With news out on Thursday of last week, that net migration to Britain had fallen by more than 100,000 since the Brexit referendum, Executive Grapevine picked up with Eric Salmon & Partners Co-Presidents Raoul Nacke and Sophie Wigniolle for insights into the international Executive Search and Leadership Assessment Industry, at this time of rapid change.
For many clients, especially those who work cross-border within the EU, there’s one impossible subject to ignore: Brexit. Inevitably, the significant implications for free trade and workforce mobility are having a profound impact on strategic planning and investment. Despite much of the negativity circulated by the media, politicians and industry leaders, there is however, reason to be optimistic.
Nacke, who is based in Eric Salmon’s Frankfurt office, confides that “with so many moving parts, conflicting stakeholders, such speculation, lack of clarity and with so much at stake, I would have to take one former UK Prime Ministers’ advice and suggest to the current incumbent: ‘if you're going through hell, keep going.’ Tough as it is, it’s in all our interests that she perseveres and reaches a clear outcome that allows us all to get on with the future”.
He continued: “As we work with our clients and collectively wrestle with the implications of the UK's exit from the EU and we think about the strategic direction of our firm across Europe and beyond, I take solace from one of Churchill's other quotes: ‘the pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty’.”
And, although some still believe that the UK’s exit from the EU either won’t occur, or will be significantly watered down, many companies might describe this as an unrealistic outcome. Nacke adds that “it has become a very real and unavoidable truth that only the foolhardy choose to ignore and many have already had to take proactive steps to prepare for the future in all of its possible guises.”
Talking from the Paris office, Wigniolle says that “Eric Salmon & Partners is large enough to have a multi-industry specialism and an international operation whilst small enough to share internally the insights it gains from our relationships with Board members across a variety of industries and we learn from them.”
She added that “there is a backdrop of what some might describe as an inflated market, with many companies undergoing transformational change regarding distribution and technology, societal shifts in terms of an ageing population and varying reactions to existing and new forms of risk. Each sector is adapting individually but also in conjunction with those that they either rely on - or in many circumstances used to see as a threat.”
Nacke continues: “Across our key markets of financial services, retail, travel and leisure, consumer goods, pharma/healthcare, industry and technology we see the cause and effect of the Brexit negotiations directly impacting our clients. Not only do they need to identify new sources of talent but also, increasingly, assess their existing senior managers and plan for either voluntary or mandatory mobility and succession. All of this is to help build and implement different business models, new distribution channels or operate in new markets operating in different cultural, legislative and/or regulatory environments”.
Wigniolle further elaborates: “Across the very active technology and digital media markets, we see the emergence of London and Berlin as two of the more attractive destinations to deploy senior level staff and in some cases companies have done both to spread their risk. Financial services companies have seen large numbers of executives being deployed to Frankfurt, Paris and Dublin with many still to be decided and greatly dependant on passporting rights and equivalence status.
“De-valuation of the pound has resulted in increased foreign consumer spending at the top end of the luxury goods market..."
"...whilst interest rates, inflation and lower consumer confidence is affecting growth in the UK domestic retail, leisure, travel and hospitality sectors. We see consumer goods companies that buy and sell across the EU setting up hubs outside of the UK for distribution purposes. Where once Brussels, Paris or one of the main German cities may have been first choice, now we see Rotterdam and Amsterdam increasing activity, with the Netherlands providing a highly skilled, international workforce, good infrastructure and excellent connections to the rest of the EU.
“Having established a team in the UK in 1994, it is important to note that we have seen evidence of EU companies either starting to or accelerating their activities in building or buying access to the UK and the US. Motivations include access to lucrative trade deals, sizeable consumer markets, avoidance of tariffs to name but a few. This has created some interesting pan-European Private equity transactions.”
Yet, this is for the clients. How does this affect Executive Search firms themselves? For Eric Salmon, Nacke explains that they are “fortunate to have a balanced international footprint with a strong pan-European and Asian physical presence allowing client, candidate and knowledge flows.” He adds that “we are also cognisant of our reach and focus across a number of key sub sectors all unique but intrinsically connected. This gives us not only the opportunity to grow but also defend our position. We are seeing the reshaping of the international landscape and have not only reacted to it but have taken some positive measures to adapt to it and change ourselves for what we see as the future markets.”
However, Wigniolle notes that “we must be careful not to spread ourselves thinly and be too generalist, so care and attention is given to key markets, functional specialisms, locations and the propositions that are provided to each. With approximately 120 members of staff, we are well placed to organise ourselves quickly whilst at the same time work with clients globally as they also see the opportunity for growth and transformation. If I may be so bold as to conclude with the words of another of history’s greatest, I think it was the US President Franklin D. Roosevelt who said the ‘only thing we have to fear is fear itself’.”