Much has been written about the rise of emerging markets and what they can offer in terms of talent pool. But not one emerging market is the same and one HR strategy may not fill all markets. In a changing environment, the HR strategies used to manage people in one country are sometimes ineffective in another and what worked in a country might not in another.
That is the reality many companies are currently facing in emerging markets because of a lack of preparation, anticipation and adequate talent strategies.
Generally speaking, there is no right or wrong HR management strategy. However, as an HR professional, you should be mindful of cultural differences and varying HR issues arising in the targeted country before trying to implement anything. Needless to say that developing an inadequate talent strategy in a BRICs country can be one of a most expensive mistakes for a company? Not only in terms of money, but also in terms of real and potential talent losses.
In order to avoid such error, you need to know what are the hottest HR issues, topics and trends in emerging markets that could be an obstacle to your company’s development? To help you in this task, below is a list of 4 critical HR challenges arising from some BRICs countries? Memorize them? You will gain time and efficiency?
HR challenge #1: Attracting and retaining talented workers
BRAZIL – One of Brazil’s biggest problems is a shortage of qualified labor. Companies operating in Brazil are demanding more skilled workers than the labor market currently offers? The shortage is especially pronounced for companies in need of technicians, engineers and English speaking managers. It is also becoming increasingly difficult to retain talented workers with 5-10 years experience because they tend to switch companies in order to advance their careers and get higher pay.
RUSSIA – Russia has a considerable intellectual capital composed of engineers, scientists and many other well-qualified people. Nevertheless, many companies reported that it is more and more difficult to find great people as the quality of staff as well as the level of education are continually decreasing. In fact, job candidates from Russia are well educated but often by universities that fail to give them practical skills? Besides, an increasing number of talented Russians have left the country to go to Israel and the USA. As a result, only 20% of Russian professionals are currently considered employable by companies.
INDIA – In spite of the huge talent pool available in India, companies have trouble recruiting qualified workers because the quality of talent is not as good as it could be. By looking closer at the workforce available, it is estimated that only 25% of Indian professionals possess the skills required by companies. Regarding to the skilled candidates, they are highly attractive, mobile and willing to switch industries in order to play different roles and increase their salary. As a consequence, HR teams waste a lot of money as well as time because of this flow of people entering and exiting companies? What is more, foreign companies operating in India have to compete not only with Indian companies but also with companies from Korea, Japan and Hong Kong who are poaching the best Indian talent. As the population of these three countries is becoming old very fast, many of companies from there are turning their attention to Indian workforce.
CHINA – Despite China’s population of more than 1.3 billion, companies are struggling to find and retain employees. Even though, million of university graduates enter China’s job market each year, only a small number of them are capable of working in a multinational environment. Reasons include lack of strong English language skills and none previous work experience. Moreover, only one-quarter of these graduated candidates live in a city or region where companies are located. As labor mobility is restricted by the government, few young talents are currently living in urban areas? Foreign companies operating in China face an additional problem that explains talent shortage: more and more graduates and senior executives are willing to work for national Chinese companies rather than foreign companies.
SOUTH AFRICA – It is estimated than 10% of companies operating in South Africa have had difficulties filling job positions in 2011. In comparison to other BRICs countries, this number is low. However, there is a real shortage of talented people particularly engineers, legal workers, technicians, teachers and finance & accounting workers. The main reason is that the South African people who do have or acquire these skills tend to migrate to other countries who will offer them better job opportunities. This brain-drain has a high impact on companies’ businesses and needs to be addressed now if the country does not want to face a bigger talent gap in the future.
HR challenge #2: Developing effective leaders
CHINA – Developing leaders is a tough task in any market, but in China HR teams have the difficulty to adapt their talent management strategies to the country’s unique business culture and values. Besides, Chinese potential candidates for leadership positions often lack international experience, innovation and an ability to assimilate into a Western company culture.
