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by Gabriela Nguyen-Groza, Marlière and Gerstlauer executive search
If you are a PE/VC or RE player and you read the LPEA newsletter or magazine, you might have seriously thought of bringing your business to Luxembourg. With a record AUM of more than 3.000 billion euros and more than 13 800 managed investment fund units, Luxembourg is the largest European fund domicile. So if you think that more than 50 promoters from 19 countries have chosen Luxembourg as their international hub and that Luxembourg funds are distributed in more than 70 countries in Europe, Asia, the Middle East and The Americas, the choice of Luxembourg is quickly done. Especially as the country benefits from a very international, highly qualified and productive workforce, with a broad expertise in the fund industry. The geographical position, in the center of Europe, the high quality of life, the social security system, the infrastructure and the interesting career perspectives attract very highly skilled profiles from all over the world. 45 % of people living in the country are not from Luxembourg and 166.000 people from neighboring France, Belgium or Germany are commuting every single day. [1] The country has three official languages (Luxembourgish, French and German) and the people working here speak at least two languages (usually three or four).
Before coming to Luxembourg, you must know one major fact about the local executive market: it’s small. This leads to several consequences:
- As a company, a good employer’s image is essential. International companies settling their offices in Luxembourg do not always realize how important is to have and to preserve a good image in Luxembourg. This is not only a mandatory condition to be respected by their competitors and business associates, but it is also a key element in attracting the best talents on the market. Good professionals in Luxembourg are well respected, well paid and their companies are doing the best they can to keep them happy. A new company on the local market needs a very good international image and interesting development perspectives in Luxembourg to attract top-level executives eager to face new challenges.
- In Luxembourg, the salary is not the most important attractiveness factor in a company. Work conditions, meaning flexible hours, number of paid holidays, the pension scheme but also the size of the team compared to the workload and the reputation of the members of the team are very important factors when accepting a job offer. Before even taking a look at the job description, executive candidates check the company first. Unlike in other financial markets, a potential candidate can find relevant information about the internal organization and the teams’ composition in any company just by making a few phone calls.
- At an executive level, everybody knows more or less everybody. Newcomers are easily accepted but, for a certain time, usually several years, they have to make the proof of their professional value in order to gain their peers’ confidence. Although unlike in other international financial centers (notably Switzerland), there is no national preference and although paperwork is not an obstacle in recruiting, most of the time companies will not hire for a high executive position someone who has just arrived in Luxembourg. One has to acquire the deep knowledge of the local market, to know the major players and the key people in the financial sector and to have a personal good image in order to be respected by the financial community.
- Once one has acquired a good reputation, they’d better keep it. If one has a « cowboy » image, people will avoid him/her like plague by fear to be considered as such. Every misstep one does will be remembered at least for a few years and it is very difficult to fix a reputation in such a small community.
- Luxembourg executive recruitment market may not seem very dynamic, compared to other financial centers. That’s because here everything is based on trust. Candidates at a certain level need to have confidence in the recruiter before sending out their resume, as they don’t want that the whole city to know that they are considering another job. They usually discreetly ask for references on the market both on the recruiter and the client before accepting a first meeting. This is the reason why, if you want your executive recruitment process to be a success, it is very important to use a Luxembourg-based executive search company. They know the market, they gained the confidence of interesting candidates and they can guide you on this very specific market.
- Don’t look for recruitment companies ultra-specialized in PE. As the market is small, recruitment companies cannot specialize in one single field, as such a strategy would be too risky in case of a crisis. If you compare bigger markets (NY, London or even Paris) with Luxembourg, you will have a scale difference according to the size of the markets: in Luxembourg the recruitment company in itself is generalist, but consultants inside each firm are specialized. These are the people you should talk to.
So, all that being said, once you took the decision to bring your company here, how do you recruit? You can put out an announcement, but you will spend a huge amount of time treating the applications, especially because, as everywhere else, you will receive a lot of profiles unfitted to the position. Remember, in such a small market, executives who matter do not usually respond to announcements. So, to what kind of recruiter do you turn to? You have the choice between Contingent (no contract, no exclusivity and paid by the client only if a candidate is hired) and Retained recruitment (exclusive contract with the client and retained fees). If you want to make your own opinion, based on the Luxembourg market specific features, you can read in the next LPEA newsletter another article on the differences between the two approaches and their relevance to the local market.
[1] PwC, Asset Management, Luxembourg your location of choice, 2015
