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Human Resources
Setting over salary
Executives do not simply follow the money, writes an IMD research team. Rather, they are looking for a balance.
The ability to attract highly skilled talent from around the world is a key element in nurturing a nation’s innovation and entrepreneurship. A new study into what drives people to relocate for work by Arturo Bris, Shlomo Ben-Hur, Marco Pistis, and myself – The macro-contextual drivers of the international mobility of managers and executives – assesses whether pay alone is enough to encourage a steady inflow of talent. What we found was that remuneration, while important, is not the main pulling factor for a highly skilled workforce looking to move.
The push and pull of the international labor market
Specifically, we asked how effective salary uplifts were in attracting executives from 190 countries into 32 OECD countries. It is a more nuanced picture than you might expect.
For one thing, some of those looking to move are already established in well-paid jobs. So, aside from money, what other factors could attract an experienced executive to a new environment?
One of the most persuasive factors in the prospective host country is the quality of life, including that of the education and health systems. Executives in their 30s and 40s typically have children under 18 years old, so when they move, they are thinking long-term. In this context, the quality of the education of host countries becomes an essential factor in their decision to relocate. Other key executive “twitches” are focused on long-term family well-being. The potential new home under consideration should offer high-quality healthcare, a factor that may become even more relevant if the executives decide to remain in the host country post-retirement. In addition, particularly for executives with families, there is a need for a safe and secure environment and, ideally, an appealing (or at least adequate) property market.
A close relationship
Our research has implications both for individual companies and the countries in which they operate. The availability of these favorable conditions will reflect the degree to which the business environment can attract talent and businesses from overseas. A country that is welcoming to migrants and supports them in starting a new life is much more likely to also enjoy strong business-enabling regulation and an employment market unencumbered by excessive red tape.
On the former, effective international talent recruitment depends on two related processes. Companies should consider the targeted groups’ wants and needs to increase the likelihood of persuading them about the worthiness of reallocating, and then brand and position themselves accordingly. This means convincing targeted groups of executives that they will have a sense of belonging in the company and that they will find what they are looking for in terms of both professional opportunities as well as the well-being of themselves and their families.
What the study identifies as “cultural affinity” is key here, too. For example, say Mexican companies decide to target Panamanian executives. Those companies need to understand what “quality of life” means for this group, and Panamanian executives thinking of making the move require a sense of what belonging to a Mexican company will entail. Branding strategies can emphasize a sense of cultural affinity (in this specific example, geographical proximity could make the task easier, as the two cultures should, at least ostensibly, have more in common).
Mutual trust is also vital. This should be reinforced by a transparent and inclusive recruitment process, particularly if companies are expecting employees to move across the world to join them. Here again, branding strategies can emphasize the significance of trust in the employer-employee relationship.
On this point, if companies focus on maintaining the quality of the work environment, talent retention should be a natural outcome. If framed correctly, the family aspect can be the glue in this process. When they decide to move to another country, executives will often be leaving established support networks. Creating the image of the new company as a welcoming family environment could be a significant factor in reassuring executives who are worried that the move could isolate themselves and their loved ones.
Another important part of this is introducing and maintaining professional networks so that consistent upskilling and learning on the job are organizational priorities. Personal – rather than just economic – growth is then seen as central to the company’s ethos.
Often, highly skilled professionals who change jobs have to navigate a new cultural landscape, with all the anxieties and difficulties that brings. This can naturally impact talent retention if the new employer fails to offer adequate support in overcoming these issues. This requires some foresight and, in most cases, will involve more than just language classes. There may be key cultural considerations that new families need first to learn about and then grow accustomed to, such as certain culinary habits or ways of socializing. To this end, the offer of cultural coaching programs can be enticing for prospective recruits. Denmark has strongly increased its talent retention through such programs.
Successfully integrating highly skilled employees into the new company is, of course, mutually beneficial. Talent feels rewarded and glad to be part of a healthy and transparent organizational culture. Moreover, companies that can recruit and retain such talent contribute to the diversification of the workforce as a whole. Our research sample showed that, in the highly skilled category of employees, non-OECD countries are the principal suppliers of talent to OECD countries. However, in terms of executive talent alone, OECD countries are the principal providers of talent to other OECD countries. This highlights the so-called “diversity deficit” and the strong need to recruit from a wider pool of international executives.
Getting the balance right together
What, then, are the implications of our study for countries? Clear parallels can be drawn between corporate and national business strategies, which can both benefit from the type of branding and positioning described above. Like individual companies, countries need to create a welcoming environment for foreign talent. They also need to differentiate themselves from other countries, whether this is based on political stability, sensible, progressive regulation, strong levels of scientific development, or cultural affinities. If these are in place, then people will want to move.
Nordic countries are going even further to make those recruited from abroad feel welcome and offer them a sense of belonging. Denmark, Norway, and Sweden have all created talent initiatives or ‘clusters’ that bring together employees who share lifestyles and interests. This creates social networks that immediately make them feel at home and thus more likely to remain.
This is not something that governments can or should try to do alone. The public and private sectors need to work together to create a welcoming environment from which both will benefit. The collaboration will also be symbiotic, with private-sector involvement convincing prospective movers of the viability of the proposition and government support suggesting a conducive regulatory environment, not least in terms of migration laws.
Switzerland gets this right in two important ways. The first is to offer an easily navigable immigration process for specific skill sets and the second is to balance the skills and resources to which they have access domestically with the ones they can bring in from abroad. This balance is achieved through a dialogue between government and business talking openly about what their priorities are and trying to find common ground. This means they are both attracting highly skilled recruits and investing in the development of the local workforce, rather than relying exclusively on imported talent.
This balance will also mean the best people from overseas will want to come and, once they are in your country, will feel comfortable and secure in their jobs and will want to stay put for a while. Moreover, if and when they do decide to leave, the local workforce will be in a better position to fill the gap.
Click here to read the full study: The macro-contextual drivers of the international mobility of managers and executives, authored by IMD’s Arturo Bris, Shlomo Ben-Hur, Marco Pistis, and myself.
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