For many companies, finding good staff is among their most pressing issues, and a task that is no longer limited to their home country. Businesses today want to find talent wherever it exists, and wherever the company needs to be.

According to a survey of 479 executives conducted by the Economist Intelligence Unit (EIU) last summer, 75 per cent said they expect to compete in more foreign markets over the coming decade, while 49 per cent said they expect to hire more people in foreign markets than at home.

If they are to succeed, however, companies will need to change their approach to finding and retaining talent, HR experts say. They will need to become more aware of cultural nuances; of changing employee expectations; and what motivates high-calibre people.

At the same time, HR observers say shifts in what companies need from staff (including increased creativity and innovation) will mean changes in how they go about hiring and retaining them.

Uneven world
At the moment, Asia remains the fiercest battleground in the “war for talent”, according to Claire McCartney, lead adviser at the Chartered Institute of Personnel and Development (CIPD). “Experienced people are in massive demand. Lots of businesses are starting up and expanding.

There are lots of multinationals out there and there’s never enough people,” she says. Companies in China and India are finding it hard to retain good people, she says. One firm interviewed by the CIPD for a recent report hired 50 graduates in 2010, but ended the year with just one.

By contrast, many European and US companies have been shedding high-quality personnel, says Jeff Joerres, chairman and chief executive at Manpower, the international recruitment group. Although some introduced unpaid leave (furloughs) and voluntary pay reductions during the slowdown, hoping to keep their best people, they ended up making redundancies as the economic slump persisted.

Now, those businesses have to re-establish their reputations as good employers. “Companies that are not identified as ‘employer brands’ have to do a lot of things very quickly. The downturn was so severe that a lot of employers have been damaged,” says Joerres.

Pieter Haen, president of the European Association for People Management (EAPM), says those that have “destroyed the trust of their own people” by cutting back “are going to have a huge problem winning that trust back”. On the other hand, those that managed to keep the lion’s share of their best employees will be at an advantage, he says.

Empowerment
Joerres argues that to attract the best people, and get the most out of them, managers should resist a natural tendency to micro-manage their staff. In the future, companies need to recognise that less control often equals greater productivity in the long run.

“The notion of command and control, which has so often been the default for management, needs to be reviewed seriously because it is not attractive [to employees],” he says. “During a tension-filled time, with low margins, the natural propensity is to hunker down and inspect everything. You get rewarded in the short term for that. But in the long term, companies know they need people who can use their influence in a different way.”

Studies support the importance of empowering “high-ability” employees. A 2004 paper by researchers Michael Lombardo and Robert Eichinger found that “top talent” outperforms average employees by 40 to 50 per cent.

Meanwhile, a study by Robert Kaplan and David Norton (also 2004) found that 80 per cent of an average organisation’s value can be attributed to its most talented employees. Having good people is all very well, but you also need to be able to get the most out of them, says Mary Jacobsen, co-founder of Talent Psychology Consulting, which advises companies on talent management.

“Talented people are worth every dime and more. But if you can’t get them engaged and interested, rather than exploiting them for their ideas, they are not going to stay.” Jacobsen says many companies have misconceptions about high-flyers and fail to understand what makes them tick: “They believe the stereotypes about talented people: that they are difficult to work with, have their heads in the clouds, are socially inept, conceited, temperamental, emotionally disconnected, unstable.”

Companies need to get away from a “mechanistic” attitude that treats talent as a commodity, rather than something to nurture and cherish. “They need to go from ‘what can we get out of these people?’ to ‘what do these people need to thrive here?’ There has to be a shift away from talent being something you just exploit.”

Talented people leave companies with something of a dilemma, says Jacobsen. They know they need the best people and also that they have to give up some control to get the most out of them – something not all are prepared to do.

The fact that managers fail to make the most of their talent is corroborated by the EIU survey of senior executives last summer: 45 per cent of respondents (including 58 per cent of those at large companies) said their employers did not understand what motivates people. Similar proportions did not believe their companies were meritocracies.

Localisation
Some regions of the world remain places of high concentrations of foreign workers. In Qatar and the United Arab Emirates, for example, an estimated 90 per cent of private sector workers are expatriates.

Although the six Gulf Cooperation Council (GCC) states have policies to “nationalise” their workforces and open up opportunities for locals, companies frequently get round the restrictions.

Some companies meet their quota for local staff by hiring drivers and security personnel rather than senior staff, according to Milad Rafati, senior HR manager for telecoms equipment supplier Huawei, in Iran. So they comply with the letter of the law but not its spirit.

Elsewhere, however, observers expect business to be increasingly localised, with multinationals using fewer expats, or at least using them differently.

“We think expats must be used sparingly in today’s global world. It’s much better to reverse-expat the leader: to have, say, a Chinese executive go to Sweden or France, then go back to China. That way, they have a deep understanding of what the company needs to accomplish in the context of the Chinese labour market,” says Joerres.

As well as “reverse-expating”, he expects to see more “dipping” where executives are sent to several countries for short periods, rather than spending years in one location. This is an efficient way of training leaders in a company’s worldwide operations and is less likely to demoralise local managers.

More fundamentally, Joerres foresees less “labour arbitrage”, where companies make the most of low-wage countries. Nations such as China will become more important as domestic markets, rather than places to site a factory for cheaper manufacturing. At the same time, he expects that companies will become more sophisticated in how they exploit sources of expertise around the world – whether it is geologists from Indonesia or engineers in Poland.

Companies need to analyse a talent hot spot – see how big it is, how it can be used and how long it will be there. Too often companies will gravitate towards a hot spot, race to set up major operations there and end up depleting the talent quickly, says Joerres.

“For example, Eastern Europe is popular for transaction and shared services. But if everyone runs to Sofia and puts [a centre] in, because they heard the city has good language skills, that hot spot will be dimmed in no time at all.”

Joerres suggests companies adopt a “multi-footprint strategy”, with smaller offices in several countries. That way, they can be flexible depending on what they need and what personnel is available.

Cultural nuances
Aside from basic remuneration, there are many variations in what employees in different societies want and expect. Claire McCartney, at the CIPD, says Asian companies often have quite different retention policies compared to their Western peers.

“It’s about appealing to Asian values, particularly a sense of community. A lot of companies have told us: ‘We’re not like American companies, we don’t associate with individualism and internal competition’,” she says. “In the West, companies aspire to some of those things – we might talk about corporate social responsibility – but I think the Asian sense of community is at a completely different level. Companies in the West might think about what they can do to help the community, but they may not have that same idea of collective good,” says McCartney.

McCartney says the best Asian employers are combining Asian values with a greater openness and honesty often expected by young people.

Carol Olsby, a Seattle-based HR consultant, agrees that a more consensual approach is needed in China. She set up a division there for the Scandinavian IT consultancy Tieto.

“In China, the average worker wants to build a relationship with their employer, so you can’t just go in and start telling them what to do. In the US, the average tech worker stays in his job for two years. They are not looking for the same thing. China and India, are both more relationship-based,” she says.

In the Middle East, Rafati makes a similar point. “Workers consider salary, benefits and promotion as secondary factors leading to satisfaction. The primary motivators are the nature of the job, colleagues and a supervisor’s behaviour.”

Diversity management is also key, he says. “A one-size-fits-all solution can’t retain staff when you deal with Arabs, Iranians, Westerners and Indians.”

So, finally, if businesses are to become more local they need to understand the nuances of how to attract and retain people in different places.

Ben Schiller is a freelance business journalist and former editor of European Business Forum