About two decades ago the total of the world’s exports and imports accounted for only 30% of global GDP whereas today international trade makes up more than half of it. These numbers indicate a rapid economic integration, which is naturally transforming the global business landscape. Based on this argument, Oxford Economics undertook an extensive global survey of 352 HR professionals, and their results provide some valuable insights into how organizations in general and HR in particular need to transform themselves to effectively face this sweeping business change.
Speaking about the changing landscape of global employees, the Global Talent 2021 survey indicates that over the next five to ten years workplace recruitment will be defined by a new geography of talent. In line with the already increasing demands for workers in emerging markets, the future demand for talent will most dramatically increase in emerging Asia (22%), Latin America (13%), Middle East/Africa (13%) and Eastern Europe (10%). By contrast, the demand for talent in Western Europe (3,5%) and North America (6,1%) will be rather modest. Hence, the economic growth and increased demand for talent in emerging markets will also shift the talent pool from industrial to emerging markets. In the coming decade, the fastest annual growth in talent pool is predicted to be in India, Brazil, Indonesia, Turkey and China. While already today 54% of the world’s college graduates come from the top emerging markets (the E7: Brazil, China, India, Indonesia, Mexico, Russia and Turkey), this number is expected to rise to up to 60%, which would substantially outnumber graduates from the developed world.
Considering all the aforementioned numbers and tendencies, it becomes evident that these shifts in the geography of talent will require a fresh HR approach and mindset. The Oxford Economics research outlines five important steps that organizations can take to ‘retool’ HR for the changes that lie ahead.
First of all, HR professionals are encouraged to use more sophisticated analytical tools for making global decisions. This includes the use of globally integrated HR data systems that, as the report predicts, will rise from 39% to 47% within the next three years. Overall, the point made in the survey is that more rigorous data analysis will allow organizations to be better prepared and be proactive in times of change.
Second, organizations should use talent segmentation to understand its categories, differences and gaps. Future approaches to talent segmentation include formal identification of top-performing employees, of employees in pivotal roles and those with high potential. Clarity about employee skills and competences, and about the level of alignment between the organization’s and employees’ values enables HR professionals to anticipate and react upon talent demands in a timely manner.
Third, the future is likely to be also about talent optimization. The survey suggests that the workforce can be optimized by both investments and pruning. As people and business strategy should be interconnected, changes in the business environment should lead to strategic changes, and will hence also trigger changes in the workforce. Talent optimization allows executives to determine which areas need more investments, while also justifying the hard decisions of cutting investments in less critical areas.
The fourth proposed step is to shift from a risk-averse to a risk-aware mindset. In other words, HR professionals are encouraged to move away from risk avoidance to risk leverage techniques, as the current business landscape is characterized by increasing volatility and uncertainty. Hence, risks can no longer be avoided, they need to be managed. The research shows that more firms are accepting HR risks in such areas as sourcing, talent segmentation and market optimization. It is also important to incorporate better analysis and optimization of risks using techniques such as data-based forecasting and scenario planning.
Last but not least, HR strategies should be aligned with the objectives of the business transformation. As of today, 49% of respondents indicated that HR is already sharing governance of people management with business heads, and 57% say that HR initiatives are aligned with key strategic goals. In three years these numbers are predicted to change to 54% and 66% respectively. Therefore, the survey authors see integration/synergy as a transformative HR tool, and argue that HR functions are becoming more strategic.