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BK Blog Post
Posted by Laura Goodrich.
Laura is cofounder of On Impact, an integrated content company that specializes in creating and producing videos, television, and multimedia content delivered over time to create sustained change and adoption of important leadership concepts.
For a long time, the organizations in the United States, Europe and other developed economies, were able to grow serving domestic markets. This started to change with economic slowdown in their own markets and increased domestic and global competition. The organizations in these markets were forced to look for new avenues of growth. Entering emerging markets became a no brainer for these organizations.
This expansion to new markets was fueled by the advancements in information and communications technology. These advancements have made possible new forms of international coordination within global organizations and an increased potential to flourish in fast-growing economies.
Let us see how important are emerging markets for global organizations.
IBM expects to earn 30 percent of its revenues in emerging markets by 2015, up from 17 percent in 2009. In 2011, growth markets generated nearly half of IBM’s geographic gross profit growth. (Source: IBM 2011 Annual Report)
At Unilever, emerging markets now account for more than half of sales. (Source)
400 midsize emerging-market cities, many unfamiliar in the West, are expected to generate nearly 40 percent of global growth over the next 15 years, according to a research by McKinsey Global Institute.
The ten fastest-growing economies during the years ahead will all be in emerging markets according to the International Monetary Fund.
For such organizations, operating in global markets, one of the biggest challenges is managing a globally diverse workforce. If you are an executive working in such an environment, it is important to know about the challenges and approaches to deal with these challenges.
Most organizations face a common set of problems in managing a global workforce. The extent to which these problems affect them can vary from organization to organization, depending on the operating model, history, and global footprint of the individual organization.
When operating in a multicultural environment, organizations need to make sure that they do not offend or intimidate employees working in the different countries.
The Japanese don’t like the number 4 and 9 because of their pronunciation. Four is pronounced “shi” which is the same pronunciation as death. Nine is pronounced “ku” which has the same pronunciation as agony or torture. So an MNC working operating in Japan should avoid using these numbers while giving gifts to its Japanese employees.
Employees in several international markets may take offense if they are addressed by their first name. They may prefer being addressed as Mr or Ms prefixed to their surname.
While being global strengthens access to new customer markets, suppliers, and partners, it may also bring challenges in employee expectations. Most organizations find it difficult to provide benefits that meet the varied needs of multinational employees.
Employers should take into account how benefit policies should vary from country to country. It is important to understand how local government rules and cultural factors affect the local benefits programs and employee expectations. For example, in an emerging market like India, elements of compensation such as House Allowance, Rent pension, and health plans that include grandparents hold importance for the employees. Employers can capitalize on the fact that Indians feel a sense of security if the organization provides them accommodation and post-retirement benefits like pension. Such organizational strategies, that may not mean a lot in other cultures, can work as a great motivator for the Indian workforce.
Different countries have their own important holiday seasons. Work takes a backseat in the Western countries during the holiday season around Christmas. For the middle east, it is around the annual pilgrimage (Hajj) season.
A global organization can ensure employee satisfaction by giving its employees ample freedom during their respective holiday seasons. This can work wonders for the organization productivity as work can go on in some part of the world at all times of the year. For example when employees in London go on Holiday, those in Brazil can continue to work.
DanPink in his book “Drive” says people want Autonomy, Mastery and Purpose. These are the core outcomes an employer should provide to employees. Human resource departments should make constant efforts to make sure that all employee are able to find these outcomes.
Like most successful global organizations, the newer ones moving in that direction must devise locale-specific recruitment, retention, training, and development processes to suit the different geographies of their operation. Human resource management at the global level should focus on creating an environment where the employees can be most productive and happy. This can mean focusing on small items like cafeteria or work desk design. For example, an employer with significant operations in China can organize Chinese language training for key employees in another country. Human resources should also create country-specific conflict resolution processes.
The cost of doing business in rapidly changing and increasingly complex economic environment rises significantly as global organizations grow bigger and more diverse. Global employers should make constant efforts to standardize compensations so that they do not in any way become the reason for unrest.
Peldi Guilizzoni, the founder of Balsamiq, a young startup, came up with an innovative solution for this challenge. For the diverse workforce spread across San Francisco and Sacramento, California; Bologna, Italy; Paris, France; and, Bremen, Germany, he came up with a simple salary policy. As per this policy an employee is paid a little better than someone with the same job in her geographical area. Check out this blog post that Peldi wrote to explain it.
The cost of complying with global standards and coordinating managers across the different countries of operation, make it increasingly difficult to cope with budgeting issues in emerging markets. A solution for the employers can be to make possible a festival bonus or tax free passes such as Sodexo passes. At relatively less cost, it can give a boost to the motivation and satisfaction level of the employees, which in turn translates to benefits for the organization.
Regardless of the and differences in viewpoints, the understanding of these broad set of challenges can help global organizations in better management of global workforce. With the right tools, technology, people, and processes, organizations can utilize their human resources to achieve competitive advantage in their global business initiatives.
Did you face any of these challenges yourself? Any innovative solution that you came up with?
Let us know in comments.