Recruitment is the biggest challenge facing global companies. Sally O’Reilly looks at the movement of labour around the globe and what HR chiefs are doing to capture the top talent
The globalisation trend means that the search for the right staff is more complex and challenging than ever before. In theory at least, global firms can source people as well as materials anywhere in the world – the use of the Internet for recruitment has made this much easier. But in practice, finding the recruits you want, competing for people with sought after skills and winning their loyalty is anything but easy.
Even so, the international recruitment market is expanding. According to the latest Recruitment Confidence Index, published by Cranfield School of Management, the Daily Telegraph and TMP Worldwide, 19 per cent of firms employing more than 1,000 staff have recruited from abroad in the past six months. And while international recruitment was once dominated by financial services firms and oil companies, the recent spate of international mergers and acquisitions means that a far wider range of companies are seeking staff with cross-cultural experience.
These organisations aren’t looking for traditional "ex-pat" staff, who can go from one country to another, using the same management style in each case. International managers now need leadership skills which can be flexibly applied across a number of countries and cultures. For this, a different set of skills is needed, and major employers are looking for high flyers with the right experience. Increasingly, they are looking outside the UK.
Clare Chapman, group HR director at supermarket Tesco, believes that competing for staff internationally is increasingly important. As Tesco is opening branches in Ireland, Asia and Central Europe and currently employs over 35,000 people abroad, this means honing and adapting recruitment policies while maintaining a clear central strategy.
""It’s quite straightforward – good recruitment practices mean the skill and the will to go after the best," she says. "We have best value standards that are very clear, and in recruitment terms the skill is the same across the world. But the way it looks may be tailored in the HR division in Poland, or in Singapore.
"We know what we are looking for, and we know the values of the organisation. So we take the tools we have and customise them so that they work locally. For instance, in Poland there is low unemployment, so recruiting there is more difficult." Making recruitment work in diverse situations while keeping employment practices consistent is a challenge for any global employer. Tesco tackles this by updating its recruitment procedure every year, and building in good practice ideas from all over the world. "For instance, when we opened a hypermarket in Newcastle upon Tyne, we used a 360-degree feedback tool which had been used by staff in Central Europe," says Chapman.
This ability to organise a coherent recruitment strategy which is responsive to different cultures is vital, believes Linda Holbeche, director of research at Roffey Park. But she thinks many firms have a long way to go. Holbeche argues that companies without a coherent strategy on international recruitment will lose out to those who manage to combine sensitivity to regional employment conditions with a clear central vision.
"Recruiting overseas is an important chunk of the HR role, but a lot of HR teams aren’t doing terribly well," she says. "Particularly, trans-national organisations, in which local regions are doing their own thing. Often, the same HR system isn’t used across the whole organisation, and they aren’t able to centralise information about who is doing what. And central information is needed."
Holbeche says the problem has been exacerbated by the changing role of HR, with smaller, downsized teams working centrally, and regional HR offices left to work more autonomously. "Fewer HR people are working across the range of international environments," she says.
Such reductions in HR departments can exacerbate the problem of finding and keeping high-flying international staff. US companies are already working hard to deal with this issue – most of the 10 companies in Fortune magazine’s "World’s Most Admired Companies" see retaining key staff as a vital weapon in the war for talent. One example is US retail giant Wal-Mart, which began an international expansion campaign 10 years ago and now has about 1.1 million employees worldwide. In the past year, the company has changed its personnel philosophy, putting the emphasis on retaining and growing staff, rather than on a "hire, hire, hire" strategy.
To achieve this, Wal-Mart focuses on how employees adapt in their first 90 days with the firm. They are linked to experienced employees who act as mentors, and assessed after 30, 60 and 90 days. This initiative has helped reduce the company’s attrition rate by 25 per cent.
Combining flexible recruitment methods with a consistent approach to developing international staff once they are in post is crucial, according to Peter Reilly, principal research fellow at the Institute for Employment Studies.
