Top 4 Challenges HR Professionals Face in Emerging Markets

Much has been written about the rise of emerging markets and what they can offer in terms of talent pool. But no emerging market is the same, and one HR strategy may not cover all markets. In a changing environment, human resource strategies used to manage people in one country are sometimes ineffective in another, and what worked in one country may not work in another.

That’s the reality that many companies currently face in emerging markets due to a lack of preparation, anticipation, and proper talent strategies.

Generally speaking, there is no right or wrong HR management strategy. However, as an HR professional, you need to take into account the cultural differences and various HR issues that arise in the destination country before attempting to implement anything. It goes without saying that developing an inappropriate talent strategy in a BRIC country can be one of the costliest mistakes for a company. Not only in terms of money, but also in terms of actual and potential talent losses.

To avoid such a mistake, you need to know what are the hottest HR topics, topics and trends in emerging markets that could be an obstacle to your business development. To assist you in this task, below is a list of 4 critical HR challenges emerging from some BRIC countries. Memorize them? Will you save time and efficiency?

HR Challenge n. # 1: Attract and retain talented workers

BRAZIL – One of Brazil’s biggest problems is the shortage of skilled labor. Are companies operating in Brazil demanding more qualified workers than those currently offered by the labor market? The shortage is especially pronounced for companies that need English-speaking technicians, engineers, and managers. It is also becoming increasingly difficult to retain talented workers with 5-10 years of experience because they tend to switch companies to advance their careers and earn a higher salary.

RUSSIA – Russia has considerable intellectual capital made up of engineers, scientists, and many other well-qualified people. However, many companies reported that it is increasingly difficult to find great people, as the quality of staff and the level of education are continuously declining. Indeed, Russian job candidates are well educated, but they often come from universities that do not provide them with practical skills. In addition, a growing number of talented Russians have left the country for Israel and the United States. As a result, only 20% of Russian professionals are currently considered employable by companies.

INDIA – Despite the huge talent pool available in India, companies are having trouble hiring skilled workers because the quality of talent is not as good as it could be. Taking a closer look at the available workforce, it is estimated that only 25% of Indian professionals possess the skills required by companies. As for qualified candidates, they are very attractive, mobile and willing to change industries to fill different roles and increase their salary. As a result, HR teams waste a lot of time and money due to this flow of people in and out of companies. What’s more, foreign companies operating in India have to compete not only with Indian companies, but also with companies from Korea, Japan and Hong Kong that are poaching the best Indian talent. As the population of these three countries is aging very rapidly, many of the companies there are turning their attention to the Indian workforce.

CHINA – Despite China’s population of more than 1.3 billion, companies are struggling to find and retain employees. Although millions of university graduates enter the Chinese job market each year, only a small number of them are capable of working in a multinational environment. Reasons include a lack of strong English language skills and no prior work experience. Furthermore, only a quarter of these graduate candidates live in a city or region where the companies are located. Given that labor mobility is restricted by the government, few young talents currently live in urban areas? Foreign companies operating in China face an additional problem that explains the talent shortage: More and more graduates and senior executives are willing to work for Chinese domestic companies rather than foreign companies.

SOUTH AFRICA – An estimated 10% of companies operating in South Africa had difficulty filling jobs in 2011. Compared to other BRIC countries, this number is low. However, there is a real shortage of talented people, particularly engineers, legal workers, technicians, teachers, and finance and accounting workers. The main reason is that South Africans who have or acquire these skills tend to migrate to other countries that will offer them better job opportunities. This brain drain has a high impact on companies’ businesses and must be addressed now if the country does not want to face a larger talent gap in the future.

HR Challenge n. # 2: develop effective leaders

CHINA – Developing leaders is a difficult task in any market, but in China, HR teams struggle to adapt their talent management strategies to the country’s unique business culture and values. Furthermore, potential Chinese candidates for leadership positions often lack international experience, innovation, and the ability to assimilate into Western business culture.

