November 2004 - City headhunting in central Europe

There can be few places outside the City of London where you can find such contrasts between high reward and a sharp intellect on the one hand and irrational, even eccentric behaviour on the other.

The fall-out in jobs from the stock market downturn over the past two to three years was as predictable as the resultant shortage of expertise that led to a clamour for recruits when market confidence and investment activity began to return earlier this year.

The dissipating pool of those former employees who remained immune to the "once bitten, twice shy" syndrome appears to have all but dried up. Who knows how many leavers decided that they have gone for good? Not for nothing do newcomers nickname the City "Mordor", after the slave-run centre of Tolkien's Middle Earth.

Severe cutbacks in graduate recruitment in the previous two years, particularly among those accounting firms that had provided a reliable source of recruits in the past, means that recruiters are having to cast their nets in other markets.

Still the most popular of these are South Africa and Australasia where similar accounting qualifications among English-speaking candidates ensure a comparatively smooth transfer of skills.

Robert Walters, founder and chief executive of the mid-level city recruitment company that bears his name, has just recruited 30 South Africans for a single client bank from 150 interviews and says he expects to be hiring many more.

He compares the market to that at the end of the 1980s when it was recovering from the crash of 1987: "It's exactly like 1990 after accounting firms had stopped hiring graduates in just the same way, leaving a shortage of qualified people," he says.

But what happens if the Commonwealth stream also begins to run dry? City headhunter Hamish Foulton and Ondrej Valenta, a former investment banker, believe the time is ripe to tap in to a growing pool of investment banking expertise in the central European accession countries that joined the European Union in May.

Their new business, EU Professionals*, has been established to headhunt qualified central Europeans for the London market. "We think there is a strong groundswell of potential central and eastern European recruits for the City, and we know where to find them," says Mr Foulton.

The company is in its start-up stage and the model has yet to be tested. The partners concede that they may face concerns among employers about imperfect use of English, and worries from potential candidates about living costs, although Mr Foulton believes his experience running a property business will help people to find affordable housing.

The partners believe that the opportunity to work in London will prove the biggest lure and Mr Valenta says he has had positive responses among potential candidates who are currently living and working in Prague.

The assumption that large numbers of financially qualified eastern Europeans may be keen to travel west, however, is challenged by recruiters at Antal International who have been headhunting people into Russia for the past 10 years.

"Most of the westward movement we have seen is internal among large companies taking their eastern European employees to their operations in the west," says Tremayne Elson, managing partner.

He says that a growing market for financial talent in Russia is attracting many Russian expatriates back from jobs abroad. "I know some Russians who live with their families in London, fly out to work in Moscow during the week, then fly back to their families for the weekend," he says.

The company says it has collected 50 CVs from Russians wanting to go back to Moscow where banks such as Morgan Stanley are actively recruiting. Lower levels of income tax, lower living costs for locals, and the familiarity of the home country all help to tempt people back.

While enlargement has made it easier to move central Europeans to London, it has not led to a significant exodus of people towards the UK, says Mr Elson. The reality for London, as always, is that it is competing in an international marketplace where movement can go two ways. For the longer term, the City's banking community is showing increasing interest in recruiting from its immediate neighbourhood.

Katie Stewart, a director of the Blomfield Group, which includes financial recruiter Joslin Rowe, says that recruiters are being encouraged increasingly by City investment banks to develop relationships with groups that promote diversity and recruitment opportunities for ethnic minorities.

One of these organisations, Global Graduates, has been providing courses in schools among potential ethnic minority recruits who might have the potential and enthusiasm to pursue a career in the City. Global Graduates has established strong links with financial recruiters who can provide internships and work experience leading to permanent jobs.

"It's becoming increasingly important that we develop a diverse and inclusive workforce in the City so recruiters are looking further afield and also more comprehensively among the local community," says Ms Stewart.

The diversity drive, however, should not be interpreted as a softening of employment attitudes among City banks. Interest grew markedly two years ago when a piece of research undertaken by Barclays Bank and the Cabinet Office linked effective diversity policies with business success.

Specialist services - such as the provision of Islamic mortgages which create a mechanism for house purchases that avoid the direct payment of interest forbidden in Islamic law - are perceived as lucrative niche areas among the banks.

In the meantime, there are signs that the recruitment rush at the beginning of the year is steadying as budgets are used up and human resources departments turn their attentions to bonuses.

"The banks that had big hiring budgets at the beginning of the year went out and gorged themselves and now we are seeing some levelling off of activity," says Ken Brotherston, chairman of Morgan McKinley, the financial recruiter. "But underlying demand remains extremely strong. "We are seeing growing interest in developing under-utilised avenues of recruitment. Returning mothers, for example, are proving an excellent workforce."

Earlier predictions among pay experts that bonuses might be restricted this year after average increases of between 10 and 20 per cent in 2003, are being dismissed in some quarters as an attempt to manage expectations. For the same reason, seasonal "leaks" of possible restructuring plans are seen by some as nothing more than ploys to suppress hopes of more large bonuses this year.

The reality is that employers know an overly parsimonious approach could backfire if staff walk away in the knowledge that labour shortages remain.

*www.euprofessionals.com

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