North American organizations are facing significant staffing challenges as they expand into emerging markets, according to research by Mercer.
Mercer’s HR & Mobility Challenges of Emerging Markets Survey—which polled more than 150 U.S. and Canadian organizations—found that 59% of respondents cited scarcity of local employees with the required technical skills as the most critical human resources challenge in emerging markets. This challenge was followed by difficulties of dealing with complex labour laws (53%) and establishing appropriate salary structures (51%).
“In addition to the lack of local talent in most emerging markets, attracting and incenting expatriates that can provide the needed technical and managerial skills is a big issue for companies trying to staff operations in often difficult locations,” said Roger Herod, principal in Mercer’s global mobility consulting business.
Nearly three out of four organizations (73%) said are in the process of developing business in new and emerging markets. Of these new markets, three countries in particular were reported as posing the greatest challenge: China (52%), India (36%) and Brazil (35%).
“Besides the common difficulties of finding skilled talent and establishing competitive salary structures for local employees, regional complexities around employment laws, local benefits and tax regulations can be particularly troublesome to overcome when operating in these countries,” said Herod.
As a result of many of these issues, more organizations are developing mobility tools and a global job-leveling framework that serves as a common platform between the home and host country locations.
“Besides helping with consistent pay practices across borders, global mobility tools like job leveling help companies manage the development and career paths of employees,” said Loree Griffith, Principal in Mercer’s Rewards consulting business. “This is particularly important as companies strive to quickly establish themselves in an emerging market and maintain their competitive advantage once there.”
In addition to the challenges organizations face with local nationals when doing business in emerging markets, they encounter issues with their expatriates in these markets as well. According to the survey, the top three challenges for expatriates in emerging markets are establishing competitive policies for attraction and retention (38%), attracting the right candidates (34%) and addressing equity issues between expatriates and local nationals (33%).
“International assignments to developing countries can be very costly because of shortages of suitable housing for expatriates, high cost of goods and services, and often high taxes. Additionally, assignments are frequently ‘hardship’ locations,” said Herod. “As a result, companies must implement policies that will attract employees to take assignments at an affordable cost.”