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International HR Leaders Meet in London to Discuss Talent Strategies in Emerging Markets

Hosted by: GSK

Twenty international HR representatives from some of the world’s prominent multinationals met at the London group headquarters of GlaxoSmithKline for a dialogue on talent development strategies in emerging markets. The session was jointly hosted by Organisation Solutions and The Chapman Consulting Group.

The conversation centred on the ability of multinational organisations to manage their talent inventories and their leadership pipelines in emerging markets, with a particular emphasis on the high-growth geographies in Asia such as India, China and Indonesia.

The key takeaways from today’s lively and interactive meeting were as follows :

1) Don’t Let the Term ‘Emerging Markets’ Lull you into Creating a One-Size-Fits-All Approach.

There is an inherent danger in grouping individual countries under the umbrella term of ‘emerging markets’, because issues in one high-growth market can be very different to another. While it can be useful as a shorthand comparison with the generally slower-growth markets of Europe and North America, there is no substitute for understanding and acting upon the granular detail of any key geography.

2) Your Talent Strategy in an Emerging Market will Largely Depend on the Local Reputation of Your Company and Your Brand Image.

No matter how well-known a multinational might be in developed markets, it can be hard to build an attractive brand value proposition in a developing market that may have been largely shielded from global corporate and consumer trends over the last 20 years. This in turn can negatively impact a company’s ability to attract and retain talent. Even companies with a relatively long history in a market can suffer from limited brand recognition. Companies in this category often feel that employees are ‘using’ them until a better offer comes along. In comparison, a company that has had a longer track-record in a market and that has been able to build a level of trust in the local environment can usually find more employees that think of their relationship with the company in a longer-term. Companies in this category have a greater chance of being able to bed down more solid talent management strategies.

In general, the group discussed that there are no ‘short cuts’ in making a solid employee value proposition. In one example, the participant explained about how they focused on ‘hygiene factor’ HR service delivery issues in China, and could only tackle the broader issues of Talent Management once these were in place and a level of trust had been built. In a contrasting example, a participant discussed how their company’s entry into China had been beset by problems due to a lack of oversight into simple employee working conditions. The only Talent Management strategy that this Global HR Director had been able to employ due to this ‘false start’ was in fixing up these labour relations issues to get the annual employee attrition rate down from 100% to a more manageable 40%.

3) If Your Company Can’t Keep Up with the Pace of Salary Expectations in an Emerging Market, it’s Time to Get Creative.

The group discussed the fact that salaries in emerging markets are growing to such an extent that some senior executives in emerging markets are being paid more than their peers (and even their superiors) at the global headquarter level. The group heard of one example where a company who had been looking for a specialist engineer for over 12 months ended up asking a successful candidate to ‘name their price’ upon job offer, and allowed the external candidate to write their own salary in the contract.

These ‘scare stories’ always get repeated and passed around global HR communities, but thankfully they appear to be applicable in only a minority of cases. They only tend to crop up in situations where the skills needed for a particular role are highly specialised and/or are very market-specific. It can be hard to avoid being drawn into a salary battle, especially if competition for this skill-set among other multinationals (and even local companies or civil services) is in high demand.

One participant that faced this problem in China gave a good example about how their company was tackling this problem creatively. Since their company had a better long-term track-record in Taiwan than in mainland China, they had opted to base more China-related roles in Taipei so that China could be covered remotely by their existing seasoned Taiwan-based team. This allowed the company to avoid costly hires in China, while allowing more junior talent there to be promoted from within while being mentored by their Taiwan-based colleagues. These kind of practical solutions based around ‘working with what you’ve got’ need to be considered where companies have immediate needs in a local emerging market but simply can’t get their hands on the requisite talent in a timely manner.

4) Plugging Gaps in an Emerging Market with Expat Talent Only Works if it’s the ‘Right’ Expat Talent.

Throughout the conversation, it was clear that most companies had at some stage grappled with the issue of how to use expat talent in emerging markets, particularly to ‘plug the gaps’ of the local talent portfolio. Various issues arise in the deployment of non-local talent into emerging markets, including the problem of appearing to be too ‘neo-colonialist’ in your attitude to the local market, and in not empowering the local management team to make decisions based on their own local market knowledge.

One international HR Leader made the simple point that the key to the successful deployment of expatriate talent was in getting the right expat talent for each circumstance. For example, if an expatriate assignment is more about giving that expat a personal development opportunity, then the company should expect (and indeed desire) that person to make many mistakes and to learn from them. However in business-critical roles that affect the local subsidiary to a disproportionately high degree, it’s more important to get someone who will be able to ‘slot in’ to the role quickly and to add value and expertise where it’s needed most.

Where expats can be particularly useful in not necessarily in mentoring local employees, in fact the comment was raised during the meeting that mentoring does not always have the desired effect in terms of talent development. No, the greater advantage of having expats in emerging market roles is simply to have an ‘outside voice’ to take part in decision-making at the country level. An expat with a high degree of specialist knowledge at an international level, but who only has a limited understanding of local market conditions, is more likely to question local working practices and in fresh ways that in-country employees would not have considered. This kind of international diversity can offer the local executive team an unparalleled learning opportunity to tackle local problems with a more international perspective, which in turn can generally lead to more flexibility and broadmindedness in future decision-making. And it has the other key advantage of offering senior employees an opportunity and a working atmosphere that cannot be replicated in domestic companies, which are increasingly becoming dangerously competitive for international local talent in these markets.

5) Aligning Local Talent Management Strategy to Your Company’s Overall Local Workforce Strategy.

Finally, alongside the anecdotal topics that were discussed by international HR Leaders during today’s session, Organisation Solutions also presented a more scientific analysis of how Talent Management strategies are being used in the emerging markets of Asia and beyond. Attendees were asked to think about whether their company’s overall talent ethos was more exclusi
ve (i.e. limited to just a select group of high performers) or more inclusive (broad based). And they were also asked whether they plan their talent strategy around what their desired organisation chart looks like, or whether they contrived the organisation chart based around the capabilities of their key talent.

It was clear from the group in question that most multinationals focus on an ‘exclusive’ approach to Talent Management, with the key exceptions being the FMCG companies that are able to pool talent through a long-term process of large-scale graduate recruitment followed up by a competitive promote-from-within culture.

Among the global HR Leaders in attendance that deployed an exclusive approach, the group was split halfway down the middle into those that plan around job positions and those that plan around key talent. In both cases, one of the key challenges was around the overall pace of change. In some situations, the growth of the role itself can sometimes outpace the talent of the person hired, which presents a problematic need to over-recruit for roles. The participants discussed the key mechanisms that were needed in order to make either approach successful and sustainable in the longer term.

Thanks once again go to GlaxoSmithKline for their generosity in co-hosting the event. The group will reconvene for the next Global HR Leaders meeting in early 2012.

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