The Headquarters Dilemma
Photo by Clem Onojeghuo on Unsplash
There is a really worrying trend in high-growth HR markets (LATAM, Middle East and particularly Asia) that European and American CHROs and business leaders need to take note of.
Warning: Brace yourselves because you may not like what I am about to say.
High-potential, regional HR and business talent are, generally speaking, no longer interested in moving to headquarters. And I’m hearing more and more HR leaders out in these high-growth HR markets saying that if they continue to be pushed into this “necessary” move for career development, they are going to leave. In droves. And guess what? It's already happening.
The world has changed. Fast.
1. Many high-growth markets now pay higher salary package, charge less taxes and offer a higher standard of living than mature locations in Europe and America. Yeah, I know it’s hard to believe and you may not want to think this is true. But the talent in these high-growth markets I speak with disagree with you.
2. The opportunity cost of leaving these high-growth markets for a year or two to go to Europe or America is now higher than ever—from a career perspective… from a family angle… even from a challenge perspective.
3. Coveted HR leadership or global roles (taking into account points 1 and 2 above) are no longer seen as the holy grail. Many regional roles are literally “the meat” in the sandwich between headquarters and individual countries, and they can be more challenging than a sometimes-hands-on-hands-off global role.
So, what can you do when you realise that headquarters is no longer the “centre” of the proverbial corporate world?
Do away with the centre
1. Schneider Electric is doing a great job of this. They decentralised their global business and HR leadership teams around the world. They admit that it was hard, it took them years to accomplish and there were many arguments why all the heavy global roles should be together in one location. But in the end, they realised that key global influencers in the company who were not sitting in headquarters were able to decentralise the company’s thinking—and this allowed them not only to be more agile, but more relevant.
2. Put global non-leadership roles out in regions and different countries. It's inevitably cheaper to retain an elite talent by promoting them into a global role from a location they are already in, without moving them or their family. The world moves in a 24-hour cycle; we need to think about the same being able to happen with decisions (they can be made within 24 hours). Besides many of these roles require at least 50-percent travel.
Do not create a ticking time bomb for elite regional talent where you stipulate that they "must" move to headquarters. Most of regional HR leaders in this scenario are already talking to headhunters or other companies about their next move. Instead, broaden their role by giving involvement in global HR projects or adding a double-hat role or moving them into the business.
But, if mobility to headquarters is important in your company for talent in high-growth markets and there’s no way around that, consider:
1. Only hire talent who will definitely move. This needs to be part of your initial screening process and a necessary amount of emphasis needs to be put on it. Look at whether the person has completed overseas moves before. This may be an indication that they enjoy international moves.
2. Cross check mobility often. It will change by quarter or even within a few months. Events such as an illness in the family, a partner's job change, leadership changes at headquarters or even world events can change one's threshold for mobility.
3. Be prepared to financially protect the person. Very few people from low tax markets such as Singapore or Dubai are willing to move to headquarters if it involves a higher tax burden. Most companies will tax protect the person and keep them on their international salary, but this can be expensive. Countries like the US impose complex tax restrictions, relatively speaking, for many incoming assignees. It doesn't matter how sexy the new job or career prospects might be; I have seen people resist a seemingly great move on the basis of financial loss. (See initial point 1.)
4. Provide cultural mentoring to better help assignees integrate into headquarters. Many from high-growth markets struggle to fit into the seemingly slower pace of a European or American headquarters setting versus, say… Hong Kong. The mountains may be prettier or the circles of leadership influence greater, but the lack of change and seemingly stable nature of a mature market environment is a huge adjustment for talent coming from markets where a year seems like a decade.