Global survey reveals talent management challenges for rapid growth market multinationals

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London, 10 July 2012 – Emerging market multinationals are struggling to build effective international management teams as they grapple with cultural differences, conflicting internal perceptions of talent management, difficulties in balancing global and local talent, and a lack of a reliable leadership pipeline.

These are the main findings of a new EY survey “Growing Pains: Companies in Rapid Growth Markets Face Talent Challenges as They Expand” of 810 business executives from all major rapid growth markets.

The majority of respondents to the survey lack confidence that their organisation has or can build an effective international management team. Just one in five (20%) believe their company manages talent effectively across all markets. Less than a third of respondents polled agree that their top management team has an international outlook on decision making (28%) and the same number say their top management team has sufficient work experience outside of their home country.

The two main knowledge gaps in top management teams are an awareness of local culture (51% say this is where top management need more insight) and an understanding of global markets (50%). Only one in five (18%) say their company achieves the right balance between local talent and expatriate managers in international markets.

Mike Cullen, Global Managing Partner, People, EY says: “Rapid growth market companies expanding into new markets are facing major challenges in building and executing effective talent management strategies. The key challenge for these companies in the next decade will be to integrate talent strategies with global mobility strategies to form a top management team that has a mix of international expertise and local knowledge.

“Multinationals in the developed world have been internationalising for years through a global/local approach to talent management – it is the glue holding many organisations together as they grow into new markets. Top managers need to demonstrate that they can get the best out of their teams through sensitivity to local markets, making everyone feel valued, and being adept at harnessing diverse opinions to produce a better result for customers and for clients. In emerging markets, a new breed of manager is needed to transcend multiple geographies, balancing autonomy and centralization, global and local.”

Bill Leisy, Global Talent Management Market Leader, EY, says: “The most significant event in human capital in the past three to five years has been talent management's move to the forefront. Not only is it of increasing importance to the development and execution of an organization's business strategy, but it has become a unique competitive advantage.

“This research reveals why talent management has become one of the top business and risk areas in global organisations. Today's talent challenges are only the tip of the iceberg. Responses will evolve as organizations continue to expand into new markets, searching for the most effective and efficient means to align talent management to business strategy.”

Other key management challenges revealed in the survey include:

  • A lack of an internal management pipeline forces companies to recruit from rivals. While building an internal pipeline requires time and investment, the latter can result in high turnover and salary inflation. Respondents put equal weight to building from within the company (53%) and requiring international experience (51%) when asked what approach they will use when building international management team in next three years.
  • Companies are unable to retain and reward high performers in different markets. Many   companies feel they can improve their approach to retaining high performing global talent. Only 20% believe their companies do an effective job of evaluating and rewarding high performance across different markets and only 23% think their company is good at retaining key global talent.
  • C-suite leaders and lower-level managers hold conflicting views on talent management. The widest gap is in their priorities with regard to building an international management team – C-suite respondents give a low priority to recruiting locally from new international markets, compared with managers (16% as opposed to 33%). And compared with managers, C-level respondents have a much lower opinion of their companies’ effectiveness in rewarding high performance across different markets (19% vs. 26%) and aligning business strategies with an individual’s performance objectives (13% vs. 25%).

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