Much has been written about the rise of emerging markets and what they can offer in terms of the talent pool. But no emerging market is the same, and one HR strategy may not fill every market. In a changing environment, HR strategies used to manage people in one country are sometimes ineffective in another, and what worked in one country may not work in another.
That is the reality that many companies in emerging markets are currently facing due to 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 need to be aware of cultural differences and the various HR issues that arise in the target country before attempting to implement anything. It goes without saying that developing the wrong talent strategy in a BRIC country can be one of the most costly mistakes for a company. Not only in terms of money, but also in terms of actual and potential talent losses.
To avoid these kinds of mistakes, you need to know the hottest HR issues, topics, and trends in emerging markets that could be hindering your business development. To help you in this task, below is a list of 4 critical HR challenges emerging from some BRIC countries. Memorize them? Will you gain time and efficiency?
HR Challenge #1: Attract and retain talented workers
BRAZIL – One of the biggest problems in Brazil is the shortage of qualified labor. Are the companies that operate in Brazil demanding more qualified workers than those currently offered by the labor market? The shortage is especially pronounced for companies that need English-speaking technicians, engineers and managers. It’s also becoming increasingly difficult to retain talented workers with 5-10 years of experience because they tend to switch companies to advance their careers and earn higher salaries.
RUSSIA – Russia has considerable intellectual capital made up of engineers, scientists and many other well-qualified people. However, many companies reported that it is increasingly difficult to find great people as the quality of staff and the level of education are continually declining. In fact, job candidates from Russia are well educated, but often by universities that don’t give them practical skills. Furthermore, an increasing number of talented Russians have left the country for Israel and the United States. As a result, only 20% of Russian professionals are currently considered employable by companies.
INDIA – Despite the huge talent pool available in India, companies are having trouble recruiting skilled workers because the quality of talent is not as good as it could be. Taking a closer look at the available workforce, it is estimated that only 25% of Indian professionals possess the skills required by companies. As for qualified candidates, they are highly attractive, mobile, and willing to switch industries to fill different roles and increase their salary. As a consequence, HR teams lose a lot of money and time due to this flow of people in and out of companies. Furthermore, 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 top Indian talent. As the population of these three countries is aging very fast, many of the companies there are turning their attention to the Indian workforce.
CHINA – Despite the fact that China has a population of more than 1.3 billion, companies struggle to find and retain employees. Although millions 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 a lack of strong English language skills and no prior work experience. Furthermore, only a quarter of these graduate candidates live in a city or region where the companies are located. As labor mobility is restricted by the government, few young talents currently live in urban areas? Foreign companies operating in China face an additional problem explaining the talent shortage: More and more graduates and top executives are willing to work for domestic Chinese companies rather than foreign ones.
SOUTH AFRICA – An estimated 10% of companies operating in South Africa had difficulty filling jobs in 2011. Compared to other BRIC countries, this number is low. However, there is a real shortage of talented people, particularly engineers, legal workers, technicians, teachers, and finance and accounting workers. The main reason is that South Africans who have or acquire these skills tend to migrate to other countries that will offer them better job opportunities. This brain drain has a high impact on the businesses of companies and must be addressed now if the country does not want to face a greater talent gap in the future.
HR Challenge #2: Develop effective leaders
CHINA – Developing leaders is a difficult task in any market, but in China HR teams struggle to tailor their talent management strategies to the country’s unique culture and business values. In addition, potential Chinese candidates for leadership positions often lack international experience, innovation, and the ability to assimilate into a Western business culture.
Due to their cultural background, they are not used to taking risks and managing change. As a result, about a quarter of Chinese leaders are weak in the skills most critical to success in their roles, and more than half are inadequately prepared for their roles. There’s another thing to consider: working for a Chinese company seems to be becoming the preferred career option for Chinese executives as well as expats immersed in the market.
SOUTH AFRICA – It is extremely difficult to fill executive and senior management positions with a top quality leader. Many of today’s leaders working in leading companies are nearing retirement and there is a lack of suitable 40/50 year old candidates with strong management experience to replace them. To overcome this critical situation, many companies promote young talents to leadership positions and offer accelerated careers to keep the best of them. Since these new young leaders do not have enough work experience and are not prepared to handle such responsibilities, most of them fail or underperform. Investing in leadership programs to develop a generation of truly talented leaders is vital to the success of companies operating in South Africa.
HR Challenge #3: Dealing with Difficult Employment Laws
BRAZIL – The Brazilian labor code makes it difficult to use expatriates to fill the shortage gap. The Ministry of Labor seeks to protect the national labor market as much as possible by limiting the hiring of foreign workers. As a result, trying to obtain work permits for foreign employees is a very difficult task for any HR team. When possible, the maximum duration granted for a temporary work permit is 1-2 years, but the reality is that many foreign workers can only stay in the country for 90 days. Regarding Brazilian national workers, the labor code is very pro-employee and provides broad protection to the employee at the expense of the employer. Recently, President Dilma Rousseff passed a law ordering companies to pay overtime rates for calls or emails outside of working hours. This regulation reflects an existing trend in Brazilian courts: employees sue their bosses for working outside the office.
RUSSIA – The Russian labor code is extremely employee-friendly and it is almost impossible to fire an employee. However, it allows any employee, regardless of seniority or nationality, to quit a job after only 2 weeks notice and go to work for a competitor immediately. Also, Russian labor laws apply to all nationalities, which means that foreign employees (including expatriates) have the same rights as Russian employees. This is standard practice in some EU countries required by EU employment law.
HR Challenge #4: Managing Gen Y Career Expectations
INDIA – Generation Y is writing the new code in the Indian workforce. Mature enough to fill crucial roles in companies, however, they can be a nightmare for HR teams, as they are more inclined to leave companies than any previous generation. Aside from attracting and retaining Indian Gen Y, the biggest challenges today are communicating with them and providing rapid career progression. In fact, the typical Indian Gen Y worker wants success to come quickly and money quicker.
As the majority of India’s high-potential workers (around 64%) and middle managers (around 55%) belong to generation Y, the future of India, as well as the companies that operate there, it depends on your ability to engage this generation.
CHINA: Chinese Generation Y makes up about 50% of China’s current workforce. Raised to succeed, they are more educated, talented, and ambitious than previous generations. As a result, their demands, values, and behavior 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 can’t offer them an exciting career path, they will move to another company for a better career opportunity and increased pay as well. Getting promoted is the biggest motivating factor in your career. Unfortunately, it is not always possible. Therefore, 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 solve ALL of these problems alone! However, does your company deeply trust its human resources team to anticipate any people risks that could affect its development? By gaining a clear view of the issues facing other HR teams in emerging markets, you will not only improve your global HR knowledge, but you will also become 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 looking for ways to reduce risk to people in emerging markets.
Remember what Ulrich says: “Modern human resources have to take on many roles to demonstrate competence and effectiveness.” And I’m pretty sure that, like any HR professional, your goal is to get better at what you do and show people that you can be a strategic business partner.
