Today organisations find themselves in a race to acquire and develop human capital as an asset, unlike 30 years ago when financial capital was in short supply. This change can be attributed to factors such as: access to robust and customised financial instruments, the development of low-capital-intensive sectors/business models, and technological advancements that have eased new market access. But the most widely accepted reason for this change is the lack of vision and investment when it comes to capacity and skills enhancement, which has led to greater demand for a skilled workforce. Many studies have shown that even in the first decade of the 21st century, global education spending is concentrated in a handful of countries.
That said, it is also true that today human capital capacity development has become the focus area for many national and provincial governments as well as industry associations. Even multilateral funding agencies such as the World Bank and Unesco are focusing on these areas.
What does this mean for those organisations looking to globalise, grow and gain? The consensus is that talent availability, talent cost and talent quality need to be prime drivers
in identifying investment locations. Also, locations that provide the best quality, not necessarily at the best cost, will be the ones to emerge the stronger. Companies need to – and some large ones have started to – view the world as one integrated network for capability and skill sourcing. Again, technological advancement leading to the creation of global citizens and virtual offices has enabled such strategies.
Highly skilled talent
The scenario is not very different when it comes to highly skilled manpower requirements such as engineering, R&D, analytics, knowledge services, etc. In fact, the trend of assessing the talent driver while making location decisions is only more prominent. Reasons for this are:
- Corporates are looking for skills that are highly technical and rare to find in large quantities;
- The skills are not easily trainable through company-sponsored trainings or on-the-job learning; and
- The skills can only be developed if there are strong links between the industry and academia (which is not the case in most places).
- The government’s economic strategy and plan: does my industry find a place in the priority sectors list? If yes, how much of a priority is it?;
- The educational system and institutions: how prominent are institutes that teach courses specific to my requirements? What is their overall ranking and prevalence in the macro environment? How involved is the present incumbent industry in the educational system?;
- Finishing schools: how prevalent are prominent finishing schools for my domain and skill needs?;
- Local and global incumbents: what is the talent strategy of my future competitors? How are they managing their talent needs and acquiring new talent?
The job has only begun once a detailed evaluation of multiple locations is carried out and the best suited are chosen. The need to nurture local talent to meet the future needs of the firm is equally, if not more, critical than the initial choice itself. While the right choice provides the platform to grow, investments in local capacity development and skill enhancement initiatives is the fuel to build scale and execute future expansion strategies. It is a best practice seen among most successful corporates that have taken the globalisation route.
Key strategies include:
- Developing a link with academia and government: academia to establish course curriculum and content specific to the firm’s requirements, and government to obtain a buy-in and broaden the scope for such interventions in the education system. This develops a strong employee value proposition within the potential talent pool and the firm could become an employer of choice for the local talent;
- Creating strong ties on the talent development front with industry associations that provides visibility and scale to the initiatives. It also creates a joint ownership among all incumbents resulting in reduced investments (compared with if the firm goes it alone). Above all, initiatives routed through industry associations result in greater buy-in from the talent pool and create a case for the raw talent to choose this industry over many other options they might have;
- Investing in finishing schools to create the required quantity of employable talent in the short term. In the long run, use these finishing schools as high-calibre institutes that provide courses on future advancements, be they labs for conducting research or those that act as incubation centres for business ideas;
- Creating an ecosystem conducive for global talent to enter the location. The dual advantage is that this will help ramp-up operations quickly while allowing experts from foreign locations to mentor the local talent employed;
- Concentrating on middle management and mid-career development programmes. Many global locations have been successful in incubating businesses in specific industries but have not been able to provide the required local staff at the middle and senior management levels. This becomes a hindrance to growth and must be avoided.
Anupam Prakash is Asia-Pacific practice leader, corporate transactions and transformation, for Hewitt Associates in India.