Don’t pay over the odds for staff in new markets

Wage dynamics in emergent markets still amaze me.

I was in Mumbai recently, conducting interviews for two senior roles there. During my visit, I saw a number of candidates, all of whom were well-qualified for the roles we were seeking to fill.

These were candidates for senior roles, with a good 10-plus years in their functional discipline behind them. They brought credible experience to the table, and could clearly hit the ground running. They came from brand-name companies, including Indian, European and US firms.

Education levels were impressive.

Perhaps what struck me the most, though, was the expectation on pay packages.

Candidate after candidate would clearly spell out their current remuneration, and then stun me with expectations of 40% to 50% uplifts in base pay. Tellingly, these were usually the same candidates who averaged 18 to 24 months per employer.

I’m a capitalist – I really am. I believe in free markets and supply/demand cycles. Having lived in China in the late 1990s, though, I’m also painfully familiar with opportunistic job hunters and the Western firms that fuel them.

When we (HR professionals wandering about in new markets) start looking for talent, we quickly become our own worst enemies. We are obsessed with finding skills and experiences like our own. In our home markets, we would never agree pay rises like this; we’d wait until we found the correct intersection of skills, experience and cost.

We have no-one to blame but ourselves for the vicious wage spirals we’re seeing in a number of sub-markets.

Go look for skilled IT folk in Indonesia; do a search for an HR person in India (not personnel admin, but real HR); wander into Ulan Baator to find your next chief financial officer.

Sure, there’s a supply/demand equation in place, and you have to deal with it, but there’s also a basic requirement to exercise a bit of discipline in recruitment and job offers.

Recruiting outside your home market is always challenging. It’s essential that you do your homework and understand current market conditions. Have you researched wage practices? Do you understand availability, or lack thereof, of key skillsets?

As you work through your recruiting process, are you keeping a close watch on your ‘must haves’ rather than your ‘nice to haves’? Are you being realistic, or have you picked up a headquarters’ competency model and forced it to fit onto a very different business culture?

We, as HR leaders for our firms, have a responsibility to understand the markets we operate in. Then we have an obligation to set and manage expectations with our senior leadership. Only from instilling this discipline into our organisations can we make a true difference for our businesses.

Denouement? I found excellent candidates for both of my roles in Mumbai, and made two hiring decisions. I paid appropriate market wages, and both candidates are looking forward to coming on board. And neither of them sought 40%-plus increases.

Lance Richards is senior director of international HR for Kelly Services and adviser to SHRM

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