Talent mapped out

first_img Previous Article Next Article Related posts:No related photos. Anycorporation setting up shop in a developing country will need to recruit locallabour. Liz Hall looks at HR’s role in what can be a challenging processWhenthe Edinburgh-based marine service company BUE Marine moved into Azerbaijan’scapital Baku to take advantage of its natural resources, it faced a catalogueof HR obstacles from nepotism and theft to low skills levels and deceitful CVs.Theoil industry supplier was forced to make concessions to nepotism by employingat least one government-recommended worker per boat. On-the-spot anti-theftsearches became a necessary part of working life and a company freebie of aweek’s supply of oranges was hidden away within two minutes by impoverishedstaff, recalls Linda Kennedy, group sourcing manager at international miningcompany Billiton and former personnel manager at BUE Marine.”Itwas a complete culture shock. Nepotism was even more of a problem than it hadbeen in Latin America and we saw many dubious qualifications, as you can buyanything there. We had to work very hard to build trust,” says Kennedy.Asnew business opportunities, cheaper labour and alternative sources ofspecialist staff lure growing numbers of companies to developing countries,particularly to Central and Eastern Europe (CEE), Latin America and Asia, HR’sskills are increasingly being put to the test. Since moving to Billiton, a FTSE100 company, Kennedy’s experiences in Latin America and China have served tofurther underline the HR challenges inherent in sourcing and retaining staff indeveloping countries. Oncea company has its sights on a merger, acquisition or joint venture, one of thefirst steps is to examine costs and analyse the local labour force. “Whencompanies want a foothold in a developing country, they need to research labourcosts, cultural differences, benefits, legal jurisdiction and how to hirepeople locally. “InChina, for example, they would need to sign contracts through one of twogovernment agencies: the China Interlattec International Corporation (CIIC) orthe Foreign Enterprise Service Corporation (FESCO),” says Alan Tsang,managing director for Asia for search and selection firm Norman Broadbent.In-depthanalyses of local labour issues often make for lucky escapes. Already ensconcedin Chile, Peru and Colombia, Billiton tendered for a Venezuelan aluminiumoperation in Puerto Ordaz in 1999. “We found recruitment run down, highlevels of theft, gross over-manning, higher production costs than anywhere inthe world,” says Kennedy. “The operation was heavily unionised andall pay amendments had to be agreed with the unions and government, who had notpaid its workers full wages for two years. We would have incurred this debt.Plus the existing skills levels were not very high.”Billitonhired Latin American search firm Heindric & Struggles to look at theviability of hiring a local manager to head up the project – ideally arepatriate with local knowledge and widened horizons. But the choice waslimited and it also envisaged difficulties recruiting a CFO. HR problemscombined with the country’s unstable economy persuaded Billiton to abandon theproject.HRis increasingly involved in the planning stages, but levels of involvementstill vary: “I do a lot of work in the banking field and HR tends to comein later. But if a company is thinking of setting up a factory, say, HR isdefinitely brought into the process much earlier on,” says PatrickAlexander, vice president for executive search and selection firm Korn/FerryInternational.Tappinginto expert local knowledge is essential when moving into new territory andmany companies choose to work with consultancies like PricewaterhouseCoopers,Korn/Ferry International or Arthur Andersen.Kennedykicks off any expansion into new territory by identifying which are the bestheadhunting firms to get the top people in place. She benchmarks againstcompetitors and builds up an extensive database of all companies used.”You cannot expect to be an expert overnight and as a big internationalcompany, the key is to identify a good, well-established partner to supportyou. Doing a major fact-finding mission is fine if you have the time, but whyreinvent the wheel?” says Kennedy.  Proximityto the European Union, availability of talent and relatively stable economiesmake CEE the fastest-growing market for European and US companies, with LatinAmerica not far behind, according to Dr Richard Croucher, lecturer in HR atUK-based Cranfield School of Management. “Companies can draw on a highlyskilled labour force with high standards of numeracy, computational capacityand linguistic ability,” he says.JeanYves Alquier, partner for CEE in French HR consultancy Arthur Hunt, whoseclients include telecommunications firm Alcatel, Deutsche Bank and IT firmBull, says: “All the important factors for moving into new territory comeout positive in CEE, including Bulgaria and Romania, which are theleast-developed countries in the area. In all these countries, even small oneslike Slovakia and Slovenia, there are high-quality people in most specialties,particularly the scientific, technical and engineering sectors.”Butthe lack of exposure to capitalism or wealth in developing countries can mean alack of commercial awareness. Training and