HR in emerging markets – cultural learnings for the benefit of a business...
Alan Dixon
Independent HR consultant
This morning, Alan Dixon discusses the many different HR strategies used in the western world compared with those used in emerging markets, and looks at some of the challenges businesses face.
Not quite the politically correct start to an article on “emerging” or should we say “fast developing” markets... but one that recognises that a sense of the absurd is necessary. For instance, most business managers in the UK struggle to define the differences between competence, competences and competencies in English, add another language and culture and you can see the absurdity of promoting this as a “must have” in your local HR policy.
In emerging markets, it is even easier than being a part of head office (H.O.), to immediately understand the detail of the tasks senior management sets. These decisions come thick and fast as soon as a decision to move into a market is agreed. For example, senior management might say “you need to be in the market next Monday to recruit a head of country, head of finance, sales director within 2 months”. In HR ,we tend to immediately focus on the consequent short term tasks, for instance, “should we appoint our usual head hunter?”, do we begin to worry that they don’t have an office in say Romania, begin thinking how will they avoid any local crooks and so on and so on... all the time MISSING the key business drivers.
Or, HR may be worrying about the legal status of overseas employees, through questions such as:
• Should we “rent a rep” through a distributor?
• Should we have our own contracts locally?
• Should some of the staff be on UK / home country contracts or short term assignments?
While all these questions are important, the business drivers and local autonomy priorities should be clear first.
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"...most business managers in the UK struggle to define the differences between competence, competences and competencies in English..."
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The biggest “cultural learnings” I have seen in 10 years of working in Latin America, Middle East, Africa and Eastern Europe, is that absolute clarity is needed about the BUSINESS strategy, before you start worrying about people strategy elements. This includes formally agreeing the degree of local autonomy versus your international business model.
What do I mean?
Well, business drivers such as growing organically or licensing products or acquisitions, require different HR capabilities. Whilst everyone always wants to be the first to say they are, “fast and effective” in a particular market, NOT everyone may want the market to operate within some form of worldwide business strategy on acceptable product development, or have segments of a market that you may not want to enter however profitable the local opportunity. This impacts the HR strategy.
At the basic HR level, in most emerging market business situations, the market is made up of highly competent competitors so everyone will sign up to people as the best source of true competitive advantage, which is nice. However, there has to be an HR / people strategy supporting this or we in HR will be sucked into the detail of difficult tasks in a different language and culture that will drown us in short termism... and strengthen the view that HR is an admin function, that it doesn’t add to the business strategy.
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"At the basic HR level, in most emerging market business situations, the market is made up of highly competent competitors..."
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Additionally in some emerging markets, in particular for older staff for instance in places such as the Middle East and ex-soviet central Europe, it is a very short time since admin is all HR was, so it is doubly important to show the business they are wrong, not by what we say in fancy written policies, but by how we link HR to the business drivers in the new market.
So, that’s fine on paper but give me a real example of how to escape this catch 22?
A real example, for instance, is say you have a business goal of “organic growth through sales and marketing of current key products”, then your business priorities will probably pan out something like:
• “Grow at double / triple / quadruple the market rate”.
• “Innovate products locally that deliver local value”.
• “First choice for customers in X segments locally”.
BUT, importantly for HR, the business priorities might go on to include “Marketing strategy to be part of a worldwide / regionally agreed plan” depending on your business philosophy.
You will then have most of the key drivers that will tell you where to focus your HR priorities in this market. You will now definitely know that:
1) Your recruitment strategy requires careful consideration of compensation and benefits in order to get people able to grow the products at double / triple / quadruple market rate. Follow on questions, such as, “will we train / educate local staff with some expat assignments?” can then be asked.
2) In this case, it is likely your business standards or ethics will be led by local people, so how are you going to ensure that your H.O. centric culture begins to reflect the different culture of family or trust while maintaining your business standards? For instance, in the Middle East it is OK to have a head of finance who is a relation of the local head of the company. Is this the case in your H.O, or do you mind either way?
3) The complexity of these priorities will soon mount up, so a “business” timeline becomes the key HR driver, showing, for example, when the product launches are, what relationships have to be built with what bodies and what competencies are required to do these things.
4) H.O., or local HR if it exists, will need to test that the organisation planned can meet these business needs.
"Do you have HR local expertise that can advise on the organisation in that culture or someone in H.O. with the sensitivity to do that?"
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A secondary set of HR priorities to build the people strategy will then follow on from moving the above key business strategy forward.
In this scenario, the business strategy will include more obvious HR priorities, such as:
1) Are you going to recruit enough staff to justify a talent assessment centre rather than traditional interviewing? Are assessment centres acceptable in this market?
2) Do your newly appointed local leaders understand how your organisation does formal performance assessments, or individual development plans? If it’s local rather than business wide, it’s a different answer, but either way someone still needs to train them.
3) Do you have HR local expertise that can advise on the organisation in that culture or someone in H.O. with the sensitivity to do that? Job titles, hierarchy and car size are massive variables internationally, and one thing is for sure is that your H.O. approach will not fit.
4) Who is scheduling to make sure that within the local business meetings, the people and development agenda is discussed properly, every meeting?
5) Who is sensitive to local market conditions and is monitoring that you have established yourself as an employer of choice versus the competition? Is being seen as an offshoot of a western company a positive or negative driver?
To conclude this example, the questions posed will depend on the business drivers as illustrated, but in my experience, HR should very early on ask, not only for clarity around the business, but also what is the real degree of autonomy locally versus H.O / worldwide requirements?
Clearly in HR, this has a massive effect on whether or not you have international practices for recruitment / assessment / talent planning or whether you leave it to the locals. These decisions reflect the business, not just HR issues, so we should have the assertiveness to say no one should start task-based HR in any new market until the answers are crystal clear.
About the author:
Alan Dixon works as an independent HR consultant, after spending 25 years in the agrochemicals and pharmaceuticals industries. He has worked in manufacturing and sales and marketing HR, the last 8 years in emerging markets.
This article was coordinated by PiR Resourcing. PiR Resourcing is a brand synonymous with providing innovative senior resourcing solutions to international life science organisations. As a result of our exclusive focus on the sector, we have an understanding of many of the issues faced by pharmaceutical, biotechnology, diagnostic and medical device companies in the 21st century. PiR Resourcing offer a range of resourcing services, core to these are senior permanent and interim staff.
• Permanent Resourcing Solutions
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PiR Resourcing’s expertise is particularly evident across functions in high demand. These include Medical, Regulatory, Programme Management, Supply Chain, Market Access, Health Economics &, Outcomes Research (HEOR), Pricing &, Reimbursement and senior level Commercial roles.
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