Executive Briefings

Companies Face Talent Management Challenges in Emerging Markets, Survey Finds

Emerging market multinationals are struggling to build effective international management teams as they grapple with cultural differences, conflicting internal perceptions of talent management, difficulties in balancing global and local talent, and a lack of a reliable leadership pipeline.

These are the main findings of a new Ernst & Young survey -  Growing Pains: Companies in Rapid Growth Markets Face Talent Challenges as They Expand - of 810 business executives from all major rapid growth markets.

The majority of respondents lack confidence that their organisation has or can build an effective international management team. Just one in five (20 percent) believe their company manages talent effectively across all markets. Less than a third polled agree that their top management team has an international outlook on decision making (28 percent) and the same number say their top management team has sufficient work experience outside of their home country.

The two main knowledge gaps in top management teams are an awareness of local culture (51 percent say this is where top management need more insight) and an understanding of global markets (50 percent). Only one in five (18 percent) say their company achieves the right balance between local talent and expatriate managers in international markets.

"Rapid growth market companies expanding into new markets are facing major challenges in building and executing effective talent management strategies," says Mike Cullen, Global Managing Partner, People, Ernst & Young. "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.

"Multinationals in the developed world have been internationalising for years through a global/local approach to talent management - it is the glue holding many organisations together as they grow into new markets. Top managers need to demonstrate that they can get the best out of their teams through sensitivity to local markets, making everyone feel valued, and being adept at harnessing diverse opinions to produce a better result for customers and for clients. In emerging markets, a new breed of manager is needed to transcend multiple geographies, balancing autonomy and centralization, global and local."

Other key management challenges revealed in the survey include:

-A lack of an internal management pipeline forces companies to recruit from rivals. While building an internal pipeline requires time and investment, the latter can result in high turnover and salary inflation. Respondents put equal weight to building from within the company (53 percent) and requiring international experience (51 percent) when asked what approach they will use when building an international management team in the next three years.

-Companies are unable to retain and reward high performers in different markets. Many companies feel they can improve their approach to retaining high-performing global talent. Only 20 percent believe their companies do an effective job of evaluating and rewarding high performance across different markets and only 23 percent think their company is good at retaining key global talent.

-C-suite leaders and lower-level managers hold conflicting views on talent management. The widest gap is in their priorities with regard to building an international management team - C-suite respondents give a low priority to recruiting locally from new international markets, compared with managers (16 percent as opposed to 33 percent). And compared with managers, C-level respondents have a much lower opinion of their companies' effectiveness in rewarding high performance across different markets (19 percent vs. 26 percent) and aligning business strategies with an individual's performance objectives (13 percent vs. 25 percent).

Source: Ernst & Young

 

These are the main findings of a new Ernst & Young survey -  Growing Pains: Companies in Rapid Growth Markets Face Talent Challenges as They Expand - of 810 business executives from all major rapid growth markets.

The majority of respondents lack confidence that their organisation has or can build an effective international management team. Just one in five (20 percent) believe their company manages talent effectively across all markets. Less than a third polled agree that their top management team has an international outlook on decision making (28 percent) and the same number say their top management team has sufficient work experience outside of their home country.

The two main knowledge gaps in top management teams are an awareness of local culture (51 percent say this is where top management need more insight) and an understanding of global markets (50 percent). Only one in five (18 percent) say their company achieves the right balance between local talent and expatriate managers in international markets.

"Rapid growth market companies expanding into new markets are facing major challenges in building and executing effective talent management strategies," says Mike Cullen, Global Managing Partner, People, Ernst & Young. "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.

"Multinationals in the developed world have been internationalising for years through a global/local approach to talent management - it is the glue holding many organisations together as they grow into new markets. Top managers need to demonstrate that they can get the best out of their teams through sensitivity to local markets, making everyone feel valued, and being adept at harnessing diverse opinions to produce a better result for customers and for clients. In emerging markets, a new breed of manager is needed to transcend multiple geographies, balancing autonomy and centralization, global and local."

Other key management challenges revealed in the survey include:

-A lack of an internal management pipeline forces companies to recruit from rivals. While building an internal pipeline requires time and investment, the latter can result in high turnover and salary inflation. Respondents put equal weight to building from within the company (53 percent) and requiring international experience (51 percent) when asked what approach they will use when building an international management team in the next three years.

-Companies are unable to retain and reward high performers in different markets. Many companies feel they can improve their approach to retaining high-performing global talent. Only 20 percent believe their companies do an effective job of evaluating and rewarding high performance across different markets and only 23 percent think their company is good at retaining key global talent.

-C-suite leaders and lower-level managers hold conflicting views on talent management. The widest gap is in their priorities with regard to building an international management team - C-suite respondents give a low priority to recruiting locally from new international markets, compared with managers (16 percent as opposed to 33 percent). And compared with managers, C-level respondents have a much lower opinion of their companies' effectiveness in rewarding high performance across different markets (19 percent vs. 26 percent) and aligning business strategies with an individual's performance objectives (13 percent vs. 25 percent).

Source: Ernst & Young