"To me, the key issue is developing staff in post," he says. "You need their loyalty – and it can be hard to keep the loyalty of international staff.
"Using your resources to develop staff when they are in post is essential. And you need to rethink succession planning so that staff from a non-standard background get a chance to take on senior management roles."
The war for talent isn’t just a US phenomenon, of course. UK firms with a global reach are also in the international market to find and recruit the best staff. For instance, Cable & Wireless, which employs some 41,000 people worldwide, has built in so much geographical flexibility into its employment policy that it has only 300 staff working on traditional ex-pat contracts. While Cable & Wireless Global – the division responsible for business in the US, Japan and Europe (including the UK) – has 15,000 employees, its sister operations in the Cable & Wireless Group have staff working in the Caribbean, the Middle East, the Pacific, the Indian Ocean and Australia.
"The decisions about where we go now involve going to the location where skills exist, and seeing how tight a market it is," explains Brian Siller, vice-president of global HR with Cable & Wireless. "If the skills are only found in certain places, we have to set up there even if the recruitment market is tight. In the US, for instance, it’s difficult to recruit and hold staff, but we need to do it.
"But where it’s not necessary, we can go to where the labour is available. For example, we have set up a multilingual service centre in Shannon, in west Ireland. We didn’t import staff to work there, we recruited locally, taking on local staff with language skills, and foreign nationals already living there. And there are a variety of nationalities in most locations of the world."
In simple terms, making international recruitment work means knowing who you are looking for, where to look and how to attract those people when you find them. This is equally true if you are taking on staff within your own national boundaries. But Chris Bristow, director of careers management at the London Business School points out that matching the applicant with the post is more challenging if you are working across the globe. He believes it’s essential to develop a process which uses the experience of staff working in the relevant region.
"Getting the right fit is vital," he says, "and we do find that global companies recruiting for their Indian office, for example, will bring in people from that office, either physically or via video conferencing. It’s difficult for UK HR staff to make recruitment decisions without their help."
Bristow believes that second interviews ought to take place in the region where the job is to be carried out. "Applicants need to get a real feeling for the culture. Flying them out is an additional expense, but one which needs to be built in," he stresses.
Making global recruitment effective clearly means thinking beyond techniques traditionally used in the UK. So what additional skills do HR staff need? According to Chris Brewster, Professor of International HRM at Cranfield Business School, awareness of the changing mechanisms used is essential, together with a broad knowledge of international employment credentials. "The Internet is increasingly important – more than half of firms are using this to widen their search, and aren’t looking for applicants from just one country," he says. "This is particularly significant in the EU, because there are no restrictions on work permits there.
"And HR staff also need to be more aware of the value of international qualifications. For instance, in the academic world, it’s hard to know how much the value of a PhD varies from country to country."
The means of advertising posts can also be a minefield, warns Brewster. "An ad which looks very amusing in the UK could look to German applicants as if the company has no confidence in itself," he warns. "While in Portugal, where the first thing job-seekers do is ask their friends and family what’s available, you may miss the best people altogether."
Terry Lawes, international relationship manager with global recruitment firm TMP Worldwide, believes that firms need to work hard to get this right. "The wider the recruitment advertising and communications agency network is, the more likely it is to succeed," he says. "Lawes advises firm to reconstitute their recruitment advertising messages with great care. "A straitjacket approach simply won’t work," he says.
Using alternatives to job ads is also important. Companies like Cable & Wireless and Microsoft have employee referral systems to spread the word about vacancies as widely as possible. This involves announcing internal vacancies via the company intranet, and encouraging employees to recommend friends, family and former employees to apply. "It’s a form of very cost-effective, orchestrated networking," says Brian Siller of Cable & Wireless.
In spite of all the talk about "cultural awareness" many companies, particularly the major US firms, still believe company culture is more important than local variations in working styles. Though taking this line goes against the more politically correct pronouncements on the subject of cultural difference, it does make recruitment easier. For instance, if Microsoft UK finds impressive new recruits, it will place them anywhere in the world. "Our strategy for employment is that if we find the right person for Microsoft, and there is no suitable vacancy here in the UK, we will refer them to a job in Europe or the US," says group human resources manager Beverly Stratton. "This applies both to existing staff and new applicants."
