Recruitment and retention hard in emerging markets

Recruitment in emerging markets is difficult and employers find cash is a stronger motivator than other perks, says Victoria Furness

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  • Competition for talent in the emerging markets of China and India means that employers are fighting over the same labour pool. Employers are competing for both British expats based overseas and local employees.
  • Talented managers are attracted by factors such as job satisfaction, career development and a strong employer brand.
  • Local laws within countries vary, which will influence the package an employer can give

In countries where several companies are trying to establish a presence, finding and keeping employees, whether they are British expats or locals, can be hard. This can also be made worse by firms in the region poaching one another’s staff.

Some 54% of organisations in China have experienced an increase in turnover of professional staff since 2005, according to the China employee attraction and retention survey 2006 produced by Mercer Human Resource Consulting. Furthermore, the Global relocation trends survey from GMAC Global Relocation Services and the National Foreign Trade Council shows that expatriate employees are twice as likely to leave their jobs than local staff.

Jim Leininger, general manager for Beijing at global consulting firm Watson Wyatt, says that in Asia, employers are chasing after people with leadership and management skills who are "proactive, strategic thinkers [with] international experience." Unsurprisingly, this means that employees who fit the bill can command a significant pay and benefits package.

In China, the shortage of home-grown senior talent has been exacerbated by the thousands of multinationals that have flocked to the region. While in India, Lee Quane, general manager for international human resources organisation ECA International, says: "The country’s education institutions cannot produce the graduates as quickly as companies want them to meet the demands of industry." Clearly, recruitment and retention of employees in these overseas markets is pretty tough.

Money talks in such competitive markets, with global recruitment firm Antal saying it has recently seen salary increases of 200% in some countries. However, it adds that perks are not being used effectively to recruit and retain staff.

Expatriates in all locations typically receive a benefits package similar to the one they received at home, with extra allowances made for travel and schooling. For local senior executives the perks are usually far less competitive.

In China, several organisations have introduced supplementary benefits, such as medical cover and housing perks, to add to employees’ state benefits provision. Local senior managers may also receive a car and stock options. According to Antal, Pepsi China offers senior managers stock options worth $500,000 if they stay for four years.

But with few tax incentives in overseas locations for employers to offer cash alternatives, firms have tended not to use the benefits package to stand out from the competition. "It’s difficult in China to make an impact through benefits," admits Watson Wyatt’s Leininger.

For employers looking to recruit and retain staff in competitive overseas markets it will pay to look at what the competition is offering and see where it is possible for them to compete.

Leininger also recommends that companies focus on the areas talented employees are interested in, such as training and development, job satisfaction and employer brand. Tony Goodwin, CEO of Antal, agrees: "Employees are looking for employers to give them the career opportunities, training and support they crave. That can make the difference between keeping somebody or not when salary [and the benefits package are] quite close."