Global Challenges for Strategic Workforce Planning

Introduction

The primary goal in Global Strategic Workforce Planning (GSWP) is leveraging worldwide talent to its best and most productive use.

This article is a basic introduction to the challenges of GSWP. The intent is to show all the variables that must be considered.

Since it is a basic introduction, it will look at how only a single critical skill, identified as the key in fulfilling a company’s business strategy, can be managed both by developing and retaining current employees and in acquiring and retaining new employees.

The article will not address offshoring, outsourcing, greenfield setup or contingent workforce usage. These factors are certainly very important and would no doubt be incorporated in a total planning effort. However, GSWP is difficult enough to discuss without adding all the talent usage possibilities in an article focused on the basics. For simplicity sake, the article will also narrow the definition of critical talent to “high tech” talent. To try to address multiple professions would add another layer of complexity. In discussing “mobility” the article is addressing the movement of employees from one country to another, not just to and from the U.S.

Global Strategic Workforce Planning

According to the 2010 McKinsey Global Survey, executives worldwide believe that the most important development in the next five years will be the shift of global economic activity from developed to developing countries with a growing number of consumers in emerging markets. Corporate challenges center on being able to find the right talent to meet these developments, particularly in view of low birth rates and the aging workforce in many developed countries.

The survey found that less than 40% of executives are confident about having the talent
needed in the next five years to meet strategic goals.

Conducting Strategic Workforce Planning (SWP) in the U.S. is difficult. Expanding it to include operations overseas can be almost overwhelming. Take the demographic, talent and competitive pressures in the U.S. and multiply them by a factor of 10 and that may give an idea of the complexity involved.

Historically, GSWP has tended to take place mainly at the regional (including the U.S.) or global business unit level in silo fashion which prevents the flow of talent across the entire company and the synergy of recruitment campaigns for the same resources. It can be wasteful and costly and typically results in a lack of alignment with the overall corporate business strategy.

Companies are realizing that the war for talent is global, and that it is no longer possible to rely on regional or business unit planning ---- especially critical technical talent that is crucial for the success of the overall corporate strategy. C level executives now understand the importance of leveraging talent more effectively across their business units and worldwide locations. Companies want and need to view a global picture of their workforce. This is important in order to decide where and how work will actually be performed worldwide, taking into consideration multiple issues including talent supply, cost, mobility, accessibility to customers and which business units need the talent.

The biggest challenges simply put are:
• How to identify the employees companies currently have overseas that have the skills/expertise needed
• Where to find additional external employees that have the talent needed
• Where in the world to put all of that talent --- which country, which business unit
• How to leverage that talent in the best possible manner

How to identify the talent/critical skills companies already have

Many companies are faced with a significant problem in that they do not have talent profiles on their current employees. This may occur for several reasons:
• Specific skill data or job history of employees is not input into the HRIS when hired. In addition, ongoing training/education courses or new skills/knowledge gained after hire are not tracked.
• The data is entered and kept, but the company has multiple databases that don’t talk to each other.
• Terminology in defining each critical skill is not the same across company locations.

As a result companies cannot be certain what talent they already have in-house. This data needs to be added and maintained in a single global database where it can easily accessed at the corporate level. One of the basic steps of SWP is understanding the talent gap that exists. Knowing what talent companies already have is the first step in gap analysis.

Companies have to make data mining a priority in SWP ---- it is even more important when expanded overseas. Given its importance, companies need to do a skills inventory on current employees and begin compiling this type of data for new hires.

In addition to collecting data, here are additional questions to address:
1) As it pertains to retention, how do companies know what their critical talent really wants? Are they asking them?
2) What do companies need to be doing to show them they are appreciated and valued?
3) What should companies do to stay ahead of competitors in retaining critical talent and developing new leaders?
4) Have companies created clear career paths for less experienced employees with critical skills?
5) Do companies actively “manage” the career development of experienced critical talent?
6) Do companies realize the real impact of talent retention and voluntary turnover on the bottom line?


Employees identified as critical talent need to have succession plans, have their career development actively “managed”, have mentors and have access to continued skill development. Their compensation needs to reflect the fact that they are appreciated and valued for their talent and performance.

Many companies play Russian roulette with retention. They do not seem to realize both the risk and cost associated with losing their critical talent. Those that are leaders understand the need to “stay paranoid” or run the risk of losing key talent.


Where to find additional talent needed

In looking for external talent globally companies must decide where new key talent needs to be placed in existing locations. Is it based on certain business unit needs? Is it for customer accessibility? Is it necessary to place the new talent in one business unit in a single location or with multiple business units in different locations? Do companies need to relocate some critical talent?

