Companies wishing to take advantage of business opportunities in emerging markets need to be more flexible both in their pay structure and organisational models.

The advice from Nenad Pacek, president of Global Success Advisors, was given at a Knowledge Exchange Business Breakfast held last week in London and hosted by executive search firm SpenglerFox. The discussions centred around the economic trends and opportunities in the emerging markets of Central and Eastern Europe (CEE), the Middle East and regions in Africa.

From working with over 200 multi-national companies, Pacek said firms opening up in these markets were moving away from using expats, which he described as a “dying animal”. Firms need to nurture locally grown talent to build relationships, which are especially important in the emerging markets. “You can’t do this with an expat on a three-year assignment,” he suggested.

Skill sets in CEE are certainly growing but it is unable to keep up with demand. Michal Vajskebr, country manager UK for SpenglerFox, said the market for talent in Russia and Poland, for instance, was “overheated”. The situation was similar in Turkey, Pacek added, with salaries increasing rapidly.

Organisations should no longer look at a global pay scale, but adjust salaries for the emerging markets, he told the audience. This might lead to regions requiring certain roles that don’t exist anywhere else in the company, so organisational flexibility is vital, even if the global structure is ignored. “There is a shift towards a geography-driven not a business unit-driven model,” Pacek explained.

There was a move for firms to give more responsibility to the people on the ground and become less centralised. Thomas Board, senior vice-president HR at Grohe, manufacturer and supplier of luxury bathroom and kitchen fittings, agreed: “We look for a sense of entrepreneurialism in our managers - people who are independent … who have a feeling for what is happening in the local market.”

He added that in emerging markets where the salaries are rising fast, “I wouldn’t bat an eyelid to make a big salary offer just to keep a valuable person”.