EMB
AT A GLANCE
Many of the differences that set emerging market workforces apart from those of developed
economies
economies are
are in
in fact
fact similarities.
similarities. While
While issues
issues such
such as
as low-cost
low-cost labor,
labor, rights
rights and
and skills
skills gaps
gaps
dominate emerging market discussions today, societies across North America, Europe and parts of
dominate emerging market discussions today, societies across North America, Europe and parts of
Asia have experienced the very same debates in their time—their journeys to corporatization simply
Asia have experienced the very same debates in their time—their journeys to corporatization simply
started at different points in history.
started at different points in history.
So, if you are a corporate leader seeking emerging market growth, ask yourself this: which corporate
So,
if you are
a corporate
seeking
emerging
market
generation
are
my target leader
or existing
markets
currently
in? growth, ask yourself this: which corporate
generation are my target or existing markets currently in?
Five Indictors of Corporatization:
Five Eras of Corporatization:
1.Rural to Urban Migration
1. Agrarian
2.Workforce Composition Change
2. Employment Creation
3.Rising Literacy and Education Levels
3. Standardization
4.Improving Infrastructure and Connectivity
4. Specialization
5.Increasing Energy Consumption
5. Professionalization
In some respects, this naivety is understandable. On the surface,
a location may give the appearance of being corporatized, yet the
practices which take decades to master before a market reaches
corporate maturity have not been built into the rhythms and psyche
of the society. For example, in industrialized nations, business
structures stem from a mechanistic mentality, while in most
emerging and frontier markets, they remain family-oriented with
a dependence on low-labor cost at the core of the business model.
While the emerging markets boast some mature family
businesses, some of which go back generations, the workforces
of these markets have historically worked in agriculture,
small proprietorships or, to a lesser extent, in public service.
Only recently have individuals started to become paycheck
employees and populate the corporate world.
Over the years, I have watched both national and expatriate
business leaders assume their posts across the emerging
markets. I have observed that too often they fail to appreciate the
character of the workforce and the challenges of relying principally
on the first generation of employees to penetrate the private
sector—that is, corporate life. Unfortunately, most import fully
corporatized models and attempt to lead without understanding
the reality of the first-generation corporate society.
The central message here is that leaders need to discover
what it means to lead in a first-generation corporate
society. Businesses accept that consumers are different in
the emerging markets; it’s time for them to realize that the
employee is different, too. The first step here is to understand
the journey that societies make on the way to corporatization.
THE JOURNEY
TO CORPORATIZATION
To understand where a society sits on the journey to
corporatization, we look at five indicators, the aggregate of
which signals when the process of corporatizing began or will
begin for the market in question. From there, both domestic
and international companies can align their practices with the
society’s stage of corporate development in order to have the
greatest productivity impact.
Five Indicators
1 - Rural to Urban Migration
Globally, one million people make the trek from the rural to the
urban world every five days, spurred by scarcity of resources
and the perceived abundant opportunities that lay waiting
across city borders. The most aggressive impact of this trend
is visible in societies across Africa, Asia and Latin America,
where all future population growth is expected to take place.
Urban migration represents the transition from the agrarian
era to the low-labor cost era of societal corporatization.
2 - Workforce Composition Change
When urban migration occurs—whether within national borders
as with China, or across them as was the case in 19th century
America—the very nature of work changes during the first
generation of a corporate society. Consequences of rural to
urban migration are that a smaller fraction of people earn their
living from agriculture and official labor force participation
climbs as factories replace cottage industries and small shops.
This signals the beginning of paycheck employment and the
emergence of new industries as innovations take place.
3 - Rising Literacy and Education Levels
In developing markets, literacy rates typically lag in rural areas
compared to those in urban centers. As a result, when the
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