Once decisions are made on these issues, the talent acquisition process will have more clarity and focus.
Supply, cost, mobility, attrition, needs of business units, accessibility to customers and new markets ---- these are all very important factors to consider. The priority order will be different depending on each company’s needs.

1) Supply: Adequate supply of talent both now and in the future is important. In order to feed the talent pipeline, companies need to look at the number of competitors in a location to hire from, as well as the number of universities that have programs that can provide talent they need.

China and India have experienced a boom in global demand for work and a source of talent for companies around the world. This is not just due to low labor costs. It is also the sheer volume and supply of workers with adequate, if not outstanding skills that makes these locations particularly desirable.

Companies already located in India and China, may simply want to increase headcount there. Supply is not an issue. However, if already there, companies are also aware of a few negatives.

Companies trying to build and retain competent and stable workforces are encountering young employees who job hop to advance their careers and income. While they try to retain talent by promotions and salary increases, competitors attempt to lure talent away with additional promotions and salary increases. This makes for employees with inflated titles, little depth of knowledge, and salaries that do not accurately reflect the employees’ actual skills and knowledge.

High tech talent is attracted to large global companies with name branding as they believe these companies will provide more development opportunities. The company name will also look good on their resumes when they leave. This makes hiring difficult for smaller companies that may not have the name branding and sophisticated development capabilities that the larger companies have.

Local management skills are in short supply in China. To date, global companies have paid premiums for the international experience of ethnic Chinese managers from Taiwan, Hong Kong and Singapore. But the cost of these expatriate assignments is becoming burdensome. Global companies need to put considerable effort into the development of local Chinese management --- more than they would normally do in other countries. In particular, they need to focus on development needs such as coaching, leadership development and the ability to handle change.

In India, although there is a ready supply of talent coming out of the universities, as many as a third of university graduates leave for graduate school or work in the U.S. Many of them stay in the U.S. and create their own businesses. If they do return to India with MBAs, they earn about the same as Americans with an MBA from the top U.S. business schools.
So while there may be a large supply of talent in both China and India ---- talent acquisition is not without problems.

2) Cost: Labor costs are more of a concern for high tech design companies than in a manufacturing environment. In these situations, labor costs can represent 55% to 60% of total costs. When 90% of a company’s employees are technical workers with specialized training, attrition is a big concern. Replacing critical talent is very costly. It is also disruptive to the continuation of important projects. It may take months for new key, specialized talent to begin to add value and to pay for itself.

If companies have design centers in Western Europe which are necessary due to product customization or customer contact, costs will have to be accepted. Pockets of high tech talent exist in Europe, such as France, Germany and the UK. However, most companies attempt to limit the size of their operations in Europe due to the high labor costs involved. In addition, supply of talent in Europe is not as great as in Asia.

3) Mobility: Global Talent Mobility Research shows that the willingness to work abroad is high among people living in developing economies. In South America it is 93%, 91% in Asia and 70% in ME. Numbers can be deceiving however. Percentages by country are different than percentages by region. In countries where there are close family ties, it can be more difficult to entice people to move overseas.

In Poland, for example, there is a high level of willingness to relocate abroad, while this willingness is much lower in the Czech Republic. In some countries in Asia, people are much less likely to move away from family. The mobility issue is clearly more difficult in countries where the cultures emphasize close knit family relationships.

On a positive note, Generation Y is entering the global workforce in large numbers and they are very willing to live/work overseas. Generation Y exists in all countries not just the U.S. It may be called something different in other countries but the characteristics, work habits, values, goals and career aspirations are very similar.


4) Attrition: In every “hot” market, attrition accelerates as people take advantage of their value in the workplace. It is the age-old concept of supply and demand. In markets such as these, retention is king--- both in keeping current talent as well as by attracting and keeping new talent.

5) Needs of customers and business units: Talent must be directed to the business units that need talent regardless of the location. If there is a dwindling supply of talent or if employees cannot be persuaded to move from another country, this puts additional pressure on management to find other methods of leveraging talent.

How to find talent once the market is defined

Once companies find out where their target population is --- country or countries ---- talent acquisition needs to be tailored for each country’s culture.

Companies need to know how well their Employer Value Proposition is known in these markets. They must know the behavior of each target group when looking for jobs. What method do these target groups use? What do they consider important when looking for new job? Talent acquisition campaigns need to be tailored based on each country’s target audience. Better knowledge of the target group makes it possible to communicate with and attract them more effectively.

