Human resources strategies for emerging market multinational expansion

The human resources management strategies of emerging market multinationals (EMMs) are crucial to the success of firms during their regional and global expansion. Turnover rates, both for local and expatriate talent, are especially high among EMMs, presenting problems for cost management as well as meeting strategic objectives (Ambrosius, 2016). Local managerial talent can be considered “scarce” in many emerging markets, requiring some firms to hire expatriates (Dewhurst, Pettigrew & Srinivasan, 2012, p. 1). Yet exclusively focusing on reflexive hiring of expatriates without the long-range tools needed for developing local talent may prove deleterious in the long run. Many successful EMMs incorporate diverse, situational, and flexible human resource management (HRM) practices during their expansion processes, adapting HRM to the labor market needs and norms. Doing so allows for more harmonious employer-employee relations, also encouraging EMMs to cultivate a vision for how to use training and talent management to cultivate a more diverse pool of future leaders. Diversifying staff in regional offices, and paying attention to the differential needs of various departments, is one of the most crucial human resources management strategy for ensuring EMM success. For example, Fey, Nayak, Wu, et al. (2016) recommend “at least one home country employee at each subsidiary to facilitate cross-cultural understanding and also to help integrate the subsidiary with the rest of the firm,” while also hiring local talent for roles like sales or legal counsel: positions that require extensive interactions with local suppliers, clients, or government officials (p. 11). Ambrosius (2016) also suggests paying attention to firm specificity, making sure to retain local talent that could be easily poached by competitors. When local talent proves especially scarce or expensive, or difficult to retain, the EMM can and should create development programs targeted to the local labor market and create a “strong employer brand,” (Dewhurst, Pettigrew, Srinivasan, 2012, p. 1). Not all human resources management strategies should be situational, though. Using what are considered to be “global best practices” for performance management rather than indigenous or local methods helps to create the unified culture and vision and also prepare the EMM for success during expansion (Mellahi, Frynas & Collings, 2015, p. 876). Paying attention and responding to cultural differences and making decisions on a local level rather than reverting to company headquarters is important, too (Fey, Nayak, Wu, et al., 2016). In other words, using transformational leadership strategies that empower local managers and leaders can promote the EMM’s success during expansion or otherwise. During expansion, a home grown business can take advantage of local human resources without neglecting the need for hiring expatriate talent for key positions requiring international interface. Human capital can provide EMMs with strategic competitive advantage, but only when that human capital is valuable and rare in terms of unique or specialized skills (Ambrosius, 2016). Employer-employee relations are also more likely to remain harmonious when senior management cultivates a strong and cohesive vision during the expansion process (Fey, Nayak, Wu, et al., 2016). Likewise, communicating regularly with subsidiaries, holding regular meetings and creating a genuine sense of integration and interdependency will help employer-employee relations within each subsidiary as well as throughout the entire EMM. Creating a unified organizational culture and socialization process may help to reduce turnover and increase retention of top talent, whether expatriate or local (Ambrosius, 2016). Finally, one challenge EMMs face during expansion is how to best transfer and structure rewards and benefits policies and practices to adapt to new market contingencies (Aguzzoli & Geary, 2014). Responding to labor disputes, and even issues like discrimination and anti-immigrant sentiments among the local population have also proved to be major issues for EMMs during expansion (Aguzzoli & Geary, 2014). Aligning the needs of the firm with the diverse range of employee needs, plus navigating the local regulatory environment requires deft visionary leadership.