The benefits of investing in a local talent pipeline
Global Vice President and CEO in Europe of Education For Employment (EFE), Salvatore Nigro, discusses the benefits of local talent when expanding abroad.
Whilst access to credit is becoming easier in some parts of the globe, business leaders and HR professionals have for some time expressed concern that it is becoming increasingly difficult to locate job applicants who have the skills, educational qualifications and experience to perform certain roles. As a skilled, diverse and quality workforce is an important factor in determining the success of a business, these challenges can directly influence the growth and competitiveness of companies both today and in the future.f
For many organisations, one of the key drivers of an integrated global HR strategy is the need for talent mobility within the company. This is increasingly significant for companies looking to expand abroad, which must source the correct talent to open and run their new premises.
For HR teams, deducing the most suitable recruitment strategy for international expansion can be difficult. On average, an expat costs a company three times what they would in an equivalent position back home, mostly due to transportation, relocation benefits and training costs. This is a hefty investment considering that a large proportion of expats return early or join a competitor one year after repatriation.
The other option is to hire local staff, a strategy that is commonly overlooked out of fear that local talent pools lack the required skills. The irony of this is that well-trained local professionals can offer a huge amount to a company in terms of language skills, cultural knowledge and economic stability. As natives to the region, they have strong ties with their communities – enabling them to navigate potential problems more effectively – and come at a fraction of the cost of expats.
Local talent also has a statistically higher retention rate, particularly in developing areas. This is because businesses are engaging a workforce that has limited economic opportunities in life and is grateful to those who have invested in them. As such, these employees often stay with a company for a large proportion of their career, saving businesses hundreds of thousands of pounds in recruitment costs.
By investing in training and educating, businesses are also creating a younger pool of ‘wider talent’ to reduce pressure on existing trained resource. This strategy is notably useful in developing regions such as the Middle East and North Africa (MENA), which concentrates more than half of the world’s ‘working poor’ and unemployed youth. A large proportion of these youth have a tertiary education but require training on the 21st century skills, particularly digital skills, needed for infrastructure and economic development. By tapping into and upskilling this population, businesses can widen their talent pool and assist with economic development in these regions.
Morocco is a key example. The entry of aeronautics, renewable energy or automotive companies such as Renault pushed economic growth to 3.1% in 2018, making it the sixth largest African economy. In partnership with specialised organisations and the Moroccan government, these businesses have been developing local training programmes and employing local talent to upskill workers. These sorts of efforts have had the added benefit of gaining positive media traction and enhancing brand recognition. In addition, 66% of consumers are also willing to pay more for products from socially responsible companies, so training local staff can aid company sales and form part of their CSR initiatives.
Overall, a large number of companies are expanding abroad in search of greater profits and lower production costs. Yet, until businesses increase domestic hiring levels, they will continue to rely on the unsustainable and expensive method of expatriating staff. By adopting an inclusive and flexible corporate culture that supports the integration and development of nationals into the workforce, businesses can enhance reputation and create a reliable and stable workforce, whilst tackling skills shortages in regions such as MENA.
Education For Employment (EFE) is a leading network of non-profits that trains young people and links them to jobs across the Middle East and North Africa (MENA). EFE operates in nine countries across the region to boost youth employment.