Specialists suggest that, should there be a slowdown in the world economy, as the pessimistic scenarios are forecasting, the lack of jobs could force some of the two million Romanians working abroad to come back home. Until then, companies must find solutions to close the gap. Automation for increased productivity, advanced training and even the import of workforce are among the easiest options.

On an employee market, with an obvious gap between supply and demand, there is a permanent risk of losing your staff to the competition. Moreover, there are not many sources of new specialists. That is precisely why companies need a carefully planned human resources strategy - an efficient recruitment and retention policy (which does not necessarily mean high wages).

"Up to a certain professional level, people change jobs for money. However, from a certain point, money is no longer an issue, but is replaced by human relations," says Delia Burnham, country manager of CVO Group.
Textile producer Alison Hayes, for instance, places great emphasis on trainings. "We manage to bring and keep young talent, but also inexperienced staff, whom we guide through various stages during which we realise what they like and where they should be assigned," says the company's human resources director, Corina Neagu.

One problem, several solutions
The first effects of the lack of workers include higher wages and, implicitly, lower competitiveness.
'Attracting or retaining employees in a market plagued by a workforce deficit means that raises are no longer correlated with increasing productivity, as it should normally happen," explains Alexandru Talmazan, managing partner with the HR agency Wrightson Romania.

Personnel costs - currently among the biggest costs incurred by companies - can be reduced by creating a competitive climate on the labour market, he adds. "If more people are looking for jobs (and that includes imported workforce), then balance shall be restored."

The import of workforce can be a short-term solution, but it is not recommended for the medium and long term, Talmazan adds.

Still, there are cases when this is the only solution, Delia Burnham shows. "For instance, we are now headhunting two expats - one for a management position and a specialist for a real estate company. It does not matter what country they come from - but it is crucial that they know the field. In Romania, there are only five persons qualified to do what this company is looking for."

Corina Neagu from Alison Hayes acknowledges the importance of foreign know-how. "We have foreign employees and we encourage the exchange of experience. We are aware that they can bring expertise, ideas and essential strategies for the company's development and growth."

Perhaps the most efficient method to restore balance is higher productivity.
"More important than a cut in wages, which do need to go up in the medium term for us to be in line with EU standards is an increase in the worker's efficiency," says Talmazan. "Productivity per worker in Romania is now much lower than in the EU countries. The solution would be to continue investing in automation, but also in the workforce qualifications and awareness."

Delia Burnham encourages such stimulants. "Companies need to perform a productivity check and an employee assessment. This way, you can reduce personnel expenses by 5-10% if you bet on other benefits than wages."
Outsourcing also contributes to cost-cutting, even if it is not 100% dedicated to the company's activity.

Certainly, for the companies that can afford it, raises can slow down or even stop the migration of personnel. However, the minimum wage in Romania is now ten times smaller than in other EU countries.
Raises can also trigger downsides, if they are not justified, specialists warn.

"Increasingly more employees are going from company to company every year and they can double their salaries without actually earning this money. Investors are also to blame, if they are ready to pay any price, because any price means half the amounts paid in developed countries," Burnham says.

In her opinion, the extreme solution is to relocate the factory to a different country when things get out of control.
Such an example comes from Cyprus, where the textile industry was thriving in the '70s and the '80s. The unions started asking for higher and higher wages, until the point where these costs could no longer be sustained. Eventually, only 5 factories were left out of a total of 110, in only two years. The rest relocated to other countries.

The future depends on the lessons learned
An investor will choose between locations depending on how hard or how easy it is to recruit specialists/workers.

Timisoara, says Burnham, has a negative unemployment rate. "Why would a foreign investor set up a factory there, when the market is already saturated? The answer is simple: because it can pay higher wages than the local players, as it is already cost cutting by moving to Romania."Another factor that can facilitate or hinder operations is the infrastructure development and, also, the location of the company's office.

"In two years, Bucharest will no longer be the main investment destination because crossing the city has become a nightmare. Employees do consider the location of their future offices," shows Burnham. "Why did Nokia go to Cluj instead of Bucharest? Because access is much easier there than in the Capital. Also, it's very likely that they were granted a discount for the land by the local authorities and, last but not least, they found cheaper workforce there."

The good news is that companies can still juggle with the various sides of the business to counter the HR crisis. The bad news is that the deficit will worsen, given the upcoming wave of foreign investors.
Studies show that all production jobs will be moving in the following years, from the developed countries to the emerging and the developing economies.

"This is part of the world industrial migration phenomenon and it will continue until a full cycle is complete," Talmazan states. "This phenomenon will affect Romania, in the reverse sense. We will witness the migration of certain industries which have come here recently or some time ago to the farther east, in the former Soviet countries, India, Pakistan or China, as the companies will be looking for lower costs."

Thus, it is important that Romania should create infrastructure in the meantime and that it should develop industries with higher added value or increasingly sophisticated services, able to take over the industrial abandons of multinational companies, Talmazan concludes.

Quotes
"More important than a cut in wages, which do need to go up in the medium term for us to be in line with EU standards is an increase in the worker's efficiency. Productivity per worker in Romania is now much lower than in the EU countries."
Alexandru Talmazan, Wrightson Romania

"Increasingly more employees are going from company to company every year and they can double their salaries without actually earning this money. Investors are also to blame, if they are ready to pay any price, because any price means half the amounts paid in developed countries."
Delia Burnham, CVO Group

"There are enormous gaps between motivation and retention packages for managers and for lower levels, which is felt increasingly more acutely by the employees."
Corina Neagu, Alison Hayes

Multiple-cause crisis
HR Migration - So far, it has happened in IT, constructions and agriculture, but specialists estimate that it will soon affect medial services (doctors and nurses) and other types of services and of industrial production.
Remuneration, compensation, benefits - There are still significant gaps between management and the rest of the team. Moreover, salary demands go up, with no valid grounds.

Education - The lack of an efficient education reform and the failure to adjust to market needs leads to a dearth of new and well-prepared candidates, especially where the practical side is concerned. There is not enough communication between the business environment and the academic environment. Also, students tend to go for soft subjects (such as communication or marketing), which causes a deficit in sectors such as physics and chemistry.

Economic growth - The more Romania will grow, the more investors will come. "This is a perfect investment period, which started in 2002 and will last until 2010. Afterwards, those investments that were made for cost-cutting will move elsewhere. Romania will be left with investments that need complex work, whereas investments revolving around basic work will relocate to China or to the Ukraine, for instance, where the workforce is much cheaper," Delia Burnham shows.

articol scris de Emi LISA

© 2008 The Investor

http://www.theinvestor.ro/hr/solutions-for-the-employee-market/