“Pull” factors vary among different countries. For instance, people in France attach more importance to standard of living compared to those in the Ukraine. Other “pulls” might include better career opportunity, better training and development, chance to work for a well-known company, better economic situation in another country, opportunity to broaden experience, more money and other reasons. Research needs to be conducted to find specific “pull” factors for each country targeted.

There are many channels for job search. Corporate websites features strongly in this regard. The same is true of job boards. Different types of job boards can be identified where candidates search for jobs in global labor markets. Companies need to ensure they know these job boards.

In countries where internet access is not widespread, digital job searching will be used less compared to more connected locations. The same with social media. In Europe, placement agencies/headhunters tend to play a bigger role than in other regions. Personal networking is perhaps the most widely used channel for people searching for jobs regardless of country.

Leveraging Talent Globally

Companies are realizing that not all talent needs to be mobile. They are increasingly seeking other avenues that offer greater flexibility to remain competitive and leverage the talent they have.
One avenue is the use of global teams.

Traditional teams are those that meet on a face-to-face basis. Employees from different locations (both within and outside the U.S.) are brought together to work on strategic business projects. Some teams may be brought together to address the balance needed between global product branding and local marketing strategies. Other teams may focus on the necessity for product customization. Regardless of the project, team members not only bring diverse viewpoints to the company’s attention, but they learn to think of the company from a worldwide perspective, not just their country or geographic region.

The disadvantage of traditional teams is obvious and that is the cost involved in physically bringing employees together. If an issue needs to be resolved quickly, there may be the cost of multiple trips within a short period of time or the cost of paying for short-term assignments (some as long as six months) for the entire team. Neither choice is very appealing.

With the advancements in information and communication technologies, there is another avenue that is being increasingly used ---- that of global virtual teams. Global virtual teams allow companies to leverage competencies and skills from all parts of the world with employees never having to leave their work location. Employees can communicate asynchronously via email and shared databases or synchronously via conference calls and video conferences. They can also meet more frequently than traditional teams which is an advantage when there are short deadlines to meet.

Regardless of whether traditional or virtual teams are used, they have a number of characteristics in common. Team members are usually located in different countries. Culturally, they differ as well—from different regions, nationalities and ethnic groups to differing internal business unit cultures. They may work for the same business unit or represent a number of business units of a company. They have a shared mission and vision and are held accountable to accomplish their goal. Individual team members bring a diverse mix of experience, competencies and skills to the group. Their project may be long- or short-term, often defined by the company’s strategic objective.

By using teams, companies can take advantage of the synergies that teamwork provides. Teams composed of employees from diverse backgrounds and cultures tend to resolve issues in more innovative ways than teams that are more homogeneous culturally.

There are several other advantages to using teams:
• Global awareness and mindset are spread across the company. The beauty of this is that it is a result of direct business endeavors in the “real” world, rather than in traditional classroom or webinar training courses on cultural awareness.
• Transfer of knowledge is invaluable across the company
• Leaders are developed who can function successfully in a global environment. This is one way of preparing younger and less experienced managers for the very different experience of managing a global company.

The key is to create teams that can work together effectively and in harmony. This takes time and a good team leader who is already globally savvy.

Global Talent War is a Two-Way Street

It is important to remember that the global talent war is a two-way street. Not only are U.S. companies searching outside the U.S. for talent, but companies headquartered in other countries are also searching globally. For example: A leading high tech company in China is currently on an all-out campaign to hire Western managers in order to fill a very real management gap as well as to bring new, leading edge thinking into their company.

China and India have begun hiring far more people in the U.S. and Europe. A recent IBM survey of more than 700 chief human resource officers and executives from 61 countries found that almost half of Indian companies and more than a third of Chinese firms said they were going to increase the number of employees they have in North America.

The logic is simple: It's all about expansion. Companies in China, India and other developing countries are eyeing North America and Europe as targets for new growth.

Conclusion

Labor supplies, costs and markets are shifting among regions, and new competitors are emerging. Markets originally growing in the Western world in the U.S. and Western Europe have spread into Asia, Eastern Europe, SE Asia, and now Latin America and Africa. Old locations will become non-competitive due to cost, supply and other considerations. New locations will rise in terms of supply, low cost and access to new markets. All of these shifts are very fluid and will continue to change over time.
Global business is not for the faint-hearted. Global companies are faced with volatile worldwide economies, rapidly changing markets, competitors, product obsolescence and uncertain political climates. The global war for talent is now one more factor to deal with.

GSWP is a critical source of competitive advantage, and companies need an embedded global mentality included in their overall strategic business planning. How companies respond in addressing this challenge will clearly impact their future success. It is time to embrace the challenge and embrace being global.