Given the rapid rate and scope of globalization, organizations continue to face significant challenges related to staffing in emerging markets.
Mercer’s HR & Mobility Challenges of Emerging Markets Survey (2012) found that more than half (59%) of participating organizations cite scarcity of local employees with the required technical skills as the most critical human resources challenge in emerging markets.
This challenge is followed by difficulties of dealing with complex labor laws, and, establishing appropriate salary structures (53% and 51%, respectively).
Conducted in late 2011, Mercer’s survey examines the types of issues that organizations in North America are facing as they expand into emerging markets, and which issues and countries present the most critical challenges. It includes responses from more than 150 US and Canadian organizations.
According to Roger Herod, Principal in Mercer’s Global Mobility consulting business, “In addition to the lack of local talent in most emerging markets, attracting and incenting expatriates that can provide the needed technical and managerial skills is a big issue for companies trying to staff operations in often difficult locations.”
While nearly three out of four organizations (73%) are in the process of developing business in new and emerging markets, three countries in particular pose the greatest challenge reported by more than one-third of responding organizations – China (52%), India (36%) and Brazil (35%). “Besides the common difficulties of finding skilled talent and establishing competitive salary structures for local employees, regional complexities around employment laws, local benefits and tax regulations can be particularly troublesome to overcome when operating in these countries,” said Mr. Herod.
As a result of many of these issues, more organizations are developing mobility tools facilitated by a global job-leveling framework that serves as a common platform between the home and host country locations.
“Besides helping with consistent pay practices across borders, global mobility tools like job leveling help companies manage the development and career paths of employees,” said Loree Griffith, Principal in Mercer’s Rewards consulting business. “This is particularly important as companies strive to quickly establish themselves in an emerging market and maintain their competitive advantage once there.”
HR challenges with expatriates
In addition to the challenges organizations face with local nationals when doing business in emerging markets, they encounter issues with their expatriates in these markets as well.
According to Mercer’s survey, the top three challenges for expatriates in emerging markets, reported by more than one-third of participating organizations, are establishing competitive policies for attraction and retention (38%), attracting the right candidates (34%) and addressing equity issues between expatriates and local nationals (33%). Less common challenges are those associated with housing assistance and establishing pension or health insurance coverage.
“International assignments to developing countries can be very costly because of shortages of suitable housing for expatriates, high cost of goods and services, and often high taxes. Additionally, assignments are frequently ‘hardship’ locations,” said Mr. Herod. “As a result, companies must implement policies that will attract employees to take assignments at an affordable cost.”
While the majority of participating organizations are satisfied with the HR policies established for their local nationals and expatriates in emerging markets, approximately two-thirds are in the process of fine-tuning their policies. Moreover, Mercer’s survey shows that more than one-third (35%) of organizations are still trying to put appropriate HR policies in place for local nationals and one-quarter (25%) are still establishing the right policies for their expatriates.
Said Mr. Herod, “Establishing HR policies in frequently fast-changing situations in emerging markets is not simple – and clearly an indication of the complexity of dealing with a variety of HR issues.”
Recently, the World Economic Forum and Mercer collaborated on extensive research on how effective talent mobility can spur economic growth. The report – Talent Mobility Good Practices: Collaboration at the Core of Driving Economic Growth – discusses talent mobility practices among more than 500 organizations in 45 countries and outlines concrete actions that stakeholders around the world have implemented to address their talent challenges. The 55 case studies included in the report reveal that collaboration among stakeholders on all sides of the employment equation – companies, governments, academic institutions, nonprofit entities and employees – is essential to successful talent mobility efforts.
The full report, along with a searchable library of the case studies and an array of thought leadership to help organizations address global talent issues, can be found at www.mercer.com/globaltalent.
About Mercer (2012)
Mercer is a global leader in human resource consulting and related services. The firm works with clients to solve their most complex human capital issues by designing and helping manage health, retirement and other benefits. Mercer’s 20,000 employees are based in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Marsh, a global leader in insurance broking and risk management; Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a global leader in management consulting. For more information, visit www.mercer.com. Follow Mercer on Twitter @MercerInsights.