But Gary Luddington, a partner with international headhunting firm Odgers, Ray and Berdston, thinks that moving employees to an unfamiliar country is fraught with problems. "Placing people in overseas posts is high maintenance," he says. "Companies have to pay high salary, plus school fees, housing costs and a range of other expenses." This will vary, depending on the location, but a low cost of living doesn’t necessarily mean a cheap employee. "You have to pay people more in hardship areas like Russia, Eastern Europe and China," he points out.
And Luddington stresses that attitudes to working overseas are changing. Many people are actually more reluctant to uproot their families than they have been in the past – particularly if their partner is also established in a career. "We don’t have a problem identifying people – we have the databases and the contacts to get hold of people anywhere in the world," he says. "The greater issue is persuading people that this is a good career move. After all, if you are headhunting someone, then by definition they are doing well where they are."
So what demands does all this made on HR staff? Do they need skills which are specific to international recruitment? Russell Andrews, head of HR resourcing at recruitment company Macmillan Davies Hodes, thinks cross-cultural awareness is the key. "You do need some additional technical knowledge about compensation practices, employment law, and employment practices, which vary from country to country," he says. "But you can learn all this very quickly. Cultural sensitivity is what HR people need most of all and you get this from experience."
Clare Chapman of Tesco says her company is beginning to develop HR staff with global experience. "It is a process of evolution," she concedes. "But there is more international movement of HR staff. "In the past three weeks, we have appointed an American to work in the HR department in Thailand, and we have also set up a resource pool, which is a way of moving people across the business to work on different projects." This is a move which is welcomed by Terence Brake, vice president of global development specialist TMA. "The people I find most difficult to train are those who have no global experience at all," he says. "You can talk about cultural differences till you are blue in the face, but people who have no international knowledge whatsoever have no frame of reference."
Awareness of cultural difference is particularly important during the selection process, stresses Brake. "You can’t make the usual assumptions about body language in an interview if you are working cross culturally," he says. "It’s easy to make false attributions – for instance, you can’t interpret silence as passivity or ignorance, or failing to make eye contact as being untrustworthy."
Understanding where your potential recruits are coming from also means taking their age into account. Increasingly, younger employees are concerned about the ethics of global firms, and are unwilling to sign up to jobs which will consume all of their time and energy.
"Senior management may embrace globalisation and the freedom it advocates, but HR managers need to re-define new employment contracts," says Dr Elena Antonaopoulou, lecturer in human and organisational analysis at Manchester Business School. "There is more pressure on organisations to negotiate with staff to win their loyalty and commitment, and employees will be more assertive about choosing where they want to work and moving on."
Global firms also need to convince young recruits they are ethical employers. Your average MBA student is unlikely to have joined the 15,000 protesters at the World Bank/IMF conference held in Prague in September. But he or she may well share their concerns. It’s no longer good enough to simply ignore criticisms that globalisation is the cause of world-wide inequality, enabling trans-nationals to shop around for cheap employees. Interviewers may well find bright young graduates asking them what their company is doing about the fact that billions of impoverished workers in Third World countries earn less than £1.40 a day. But according to Simon Hamm, head of careers and placement at the European Business School, graduates are often frustrated in their quest to get the low-down about a prospective employer.
"We have graduates from all over the world who are keen to work for global employers," he says. "But they need more than just the brochure, the web site and the presentation. It is not enough for firms to say ‘we want dynamic graduates’ – they have to give applicants hard information."
Hamm says applicants also want to see fair, consistent recruitment policies. There are still companies which seem to be unclear about who they want, and bigger, more complex global organisations can be the worse culprits. "At the moment, we do find that line managers in some companies take a different line to HR people," he comments. "We find that, for instance, the head of mergers and acquisitions may say, ‘I want to recruit this student’ and there is a clash with HR. Or the opposite happens, and they aren’t taken on via the conventional route, but work for the head of the Russian desk, impress that person and are eventually offered a permanent position. The issue is who decides the recruitment strategy?"
