HR Challenge: Scarce Local Talent in Emerging Markets Employers headquartered in North America continue to face significant challenges in staffing their operations in emerging markets, according to Mercer’s HR & Mobility Challenges of Emerging Markets Survey. The challenges varied somewhat as between managing local nationals and managing expatriated employees. Nearly six in ten participating employers surveyed (59%) cite scarcity of local employees with the required technical skills as the most critical HR challenge in emerging markets. The next-most-important challenges are dealing with complex labor laws (53%) and establishing appropriate salary structures (51%), according the survey of more than 150 companies in Canada and the United States. “In addition to the lack of local talent in most emerging markets, attracting and incenting expatriates with the needed technical and managerial skills is a big issue for companies trying to staff operations in often-difficult locations,” said Roger Herod, a principal in Mercer’s global mobility consulting business. Nearly three-quarters of employers (73%) are developing business in new and emerging markets, but three countries in particular pose the greatest challenge, according to more than one-third of respondents: China (52%), India (36%) and Brazil (35%). “Beside the common difficulties of finding skilled talent and establishing competitive salary structures for local employees, regional complexities around employment laws, local benefits and tax regulations can be particularly troublesome to overcome when operating in these countries,” said Herod. In addition to the challenges employers face with local nationals when doing business in emerging markets, they encounter issues with their expatriates in these markets as well. The top three challenges, reported by more than one-third of survey respondents, are establishing competitive attraction and retention policies (38%), attracting the right candidates (34%), and addressing equity issues between expatriates and local nationals (33%). “Assignments to developing countries can be very costly because of shortages of suitable housing for expatriates, high cost of goods and services, and often high taxes. Additionally, assignments to emerging markets are frequently ‘hardship’ locations,” said Herod. “As a result, companies must implement policies that will attract employees to take assignments at an affordable cost.” While most employers are satisfied with the HR policies established for their local nationals and expatriates in emerging markets, about two-thirds are in the process of fine-tuning their policies. And more than one-third (35%) are still trying to put appropriate HR policies in place for local nationals, while one-quarter (25%) are establishing the right policies for their expatriates.