A new report by Ernst & Young shows that talent is a growing concern for business leaders in expanding markets. In his introduction to the study, report co-author Bill Leisy, Global Talent Management Leader for Ernst & Young, writes, “Perhaps the most significant event in human capital in the past three to five years has been talent management’s move to the forefront. Not only is it of increasing importance to the development and execution of an organization’s business strategy, but it has also become a unique competitive advantage.”
Indeed, according to the survey of 810 executives in “major rapid growth markets” only 20% think their company manages talent effectively across all of the markets in which it operates.
Co-author Mike Cullen, Global Managing Partner for People at Ernst & Young, says, “Rapid growth market companies expanding into new markets are facing major challenges in building and executing effective talent management strategies. 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.”
Based on the study, Ernst & Young identified several challenges facing companies in growth markets. Here’s how business leaders can more effectively manage and develop talent that will give them the competitive edge in markets around the world.
First of all, the study reveals that few employees or managers have confidence in their company’s expertise in international decision-making. The study says:
“And C-suite executives are even less sure than their line managers, with only about one in four (24%) expressing confidence, compared with one in three (34%) of the managers. Overall, just one in five executives believes that their company achieves the right balance between local talent and expatriate managers in international markets.”
This could be remedied, says the report, by better talent management. Rather than filling gaps by hiring from competitors, the ideal solution would be to invest in internal pipeline development. Turnover is also a challenge in growth markets, especially because incentives vary across regions, and many executives lack the cultural competence to identify what appropriate incentives are around the world.
“Only 20% of our survey respondents believe their companies do an effective job of evaluating and rewarding high performance across different markets, and only 23% think their company is good at retaining key global talent,” the report continues.
The survey also identified a gap between c-suite leaders and managers when it comes to talent. “The widest gap is in their priorities with regard to building an international management team: C-suite respondents give a very low priority to recruiting locally from new international markets, compared with managers (16% as opposed to 33%).”
The study continues, “Compared with managers, C-level respondents have a much lower opinion of their companies’ effectiveness in rewarding high performance across different markets (19% vs. 26%) and aligning business strategies with an individual’s performance objectives (13% vs. 25%)”
Leisy and Cullen identify a few solutions to the challenges that global companies are experiencing in growth markets.
“Ideally, the best-run companies would achieve a perfect balance between autonomy and centralization and between global and local, and would have efficient communications between the top of the company and the bottom. These companies would be led by individuals who are sensitive to the nuances of different markets, communicate effectively with their teams as well as with employees across the company, and understand the value of diverse perspectives in producing better outcomes – all while keeping the overall mission and values of the company in mind.”
But, they add, “In reality, not many such companies exist.”
They suggest that a few first steps in building an effective growth market strategy is implementing a metrics-based approach to talent management. “A single set of metrics that can enable firms to compare one region’s talent management process with another helps to provide a yardstick, however imperfect, by which to measure performance.”
Secondly, they suggest, companies must work harder to ensure that their corporate culture must pervade through out all markets. “There has to be a single mission statement, and a related organizational approach, that everybody can sign on to, whether they are from Indonesia or Indiana, China or Canada. This is the glue that holds great companies together.”