Due to their cultural background, they are not used to taking risks and managing change. As a result, about a quarter of Chinese leaders are weak in the skills most critical to success in their roles and more than half are not adequately prepared for their roles. There is another issue to consider: working for a Chinese company seems to become the preferred career of Chinese executives, as well as expatriates immersed in the market.

SOUTH AFRICA – It is extremely difficult to fill senior and executive management positions with a high-quality leader. Many of today’s leaders working in leading companies are nearing retirement and there is a lack of suitable 40/50 year old candidates with strong managerial experience to replace them. To overcome this critical situation, numerous companies promote young talents to leadership positions and offer accelerated careers to keep the best of them. Because these new young leaders do not have enough work experience and are unprepared to handle such responsibilities, most of them fail or perform poorly. It is vital to the success of companies operating in South Africa to invest in leadership programs in order to develop a generation of truly talented leaders.

Human Resources Challenge n. # 3: deal with tough labor laws

BRAZIL – The Brazilian labor code makes it difficult to use expatriates to fill the shortage gap. The Ministry of Labor seeks to protect the national labor market as much as possible by limiting the hiring of foreign workers. As a result, trying to obtain work permits for foreign employees is a very difficult task for any human resources team. When possible, the maximum duration granted for a temporary work permit is 1 to 2 years, but the reality is that many foreign workers can only stay 90 days within the country. With respect to Brazilian national workers, the labor code is very employee-friendly and provides broad employee protection at the employer’s expense. Recently, President Dilma Rousseff passed a law that directs companies to pay overtime for calls or emails outside of business hours. This regulation reflects an existing trend in Brazilian courts: employees sue their bosses for work outside the office.

RUSSIA – The Russian labor code is extremely employee-friendly and it is almost impossible to fire an employee. However, it allows any employee, regardless of seniority or nationality, to quit a job with just 2 weeks notice and start working for a competitor immediately. Furthermore, Russian labor laws apply to all nationalities, which means that foreign employees (including expatriates) have the same rights as Russian employees. This is standard practice in some EU countries required by EU labor law.

HR Challenge n. # 4: Manage Gen Y Career Expectations

INDIA – Generation Y is writing the new code on the Indian workforce. Mature enough to play crucial roles in companies, however, they can be a nightmare for HR teams, as they are more inclined to leave companies than any previous generation. In addition to attracting and retaining the Indian Gen Y, today’s biggest challenges are communicating with them and offering them rapid career development. In fact, the typical Generation Y Indian worker wants success to come quickly and money faster.

As most of India’s high potential workers (about 64%) and middle managers (about 55%) are from Generation Y, the future of India, as well as the companies operating there, depends of your ability to engage this generation.

CHINA – Chinese Generation Y makes up about 50% of China’s current workforce. Raised to succeed, they are more educated, talented and ambitious than previous generations. As a result, their demands, values, and behavior at work are different from those of their parents. For example, their expectations for rapid career advancement and mobility are high and they place great emphasis on salary. If your company cannot offer them an exciting career, they will move to another company to have a better career opportunity and also increase their remuneration. Getting promoted is the biggest motivating factor in your career. Unfortunately, it is not always possible. Therefore, it is imperative that HR teams find new ways to motivate them.

Of course, as a global HR professional, you will never be asked to solve ALL of these problems alone! However, does your company rely heavily on your HR team to anticipate the risks from people that may affect your development? By having a clear view of the issues facing other HR teams in emerging markets, you will not only improve your overall HR knowledge, but also become aware of HR differences and similarities between these different countries in terms of human resource challenges. As a result, you will be able to suggest better ideas and solutions to your HR team. Developing a global mindset will also help you become an integral part of the leadership team looking for ways to reduce people’s risks in emerging markets.

Remember what Ulrich says: “Modern HR must take on many roles to demonstrate competence and effectiveness.” And I’m pretty sure that, like any HR professional, your goal is to get better at what you do and show people that you can be a strategic business partner.

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