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There’s a lot to learn from emerging-market economies. Businesses seeking to expand into Asia, Africa and Latin America would be wise to analyze emerging-market experiences and shift their talent focus, according to global professional services firm Deloitte.
Traditionally, global talent strategies typically ran in one direction: from developed markets to emerging markets, known as the north-south model, or what one Deloitte expert refers to as the “colonialist” approach to talent management. “You take what works in the U.S. or the U.K. or France or Germany and make it work in a new environment,” said Jonathan Pearce, tax principal and global mobility transformation practice leader at Deloitte.
During a webinar briefing on emerging-market talent strategies, Pearce explained that the BRIC economies (Brazil, Russia, India and China) have matured and that newer emerging markets—such as Indonesia, Malaysia, the Philippines, South Africa, Thailand, Turkey and Vietnam—have risen as growing sources of talent. Pearce and other experts from Deloitte argue that using just the north-south model for managing talent globally is no longer effective.
They propose that the lessons learned in BRIC countries and other emerging markets can revolutionize talent strategies, and companies can use these south-north and, especially, south-south models to find solutions to pressing global talent challenges.
Competition for Talent Getting Fierce
The BRIC countries and newer emerging markets are becoming the centers of gravity in the global competition for talent.
Pearce explained that the percentage of college-educated professionals from the industrialized world is shrinking while it continues to grow in the emerging markets: By 2021, 60 percent of the higher-educated talent pool will be from the emerging-market regions.
“As more and more of our focus is moving south and east, those educated customers have expectations that the products they buy will be developed with them in mind and marketed with them in mind by companies that have an understanding of them and their needs, rooted in those markets,” he said.
It’s not just that workers in emerging-market nations have the skills needed to expand businesses, but that many of these workers are becoming more discerning because of the growth of local employers and the presence of global companies offering more choices for employment. Income levels in emerging markets soared 96 percent from 2000 to 2010 and are expected to increase 45 percent from 2010 to 2016, driving a wave of consumerism, according to Deloitte.
Workers are more likely to vet companies on career development, financial incentives and working conditions. Customers in emerging markets increasingly want to do business with companies that contribute to the local economy, provide local jobs and take care of local workers, Pearce said. To meet these demands, forward-thinking global companies are already developing country-specific talent strategies and HR programs that make them more attractive to the local workforce.
Beyond the BRICs
The global talent pool is diminishing not only in the mature markets but also in the still-emerging BRIC markets, Pearce said. “By 2021, labor shortages will likely appear in the developed markets and even the BRICs, and new and unlikely regions of the world may generate a surplus of talent. The BRICs are a beginning, but building a global talent framework is not just about localization there but [also] learning from that experience, being more flexible and agile, and taking what you’ve learned into the next tier of emerging markets.”
International companies are beginning to recognize the importance of directly addressing the specific requirements and preferences of local workers. “Maybe the most important approach to a global talent framework is the south-south model,” said Pearce, “taking the lessons we learn from responding to employee expectations and modes of effective development in emerging markets and applying those lessons to more-emerging markets.”
Attempting to force-fit international HR and business standards into emerging markets without acknowledging local values and culture can make it difficult to attract and retain top local talent, he said.
“Workers in Indonesia, Thailand and South Africa want talent strategies tailored to their needs that still provide benefits tailored to a global enterprise.”
Don’t forget why many workers are attracted to a multinational in the first place.
“Don’t throw out the baby with the bath water,” he advised. “You can’t exclusively use a north-south model, but adaptation from developed markets can be important. Company values, leadership behaviors, consistency of performance management, and succession planning can all be adapted very effectively worldwide.”
These are the reasons that employees are attracted to a worldwide organization—as well as the reasons they stay, Pearce noted.
“You need to find the right blend of all three models to find the right framework,” he said.
“When building your strategies, think about the north-south model and what makes sense; think about the south-north model and taking the best practices from emerging markets to use in a global framework; and think about the south-south model and the lessons learned from BRICs that can become enablers to success in newer emerging markets.”
Strategies to Apply
So you recognize the need to modify your existing global talent strategy to allow for local customization. But how do you do this?
Here’s where the evolution of the BRIC markets provides lessons. While there’s no one-size-fits-all approach to managing talent worldwide, there are areas to consider, such as the following:
New career paths that offer real advancement opportunities, both locally and globally. International employers need to align their organizational structure and career paths with local cultural values within a global framework, said Pearce.
Understanding how cultural perspectives shape career paths in emerging markets is key to effectively managing top talent in those markets, he said. “For example, in the established economies there is a human capital trend toward flatter organizational models. However, in emerging markets like India, progression through job titles really matters. We have to be sensitive to the fact that attitudes to job progression will be different.”
Another important area where employee perspectives vary considerably is global mobility. Cultural attitudes can affect what role international assignments play in your organization. The traditional north-south mobility assignment, which lasts three to five years and is typically for senior executives who return to the home country, may not be attractive to emerging-market employees.
Tactics developed in emerging markets have produced a variety of mobility models that grew out of the sensitivity to different employee expectations, Pearce explained. The models include “much more fluid solutions like short project-based assignments, rotational programs, intracountry mobility, virtual mobility and global-nomad assignments.”
Country-specific rewards strategies. Different cultures, environments and regulatory regimes drive different needs and employee priorities in your rewards practices, said Tom Morrison, a principal in human capital at Deloitte. “Health care is a great example of this. Some countries rigidly regulate health care, while in other countries there are no requirements at all.” Transportation and day care are other examples. “While it may seem obvious that workers in countries with universal health care do not value employer-provided medical benefits, it may require deeper analysis to understand if those same workers are attracted to employer-provided transportation or onsite day care,” Morrison said.
Global employers in growth economies need to keep pace with rapidly changing employee priorities. For instance, while pay continues to be one of the most important tools for worker retention in China, other factors, such as benefits that support work-life balance, are increasingly important. “Even something as seemingly minor as the timing of paycheck disbursement can be a significant differentiator, based on the needs of residents in those areas to meet their cash-flow issues,” he said. Hence, paying employees through direct-deposit debit-card accounts has become more common in emerging markets such as Mexico.
Leadership development. The leadership pipeline needed to drive growth is lacking in emerging markets, Morrison said, adding that long-term leadership development, not just technical training, is critical.
“Deploying senior executives is the traditional north-south model and has been very successful for many companies in emerging markets,” he observed. “That model is now being augmented, or in many cases replaced, by models that develop talent locally.” An example is IBM, which has established software centers of excellence in India with more than 100 locations. As more companies expand into newer emerging markets, the ability to develop local leaders will likely become a key differentiator, he said.
Flexibility and innovation. It is essential that international businesses tap into the ideas and innovations coming out of emerging markets, Morrison said. Some businesses are seizing this opportunity by investing in emerging-market design centers or by moving entire operations to emerging markets from traditional strongholds. Bayer MaterialScience, for one, relocated the global headquarters for its polycarbonates business to Shanghai to increase its access to customers and innovative ideas. Business leaders and staff in established markets need to be receptive to new ideas and innovations from their counterparts in emerging markets, he added. “This perspective will likely only grow in importance as emerging markets gain stature in the global business landscape.”
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