The Biggest Staffing Mistake Companies Make When They Enter Developing Countries

The McKinsey Quarterly ran an interview with Jeff Joerres, the CEO of Manpower, the world's second largest provider of employment services.

In it he addresses the changing nature of the workforce, as well as the challenges faced by companies in both China and India. (Worth reading at http://www.mckinseyquarterly.com/article_page.aspx?ar=1709&L2=18&L3=31&srid=27&gp=0.) He also shares the biggest mistake he sees organizations making when they enter developing markets. Here's that excerpt:

The Quarterly: What mistakes do you see companies making with respect to labor when they enter developing markets?

Jeff Joerres: The most classic mistake -- one that's perpetrated again and again -- is to start by bringing in an expatriate management team. It's seductive because when you bring in expatriates, communication throughout the organization is right and everything seems to be working fine. Executives make site visits and it all feels right. Then, about three or four years later, the CEO is thinking, "OK, we had this big growth spurt but now we've plateaued." So the CEO puts in new expats and still can't get growth out of the company.

If you're going to be in a developing market, you've got to invest in nationals—in your own way and in keeping with your company's culture, of course. It's fine to bring in expatriate teams for a short time to make sure the culture of your company is transferred to the new location, but that's it. Expats simply won't have the local market knowledge that the national managers have.

Paradoxically, one reason some companies are using expatriates less frequently now is that the lean machine is at work again. Executives look at their expat bill and say, "Too expensive. I can't keep doing that." They're arriving at the answer in a different way, but I think they're going to be solving a much more systemic problem by not overusing expats.