What would you make of the security of a payroll function which pays employees in actual piles of cash each Friday? Would you maintain these policies and book yourself onto an animal husbandry course or would you amend them to conform to what you see as 'correct' western practices?
I've encountered these HR practices while working in the HR functions of western organisations operating, or starting out, in developing countries. My experience is that flexibility and the ability to deal sensitively with cultural issues are the most crucial skills that HR practitioners can bring to support their organisation's development in these regions.
Emerging economies are crucial to the growth strategies of many organisations. These regions often have, what CK Prahalad described as "bottom of the pyramid" consumers - a population group whose basic needs are not yet satisfied. These countries often also have an emerging aspirational middle-class and their governments are both seeking inward investment and acting as buyers of foreign goods, expertise and services. For any company making a strategic decision to venture into such lucrative markets, their HR team tasked with launching the local operation, plays a vital role and faces a very steep learning curve.
Many policies that we take for granted in the developed world may currently have no place in some of these developing countries. In countries like Ghana, Guinea, Congo, or Cameroon, for example, governments don't - or can't - provide a pension or sufficient health cover for their workforces. While establishing a corporate pension or health policy may seem an appropriate step, it might actually be financially disastrous. For example, with this group of countries there are scant numbers of local health insurers - meaning that health policies would have to be "self-insured" - and life expectancy for many is barely 48 years old. Implementing these polices would add a substantial cost the fledgling operation and be of doubtful use.
Our first recommendation is to be prepared to adapt to the reality of local practices and circumstances. Building a salary scale in local currency is a useful example. It's a textbook illustration of how usual western approaches often don't work. Most HR practitioners are used to the well-established notion of labour markets and the prices that are attached to different types of labour. A typical market salary survey in the UK, for example, may count up to 400+ participants, and up to tens of thousands of data points. However, the notion of market can be much more elusive in emerging economies, and so can the idea of paying a competitive rate. The result will be to set promises the company can't keep.
In Guinea, with authoritative salary surveys unavailable, we built a local salary scale including the price of local goods, utilities, rent, and taxes. Grossing it up defined the minimum salary of the lowest band, and we established a progression to next band up, and so on. We eventually carried out a conclusive test against which showed we had come slightly above what was known of pay levels. The salary scales were negotiated with union representatives and agreed upon.
Our second recommendation is to spare no effort in developing a local workforce rather than relying on an armada of expatriates. Granted, when setting up operations finding local people with the right skills and experience can be a challenge especially in countries where the workforce is small. Expatriates represent a source of knowledge, skills and can help the operation find its feet. But many of those emerging economies attract investments in the hope, if not the necessary condition, that it brings jobs to local people. In Cameroon, one of our clients has hired local people into the HR function, and has trained them up as their expatriates' short term contracts come to a close. There is an obvious cost benefit to the company as expatriates can be expensive. Another client with operations in Nigeria and Ghana puts its expatriates on rotations across their African operations - they move on after having trained up their local replacement.
Failing to develop a local workforce can lead to complications. In Mongolia, there have been some employee relations concerns as locals perceive that most office-based jobs are out of reach of most Mongolians. Companies can, and are, addressing this by demonstrating that a plan is in place to employ local people. Local HR team members are crucial in this regards as they are part of, and trusted by, the local community and key in interacting with managers, and employees.
Our final recommendation is not to underestimate the importance of transparency. The workforce is a microcosm of the country with all associated stresses and strains. In Guinea, workers, always conscious of ethnic rivalries, began questioning whether job offers or promotions were due to membership of a particular ethnic group. To counter this, we built a grading system to demonstrate that career progression was about the rigorous, objective and fair assessment of jobs, not individuals. Guinean workers and managers were interviewed to understand scope and responsibilities of their roles and the proposed grading was moderated and validated by local managers. The transparency about the grading process - and the process itself - soothed workforce concerns and gained unexpected support from union representatives. Recruitment practices are subject to similar concerns. A company's fairness and objectivity must be beyond reproach as the repercussions can be damaging. In Madagascar, Ghana and Nigeria, threats or strikes have taken place against perceived discrimination. Transparency about the methods and tools should help prevent abuses and demystify HR practices.
Navigating the unchartered waters of human resources in emerging economies may be a daunting task but flexibility and transparency can make the journey much easier. Incidentally, we could not continue with the sacrificial cow policy, but are investigating a policy that satisfies both the local community and the company.
Bertrand Hamon, senior consultant in the hr and change management practice at Mercer
