Any corporation setting up shop in a developing country will need to recruit local labour. Liz Hall looks at HR's role in what can be a challenging process
When the Edinburgh-based marine service company BUE Marine moved into Azerbaijan's capital Baku to take advantage of its natural resources, it faced a catalogue of HR obstacles from nepotism and theft to low skills levels and deceitful CVs.
The oil industry supplier was forced to make concessions to nepotism by employing at least one government-recommended worker per boat. On-the-spot anti-theft searches became a necessary part of working life and a company freebie of a week's supply of oranges was hidden away within two minutes by impoverished staff, recalls Linda Kennedy, group sourcing manager at international mining company Billiton and former personnel manager at BUE Marine.
"It was a complete culture shock. Nepotism was even more of a problem than it had been in Latin America and we saw many dubious qualifications, as you can buy anything there. We had to work very hard to build trust," says Kennedy.
As new business opportunities, cheaper labour and alternative sources of specialist staff lure growing numbers of companies to developing countries, particularly to Central and Eastern Europe (CEE), Latin America and Asia, HR's skills are increasingly being put to the test. Since moving to Billiton, a FTSE 100 company, Kennedy's experiences in Latin America and China have served to further underline the HR challenges inherent in sourcing and retaining staff in developing countries.
Once a company has its sights on a merger, acquisition or joint venture, one of the first steps is to examine costs and analyse the local labour force. "When companies want a foothold in a developing country, they need to research labour costs, cultural differences, benefits, legal jurisdiction and how to hire people locally.
"In China, for example, they would need to sign contracts through one of two government agencies: the China Interlattec International Corporation (CIIC) or the Foreign Enterprise Service Corporation (FESCO)," says Alan Tsang, managing director for Asia for search and selection firm Norman Broadbent.
In-depth analyses of local labour issues often make f