Alexander Hughes EXECUTIVE SEARCH CONSULTANTS Founding Member of AEA International Search

1. Alexander HughesEXECUTIVE SEARCH CONSULTANTSFounding Member ofAEAInternational Search TALENT ATTRACTION, MOTIVATION AND RETENTION 6th BHRMDA Conference, 12-14 May 2005, Albena, VarnaBenoit Chaignon, Managing PartnerAlexander Hughes Bulgaria

2. Content • Why taking care of your talents? • Convergence of factors which lead to shrinkage of talents • Attracting talents • Motivating talents • Retaining talents • Return on retention investment • Presentation of Alexander Hughes 2 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

3. Why taking care of your talents? Above-the-line personnel • It is a stronger driver of a company’s growth • It dramatically boots company performance • It is the most important resource for businesses • Companies need to carefully plan for their long-term developments and have to anticipate for shortages or lack of resources • There is a talent market shortage. Are you prepare for it ? 3 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

4. Convergence of factors which lead to shrinkage of talents • The growing shortage of labour and talent in Bulgaria shortage is driven by long-term trends. • The convergence of demographic changes and market forces - creating major recruiting and retention challenges for Bulgaria.a. Fast growing economy (all statistics below are from Eurostat) GDP per Capita in purchasing power standards Real GDP Growth Rate (constant price 1995 - % change on previous year) 4 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

5. Convergence of factors which lead to shrinkage of talents b. Continuous increase of foreign investments Foreign direct investment stocks as % of GDP Yearly amonts of foerign investments Source: Bulgaria Investment Agency • There is an important salary and benefit gap, although it is decreasing • Many expats have settled down abroad and wish to stay permanently. They have founded a family. • It is not certain their experience abroad is easily applicable when back. They might face lack of knowledge of local realities and some rejection by system locally. 5 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

6. Convergence of factors which lead to shrinkage of talents (continued) c. Slower population growth • Population decrease forecast • Present decrease of generation 25-35 employees and soon 35-45 employees • Decrease of number of students enrolled in tertiary education in Bulgaria 6 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

7. Convergence of factors which lead to shrinkage of talents (continued) d. Changes in work patterns • Foreign owned companies impact on the market, • A university degree is a first key to success, • An experience with a foreign management is a second key to success, • A new demand for executive management positions, • Bulgarian owned groups are also restructuring, 7 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

8. Convergence of factors which lead to shrinkage of talents e. The reservoirs of Bulgarian expatriates is not huge and is only marginally attractable (source: OECD, excluding Germany and Russia – last update April 2005) 8 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

9. Attracting Talents • Challenge • Exciting Work • Career Growth • Development • A Good Boss • Working with great people and, surprisingly at a lower priority, • Fair pay 9 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

10. Motivating Talents • Give them work that challenges and engages them, • Structure a development strategy, • Give them opportunities to stretch and grow, • Identify a mentor for them, • Deploy Employees thrive when doing work, • Align people with the right tasks, • Involve them in something ambitious. 10 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

11. Retaining Talents • Identification of critical workforce segmentsaccording to business strategies and priorities : who your ‘A’ and ‘B’ level performers are ? • Identify in which areas is the talent market heating up because demand is much more than supply and which segments of our workforce will be most impacted, • Assess the organization’s ability to develop and retain employees, • Build acquisition and retention strategies around issues that matter to critical talent, increase provision of positive incentives for people to remain in the workplace. 11 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

12. Retaining Talents • Compensation design • Mix of pay (short term versus long term) • Link to operational results (fixed versus variable) • Link to financial results (yearly bonus) • However, rich compensation packages and “hot skills” bonuses are easily matched by competitors and don’t generate sustained commitment. 12 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

13. Retaining Talents (continued) b. Develop and build a strong executive management team • Establish “cultural” aspects in need of change and local strong points, in terms of management processes, and managerial behaviours, • Assess Role Profile requirements in terms of establishing the different type of activities in the typical working environment. • Assist your Management Team to match people against “jobs”, • Discuss individual development needs with Senior Management Team, • Discuss and highlight individual "readiness" factor, • Involve local managers in decision making processes, • Establish clear and achievable objectives to managers, • Clarify reporting procedures, • Share information with executive management, • Use coaching for leadership development, style issues and talent retention. 13 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

14. Retaining Talents (continued) c. A global unifying vision and a strong corporate performance culture • Identify key company stakeholders’ perceptions of the company, along with a draft statement on the company’s mission, vision and values (MVV). • Engage management and employees in confirming and validating company mission, vision and values. • Improve communication and opportunity for feedback at the management level and between management and employees. • Discuss the impact of the leadership team on the success of the business transformation process (Performance Culture) in the Company and the links between the expected change initiatives and the adequate leadership development. • Increase involvement of employees in programmes and decisions that impact them and their work environment. • Design and implement programme to support culture change. • Design internal communications plan. 14 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

15. Retaining Talents (continued) d. Thinking globally • Companies with a significant international presence are implementing a talent management strategy. • Global companies need employees with global perspective. • The best way to develop a global perspective is through direct, hands on experience, ranging from short-term project assignments to permanent deployment abroad. • There is more and more for international corporations the critical need for employees with international experience. • Development perspectives inside the Group should be known, successful examples highlighted 15 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

16. Return on retention investment • Cost of personnel turnover • Direct costs, • Indirect costs, • Indirect costs are usually harder to measure and are most of the times much higher than the more-easily measured direct costs, b. Impact on business strategies • Today, a corporation's investment in human capital is one of the largest asset a company manages. It is assessed in terms of return on investment (ROI). • Short supply of talent will lead companies to carefully plan for their long-term developments. • Anticipate shortages to avoid being forced into tough choices, • In either case, the impact on shareholder value is clear. 16 6th BHRMDA Conference, 12-14 May 2005, Albena, Varna

17. About Alexander Hughes Alexander Hughesis an executive search firm dedicated to helping you acquire and retain the vital human capital you need to achieve your strategic business goals. We are present in 20 countries, our headquarters are in Paris, we have 80 executive search consultants, 45 researchers and 70 support staff. Our sectors of excellence in Bulgaria are IT and Telecommunications, Consulting, Banking and Professional Services, Energy and Utilities, Industries, Health and Life Sciences, and Distribution. Finding and attracting top talent makes the difference between winning and losing in a competitive environment 17 Alexander Hughes Group 2005

18. Contact us Alexander Hughes Bulgaria 31, Gurguliat Street, fl. 2 1463 Sofia, Bulgaria Tel: +359 2 954 28 20 www.alexanderhughes.com Your contact - Alexander Hughes Bulgaria : Benoit Chaignon GSM: 0889 73 01 73 Managing Partner  Email: b.chaignon@alexanderhughes.com Silvia Umnikova GSM: 0886 01 52 05 Back Office Manager  Email: s.umnikova@alexanderhughes.com 18 Alexander Hughes Group 2005