Financial Times, March 23, 2011, Saturday

Financial Times

March 23, 2011, Saturday

Financial Times

Powerhouse economies lure staff
By Elaine Moore

Published: March 23 2011 18:30 Last updated: March 23 2011 18:30

The march of global talent from east to west, and from west to further west, is faltering. Instead, emerging powerhouse economies – mainly in the east or south – are luring ambitious workers with above-average salaries and the chance to participate in growth markets.

Brazil, Russia, India and China, collectively referred to as the Brics, are gaining a reputation as some of the best destinations for expatriates.

But this unwieldy group defies easy categorisation. Discrete in terms of geography, history, working culture and language, companies and employees who want exposure to Brics must decide whether to export existing corporate cultures or adapt to their varied local working habits.

For example, interruptions during presentations are welcomed in Brazil, where business cards should be printed in both English and Portuguese, but in India, where English is an official language, such behaviour is less acceptable. In Russia employees are entitled to 28 days annual leave, while in China workers are required to work at weekends to make up time lost during national holidays.

But negotiating such new social terrains is not enough to put off employees in the west who are faced with high rates of unemployment and stagnant economic growth. The death of long-term employment rewards, such as final salary pensions, has led many professionals to see their careers more as a series of stages, one of which may well be time spent working in an emerging economy.

David Heath, global director of international business at Alexander Mann Solutions, has worked with clients in a variety of emerging markets and says that barriers to employment are falling. “I’d say a lot of grads I speak to are just as excited by the prospect of working in Mumbai as they are about working in New York.”

Jobs agency Manpower recently surveyed 64,000 employers in 39 countries and found that across the world job prospects were strongest in India and China. Demand was so high, said employees, that rival firms had taken to poaching staff, which in turn led employers to invest in incentives to retain workers.

In a separate series of interviews, HSBC, the bank, quizzed 4,000 expatriates around the world and found that Bric countries scored above average for economic outlook, career development, earnings and the ability for workers to save money.

The term Bric was dreamed up in 2001 in a paper by Jim O’Neill, a Goldman Sachs economist, who argued that the size and speed with which these four countries were growing meant they could exceed the US and developed economies of Europe by 2050.

Goldman Sachs now says it could be sooner than that. In 2007, China became the world’s second largest economy, a year earlier than predicted. The financial group has since said that China could overtake the US in terms of stock market capitalisation by 2030.

The size and strength of Brics led Mr O’Neill to comment in a Financial Times interview that it was now pathetic to continue calling these four countries “emerging” markets.

This rapid success has made them attractive employment prospects. According to HSBC, Russia is home to the wealthiest expatriates, with more than one third earning above $250,000. In possession of the largest natural reserves of gas in the world and vast quantities of oil and coal, the country also has the best educated citizens of any emerging economy.

Sergey Salikov, manager at Ancor, the largest recruitment company in Russia, says the real expatriate rush occurred there in the early 2000s when Russian companies required western business knowledge and would pay a premium for it. Now that Russian managers have become more qualified and experienced, salaries of expatriates and their Russian colleagues are becoming comparable.

European and American expatriates in Russia are also being challenged by managers migrating from India and China, he says, whose compensation expectations are less ambitious and whose motivation levels might be higher.

“Top Chinese managers are flexible when it comes to adjustment to new conditions. Often, they imitate manners of people they are communicating with,” he says. “Indian managers favour open communication and democratic management style. So expats from India and China find it quite easy to adjust to Russian companies’ working culture.”

As employees criss-cross the world, multinational companies have started using different organizational models, according to associate professor Chris Collins at Cornell University’s Center for Advanced Human Resource Studies. One of the most successful is the development of a global culture, with norms and values that translate and transfer across boundaries and which recognize the new fluidity of employment.

In The Rise of the Global Nomad, author Jim Matthewman identified the group who might be best suited to this culture and who he believes will drive the future growth of international organisations. These multi-cultural global professionals, fluent in multiple languages, including English, will not be traditional expatriates who travel abroad for a short period, but highly mobile professionals with a global mindset.

Not all industries lend themselves to cross-border movement, of course. Blackie Swart, HR officer for Citi Russia, says that one of the bank’s most attractive programmes is internal mobility, which moves senior management around the globe, but those working in regulation have a harder time transferring their skills.

Similarly, Robert Walters, the recruitment firm, moved into the Brazilian market in 2010 and Frederic Ronflard, its country director, says tax regulations in Brazil tend to be so complex that it makes no sense for multinationals to take accountants there when good local candidates are available. Any accountants who do move to Brazil must speak Portuguese.

“The work culture is different but adaptation will be easy,” says Mr Ronflard. “But the regulations, constant change of laws and high level of demands of paperwork are complicating day-to-day operations.”

For those who can get to grips with the difficulties, success in emerging economies is seen by some companies as proof of an employee’s ability to work in a challenging environment.

Michael Maeder, account manager at Direct HR, a China-focused recruitment firm with offices in seven Chinese cities, says experience gained in China could be highly valuable, given the country’s future economic status.

However, he cautions that for those of non-Chinese background, the culture differences can be significant. There are, he says, unappealing sides to living there, such as poorer human rights and freedom of information.

Levels of transparency on key factors such as salary levels can be another sticking point for foreign employers and employees: “Most foreign enterprises underestimate HR issues when entering the Chinese market,” he explains.

And now that local Chinese firms are gaining ground on multinationals, companies are having to work hard to retain staff: “The competition for top talent with large Chinese enterprises, particularly state-owned enterprises, is becoming tougher.”

This phenomenon is also occurring in India, where home-grown companies, such as Tata, have risen to compete not only in their own country but overseas.

Prof Collins has identified a migration of talent within Bric countries from large multinationals to home country companies, where local employees perceive better opportunities for senior leadership roles.

“Local employees may believe they don’t have a shot at moving up to the senior leadership ranks of the multinational,” he explains. “The foreign companies, who look to take values and leadership models developed in the US or Europe abroad, are therefore those most likely to be the ones experiencing an outflow of leaders and technical talent.”