HR priorities for emerging markets vastly different from developed ones, reveals PwC research

New Delhi, 21 October 2014: The talent and workforce priorities in emerging markets are significantly different from developed markets and even within emerging markets HR is maturing at different rates in different regions. Indian CEOs view demographics and the challenges of dealing with our demographic dividend as a significant trend (71 percent), but it is not so much for China (48 percent).

Improving workforce diversity is important for 90 percent of Indian CEOs, which is significantly higher than the global average of 82 percent, China (84 percent) and Russia (51 percent). While only 25 percent Indian CEOs view creating jobs for young people as a priority for the government, more than half of Russian CEOs feel otherwise.

PwC’s Key Trends in Human Capital 2014 report reveals that by 2030, the wage gap between developed economies and some emerging nations like South Africa or Russia would have been bridged significantly. However India and Philippines will still enjoy significant difference in wages when compared against mature markets.

Organisations should be applying very different workforce strategies for different emerging markets. HR leaders will have to strike a balance between localisation of HR practices and having a common HR philosophy across countries.

Padmaja Alaganandan, People and Change Consulting leader, PwC India says:

"Workforce diversity and pace of demographic change is a far bigger issue among Indian CEOs as compared to counterparts in developed and other emerging markets. Human Capital strategies here will need greater flexibility and dynamism to cope with this change - including questioning some of the fundamental assumptions such as one way career paths that only go up. The workforce of the future may actually value the opportunity to "ramp down" to meet personal and other professional goals and adjust earnings accordingly - this also allows the organisation to manage productivity and people costs better but requires greater skill to do."

Another global trend is of organisations rushing to recruit as soon as economic conditions improve and growth returns. They feel the need to compensate for workforce cutbacks made during the recession, but also to counter the effect of a rising resignation rate, as disaffected employees who had remained during difficult times begin to look for new opportunities. The result is a growing global talent war.

Use of smart analytics can help HR leaders in overcoming these challenges. It can identify country-specific issues and develop customised approaches to address them. By concentrating initially on growth from existing human capital resources, before then growing the workforce at a slower rate, organisations can achieve a significant improvement in Human Capital Return On Investment – the profit returned per unit of currency spent on employees.

PwC analysis also shows that a failure to apply these ‘smart growth’ principles is costing organisations in every sector – over $50,000 marginal profit per employee in the banking sector, for example, and $104,550 per employee in the utilities sector.

‘Smart growth’ means taking a more strategic approach to resourcing - using predictive analytics to understand the skills the business will need in the future – while maximising productivity and performance among existing staff today.

PwC Saratoga data for Europe shows how high-performing organisations that apply smart growth principles are able to outstrip others. The best quartile of organisations recruit more efficiently (taking 23 days to fill a post, compared with an average of 35 days), match people more carefully into their roles and encourage greater productivity by paying closer attention to employee engagement and training (investing 1.5 percent of compensation in learning and development compared to a European median of 0.9 percent).

The right workers are found more quickly, their on-the-job competence is higher, they’re more engaged and productive (the absence rate in high-performing organisations is 2.2 percent, compared with a European median of 3.7 percent), and they stay for longer (12 years, versus a median of 7 years).

Anthony Bruce, Global HR and Workforce Analytics Leader at PwC, says:

“Organisations across the world are facing enormous talent challenges, some of which will seem familiar and some of which are entirely new. Competition for the best talent is more intense than ever, and the pressure to maximise the return on the investment you make in your people has never been higher. Good talent decisions are based on knowledge, understanding and analysis.

“This is a challenge for HR but the recent advances in analytics mean that this is also a clear opportunity for HR to prove its strategic worth. The best organisations are using analytics to predict talent supply and inform their hiring and talent management decisions. This helps them to deliver improved and sustainable business value.”

Notes to Editor

1. PwC’s report, ‘A new vision for growth: Key trends in human capital 2014’, examines the key workforce trends from around the world using PwC’s Saratoga benchmarking database. A range of quantitative and qualitative tools are used to identify the impact of people on efficiency, to identify risk and to evidence best practice across an organisation. The study draws on data from more than 2,600 organisations in over 50 countries.
2. The report highlights five global trends in human capital: the need for ‘smart growth’; talent challenges in emerging markets; the value of workforce diversity; the changing nature of employee/employer trust; and developments in the HR model.

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