HR around the world

Think it’s tough getting to the strategic table in Canada? Try Eastern Europe or the Middle East

A Canadian HR professional who sets up shop in Eastern Europe might feel as if she’s travelled back in time.

In countries such as the Czech Republic, Hungary, Poland and Romania, human resources is still struggling to get anywhere near the strategic table, said Soni Basi, an executive director of Chicago-based global human capital management research company ISR.

“The types of issues that they’re dealing with (are) back to where we were in the Americas and Western Europe 10 years ago, where they still need to prove the importance of human resources within their organization,” said Basi, whose clients include RBC, Canada Post and international bank HSBC.

“While they’re dealing with similar issues like talent management and employee engagement within their organizations, they just don’t have the power or support for it that other economies have.”

Canadian companies expanding into these countries need to show the power of HR and bring metrics to the table that show how employee engagement, culture and other HR practices relate to business performance. This could include showing the relationship between employee engagement and turnover, and tying that to product or customer service quality.

Employee engagement in China and India

While HR professionals in Eastern Europe, and even some in Canada, are still having a hard time becoming strategic business partners, China and India have leap-frogged that issue.

“Asia, given all its talent management issues, has had to bypass that and has had to go directly to more sophisticated HR practices from the get-go, just to maintain status and just to be able to get people in the door,” said Basi.

As large global organizations move into China and India, more and more workers are lured by the global brands and are jumping around more than they ever used to, said Basi. This means HR managers are finding it increasingly difficult to find and retain talented workers.

“As a way of getting ahead or as a way of building that resumé, (workers) are coming to some of these global organizations but they’re not necessarily staying, because there’s such demand for talented individuals that they’re being drawn away constantly,” she said.

To keep employees, companies need to better understand what employees are looking for from the leadership team and from the organization, said Basi. Employees in China and India want to know their careers are going somewhere, which makes succession planning key to retention.

“One of the main drivers of engagement, especially for high performers in the organization, is that they want to know that they can succeed, that there is a path for them within that company,” said Basi.

Talent management, with clear professional development plans that show employees how they can grow their careers and what skills and competencies they need to reach certain positions, also helps keep workers on the job, she said.

Leadership style is also an important factor in talent engagement. In China, leaders are well-respected but tend to be more removed from employees because of the power differential, which can present a problem for engagement said Basi.

“They might not be as willing to walk around on the floor or to be the ones who go out with really powerful and inspirational messages,” she said. “But that type of softer side of leadership is increasingly important to engaging talent within China and India.”

The challenge for organizations is finding these personable leaders, or nurturing that talent among existing leaders.

Money matters

One of the reasons China and India are such hot markets right now is low average salaries. According to Culpepper, an Alpharetta, Ga.-based compensation and benefits survey company, the average wage in India is 20 per cent of the average wage in the United States (the average Canadian wage is 89 per cent of the U.S. average). The urge to provide a more commensurate wage to workers in these countries can be a powerful one for a Canadian HR professional, but it’s one she should fight, said Florent Francoeur, president of the World Federation of Personnel Management Associations.

“At the beginning you have to follow the country’s standards. If you decide to pay a higher salary, you will probably attract a lot of people, but the result will probably be that you will have an impact on the economy of the region,” he said from his office in Montreal.

Artificially increasing a country’s standard wage faster than its economy can handle can result in the country no longer being economically attractive for other companies.

“The global result is that sooner or later this country won’t be able to compete with other countries,” he said.

This happened naturally in Mexico. Five or six years ago, the country was very competitive, said Francoeur, and companies went there for cheap labour. But as investment increased, so did salary and health-care costs, driving companies to look to other markets like India.

The future of HR

The Middle East is becoming the next hot spot for human resources. Given that the culture has focused so strongly on the financial and very little on employee satisfaction, companies in the region haven’t had strong HR departments, said Basi. With Western companies moving into the region, HR professionals will have the opportunity to build an HR department from the ground up and can strongly influence how it functions and what it looks like, something very few professionals have a chance to do.

“The first step is really building a human resources group that’s strategically focused and aligned with the business,” she said. “It’s almost like Eastern Europe where they’re starting from ground zero.”

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