Companies Thinking Local When Hiring Executives


Earlier this year, I wrote about Chinese companies' efforts to woo foreign executives, to help make up for a lack of local executives with management experience. I also wrote about HP's cultural exchange program for executives, in which the company sends execs and their families to Beijing for three weeks to help them gain a greater understanding of the country's culture and its business challenges and opportunities.


While these kinds of cross-cultural hiring and training efforts will likely continue for the foreseeable future, the Association of Executive Search Consultants (AESC) says multinational companies are increasingly seeking nationals already living in areas they are targeting as new markets or returning to them after being educated and/or employed elsewhere. The potential talent pool is growing as more folks return to their home countries or stay put.


According to AESC surveys, just 12 percent of senior executives in India, China, Russia and the Middle East are expatriates, vs. 56 percent who were expats 10 years ago. A key factor is cost, says AESC President Peter Felix in an interview with strategy+business. It's two to three times more expensive to hire an expat, after relocation, tax equalization and other costs are factored in.


Favoritism toward expats can also damage companies' efforts to expand into new markets. Says Felix:

Companies that are fully committed to globalization have come to realize that there is real danger in imposing the culture of their country of origin on a worldwide organization. If a U.S. company, for example, is seen as reserving top executive slots for Americans, it will affect the company's success.

Globalization requires companies to adopt more holistic recruitment and talent management strategies. For instance, says Felix, U.S. companies with a reputation for laying off workers in America may have trouble recruiting employees elsewhere.