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Emerging Markets – Has HR Got it Right?

Incredibly, 80% of the world’s workforce is based in emerging markets today. In addition by 2030, it is estimated that 70% of the world’s GDP will come from developing economies. Global HR Leaders have been forced to get creative when identifying, retaining and managing first-class talent in developing markets, and in many cases, the global HR agenda in these geographies is changing. Following is an overview of some of the best current HR strategies and processes currently being implemented in emerging markets.

BRIC Leads the Way

Leading the way are the BRIC economies, and globalisation has also enabled credible local competition to become stronger in these countries much faster than most had anticipated. Today, just fewer than 100 Fortune 500 companies list their headquarters in emerging markets, an incredible shift. Only a few years ago, one in three new jobs was being created in either China or India. These changes have created a war for talent unseen before, and a headache for HR Leaders globally. Market globalisation is affecting the distribution of jobs, reflecting stronger emerging economic growth, and in some developed markets, a brain drain in certain sectors where people are willing to move for emerging markets experience.

Policies and Salaries Shift

Many multinationals have had to revise their HR policies, in order to find a balance between local market cultural issues and broader company strategic objectives. Companies getting this right often find themselves ahead of the competition on many levels. Salary trends across emerging economies have undergone tremendous change over recent years. Whilst Western Europe and American economies saw some of the world’s lowest salary raises, averaging 3%, emerging countries more than doubled this. Over the past five years, foreign direct investment in emerging markets more than tripled. This has created job opportunities across a broad range of sectors, and although there is an increasing number of university graduates sitting in emerging markets at present, it is estimated that only 10-20% of these students are internationally employable.

Focus on Retention

A general reduction in employee loyalty in recent years has further complicated recruitment/ retention strategies. Companies have typically responded to limit attrition by matching salaries; however, more simple and effective techniques are also being employed to ensure top talent is retained across these markets. For example, quality cafeteria food and access to the latest technologies — mobile phones, computers and vehicles — are often provided. In addition, other {nolink}benefits{/nolink} such as gym memberships, or food and transport allowances are also on offer. In certain markets ‘family days’ are arranged, which has a very different meaning, typically in Asian and Middle Eastern markets. Housing allowances are still common practice in most emerging markets for skilled expatriate employees.

Changing Priorities

Employer branding is ever important in emerging markets, and over the past seven years there has been a 250% increase in job vacancies in this area. Interestingly, Turkey and Russia now rank just outside of developed markets when it comes to placing an emphasis on employer branding. Another fairly recent development is that female graduates have become an important audience when it comes to hiring strategies in emerging markets. Nearly 60% of graduates in emerging markets are female, and that number is closer to 70% in the Middle East. This creates an opportunity for employers, but also a challenge in some under-developed markets that are dominated by male management. This is where HR professionals have been working hard on developing appropriate Diversity & Inclusion strategies. A number of studies have demonstrated that diverse, cross-cultural and heterogeneous teams often prove to be the most productive, so a focus on D & I does reap rewards.

The Big Picture, Developed Locally

It is important that Diversity & Inclusion programmes are not only formulated in developed markets, as these should also be created across emerging markets. Understanding the ‘Cultural Big Picture’ is critical to the success of all global organisations. CEO’s play the most important role in making this a priority; however, it is the HR Professional who must be adaptable, flexible and conscious of the sensitivities involved doing business across borders. Some organisations have employed board members of varying nationalities, and Germany is a good example of this. At least 35% of DAX companies have non-German board members. D & I should not be limited to senior management, but should also trickle down through the ranks, creating a business culture that welcomes, respects and appreciates all. International assignments, rotation systems and communication programmes are all useful tools deployed by organisations, to encourage greater understanding and appreciation.

Here in Turkey, we have recently noticed an increase in expatriated Turkish talent wanting to return back home; however, we have also witnessed a large number of highly successful ‘family’ run businesses wishing to take their organisations global. Empowering local national management with a global outlook is tough, yet crucial, as is the ability to develop efficient information and knowledge transfer processes. The big question still remains…’When will the emerging markets emerge?’

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