Due to their cultural background, they are not accustomed to taking risks and managing change. As a result, about one-quarter of Chinese leaders are weak in the skills most critical for success in their roles and more than one-half are inadequately prepared for their roles? There is another issue to take into consideration: working for a Chinese company seems to become the preferred career choice for Chinese executives as well as expatriates steeped in the market.
SOUTH AFRICA – It’s extremely difficult to fill senior and executive management positions with top quality leader. Many of the current leaders working in leading companies are close to retirement and there is a lack of suitable 40/50-year-old candidates with a strong managerial background to replace them. To overcome this critical situation, numerous companies promote young talent to positions of leadership and offer fast-tracking careers to keep the best of them. As these new young leaders do not have enough work experience and are not prepared to handle such responsibilities, the majority of them fails or underperforms. It is vital for the success of companies operating in South Africa to invest in leadership programs in order to develop a real talented generation of leaders.
HR challenge #3: Dealing with difficult Employment laws
BRAZIL – Brazilian labor code makes it hard to use expatriates in order to fill the shortage gap. The Ministery of Labor seeks to protect as much as possible the domestic labor market by limiting the hiring of foreign workers. As a result, trying to get work permits for foreign employees is a very difficult task for any HR team. When it is possible, the maximum duration granted for a temporary work permit is 1 to 2 years but the reality is that many foreign workers can only stay 90 days within the country? With regard to national Brazilian workers, the labor code is very pro-employee and provides extensive protection to the employee at the expense of the employer. Recently, President Dilma Rousseff approved a law ordering companies to pay overtime rates for after-hours work calls or emails. This regulation reflects an existing trend in Brazil’s courts: employees suing their bosses over out-of-office work.
RUSSIA – Russian labor code is extremely employee friendly and it is almost impossible to terminate an employee. However, it allows any employee – regardless of seniority or nationality – quit a job after only 2 weeks’ notice and go to work for a competitor immediately. Moreover, Russian labor laws apply to all nationalities, meaning foreign employees (including expatriates) have the same rights than Russian employees. This is a standard practice in some EU countries required by EU labour law.
HR challenge #4: Managing the career expectations of Gen Y
INDIA – The Gen Y is writing the new code in Indian workforce. Mature enough to play crucial roles in companies, they can, however, be a nightmare for HR teams as they are more inclined to leave companies than any previous generation. Apart from the attraction and retention of Indian Gen Y, the biggest challenges today are communicating with them and offering them a rapid career evolution. In fact, the typical Gen Y Indian worker wants success to come to him/her fast and money faster.
As most of India’s high-potential workers (around 64%) and middle managers (around 55%) are Gen Y, the future of India – as well as companies operating there – rests on its ability to engage this generation.
CHINA – Chinese Gen Y makes up about 50% of the current China’s workforce. Raised to succeed, they are more educated, talented and ambitious than the previous generations. As a result, their demands, values and behaviour at work are different from those of their parents. For example, their expectations for rapid advancement and career mobility are high and they place great emphasis on salary. If your company cannot offer them an exciting career path, they will move to another company in order to have a better career opportunity and increase their remuneration as well. Being promoted is the greatest motivational factor in their career. Unfortunately, it is not always possible. So it is imperative that HR teams find new ways to motivate them.
Of course, as a global HR professional, you will never be asked to resolve ALL these issues alone! However, your company deeply relies on your HR team to anticipate any people risks that can affect its development? By having a clear vision of the issues facing by other HR teams in emerging markets, you will not only improve your global HR knowledge but also be aware of the HR differences and similarities between these different countries in terms of HR challenges. As a result, you will be able to suggest better ideas and solutions to your HR team. Developing a global mindset will also help you become an integral part of the leadership team searching ways to reduce people risks in emerging markets.
Remember what Ulrich says “Modern HR must take on many roles to demonstrate competence and effectiveness”. And I am quite sure that – like any HR professional – your goal is to be better at what you do and demonstrate people that you can be a strategic business partner.