We are living in a global community. That is reality. For HR professionals, it is becoming common to not only focus on a local workforce, but also a global one.
In our article The Pros and Cons of Hiring Expats, HR Exchange Network contributor Martin P. Laird wrote about hiring expatriated workers to help grow business and train new employees in a foreign country. In this article, I’d like to look at the flipside of the coin: hiring locals over expats.
For educational purposes, let’s define the term expatriate employee. According to the Financial Times:
An employee who is sent to live abroad for a defined time period. An expatriate is expected to relocate abroad, with or without family, for as short a period as six months to a year; typical expat assignments, however, are from two to five years long.
Pros of Hiring Locals for your international business
- Knowledge of the local culture and business practices
Local candidates understand the culture in which they live. That means they can navigate potential problems with greater ease. That usually translates to higher productivity and a decrease in financial loss, if any.
- Locals are fluent in the language and can manage workers using local resources
This is a big one. Often times, HR professionals and those doing the hiring get hung up on whether the employee speaks the language native to the company. For instance, an American company may favor an English-speaking expat over a local… even if the local candidate is leaps and bounds ahead of the other candidate. Don’t let the language keep you from hiring the best person for the job.
- Cost much less than expats
Hiring an expat can cost up to two-three times more than hiring a local candidate. Costs include everything from the expats normal salary to relocation costs, and language and cultural training. Those costs by the way aren’t just for the expat, but also the expat’s family.
4 Encourages diversity
Hiring local means diversifying the workforce. It also gives a company a better chance at growing business abroad and in different ways.
Cons of Hiring Locals for your international business
- The pool of people with the necessary job skills could be limited
Dependent upon the product, your pool of candidates may be limited. That doesn’t mean a company can’t hire local and then train the new workforce. It just means more money and time spent bringing the local workforce up to the appropriate skill level.
- Locals may not understand the company’s values or common practices
Depending upon where a particular company was founded, it’s fair to say it derives some of its values and common practices from its country of origin. Transplanting those to another country and another culture can be problematic.
Hiring local over expatriates or vice versa is a big decision. Here are some things to consider.
- Make sure to focus decisions on the local culture. Is the foreign culture similar enough to the one where the company is already located? Are there ways to learn from the foreign culture and work some of its best qualities into the business model?
- Think big picture. If opening an office in a foreign country, what are the later plans? Will the company continue to grow into other countries? If so, try to plan for that eventuality. Construct a global road map and pick stops that make sense based on where the company is already located.
- For workers to keep earning, they have to keep learning. What are the company’s plans for training and the continued education of its local workforce? How do workers function and how can a company invest in the workforce to increase productivity safely and ethically?
This informal article is concerned with the advantages and disadvantages of hiring locals over expats and raises some questions for HR professionals.
It is by far, much cheaper to hire locals since expats can be two thirds more expensive to hire than locals, not to mention the hidden cost of language training and other costs for the expat`s family: accommodation, re-location and schooling for children.
On the other hand, locals may not understand the company`s values and common practices. Whichever choice is made, the determining factor will always be time and money.
Flipside: another aspect or version to something: e.g. the flipside to vices is
Hung up: a feeling of being anxious or nervous about something.
Leaps and bounds: unexpected rapid progress.
Eventuality: a possible event or outcome
The word workforce appears frequently in the text. Here are some other examples of this prefix:
Workload: an amount of work that a person is expected to do.
Workshop: A place of heavy work or a period of group activity or study.
Workhouse: in old times, a place where unemployed people would live.
Workbench: a hard surface for working on with tools.