Talent Management Acute Challenge in New Markets: Survey

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Building and executing effective talent management strategies is particularly challenging in rapid-growth market companies that are expanding into new markets, according to newly released research from Ernst & Young.

The majority of 810 business executives surveyed lack confidence that their organization has or can build an effective international management team.

Only 20 percent of those surveyed think their company manages talent effectively across all markets. Less than a third agree that their top management team has an international outlook on decision making, and the same proportion say their top management team has sufficient work experience outside of their home country.

The findings are from a survey conducted in March and April 2012; 53 percent of respondents were C-suite executives and 44 percent of the companies surveyed reported revenues of $1 billion or more in U.S. dollars.

The survey report, Growing Pains: Companies in Rapid-Growth Markets Face Talent Challenges as They Expand, noted that a big hurdle all global businesses face “is that the skills they need to expand geographically are not readily available in rapid-growth markets.”

Mike Cullen, global managing partner, people, at Ernst & Young, stated in the report that “the key challenge for these companies in the next decade will be to integrate talent strategies with global mobility strategies to form a top management team that has a mix of international expertise and local knowledge.”

Key talent management challenges the survey identified:

Top management teams lack international experience.

Slightly more than half (51 percent) of all respondents said top management needs more insight into local culture and 50 percent of all respondents said top management needs to understand global markets.

Only 18 percent of C-suite respondents think their companies have the right balance of local talent and expatriate managers in international markets vs. 23 percent of managers who hold this opinion.

Lack of an internal management pipeline forces companies to recruit from rivals.

While 52 percent of C-suite executives and 49 percent of managers plan to emphasize building an international management team from within over the next three years that’s something that takes time.

Firms often recruit from their rivals to plug the gaps on their teams. This can result in high turnover and salary inflation; however, 40 percent of C-suite executives and 30 percent of managers said they will emphasize this approach over the next three years.

Companies are unable to retain and reward high performers in different markets.

It can be tricky knowing that what motivates employees in one culture can be a disincentive in another. Only 16 percent of respondents overall think their company is effective at motivating employees from different cultures. Overall, most think this is an area where they can improve.

C-suite leaders and lower-level managers have conflicting views on talent management.

Both C-suite executives and managers consider building from within the company important for creating an international management team (52 percent of C-suite respondents and 49 percent of managers) and requiring experience in different international markets (55 percent and 49 percent, respectively).

However, they are far apart on the issue of recruiting locally from new international markets.

Sixteen percent of C-suite executives said they will most emphasize recruiting locally in the next three years, vs. 33 percent of managers who plan to emphasize this approach. C-suite executives have a lower opinion of their companies’ effectiveness in rewarding high performance across different markets (19 percent vs. 26 percent) and aligning business strategies with an individual’s performance objectives (13 percent vs. 25 percent).

The report pointed out that, “As companies expand into new markets, it becomes harder for the corporate office to be aligned with satellite operations and for C-suite leaders to be in sync with rank-and-file employees.”

While there is no permanent solution to the key challenges outlined, the report listed some suggestions for businesses confronting these challenges:

  • Mandate global experience for staff as a way to develop top management teams that lack international experience.
  • Consider identifying talent needs across markets and aligning opportunities to those employees with the right skill sets at the right time in their career.
  • Connect short-term recruitment strategies with long-term workforce planning.
  • Establish uniform metrics for managerial performance. Include talent development that aligns an employee’s goals with the business’s goals as an important metric.

Additionally, create a culture that is inclusive and that communicates clearly at all levels of the business.

Bill Leisy, global talent management market leader for Ernst & Young, told SHRM Online that organizations have to be flexible in their thinking, and creative in giving international experience to people early in their careers. He cited a U.K. company looking to deploy hundreds of employees to Africa—some to countries where the infrastructure was nonexistent and the quality of life challenging—but few, if any, were willing to step forward.

The solution: the company hired local workers younger than 25 for the international assignment with the promise of being promoted twice. After the assignment employees are moved to corporate for several years then return to their home country on behalf of the company, creating an internal pipeline of employees with international experience.

This solution taps into the younger generation’s high expectation of quick advancement and their greater flexibility for international moves.

Companies such as this that are successful in building talent management teams for emerging markets have branded themselves as providing the type of experience young job candidates seek, Leisy noted.

“As we look at the emerging markets, especially from the HR and talent management perspectives, it’s a whole new world,” he said. “The emerging markets are a ‘white board', there is no one model that fits all. Most of the organizations today are really at the early talent management stages figuring out what type of skills, what type of experiences, what type of qualifications we need for what positions in what markets. Organizations are finding out that younger employees, early in their careers, with an entrepreneurial spirit are attracted more to these opportunities,” he said.

He advised companies to determine which jobs will require global experience in the next three to five years, and to have HR and business units work together to standardize skill requirements among similar positions. An engineer in one division would have the same requisite amount of international experience as an engineer in another division of the same company, for example.

“You’re finding out that HR is working side by side with the operating groups … out in the field developing the services and they have a really good handle of what’s going to be successful.”

They are “partnering with HR, rather than HR driving it,” when it comes to identifying the skills needed for particular positions, he added.

“Emerging markets are really pushing HR to be a lot more strategic, a lot more business-operating focused,” he said. “That’s great. That’s where we needed to be.”

Kathy Gurchiek is associate editor for HR News.  To read the original article, please click here.