A snapshot of an "at-the-table" session between Global HR leaders on the worldwide competition for talent and the challenges of developing global leaders. Exclusive conference coverage of Worldwide ERC's third annual Global Workforce Summit in Amsterdam.

Global business forces in Asia

Reluctance to relocate and dual career issues remain a challenge.

The biggest HR headache of the future, says P O Mak, HR leader, GE Money Asia, will be a scramble for talent as companies compete with multinationals and locals for the best people.
 
China as a strongly emerging market will need a lot of talent over the next ten years, he says. Demand is fierce, and the shortage of skilled labour, coupled with rising living standards have driven costs up.

"Assignments don't hold the same allure as in days gone by," said Mak, who believes that fewer people are feeling excited by international assignments due to events such as the SARS outbreak, natural disasters and pollution.

Global mindset, leadership skills in demand

"We need to attract people back," said Mak, who stresses that the high costs involved when selecting a national, even someone with international experience, can make companies choose for an expat, especially if the expat has better experience and managerial skills.

"After 25 years of open-door policy, the market is becoming sophisticated in many sectors," said Mak. "When companies hire senior people, the idea is to bring some one in with a global mindset, with considerable managerial experience and leadership skills.

"In the past people had the misconception that unless you understand relationships [in China] you are not effective. At the end of the day you need someone solid who can get things done," he said. "Coming from China is a plus, not a must."

On top of this are the new labour laws to be implemented in China within the next 12 months. Amongst the things affected by the new legislation are terms of contract. "You will need to stick to terms of contract, making it difficult to fire people. The law will give rise to stronger union movement," Mak predicted.

Economists rate India's growth potential over the next fifteen years as the highest in the world, followed by Malaysia and China, but Mak questions the sustainability of India's economy.

Political openness is main driver, but there is always a downside. India's economy will only continue to boom if it can continue to open up its government, says Mak. Whether the growth is sustainable depends on the infrastructure he says.

For instance Mak pointed out that last year heavy rains in Mumbai caused flooding, and "due to a weak infrastructure everything stopped running for five days."

Like India, China will continue to grow through political openness, but China's weakness, says Mak, lies in pollution and changing demographics within the country, along with a growing income gap between rural and urban, which China needs to address to enhance social stability.

Mak's message was clear; no matter what India is doing, China still matters.

Sudhir Goyal, Executive Deputy President Human Resources of The UB Group in India, has seen a rise in expats from Asia as companies grow their business internationally.

During the panel discussion, Sudhir emphasised that HR needs to nurture effective career development programmes, not only to develop the skills of their international workers, but to retain top talent.

"When you send someone abroad this shows them you value them. It's a question of identifying early potentials and seeing what exposure they need to fulfil this potential. Then bring them back on a promotion," said Goyal.

UB's model is to send out a carefully chosen 'swat team' of around 12 key managers to each post and set up a local team over six months.

"HR needs to align with the business to take the business forwards," said Goyal who believes that HR needs to be able to first identify the business skills of tomorrow and then "empower people to do the job."

Plus, "HR needs good communication skills to avoid creating problems with unintended meaning," he said.

An extra tip Sudhir offers to companies setting up in India is to hire an Indian with CEO experience rather than bringing in an expatriate. Often Indian managers come back from abroad with highly developed leadership skills and CEO experience, says Sudhir, only to find they are overqualified for available posts back home. Companies would do well do draw from this pool of expertise, he says.

Other emerging markets include Vietnam, which experts predict will be the fastest growing over the next ten years, Malaysia, and Middle Asia's Kazakhstan, the richest nation of the Commonwealth of Independent States.

Vibrant Vietnam needs business leaders

Vietnam's population is young, the average age is 26, and children of the post-war baby boom are now entering the labour market. Labour costs in Vietnam are half those in China, says P O Mak.

From economic theory the younger the population, the more sustainable the economy growth explains Mak, which makes Vietnam a good place for companies to move into. However the young don't have leadership capabilities so companies need to bring in managerial leaders.

Malaysia is also attracting a lot of foreign direct investment (FDI) but, both Goyal and Mak pointed out that the country needs to overcome internal prejudices which have created an ethnic divide which hinders business growth and practices.

Pat Casey, Vice President EMEA Learning and Development, Dell Inc, when speaking about the increasing challenges of getting people to go and live in emerging markets, has observed that potential assignees feel that the chance of coming home to the comfortable position they left is risky. After all, "you have to get off the expat-merry-go-round at some point", said Casey.

Dell has opened 22 new sites around the world. "We need to get people to go there, he said, but only 20 percent of our people are ready to take on 'frontier assignments'."

Casey lists the three key qualities to look for in potential assignees as tolerance to ambiguity, risk-taking, and the ability to build relationships.

He also advises HR not to underestimate the importance of selecting a competent relocation company. "The assignment is made or broken in the first 100 days and this is where service providers can help," he said. "Companies need to invest more in the relocation side of the process, which, depending on how it is done, can make or break an assignment."

Casey describes the migration within Europe as "an amazing phenomenon".

"Sixty-two percent of the people we hire in service level jobs in Ireland aren't Irish and this will have a big impact on the migration back home of Europeans," he said.

Mobility issues in Eastern Europe

Liking people isn't a good enough reason to go into HR, according to Rostya Gordon-Smith, former Chief HR officer for Czech Telecom, whose presentation focused on the driving force of mobility in emerging Eastern European markets.

"In Eastern Europe we are looking for people with business skills," she said.

Gordon-Smith also believes that public relations skills, both within and outside the company are a prerequisite to succeed in HR management in the future. HR needs to be able to influence the CEO says Gordon-Smith, as well as being "energetic, innovative and able to change the status quo."

During the panel discussion, Gordon-Smith, who is now managing partner of HR consultancy People Impact, dispelled the myth that recruitment costs are lower in Central and Eastern Europe.

National talent costs just as much, says Gordon-Smith, who sees reluctance to repatriate as a major problem within Eastern Europe, as well as a growing reluctance to expatriate in the first place. 

"The willingness isn't there," she said, "People have just built their house, the quality of life is better and the pull to leave simply isn't so great."

Other challenges include "duel career issues--ninety-eight percent of women in the Czech Republic work for instance--along with fear of xenophobia, racism, and the impact the move will have on self-esteem," she said.

Also, attitudes have remained traditional, making it difficult to re-enter a society you have left, especially for those who had been in international circles for a while, she says. "The locals think, 'What do you know about it now, you have been away from here?'"

Tips for HR managers include bringing the expat back home for a year or two as a kind of 'band-aid' which, says Gordon-Smith "helps them keep links with their country and put things into perspective."

Gordon-Smith adds that companies should also consider employees aged between 50 and 60 for certain more challenging assignments.

The consensus was that HR jobs are getting narrower in scope due to developments in technology and HR needs to consider developing skills such as expertise in managing mergers and acquisitions.

"In ten years time, unless HR changes, they don't have a job," said HR leader from China, P O Mak. "Outsourcing will take jobs away."

Other topics covered at Worldwide ERC's third annual Global Workforce Summit were: the impact of mergers and acquisitions on global workforce practices and policy, cultural orientation and challenges, pension portability, security, tax and legal issues with a particular emphasis on immigration concerns in the EMEA region.

For more details, visit: http://www.erc.org/Global_Summit/emea06.shtml.

June 2006

Natasha Gunn is the editor of Expatica HR.

Subject: Managing a global workforce, global HR management