Attracting, developing and retaining talent the Swiss way

With a little help from the covid-19 pandemic, companies have realized that they can operate efficiently outside of the walls of an office. When they are in high-growth mode, they are hunting for talent, on a global scale. In a recent GGBa webinar entitled “Looking for a sustainable option to attract, grow and retain talent? The example of Switzerland”, a panel of international expansion experts provided informed answers to some of the most frequent questions CEOs and entrepreneurs ask when contemplating going global.

The webinar was primarily designed for internationalizing US companies. Switzerland and the United States enjoy growing economic cooperation, as noted by Marjorie Hamelin, Director USA with GGBa. Last year, the US became Switzerland’s top export market, displacing Germany for the first time in 70 years. In terms of imports to Switzerland, the US come in third place. 500 Swiss companies operate in the US and are directly responsible for the creation of around 298,000 jobs. Around 1,100 US firms are active in Switzerland, employing just under 100,000 people.

(Re)Watch the webinar “Looking for a sustainable option to attract, grow and retain talent? The example of Switzerland”:

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A talent pool without borders

While Switzerland is not immune to the global talent shortage, it has some powerful assets to counter it, said Jean-Baptiste (JB) Olagne, Client Engagement Director with Michael Page Group. The Swiss workforce is well educated and trained, and has extensive international experience. Switzerland is also a magnet for European workers, which means that the actual talent pool companies can tap into expands way beyond national borders. From an administrative perspective, recruiting an EU citizen is a simple and smooth process.

Skilled workers are generally more than happy to relocate to Switzerland, where they can enjoy an outstanding quality of life and advance their career without the need to move away from the area. Albeit small in size (covering about the same surface as Massachusetts and Vermont combined), the country is big in business, hosting the headquarters of some 850 multinationals including HP, Logitech, Cisco, Electronic Arts, Schindler, Oracle, and Nestlé. These certainly provide ample career opportunities for expats. It is therefore not surprising that Switzerland consistently tops the Global Talent Competitiveness Index, an annual benchmarking report published by business school INSEAD which ranks countries based on their ability to grow, attract and retain talent.

In Switzerland, employees are eager to engage in further education and training, and employers are inclined to upgrade their workers’ skills and help them reach their potential.

Olagne noted that in Switzerland, the talent crunch is particularly evident in the IT and engineering fields, whereas for other roles, like that of SAP consultant, there are 11 times more jobs available than job seekers in the market. Fortunately, there is an appetite for upskilling and reskilling within Swiss organizations. According to a survey conducted by Michael Page in 2021, more than 2/3 of interviewees had been involved in some kind of reskilling or upskilling training over the previous 12 months, whether within their company or independently. “In Switzerland, employees are eager to engage in further education and training, and employers are inclined to upgrade their workers’ skills and help them reach their potential,” Olagne said.

The land of innovation

Monica Cohen-Dumani, Partner and International Tax Services Lead EMEA with PwC, gave a quick overview of the main sectors driving the Swiss economy. “There is a lot of tech and engineering really happening,” she said. Switzerland is home to a slew of “hidden champions” – globally successful, very profitable suppliers of high-tech B2B products, such as components for the automotive or IT industries. Consumer goods and luxury firms are also well represented, as are companies operating in the life sciences, crypto, and financial sectors. Last but not least, Switzerland is considered an ideal platform to expand internationally and to cover Europe, the Middle East, Africa, and other regions. This HQ model spans all sectors of the economy.

Although chocolate, private banks and watches still shape the image of Switzerland abroad, the country should be better known for its innovation, according to Marjorie Hamelin. In 2021, Swiss companies once again filed the most patent applications per million inhabitants (969), seven times as many as companies in the US (140). The country invests 3.4% of its GDP in R&D: only South Korea and Israel do better. The national start-up scene is active and vibrant, with 50,000 start-ups and 400 new ones created every year.

Competitive cost of labor

Speaking of what Switzerland is known for, being expensive is probably also high on the list. Cohen-Dumani shed some light on the cost of labor in Switzerland: “If you just look at the salary, at the number, it is indeed higher than in other locations; however, once you look at the fully loaded cost – which includes social security, productivity, and related costs – Switzerland is not that expensive.” While Switzerland is not a good fit for low-level, routine-type functions, it is clearly competitive for high value-added roles.

Moreover, higher salary levels are usually associated with greater employee engagement and retention. “In Switzerland, compensation is the fifth criterion people look at when evaluating a career change. In the US, it is the first one,” Olagne said. Since a decent salary is granted, prospective employees give more importance to other factors, such as company culture, value alignment, and doing something they actually enjoy.

In Switzerland, people stay in their job for a decade.

At a closer inspection, low attrition rates are also to thank for Switzerland’s overall competitive cost of labor, as they keep the hidden cost of hiring and training new resources down: “In the Silicon Valley, people hop from job to job. The average tenure at Google and Apple has been reported at three years and 9 months respectively. In Switzerland, people stay in their job for a decade,” said Hamelin, who is based in Redwood City, California.

An educational system geared towards market needs

All panelists agreed that the high quality of the Swiss vocational training and apprenticeship system is a fundamental strength of the county’s economy and labor market. Upon completing compulsory education, around two thirds of young people in Switzerland opt to undertake vocational training, a path that can be as much of a career stepping stone as an academic degree. Just ask the former CEO of Switzerland’s largest bank UBS, Sergio Ermotti, or Swiss Economics Minister Guy Parmelin, who both went through the system. The vocational training courses focus on professional qualifications that are actually in demand and on jobs that are currently available, ranging from catering to high-tech industries. This dual education system generates great international interest, including from the US, with which Switzerland regularly exchanges knowledge and best practices on both diplomatic and technical levels.

Liberal labor laws

In Cohen-Dumani’s experience, the many similarities between Switzerland and the US when it comes to employment laws are one of the main reasons why American companies choose Switzerland over other locations in Europe. “The Swiss system is as close as it gets to a US-type environment. An employment contract can be terminated in writing or verbally at any time by either party and without valid reason. Legally speaking, the maximum notice period is three months, and there is no severance pay. This liberal approach is a refreshing differentiator for companies,” she explained.

A favorable tax environment

Corporate and personal income tax rates are also a decisive factor for US companies. In Switzerland, ordinary tax rates are between 12 and 21%, depending on the exact location, with the majority of cantons offering rates between 12 and 15%. “Swiss corporate tax rates fall right in line with the new global minimum corporate tax of 15% for multinationals with over 750 million euros of annual revenue,” noted Cohen-Dumani. Companies with revenues below that threshold can take advantage of comparatively moderate tax rates. Special regimes like patent boxes and super deductions are also available.

From the US to Switzerland: the experience of MaCher

Derek Hydon, President of Venice, California-based MaCher, shared his experience of setting up shop in Switzerland. MaCher is a product-based branding company that uses data and academic research to design and responsibly produce highly effective products able to positively shift human behavior.

“Put aside what I consider no-brainer aspects, like the quality of life, the central location, or the ability to go visit customers by train wherever in Europe they might be, I think what really sets Switzerland apart is a natural sense of collaboration between academics, start-ups, government representatives, and captains of industry. This is deeply linked to stakeholder governance, and to happiness in the workplace,” Hydon said.

Listen to Derek Hydon explain why MaCher chose Switzerland as a base for its European activities:

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