This challenge comes up time and again in my conversations with business leaders around the world. And it was also one of the key findings of PricewaterhouseCoopers’ recent Global CEO Survey. Over half of the CEOs surveyed by PwC – and 62% in the Asia-Pacific region, home to the world’s largest workforce and fastest-growing economies – said that being unable to find key skills could hurt their ability to grow.
The reason is a chronic skills gap and a mismatch between supply and demand. The rise of emerging markets is creating jobs in places where it is hard to find the right people. International and local competition for workers who do have the right skills is growing increasingly intense. New kinds of jobs are being created – in old and new industries – for which many recent university graduates are poorly equipped. And the demand is not limited to technical know-how; companies are looking for international experience, wide-ranging “soft” skills, and adaptability.
There is no easy solution to these problems. While more and more companies are investing in diversity and inclusion, they are still struggling to get real results.
Meanwhile, demographic trends, particularly in developed economies, are causing the workforce to shrink and giving rise to a new generation of employees with different expectations. The labour pool is getting smaller as age and birth rates fall. And highly demanding young people, weaned on technology, have a different perspective on work, flexibility, and rewards. Retention is also a major problem in many countries, particularly in emerging markets. Spiraling compensation is partly to blame for job-hopping, but loyalty is falling for other reasons as well.
There is no easy solution to these problems. Tapping into under-used areas of the labour pool – like women and older workers – can help companies as they face the talent crisis. But, while more and more companies are investing in diversity and inclusion, they are still struggling to get real results.
One thing is certain: to meet these challenges, companies cannot keep doing what they have done before. Business leaders need to think more strategically about how they manage their workforce – fueling planned growth with the right people, who have the right skills, in the right locations. This sounds like a simple plan, but implementing it in our interconnected global marketplace is increasingly difficult.
Better workforce planning is a start. This can help businesses to make informed decisions about what resources they need and what is available in which locations.
A deep understanding of, and respect for, what employees genuinely value is a vital step toward shaping an organisation that attracts, motivates and retains the best talent, at every level, in every location. Another important step is to forge ties with the providers of new talent – schools, universities and apprenticeship programmes. The traditional education curriculum is not keeping pace with change or meeting the needs of business; but effecting change requires business leaders to engage fully with educators and policymakers.
There are signs that things are changing for the better. Companies are starting to take a longer-term, strategic approach to closing the gap between what they have, what they need, and what’s out there. This includes focusing at the leadership level on good succession plans, mobility strategies, and diversity programmes – not relegating these initiatives to a business-planning afterthought.
Undertaking this kind of analysis and forecasting becomes even more crucial when companies enter new markets where different risks (for example, local skills shortages, high turnover, or soaring costs) can easily mean the difference between success and failure. As the alignment of personnel strategies with business goals become more critical, the role of human-resources issues grows in significance. Talent plans become an integral element of business plans.
I will be moderating a session at the 2013 World Economic Forum Annual Meeting in Davos called “The Human Capital Context.” The session will look at the strategic shifts and transformational issues that are making human-resources challenges a central concern for companies. The session will address the true depth of the talent problem, the structural nature of youth unemployment, and the impact of technology on workforce education. It promises to be an interesting, lively, and significant debate.
Dennis Nally is chairman of PwC International.
Copyright: Project Syndicate, 2013.