Attracting, keeping employees overseas

Success of foreign shops depends on understanding what locals value

Here’s a quick, skill-testing question for HR professionals who need to attract or hold on to employees in foreign countries: In which of the following nations are workers most likely to prize work-life balance?

A: United Kingdom;
B: Japan;
C: Sweden; or
D: France.

If you said D, you’re correct. Understanding cultural differences between workforces — such as France’s ongoing struggle to extend its minimum 35-hour workweek — is a critical success factor in foreign recruitment and retention efforts, according to Mercer HR Consulting’s report Engaging Employees to Drive Global Business Success: Insights from Mercer’s What’s Working Research.

Many elements of a company’s global expansion hinge on HR’s ability to scoop up and hold onto local talent, says Imran Qureshi, international practice leader at Watson Wyatt Worldwide in Chicago. (See “HR and the 7 stages of new country expansion,” page 22.)

Intense competition for global talent

And with multinational companies rapidly venturing into countries that offer low-cost labour and fast-growing economies — such as the “BRICs” (Brazil, Russia, India and China) — the competition for talent is incredibly intense, he says.

“The pace of change in India is happening so quickly, individuals are jumping from one company to another after a relatively short period of time and getting significant raises,” says Qureshi.

Salary increases in India are routinely in the double digits, compared to about three per cent to four per cent for North America.

There simply isn’t a free-for-all when it comes to skilled labour in developing countries, says Prem Benimadhu, vice-president, governance and management research, at the Conference Board of Canada in Ottawa.

“The fact is that today the labour market in foreign countries, such as China, is very tight. Employees are job hunting as much, if not more, than employees here,” he says.

For example, the turnover rate in Bangalore, India, last year was 40 per cent, says Benimadhu.

“People say India has 1.2 billion people but only about 11 per cent have the skills required by the new economy,” he says.

Eventually, the value proposition for multinationals in countries such as Brazil, Russia, China and India will erode as the cost of labour increases. Watson Wyatt has pegged Turkey, Vietnam, South Korea, the United Arab Emirates and emerging central and eastern European countries such as Hungry, Romania and Slovenia as hot new markets.

However, understanding cultural differences, and being creative with attraction and retention strategies, can give companies an edge overseas.

“The most important thing that motivates an Indian workforce is promotional opportunities,” says Ross Coyles, a principal at Mercer in Toronto.

“One thing Canadian employers there might want to think about is changing the promotional process to fast-track people.”

Employers in China should consider upping the training budget for workers, says Coyles. That’s because Chinese workers report higher levels of engagement with companies that provide training. (For more country-specific motivators, see sidebar at right, “What keeps foreign workers engaged?”)

Benchmarking, matching not enough

Benchmarking and matching foreign competitors’ attraction and retention strategies is no longer enough, says Qureshi.

“Companies don’t want to do what everyone else is doing because then they are not competitive,” he says.

“So we’ve seen some creative ways companies are differentiating themselves.”

In India, some multinational companies are offering local employees short-term cash incentives if they remain for three years.

“It’s based somewhat on performance, but it’s loosely defined and really designed simply to keep employees there,” says Qureshi.

In Russia, the pace at which both local and international companies are poaching talent is so rapid that, in some cases, employees can double their salaries simply by moving companies.

“Some companies have set up cash reserves on their books so that in the event that talent is approached by another company with the temptation of double the salary, they can immediately match the offer,” he says.

HR professionals should also consider a country’s shortcomings when developing enticing retention plans, says Qureshi.

For example, although the prevalence of pension plans is relatively low in Russia, the pace is growing year after year and more companies are offering them “because the Russians’ social service system provides nothing by way of retirement income,” he says.

Corporate culture can be exported

And while Qureshi agrees one of the biggest challenges and payoffs for Canadian companies doing business outside of North America is understanding and tailoring strategies based on cultural difference, he cautions HR professionals there is a flip side.

“Companies should not be afraid of imposing certain standards or ways of business that define their own business culture, perspective, ethics or business processes,” he says.

“For example, pay for performance was not that prevalent in Asia 20 years ago, which typically based salary increases on tenure. Multinationals drove pay for performance, and now across the globe and across the board it is the accepted way to pay employees.

“So yes, you do need to be sensitive to environment but you also have to say what’s important to (you) as a company. There may be a certain internal business cultural consideration that you really need to export.”

Canadian organizations already have the perfect people to help bridge the divide between Canadian business values and local customs, says Benimadhu.

“We have so many immigrants in Canada who could act as ambassadors,” says Benimadhu, adding that Canadian companies with cross-border ambitions fail to tap into their own local, culturally diverse HR talent before mining markets abroad.

Lesley Young is a Newmarket, Ont.-based freelance writer.



How involved is HR?
HR and the 7 stages of new country expansion

Here is a list of the seven stages of new country expansion and HR’s potential involvement, according to Expanding into New Countries: An HR Manager’s Guide by Watson Wyatt.

Stage Level of involvement from HR
Identifying the business need to expand globally Minimal
Due diligence – ensuring location “fits” with business objectives Low, but growing
Assessing workforce needs and ability to hire local nationals Medium
Developing a total rewards offering for new country High
Employee recruiting and drafting employment agreements Medium
Sourcing compensation and benefit programs High
Post-expansion governance Medium




Global engagement
What keeps foreign workers engaged?

A look at what engages employees in four countries, taken from Mercer’s Engaging Employees to Drive Global Business Success: Insights from Mercer’s What’s Working Research, shows some engagement factors, such as a sense of personal accomplishment, are universal, but others vary greatly.

United States

1. Confidence they can achieve career objectives

2. Sense of personal accomplishment

3. Confidence organization will be successful

4. Quality is a high priority

5. Opportunity for growth and development

6. Information and assistance to manage career

7. Flexibility to provide good customer service

China

1. Sense of personal accomplishment

2. Fair pay, given performance

3. Comparable benefits to industry

4. Confidence in senior management

5. IT systems support business needs

6. Opportunities for training

United Kingdom

1. Sense of personal accomplishment

2. Confidence in senior management

3. Opportunities for training

4. Fair pay, given performance

5. Good reputation for customer service

6. Regular feedback on performance

7. Comparable benefits to industry

8. Co-operation between groups

Brazil

1. Sense of personal accomplishment

2. Confidence in senior management

3. Opportunities for training

4. Fair pay, given performance

5. Good reputation for customer service

6. Comparable benefits to industry

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