(From HR Magazine) -- In contrast to the economic malaise and high unemployment gripping the US and Europe, emerging markets continue to have relative real growth and this has brought with it a shortage of senior executives and specialist talent.
This potent mix can make building and managing a talent base in emerging markets a challenge. But with global businesses earning an ever-growing portion of the revenue from these emerging markets, addressing this challenge is more important than ever.
The largest global brands have a long history of operating in multiple countries. But as a recent survey by Ernst & Young (Growing pains: Companies in rapid growth markets face talent challenges as they expand) found, wide economic and talent imbalances have amplified their usual talent management issues.
The survey found that only one in five executives believe that their company manages talent effectively across all the markets in which they operate, while fewer than a quarter think their company is good at retaining key global talent.
Among the obstacles to building effective international management teams the survey identified were issues around cultural differences, difficulties in balancing local and global talent, retention problems and the lack of a leadership pipeline.
They also find it hard to provide appropriate incentives in different markets, with only 20% of respondents saying that their companies do an effective job of evaluating and rewarding high performance across different markets.
Add to this, the issue of how to structure international compensation packages across geographic locations which can include complicating local governance factors. As executive compensation has become a media hot button for listed companies, the spotlight has attracted regulatory as well as political interference, a potent mix for any board to manage.
Another theme that emerged from the Ernst & Young report is that cultural intelligence (CQ) is not yet a widely accepted concept. In fact, fewer than three out of 10 (28%) of those surveyed felt that their top management team has sufficient experience outside of their home country or a sufficiently international outlook on decision-making.
While recruiting locally would help to redress this balance, in many emerging markets the supply of talent lags behind demand. This situation is exacerbated by rapid salary inflation as companies vie with their competitors for suitable candidates. This is especially true the higher up you go - seasoned executives ready to take on critical roles are in short supply in many territories.