Local Talent Plus: Malaysia’s small but specialised and lucrative talent pool

Malaysia, like many emerging markets, has had a plethora of companies investing heavily and parachuting expats in to fill senior roles. This comes at great expense, with packages commonly including fees for schools, houses and flights. The full cost of an expat hire could be more than RM75k, with the local equivalent hire costing approximately one third of this amount. But, with locally-sourced candidates suitable for senior MNC positions few and far between, what is the solution?

The lifespan of these expat contracts will normally be 3-4 years as companies look to localise the roles and reduce costs. A wise expat will start their succession plan as soon as they arrive and train up locals who can then replace them. These trained-up locals will go on to make up a large part of the “Local Talent Plus” pool, who can then become the solution.

This all sounds logical and fine, except that the speed of growth in an emerging market places an added pressure on the development of local talent. People want emerging markets to grow quickly – as much as 10%-20% year-on-year. To put this into perspective, China’s growth finished 2015 at 6.9% and a developed country such as Australia averages around 2.5%.

With growth far outpacing China and Australia, can a local worker develop the essential leadership skills quickly enough? In 3-4 years, can a general manager of an MNC develop a local talent to take over?

So are there suitable local candidates already in the “Local Talent Plus” pool and what are the skills needed to take on and perform well in a senior position? The answer to the first question is yes, but the talent pool is small and without the services of a company like Michael Page, these candidates are hard to source.

As for the skills needed to qualify for Local Talent Plus, for starters, they need a level of competencies to deal with overseas stakeholders. Malaysians who have worked overseas, or been educated overseas, will have had exposure to the arts of decision making and influencing. This gives them a crucial advantage over a candidate who has only worked locally and become accustomed to following the rules and not learning how to influence at a regional or global level. Other crucial soft skills include strong communication capabilities, the ability to problem solve and display humility – knowing how and when to let others take responsibility for work.

A Malaysian who has worked for, or been seconded to work for, a big organisation will have had exposure to these soft skills and how they enable a big company to run. Time spent in different cultures and businesses will have expanded the candidate’s worth and they can negotiate better salaries because they are so much cheaper than people they will be hired to replace.

A local with regional or global exposure, even though they haven’t necessarily left the country, will also fall into the “Local Talent Plus” category. Then there are expats who have gained permits and can stay long term. This third talent pool is a tight talent pool – small but highly sought after.

Going from a full expat to someone who hasn’t worked in a big company in an international role is a risk many companies won’t want to take. If they are already developing local talent towards what they want them to do in the future and have a candidate who is a fair way down the development path, they’ll find that a better bet than bringing another expat in.

Importing a European into a company in Asia comes with the risk that it won’t work. For example, the candidate or their family may not settle, the opportunity or business might not quite measure up to their expectations or opportunities for career progression may be limited. A local candidate who is not as developed, but a few steps along the journey, is a better bet, providing they have the essential soft skills mentioned previously.

Clients commonly say to us that they need to localise a role – when they do so, we say they need to look to “Local Talent Plus”. Members of this exciting, lucrative, specialised, talent pool are often in good jobs, so they need winning. But winning them and developing others will mean companies will be seen as giving local people career growth.

With a weak exchange rate, fewer Malaysians are returning back at the moment, but this will change at some point in the future, and when it does, there will clearly be more talent who have international experience back in the local market.

When that happens, the “Local Talent Plus” pool of candidates will increase and more locals will find their way into senior management positions across the market. Until that time, companies need to work on succession plans and develop the talent that is here now and, where there is a general manager-type vacancy, work with Michael Page to find the best local candidates who have the skills and experience to fill it.

Get in touch with Michael Page to discuss how to help you source from the Local Talent Plus pool or with any other specialist recruitment needs.