development for locals, combinedwith some use of expatriates is advisable. “Although the potential ofgeneral and finance managers is high, they need to be educated in Westernnotions of profit, costs, budgets and exports,” says Alquier.Internationallogistics and distribution firm DHL, telecommunications company Nokia and carmanufacturer Audi are among those who have flocked to Eastern Europeancountries such as Hungary. Mark Loades, HR director for DHL Hungary, says:”The skills base is extremely high in Hungary with good marketing, IT,financial and economics skills, but the commercial acumen is fairly limited.People are not used to closing sales quickly. We have to train and develop,which is exciting, as people are very open to this here.”DrCroucher warns: “Companies need to get behind the talk, as although peopleknow the words to say, such as empowerment, they are not particularlybusiness-minded. They also need to explore connections into local networks ofinfluence in a region where who you know is still very important and there arehigh levels of corruption.”Gatheringinformation in CEE can be tricky, which Korn/Ferry’s Alexander attributes toinformation having represented power under communism in the absence of a pricemechanism. But local government bodies or organisations such as thePolish-American Chamber of Commerce can provide information.DHL’sLoades warns that employment law can be a minefield in Eastern Europe:”You have to be very careful to follow the labour code, which is very pro-employee.There are challenges, but you have to be creative.” However, he says thatrecruitment processes in Eastern Europe are highly sophisticated, withassessment centres, psychometric centres, recruitment agencies and so on beingvery much part of the culture. DHL uses the Budapest office of London-basedsearch company Antal, consultancy Neuman International and on-line job boardMonster.com. When34,000-strong Billiton expanded into Beijing in China, Kennedy used localrecruitment and cross-cultural training firm Nicholson International. As thecompany was awarded a high-profile government grant, it was deluged with CVsfrom locals. An ex-Shell expatriate helped build local contacts – as networkingis vital in China. Kennedywas impressed with the availability of skilled staff in China and turnover hasbeen low, but says there have been problems juggling Chinese and Western waysof thinking: “It is easy to go too one way or the other and you need to beaware of the Chinese’s emphasis on face, honesty and integrity without beingafraid to do things for profit. Also you need to employ more public/employeerelations people than anywhere else in the world.”AlanTsang agrees it is essential for employers to take cultural differences intoaccount, particularly in Asia. “Chinese people think differently and localstaff tend to cluster together whispering rather than say they are unhappy.This makes it difficult to motivate people and managers have to understand theculture,” he says.Salesand marketing people, programmers and other IT people are readily available inChina, even away from the big cities. But Tsang warns that general managers,finance people, senior managers and CEOs are not so easy to find.Recruitmentof locals in China tends not to be done directly, but through the CIIC orFESCO. Labour costs are low – with workers in China earning a tenth of themonthly average of $1,000 earned in Hong Kong. However, employers should watchout for hidden costs – in China, staff receive 13 months’ pay and bonuses, forexample.Elsewherein Asia, India is attracting many companies (see case study) because of itspool of skilled, quality IT people. Companies are basing operations here, suchas software development and outsourced customer services and financial centres.Cranfield’sCroucher attributes Latin America’s main attractions as its location – near tothe US – and its cost-effective talent pool: “In Latin America, there arewell-qualified people in the legal and healthcare fields and there are thebenefits of cheap labour and a good location.”DespiteColombia’s rate of foreign investment being slowed by the current unfavourablesocio-economic situation, it still attracts multinational companies from theservice industry, telecommunications, high-technology and e-business, accordingto Patricia Arenas, HR manager at management consultancy Arthur AndersenColombia. Arenassays that the state of the economy has prompted many Colombians to flee back tothe provinces and many companies are widening their recruitment nets away fromthe five main cities of Bogota, Cali, Medellin, Cartagena and Baranquilla tosmaller towns such as Armenia. “The level of education in Colombia isparallel to that of the US and we have a lot of well-qualified people, many of whomcan be found in the provinces again,” says Arenas in Bogota. Arenascites the example of her former employer Nortel Networks, a high-techtelecommunications firm, which successfully branched out its search forelectronic engineers from Bogota to the fairly remote Popayan, best reached byplane. Neitherthe Middle East nor Africa holds the same attractions for companies as Europe,Asia and Latin America. But the number of multinationals making an aggressivebid for locals in the Middle East is growing. Kraft, Jacob Suchard, PepsiCo,Coca Cola and Nestle are among