As a young professional in an emerging market, would you rather work for a global multi-national or for a local company? As recently as five years ago, this question was a “no-brainer” for many bright talented men and women in emerging markets like China, Thailand, Vietnam, and Chile. Working for a global company, especially one with a “brand” name and a strong reputation was especially attractive. In many cases, the pay was better but beyond that, the opportunities for developing professionally, as well as advancing (maybe even being sent abroad for an assignment), were far better than they were for local companies.
Recently, executives from several global companies whom I have interviewed paint a far different picture of the competition for talent today, especially in these emerging markets. First, many global multi-nationals’ growth plans have stalled, or at least have slowed down. Second, in some cases, these multi-nationals have had to downsize and lay off local staff; in a few cases, companies have exited their markets entirely. Third, local companies, by contrast, have been growing and in some cases, have begun to grow and expand outside of their home country. Fourth, as local companies have begun to build a strong managerial base and a more professional development process, the gap in development between global and local companies has narrowed. And fifth, the gap in compensation packages between global and local companies has also narrowed.
There are of course tremendous advantages that some global multi-nationals have. Many of these companies have been around for over fifty years, and they have a stable and deep history, which is still very appealing today to many young people in overseas markets. Furthermore, management practices such as managing by objectives, performance reviews, and coaching are well-established in these companies. So someone just out of school or coming from a state-owned company or family-owned business to join a multi-national would have significant opportunities to learn about these good management practices.
Nonetheless, the reality is that competing for talent in today’s globalized world, especially for U.S.- and European-based multi-national companies, is as tough as ever, perhaps even tougher. Here are some examples from my own experiences in working with various multi-nationals and interviewing executives from these firms.
First example. A multi-national company that was entering the Chinese market was looking for a Managing Director to head their operation. Originally, the company had discussed the position with an executive recruiting firm to see whether there were suitable candidates from the competition and/or from the region who might be interested. Fortunately, the company found the right person for the job within the company itself. He was actually a European who had been with the company for over twenty years and had a good track record. He had lived in China as a college student, and in fact had married a Chinese and so spoke Mandarin fairly well. And perhaps as important as these other factors, he and his wife were eager to return to China, and this position was a match made in heaven for them.
Second example. One of the most difficult leadership challenges is motivating a work force that is about to be laid off – not only the high potentials who would most likely get other jobs anyway, but the majority of the work force. This was the situation for several manufacturing plants that the company decided were going to be shut down in a year and a half. The employees knew the company’s rationale and recognized that they would be losing their jobs. In the meantime, they were expected to continue to be productive, adhere to good manufacturing practices and maintain quality standards.
Several months after the announcement was made (and about a year before all the plants were scheduled to close), company executives were surprised to discover that in one plant, productivity measures were breaking records. They sent some managers to the plant to find out what was going on. What they found was a work place where everyone was engaged – due in no small measure to the actions of the plant manager. Let’s call him Matt Jackson. A long-time employee of the company who had gone to night school to get his MBA, Matt was a passionate leader who believed strongly in what he called “treating people right.” When he found out that his plant was closing, he immediately called a town hall meeting and let everyone know that he would not only be updating them regularly, but that he and his management team would do what they could to help everyone find jobs.
He set up daily briefings with his direct reports, who in turn communicated these discussions to the rest of the employees. He set up career centers with his HR department to help every employee work on his or her resume and provide career counseling to everyone who was interested. The HR team began to contact local recruiters and employment agencies in an effort to find jobs for the plant employees, many of who preferred to stay in the area. Rather than feeling anxious or resentful about the closings - or worse, distracted from their work - employees became determined to prove that their plant could be productive during its last year and a half of existence.
Third example. I knew an executive who worked for a pharmaceutical company that many years ago embarked on a strategy of globalizing their manufacturing operations. They turned to Robert Marconi (not his real name), an engineer who had worked locally in the U.S. in the company’s various manufacturing plants. Robert was single, and eager to go overseas. For the next twenty years, he helped his company build greenfield manufacturing operations in various countries - selecting a team, hiring locals, directing construction and making sure the plant met FDA approvals. When I met him, Robert was about to meet with the FDA to walk them through the manufacturing plant that was nearing completion in an Asian country. He was then in his late fifties, certainly not being considered for a senior leadership position in the company. But he was a highly valued talent for the company. It would have been nearly impossible for the company to have replaced someone like him immediately. This is the kind of person that I call a “critical skills” employee for a multi-national.
Fourth example. In a consumer products organization where I once worked, its German subsidiary was underperforming. Germany was one of its largest markets but unfortunately suffered from a lack of strong leadership. Senior management considered hiring a German from outside the firm to lead the subsidiary but, after much discussion, decided to transfer a high-potential South American to become General Manager. At first blush, this seemed like a poor fit, at least culturally. However, Enrique Martinez (again, not his real name) had proven himself well in the small Latin American country he had led over the past three years and was ready for bigger challenges. Furthermore, he had many of the attributes which the company believed the German subsidiary needed – an inspirational leader who was very results-driven, with strong people skills and an execution mind set. Martinez moved with his family to Germany and within six months, had accomplished an incredible turnaround.
One of the lessons that these examples demonstrate is that companies need to think about their talent multi-dimensionally. While there should be an overall corporate talent strategy (much like an overall corporate business strategy), companies should also consider talent strategies for at least four segments of its employee population (as reflected in the examples above):
1. How do we build successors and create a pipeline for the senior levels of the company?
2. How do we retain the solid performers and the B-players?
3. How do we recruit and develop talent at the junior levels?
4. How do we motivate the critical skills employees in our company?
There is no single answer to each of these questions, partly because the answers depend on the particular industry of the company and its competitive position within that industry, the strategic direction of the organization, and its talent philosophy. Regardless of the particular approach and talent strategy, however, it is important for companies to keep in mind the outcome: to have an organization with the best talent to help the company achieve sustainable competitive advantage. This means having people with the right sets of skills and the right mindsets in all the geographies where the organization does business.