Talent Management in Emerging Markets: 1 Insight to Act on Today (Part 4, Forecast)

This article is written by James Eyring

Increasingly, companies rely on Emerging Markets for revenue growth; this is particularly true given slow economic growth in the US, Europe and Japan. One of the greatest challenges to capturing growth in these markets is having the right leadership capability. Based on our on-going research on Talent Management in Emerging Markets and experience with companies, here is one insight into Emerging Markets that you can act on today.

Better forecast your needs!

Having the right talent in the right place at the right time is crucial to fuel growth in Emerging Markets. Some companies are great at forecasting these talent needs. Others struggle. A few of the common mistakes include:
• Creating a financial forecast for headcount, not an operational view of headcount need
• Forecasting numbers, not capabilities
• Not considering turnover
• Planning programmes based on slower growth assumptions

In Part 3 of this series, we noted that some companies have a global standard of limiting high potentials to a portion of the management population at any given level in the company (e.g., 10%). This allows them to focus their development resources.

This sounds reasonable because you want to differentially invest in your best people. However, look at how this practice works for a hypothetical company in an Emerging Market like China:
• Current workforce: 10,000
• Current Managers in Workforce: 1,100
• High Potentials (10% per policy): 110
• Headcount Growth Rate: 20%
• Annual Manager Turnover: 25%

If headcount growth hits 20% per year, headcount will grow to over 17,000 in 3 years. Management headcount will grow from 1,100 to over 2,000. Having 100 leaders get preferential development in year 1 guarantees that you will lose pace with growth in demand.

Perhaps more importantly though is the impact of turnover. Turnover alone in the first year results in 275 manager vacancies where the company must hire externally or promote from within. With replacements and new positions, the company must hire or promote over 2,000 managers over the course of three years.

To better forecast your needs, consider the following tips:
1) Over hire during the quarter for large job groups, knowing that turnover will take care of any potential budget issues
2) Identify a robust workforce planning model that meets financial and operational needs
3) Forecast turnover by job group to ensure you have the pipeline you need to fill management roles

(c) 2011 Organisation Solutions Pte Ltd.

About the Authors: Dr. James Eyring is the chief operating officer of Organisation Solutions, a global consultancy specialising in organisational design, development and change solutions worldwide. James has more than 20 years of experience in the field of Organisational Development and his areas of expertise lie in large-scale organisation design and change, leadership development, and the design and management of distributed organisations.