Myanmar is certainly the land of opportunities, a young population, motivated and ambitious people and a business environment that lacks the sophistication international companies have that automatically give them an advantage.
However, there are many challenges that companies face when they enter Myanmar. A challenging legislative environment, instability of power and internet, hire real estate prices, and of course the shortage of quality human capital.
Today we will focus on the issue of human capital and what all companies entering into Myanmar struggle to believe before entering, still don’t fully believe in their first 6 months to a year, and only after about 1 ½ years finally get their headquarters to grasp. This is the serious challenges the Myanmar entity faces with finding qualified and capable talent, retaining the talent they have and the seemingly expensive salaries they have to pay compared to neighbouring countries.
Let’s start off with a shortage of talent in Myanmar. This is a fact and no matter what someone says, there are just not enough qualified and capable candidates in Myanmar of Myanmar origin to do the roles that both local and international companies need them for. Thinking of the complexities of a modern business, try to imagine a workforce that if lucky has had 7 years (Myanmar opened up in 2012) of exposure to international systems and processes, is most likely coming from an environment that was very manual, very basic and one that didn’t allow anyone except for the owner and their family to make decisions and take ownership. It is unrealistic to think that even someone who has had 7 years of experience to be able to operate at this level, but most candidates haven’t even had this length of time in an international environment. Yes of course there are repatriates (Myanmar nationals who have spent time working overseas), but most of them are not working in the industries that are needed in Myanmar (telecom, banking, financial services) and have often only worked for small local companies overseas and therefore have not had the level of education one would expect from someone who worked a JP Morgan, Procter & Gamble, etc. Yes there are a select few candidates who are truly at the international level, have worked at great international companies overseas, or been born and bred in multinationals already in Myanmar, but they are obviously in extremely high demand and there certainly are not enough of them to go around.
The simple situation is, with the poor education system Myanmar has had for so long, the lack of international business practices in most companies still to this day, mean that the majority of the English-speaking workforce, still only have local training and a local mindset to business. This often leads to disappointment from international companies when trying to hire staff for their operations, especially when they are first setting up.
You can tell by now, that the first part, finding talent, is going to be a challenge. The next part is keeping them. With competition so fierce, and getting fiercer day by day, retaining your good staff is really hard. Many companies try to attract and retain staff through offering very high compensation; however, this has proven time and time again both in Myanmar and overseas not to work in the long run. What we see is that people may move because of salary, but they do not stay, and they will not be motivated just by money. International companies have a distinct advantage in Myanmar, they will usually offer great training, a working environment that many candidates aspire to be part of, brand recognition, and international infrastructure that will likely lead them to be successful against the local competitors which offer greater long term job security and growth opportunities. From day one an international company needs to continue to promote this to their employees, let them understand the vision, what opportunities are presented to them or will be presented to them. And along the way, help the employees develop a level of attachment and ownership to the brand and the vision to help defend against other international companies coming in and poaching their staff.
The final point we will cover off today is around salaries. Most companies are shocked when they actually go to hire mid-career or senior-level employees because the current and expected salaries are significantly higher than they had budgeted for. And when comparing to neighbouring markets like Vietnam and Thailand are either the same or higher, but the capabilities of the candidates are lower. The extremely high salaries in Myanmar was largely caused by the two major international telecom operators, Telenor and Ooredoo offering 100%, 200% and sometimes 300% salary increases to entice employees from their existing employer to the telecom industry when they first set up. Ooredoo and Telenor will be the first to admit that they caused a sudden increase in salary requirements from candidates that disrupted the usual balance / ratio of salaries vs revenue.
This initial crazy competition between Ooredoo and Telenor in their race to start up prior to launch, set in motion an expectation in the market that if someone is to make a move, then 100% increases in salary are just normal. Then other companies started to make these kinds of offers as they saw that this was the only way to capture talent. This combined with the usual issues in any job market of people changing companies extremely quickly (every 6 months to 1 ½ year) has meant that salary growth has far outstripped companies revenue growth. This also meant companies were offering existing staff unrealistic salary increments as frequent as bi-annually in an effort to retain the staff or giving counter offers matching the already extreme increase.
Luckily, we are seeing that the majority of companies are now being more logical with their offers and trying to align them with other international markets. Candidates also starting to realize that company loyalty and the benefit of working for one company for a longer period of time has other benefits outside of salary and we now see that more candidates are wishing to stay at their companies for closer to 2 ½ to 3 years in many cases.
One final point worth mentioning is around the gender balance in companies. Unlike many other countries around the world, you will not struggle to have a high number of females in your business. Actually, you will struggle to have an equal number of males. Most companies we deal with have a 70:30 ratio of females to males and find that getting quality male candidates is harder than female.
All in all, this has created a situation in Myanmar where quality candidates are in extremely short supply, even candidates who are not qualified for roles are getting positions and are being paid more than they are worth simply because companies have no other choice. When operating in Myanmar this is something that all companies need to be prepared for.