Business growth across Asia, the Middle East and Africa (AMEA) is strong, and companies that aren’t confident about their strategy for competing within (or against) these markets will be at a strategic disadvantage.
Where multinational companies once had their pick of skilled talent thanks largely to higher pay premiums, they now find themselves competing in a tight labor market where employees are often attracted to local companies for a variety of reasons, such as starting salaries that are now on par with multinationals, opportunities for rapid promotion and pay increases, a sense of national pride, management styles and benefits more closely tailored to local cultural values.
Business growth has translated to positive workforce indicators across the region. Salary budgets for 2019 across Asia-Pacific are robust, particularly in the high-growth regions of China and India. Budgets are projected to increase for 2019 in three of eight life sciences markets and four of eight technology markets. Meanwhile, optimistic business growth has translated into higher employee turnover.
To find increasingly specialised talent and compete in a growing industry, HR leaders in AMEA must innovate as well. Many are turning to non-traditional job-seeking channels, including the social media platforms LinkedIn and WeChat, and expanding to new talent pools like the US and Europe. In a turn of events, multinational companies from the US and Europe are competing with AMEA-based companies on their own turf.
Business Strategy Must Account for Local Practices
Multinational companies operating in AMEA often find regional nuances make it difficult to implement rewards and talent programmes that are developed at company headquarters outside the region. The challenge for many HR professionals in Asia that work for multinational companies is helping their colleagues at headquarters understand the local practices and why they might deviate from home country practices.
When it comes to compensation planning, for example, Chinese local companies typically provide rapid advancement for new employees that are accompanied by high salary increases. The gap in pay between entry-level employees in China vs. mid-level career professionals is often much larger in China than the US because of higher salary progression. To illustrate this base salary progression, consider the following example below.
Higher Pay Progression in China
In India, we have found through our data analysis that pay differentials within the country are largely being driven by services vs. product companies as opposed local vs. multinational companies. In the US, on the other hand, there continues to be large pay differentials for similar jobs based on geographic location — with the San Francisco Bay Area setting the premium for technology companies.
Companies will benefit from revisiting their AMEA strategy in 2018 and beyond while taking into account fast-changing market dynamics in the region as well as local rewards and talent practices (which can vary widely within the region).
This excerpt is from the Radford Perspectives Report, which includes chapters on Asia, Europe, Private market trends and more. The Asia chapter can be viewed here.