the newcomers to the area.”Multinationalsare realising we have a growing population, with more than 50% aged between 18and 25. But demand outstrips supply so packages have to be verycompetitive,” says Korn/Ferry Middle East consultant Raed Sater, formerhead of HR at Unilever.Companiessuch as Unilever, Proctor & Gamble and Citibank have been in the area formany years and invest heavily in the training and development of locals.”They offer graduates training, as the education system does not preparethem for business life, for sales, marketing or finance positions, so that is areal challenge. IT professionals are still brought in from the Indiansubcontinent, while Egyptians and Lebanese are brought in for salespositions,” says Metin Mitchell, managing vice president for the MiddleEast at Korn/Ferry International. Fornatural resources companies such as Billiton, which has a strong presence inJohannesburg, Africa is an important market. South Africa is a good source ofIT specialists, particularly software developers, according to Chris Neale,director for European development at myOyster, the global technologyrecruitment arm of the Barkers Norman Broadbent group.Butfactors such as HIV have taken their toll on the African economy and jobmarket, with previous projections for numbers of job seekers being reviewedbecause of the disastrous impact of the HIV/AIDs epidemic, according to theInternational Labour Office’s (ILO) World Employment 2001 report. “Lossesare disproportionately high among skilled, professional and managerial workers.The epidemic will not only reduce the stock of such workers, but also reducethe capacity to maintain future flows of trained people,” says the ILO’sreport.Tipsfor moving into developing countries–Link up with the best local recruitment experts.–Build contacts with other firms and the government.–Examine the local skill set.–Weigh up labour costs.–Consider cultural differences.–Look at employment law.–Create teams with locals and expatriates.–Be patient and open-minded.Emergingmarket factsMostpopular emerging markets:–Latin America: Brazil, Mexico and Argentina–Asia Pacific: China, Korea and Taiwan–Africa and the Middle East: South Africa–South Asia: India–CEE:Romania, Hungary, BulgariaKeyindustries for emerging markets:–Telecommunications–IT–Financial servicesCasestudy: Hewlett-PackardVenturinginto AsiaWhenHewlett-Packard (H-P) recently assessed India as a possible growth site forsoftware development, research and business services, its HR professionalsplayed a prominent role.”Ourapproach when looking at new business ventures such as India is for HR to playa very critical role in the assessment process,” says Mike Nichols, headof H-P’s global staffing and workforce programmes.Aswell as involving HR at an early stage, H-P usually works with a consultingfirm with local knowledge to help carry out the initial assessment. ArthurAndersen Consulting was the choice for upfront assessment in India. Theconsultancy has also been used throughout Latin America, which continues to bean important growth area for sales and marketing, along with Eastern Europe andSouth East Asia.”Theylook at economic and political stability, the regulatory and legal framework,the technology and power infrastructure, and last but most significantly, theavailability of the skill set,” says Nichols.Thelabour force assessment involves drawing up a skills profile of the country –in this case India, by looking at local universities, the types of degreeobtained and whether they produce quality graduates – and examining theavailability of experienced professionals. “We then put a map togethershowing other similar operations, competitors and those outside the main areas,and examined the main options in India,” he says.”Ifyou look at the quality technical skill set, it’s immense. Last year, not longafter establishing in India, we were easily able to recruit 500 softwareengineers,” claims Nichols.RecruitmentstrategiesTraditionaladvertising, agency recruitment and employee referral were the main recruitmentchannels in India. Setting up shop in India proved easy, helped by H-P’slong-standing sales and marketing presence. H-P plans to continue to invest inthe country, attracted by its stability.Establishingin Latin America, one of the fastest-growing regions, was more challenging.Nichols was formerly the director for HR for Latin America – covering Colombia,Peru and Chile. Whenever H-P moves into a new area, it sets up a core group ofmanagers on foreign assignment with the aim of transferring to locals withinthree to five years. “We have found it beneficial to have a local HRperson with knowledge of employee relations, benefits, negotiations and legalrequirements. Once the move is on the table, we try to blend HR in with theknowledge of the consultancy.”Butin Peru, transferring the core team to the locals proved very difficult.”Putting together a core team of recruiting nationals by advertisinglocally was not working because they do things by word of mouth in Peru. So ourstrategy had to be to build a physical presence in the high-tech communityfirst. It took longer than I’d like to admit to set up our core group – sixmonths as opposed to 60 to 90 days,” says Nichols. Comments are closed. Talent mapped outOn 1 Apr 2001 in Personnel Todaylast_img read more