precisely the strategy used by Facebook, where salaries of remote employees will be differentiated depending on their actual place of residence. (Source). The third type of companies includes those who are ready to pay extra to office employees for working remotely. Another resident of the Silicon Valley, Zapier, pays USD 10,000 to the employees who are ready to move to another region or work at home. (Source).

 

  • Unfortunately, many attractive places still lack the infrastructure. Sometimes this includes medical services, children education, as well as quality leisure and entertainment. You should think about this in advance if you decided to get away from it all. We can still hope that these problems are nothing but temporary. As the trend toward remote employment is growing, infrastructure demand will ultimately trigger supply.
  1. Experimenting with cooperation formats

In their report, Gartner consulting firm states that companies currently prefer to hire people for project-based or temporary work instead of permanent employment. This involves top managers too. (Source). It may happen because of the crisis wariness, general trend for shifting from process-based work organisation to project-based models, and, among other things, companies’ attempts to go round certain legislative barriers.

  • Candidates should not disregard these offers at once, even if they may seem less appealing as compared to a stable employment job with a company. Firstly, during project work the company is less concerned where the top manager physically resides. Secondly, successful project-based job may turn into a permanent employment even before the contract expires. Thirdly, situations like these offer varied payment options. For example, it may be more profitable to agree with the employer that they pay you an interest on the project income instead of a fixed amount. Fourthly, this can be a great chance to take a shot at new areas and in mere two years accumulate a diverse experience that you would not have if working at the same place.
  • Companies should also consider using project-based working arrangements, as these are becoming more attractive for candidates in the current situation. Moreover, this may be a playground where you can gradually assimilate a remote working regime if it is too risky to adopt it at the entire company in one go.
  1. Career boost

It is likely that most of countries will face the situation that Japan has been dealing with in the recent 10-15 years: salary growth and career advancement for most executives will slow down for a few years, if not totally stop. This happens because interest rates at global banks have been declining, sometimes down to zero, and economy growth is decelerating. In these circumstances, a remote global career may be a great option for increasing income and enhancing your professional status. It works just like investments in developing markets, when your gains in other currencies may increase your income in national currency equivalent.

  • Candidates should bear in mind that global companies value them for a high level of hard skills, creative mindset and quick decision making in crisis situations. In order to achieve success when working remotely at a global company, top managers should also develop soft skills so well mastered by their foreign colleagues, namely leadership, people motivation and ability to manage scattered teams. Other important things include empathy, care for people and ability to foster a culture of cooperation instead of taking all decisions single-handedly (as it usually happens in Russia, for example). If you have already selected a country, please invest sufficient time in becoming aware of its culture. We often underestimate the problems that may be caused by the cross-cultural interplay.

Conclusion

It is only a matter of time before the majority of employees get transferred to remote work. You can try to overlook this trend, but you will not turn it back. Therefore, it is important to put forward a few more recommendations for company leaders.

  • Businesses should develop new management approaches in order to grasp all the advantages of going remote. IT infrastructure should not only enable webcam meetings, but also should provide means for working on joint projects, setting goals, controlling their accomplishment and providing feedback. It is important to tailor the in-firm communication systems and the decision-making process to the remote format.
  • Top managers will have to be re-trained in the new working conditions. You should understand that if you do not properly train your top executives, someone other will. Alternatively, they can also educate themselves, but it does not necessarily mean that they will do it for your purposes. Soft skills are the predominant area for development. They include the ability to establish cooperation in a team, motivate people, resolve conflicts and show empathy. Of course, all this was critical in the past too, but now it is becoming a first priority task as all corporate communication may completely go on-line for a very long time.
  • If you want to hire the best employees in the world, you have to learn how to deal with different mindsets and read people’s culture codes. In order to achieve this, companies should purposefully foster a multicultural environment. So far, only 5% of all companies in the world have real culturally diverse teams, but this figure will grow before long. You had better try to become one of these companies as soon as possible.

If we evaluate this situation in terms of executives, the current moment looks very similar to the state of the IT and digital market back in the beginning of 2000s. The global pandemic alongside with emerging technological capabilities have created a new reality where we can take a radically different look at our career prospects and opportunities. Not everyone will seize them, as it usually happens. Most people will wave these chances aside and limit their options down to the range from “consultant’s fantasies” to “it all is just starting, I have a lot of time on my hands”. Still, I am sure that those top managers who already see the whole picture today will make a huge leap in their international careers just in a few years. So, in terms of opportunities, is it a big French window or a small vent? The answer to this question is absolutely personal and depends on what you want to see.