International business

The key to international business: Investing in people

insight featured image
The global mid-market has put a clear focus on developing business internationally, according to Grant Thornton’s most recent International Business Report (IBR). More than half of mid-market firms (52%) are looking to increase their strategic focus on international business.
In this article

The IBR data also shows that there’s an intention to invest heavily in people (63%) amongst mid-market firms that are looking to increase their strategic focus on international business. As companies expand into new markets, this investment can be mutually beneficial in retaining and attracting top talent. This supports the idea that investing in people is a critical ingredient to growing international business.

For a broader look at how the global mid-market is choosing to grow and develop international business, our ‘Mid-market momentum’ article takes a wider look at the ambitions of mid-market organisations and what they’re focusing on over the next 12 months. 

International business ambitions: Mid-market growth and expansion
International business
International business ambitions: Mid-market growth and expansion
Read this article

How recruitment and retention can help grow international business

Carrying out business internationally has a number of advantages for companies. Many organisations will look internationally to generate value through growth, innovation and other opportunities afforded through new markets. To support this, the global mid-market is actively investing in its people in several different ways. Upskilling existing talent (59%) and increasing salaries or financial benefits (56%) are two such methods, both of which aid recruitment and retention. Strong local integration can benefit companies expanding internationally through increased local knowledge and better diversity of thought facilitating stronger decision-making.

Alongside these, there’s also a renewed desire to increase investment in technology among the mid-market (66%). The availability of technology is an important enabler to the investment in people, as it can often help attract, retain and motivate employees through the provision of an enhanced workplace experience. This allows a business to benefit from the efficiencies and optimisation granted by technology, while also attracting a more skilled workforce eager to work with it.

As Pablo González-Costea, Human Resources Director, Grant Thornton Spain, explains,

“People leaving one organisation to join another or perhaps joining the workforce from the education system may well have been exposed to cutting-edge technologies. Continuing that experience is a key decision in developing and growing your career. What's my experience going to be technologically in that organisation? How am I going to continue to learn so that I don’t fall behind? Organisations really need to be upskilling workers all the time so that they can continue to interact with technology in a way that's going to drive growth.”

This ongoing investment in people – whether through remuneration, upskilling, or access to technology – is fundamental to strengthen the growth of international business within the mid-market in a sustainable manner.

Developing diversity to drive quality

The mid-market’s willingness to invest in people to support international business is also linked to its desire to build on quality. According to our IBR data, quality is a top priority (37%) for mid-market firms aiming to expand their focus on international markets over the next 12 months. Improving quality can be achieved in many ways, but one that can influence every area of an organisation is to improve the overall quality of thinking. Diversity of thought has often been named as key to driving innovation, and investing in people through international expansion is a strong strategy for achieving this.

According to Dave Munton: “A focus on quality and innovation, supported by a diverse and engaged workforce, is fundamental to successful international expansion. There are pockets of world class talent in some large economies that bring a unique perspective and can really help drive innovation around the success of products, how they're manufactured, and how they're taken to market.”

Moving into a new territory can be difficult, as how business is carried out can change drastically from market to market. Customer intentions, business practices, and regulatory requirements can be very different depending on where you are in the world.

“I think you need a leader who understands the differences in the market – who understands the opportunities within the supply chain, but also understands those rules and regulations.” – Schellion Horn, Partner, Head of economic consulting, Grant Thornton UK.

One way for leaders to gather this information quickly is to utilise the existing local networks of the territories you expand into by investing in people there. Bringing together a strong mix of both international and local talent can help leadership both realise and minimise the differences between markets by developing greater diversity of thought and ideas. These ideas – generated through a willingness to invest in people – will ultimately lead to better decisions, improve business performance, and develop better quality for mid-market organisations who expand internationally.

AI and technology offer opportunities, not threats

It’s clear that the mid-market is prioritising investing in its people, but there’s also a strong focus on investing in technology. In fact, with 66% of global mid-market businesses intending to invest in technology, it’s the top-ranking priority across the entire mid-market. The marked increase of 5pp from 2023 (61%) could well be driven by the introduction of disruptive technologies, with many pointing to the rise of artificial intelligence (AI) as a driving factor. In fact, 61% of mid-market firms planning to invest in this sector have declared they’re investing in AI over the next 12 months.

As has been discussed more generally for some time now, many consider that AI has the potential to replace a significant volume of roles globally.[i] However, it’s still quite early to realise the full and realistic impact of these technologies in the mid-market, although many are actively exploring the potential opportunities for those willing to adopt them. 

According to Dave Munton, “I think companies by and large – certainly in the mid-market – are still trying to understand what both the potential and the threats of AI are. Companies are still learning about how to benefit from AI in a sustainable, long-term, profitable way that ultimately gives organisations a competitive advantage.”

As these technologies become more widespread and more accessible, there’s an opportunity for them to promote business equality – if companies of all sizes have access to it, the key differentiator could be the human capital available, their skillsets, and just how much an organisation is willing to invest in people to keep them at the forefront of technological skillsets.

“The chemistry between human capital and technology is what will give commercial advantage going forwards. Organisations really need to be upskilling people all the time so that you can continue to interact with that technology in a way that's going to drive growth.” - Dave Munton, Global head, International capabilities and support, Grant Thornton International

Banking versus asset management: Investing in people

The global mid-market’s focus on international markets aligns with its desire to invest in its people. The IBR data, however, shows how different sectors approach this investment can be quite different. The banking sector and the asset management sector have quite a lot in common, but their approach to investing in their people varies.

Interestingly, 65% of mid-market banking firms surveyed by Grant Thornton see the availability of skilled workers as a constraint – much higher than the global average of 53%. Asset management, on the other hand, sees 49% of those surveyed identify the same constraint.

Banking has a clear preference for investing in people through an increase in salary or remuneration (65%) as opposed to upskilling employees (56%), However, asset management is taking the opposite approach, with a clear preference for upskilling (76%) compared to increasing financial incentives (59%). This is quite a marked difference, particularly considering how similar the two sectors are in the talent they tend to attract and recruit.

The difference in the availability of skilled workers could show why there’s such a different focus for each sector – one is investing in people through trying to attract talent amid a competitive market, while the other is investing in people through prioritising upskilling.

Other sectors such as technology and energy intend to invest in upskilling and remuneration in relatively equal proportions. Both also see the availability of skilled workers as less of a constraint this year than in 2023, perhaps showing why they’re choosing to focus on strategies that encourage both recruitment and retention in equal measure.

A clear link to investing in people

As the global mid-market looks to further expand internationally, it’s clear that there’s a linked desire to invest in people. People are the heart of any business, and investing in them is likely to propel these organisations closer to their international business goals. As we’ve seen, there are numerous ways that mid-market businesses can look to invest in their people. Increasing salaries, upskilling, and access to new technologies are just some of the ways that the global mid-market is looking to do so to grow international business in a sustainable manner.

For more information on how the mid-market is looking to invest, Grant Thornton’s ‘Mid-market momentum’ article takes a closer look at how business leaders are accelerating investment as they look abroad for growth. Access it now and discover what our latest IBR research has revealed about the latest opportunities for the global mid-market.

_____________________________ 
i. imf.org - Gen-AI: Artificial Intelligence and the Future of Work - 14.01.24