Linda Holbeche of Roffey Park shares this concern. In the end, the success of global recruitment depends on the strength of communication within trans-national companies, she believes. And if communication is weak – then HR departments must take the initiative.
"If there are relatively informal links between local and global offices, it falls on HR people at head office to build networks with fellow HR practitioners working in different locations," she says. "You have to reach out and create relationships with people in local offices who may be hostile to the centre."
Networking with senior people closer to home is also vital. "Be prepared to use the influence of senior managers – you need to build relationships with key players in the business, and learn to understand the business so that you can sell your strategy to them," advises Holbeche.
"The Achilles heel of HR managers is that they are often cut out of the loop because they are seen as lacking the business awareness which senior managers are looking for."
The international manager a checklist of ideal attributes
Conflict resolution skills particularly important in a cross-cultural setting in which both misunderstandings and racial tensions may play a part
Ability to communicate important with staff at all levels, including those for whom English is not a first language
Flexibility and open mindedness managers need to understand trends and new directions in technology and see their potential
Broad understanding of business needs a knowledge of financial resources, marketing and distribution practices, political and cultural influences and international economics
Interest in and willingness to try new things both in corporate and cultural terms. This isn’t a job for someone who wants to stick to familiar territory, in any sense
Ability to cope with stress international leadership involves a great deal of travel, upheaval and stress. Executives have to be prepared to spend long periods away from home
Tolerance for ambiguity anyone in this role needs to speed up business development where possible, by exploiting and adapting learning between different countries and markets.
Language skills even if English is the corporate language in many firms, knowing other languages shows commitment to valuing different cultures
Experience of living or working in other countries, or strong interest in other cultures and lifestyles. Anyone with a strong commitment to global working and global thinking is likely to have travelled and experienced different cultures
Adapted from Towards Global Leadership by Caroline Glynn and Linda Holbeche, published by Roffey Park
Top 10 global firms
1. General Motors (Motor vehicles and parts)
Headquarters – Detroit, US
Global turnover – $189,058m
Workforce – 388, 000
Web site – www.gm.com
2. Wal-Mart Stores (Merchandising)
Headquarters – Bentonville, Arizona, US
Global turnover – $166,809m
Workforce – 1,140,000 (including 255,000 outside US)
Web site – www.walmartstores.com
3. Exxon Mobil (Petroleum refining)
Headquarters – Irving, Texas, US
Global turnover $161,881m
Workforce – 106,000
Web site – www.exxon.mobil.com
4. Ford Motors (Motor vehicles and parts)
Headquarters – Michigan, US
Global turnover $162,558 million Workforce – 364,550
Web site – www.ford.com
5. Daimler Chrysler (Motor vehicles and parts)
Headquarters, Stuttgart, Germany
Global turnover – $159,986m
Workforce – 466,938
Web site – www.daimlerchrysler.com
6. Mitsui (Trading)
Headquarters – Tokyo, Japan
Global turnover – $118,555m
Workforce – 10,702 (including
Web site – www.mitsui.co.jp
7. Mitsubishi (Motor vehicles and parts)
Headquarters – Tokyo, Japan
Global turnover – $117,766m
Workforce – 42,050
Web site – www.mitsubishi.co.jp
8. Toyota Motor (Motor vehicles and parts)
Headquarters – Toyota, Japan
Global turnover – $115,671m
Workforce – 214,631
Web site – www.toyota.jp
9. General Electric (Diversified financial)
Headquarters – Fairfield, Connecticut,
US Global turnover – $111,630m
Workforce – 340,000
Web site – www.ge.com
10. Itochu (Trading)
Headquarters – Osaka, Japan
Global turnover – $109,069m
Workforce – 7,454 (including 2,200 overseas)
Web site – www.itochu.co.jp