We talked about the executive labor market with Sevada Bagdyan, a partner at Boyden, a leading global executive search and consulting company in Armenia and Georgia.

What was the executive labor market like in Armenia in 2023?

To give a short answer, last year it was in the process of transformation. To present the issue more comprehensively, I will approach it from a broader perspective, taking as a basis the information at the disposal of Boyden Armenia. In the past few years, IT companies and other firms providing outsourced services outside of Armenia, due to dynamic growth, attracted professionals from various fields. This trend extended beyond tech staff to encompass financial, marketing, HR, and other managers, all of whom were in high demand in these companies.

In addition to IT companies, the economic activity of the last two years has also influenced the demand in the labor market for executives. When any business achieves financial stability, it becomes bolder in recruiting experienced professionals from other companies.

As the number of experienced professionals did not grow at the same pace, the labor market heated up in recent years, resulting in a sharp increase in wages. Often, this occurred unjustifiably; mid-level professionals, lacking sufficient experience, were given the opportunity to become executives with correspondingly high salaries.

What changed in 2023?

Starting from the beginning of 2023, both IT companies and firms providing outsourced services outside Armenia faced a crisis due to the sharp revaluation of the AMD and a crisis in the global IT sector. Most companies undergoing optimization started by reducing their high-paid non-technical professionals, including the executives mentioned earlier.

Until mid-2023, the labor market remained somewhat 'hot,' driven in part by the financial and banking sector, especially banks and investment companies, which had generated substantial profits for 1.5 years and were active in the labor market.

However, from the second half of the year, companies across almost all sectors began facing certain difficulties. Many businesses experienced a slowdown in growth or a decline in turnover. Although there is no current crisis, they have started adopting a more restrained policy, including in the compensation of executives. Cases of job cuts have also emerged.

Are there currently many executives actively seeking jobs?

I wouldn't say that the number of active job seekers has significantly increased compared to previous years. Generally, good executives do not often face job cuts. So, they are still employed.

However, there are several changes in the labor market. With relatively few newly opened positions, there is greater competition for the existing roles, allowing employers to negotiate lower salaries with candidates. Since the second half of last year, contracts have been signed at an average of 10-20 percent lower.

Moreover, the requirements for executive directors' experience have shifted. Since June, executives with finance experience, even if not in a managerial role, are in the highest demand during executive searches. In the previous years of the Covid pandemic 2020, directors with financial expertise were only in third place in demand. I think it’s the right approach when a business is going through difficult times. Leaders with financial experience are better equipped to manage business crises, optimize operations, and establish a foundation for recovery.

How long will this process last, and what should we expect from 2024?

I assume that the first six months of 2024 will resemble the last six months of 2023. The future, however, remains uncertain, dependent on various factors, including non-economic ones.

Last year, many companies in the global financial and banking sector began cutting staff, and this trend is likely to continue into 2024. Typically, such global trends reach Armenia after several months, although with less intensity.

Despite this, given Armenia's financial and banking system's substantial profits in previous years, I don't expect a lot of job cuts in 2024. Instead, we might see companies trying to optimize costs and practice restrained politics.

In past years, not only the financial and banking sector but also nearly all companies experienced high profitability. With the implementation of a competent strategy this year, I believe they have the potential to navigate through 2024 without incurring losses. Challenging times are also times of new opportunities.

How can the Boyden Company assist Armenian businesses to navigate 2024 with minimal difficulties?

In difficult times, the need to do more or do things better is paramount. Executives play a crucial role in determining the success or failure of companies. As our experience shows, not all companies have enough experienced executives to navigate business challenges.

At Boyden, we specialize in finding and selecting executives. We also understand how employers should collaborate with them, enabling the latter to navigate the company out of difficulties or elevate it to the next level.

Additionally, there are other solutions that may not be widely popular in Armenia, but we can help companies explore these alternatives.

Interim Management

There are cases when businesses require an executive with specific expertise for a defined period to address a particular issue. However, in the long term, they may either not need such an executive or lack sufficient funds. This is where interim management comes into play. Unlike in developed countries, interim management services are not widely utilized in Armenia.

Businesses may require interim managers in following situations and not only:

•    when the company is facing a crisis,
•    when undertaking a digital transformation initiative,
•    when establishing a new direction, such as a new sales strategy or a new production unit,
•    a temporary replacement for the unexpectedly departed executive, this will allow the company to find the best solution to the issue without being rushed,
•    when preparing for an IPO,
•    during the acquisition of another business.

Advisory Board

Advisory boards typically consist of experts with extensive international experience who offer guidance on strategic issues related to sales, marketing, finance, legal, technical, and other areas.

The composition of the advisory board's experts may vary depending on the company type and current challenges, and it can also be subject to frequent changes.
Since the experts on the advisory board will not provide much time to the company throughout the year, businesses won't have to pay substantial sums of money while still receiving high-quality advice.

What would you advise business to focus on in 2024?

I believe that regardless of whether a business is in a difficult phase or not, emphasizing the integration of artificial intelligence (AI) in operations should be a key priority in 2024. You can take a closer look at all the company's processes and see what kind of AI solution can be integrated into which process. This approach should be systematic, beginning with the careful selection of solutions and ensuring their mandatory adoption by the team. It's essential to collaborate with the team to make sure they understand that these solutions are not about making them unemployed but to boost productivity and create opportunities for more profound and intellectual work․

Furthermore, I suggest that companies explore innovative approaches to boost sales. While this topic is extensive, I'll highlight two factors: proactive engagement in sales growth and thinking outside the box. Challenging times often bring forth new possibilities.