They did not see it coming. Staying relevant is no easy task as there are a multitude of underlying forces continuously reshaping the world and changing how business is conducted. These drivers shape where the global consumer spends now and in the future. These underlining forces by their very nature span a period of time and leave a lasting impact. The five most prominent drivers as identified by Euromonitor International are shifting economic power, population change, new technologies, changing consumer values and environmental shifts and pressures.
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Changes in the Supply of Talent As these six forces propel a variety of changes in the demand for talent, six social, economic, political, and technological forces are shaping the supply. We have divided these forces into two groups. See Exhibit 3. Shifts in resource distribution: a new demographic mix, skill imbalances, and shifting geopolitical and economic power Changing workforce cultures and values: diversity and inclusion, individualism and entrepreneurship, and well-being and purpose Shifts in Resource Distribution An increasingly dynamic global economy has led to shortages of skilled, knowledgeable employees in some markets and may create a surplus of less-skilled workers in others.
As Baby Boomers age, the demand for scarce and specialized talent grows, and as talent disperses as a result of various geographic, economic, and political factors, companies will be increasingly challenged to attract and retain the highly skilled people they need.
A New Demographic Mix. The global population is aging. After rapid population increases during the 20th century, birth rates have stalled—and even reversed—in many regions.
By , one in five people worldwide will be 65 or older. On the basis of several simulations using demographic data and global trends, BCG projects a global workforce crisis within the next 15 years, with a labor deficit in most of the 15 largest economies, including in three of the four BRIC nations. But many of them do not acquire the skills that would make them employable. The challenge is to help them develop those skills, or—for some young people—to increase their mobility so that they can find jobs elsewhere.
Meanwhile, millennial and Generation Z digital natives are entering the global workforce with new expectations and orientations. In their search for a healthy work-life balance and opportunities for self-expression, they are harder to please than their predecessors. They are also harder to retain. These demographic shifts will put pressure on companies to devise entirely new ways to attract, retain, and develop talent across locations and age groups.
For example, Bosch has started an initiative in which older and younger employees from different divisions with at least a ten-year age difference meet on a regular basis in order to learn from each other. The young employees learn best practices and get career advice, while the older workers gain insight into new technologies and the use of social media. The skills and capabilities businesses require are rapidly evolving. Even as automation may yield a surplus of unskilled and semiskilled labor, the digitalization of products and services is creating an enormous demand for skilled digital talent.
Nearly half of US and German companies in a BCG survey cited the lack of qualified employees as the biggest constraint to a full digital transformation. In addition, according to a Gartner study, a third of all technology jobs will go unfilled by because of talent shortfalls. Meanwhile, Citigroup and others are introducing online gaming apps, either as recruiting tools or to identify hidden skill sets among employees.
Others are attempting a more sustainable remedy for skill shortages: developing them among the existing workforce, including among many of the employees potentially displaced by automation. Given that many universities are already overwhelmed with demand, the responsibility for this radical retraining will likely fall into the hands of business.
Moreover, programs designed for the academic domain are increasingly ineffective in building the skills required in the modern workplace. Instead, companies are turning to organizations such as Udacity, edX, and Coursera, which allow people to receive training while working full-time.
For many companies, incubating talent internally is more likely to pay off than depending on the marketplace. To that end, GE has introduced a mobile application that prompts employees to work on development areas and provides real-time feedback. The company expects this app eventually to replace traditional performance management.
Regardless of their current talent situation, companies should systematically analyze future supply and demand for various jobs under different scenarios and then plan accordingly.
This approach, known as strategic workforce planning, helps businesses ensure that they will have enough people with the appropriate skills. Talent is more mobile than ever, with workers willing to cross borders and cultures to improve their career prospects. Yet a number of geographic, economic, and political developments are blocking the smooth flow of talent to areas of demand, thereby compounding the overall talent shortage.
Of the more than 60 hot spots worldwide, nine out of ten are in the United States. Companies will need to learn how to compete for talent in these locations while developing talent in other areas. This trend is forcing global companies to grow their operations or find talent elsewhere—even in markets where they have no existing interest.
Third, income disparity is increasing, especially in developed and rapidly developing regions. As a result, the migration of workers from the poorest and most rural areas to the richest and most urban areas is accelerating, as is the desire of employees to work virtually. Yet, more worryingly, the rising disparity also means that more and more people are being left behind on the education front, unable to afford the ongoing training or reskilling they need to compete.
Large organizations can address these pressing talent issues by establishing a presence in digital hot spots or helping new hot spots emerge.
They can take full advantage of cloud computing and other technologies to create virtual teams and mechanisms for collaboration across regions. Changing Workforce Cultures and Values As the skill shortage increases, new attitudes among talented people are also changing the workplace—in particular, the growing preference for independent work instead of dedicated corporate careers.
Many people are also stressing the importance of three areas: diversity and inclusion, individualism and entrepreneurship, and well-being and purpose. Diversity and Inclusion. The business case has never been stronger, as studies show that diverse teams are much more likely to foster employee engagement and improve business performance.
The company uses diversity to improve innovation and productivity and to reach customers in various demographic segments. For example, the use of new technology and online communities can help prevent a high bias rate in recruiting.
Pinterest and American Express are using Jopwell, a career advancement platform for black, hispanic, and Native American students and professionals. Companies can achieve significant business outcomes from diversity only if they make it a part of their core strategy. Not only will they improve performance, but they will position themselves as a force for economic and social equality.
Individualism and Entrepreneurship. Independence is becoming the dominant motivator for a large section of the population, particularly for millennials born from the early s to the mids and Gen-Zers born in the mid- to late s and after.
These younger people tend to get bored doing the same kind of work for long stretches, and they are especially interested in independent careers. Empowered by digital platforms and ecosystems, many are choosing entrepreneurship and self-employment over traditional corporate employment.
Among those still interested in corporate jobs, many are keen to experiment with new ideas, take long career breaks, and even work part-time as a volunteer or freelancer in entirely new fields. They will need to create career paths and roles to serve the entrepreneurial aspirations of the highly skilled talent they seek.
And leaders will have to tailor their leadership style to the hyperindividualized environment, finding new ways to empower and inspire individuals and teams in their dispersed organization. Well-Being and Purpose. Millennials and Gen-Zers, who are taking on an ever-increasing role in the workplace, want more from their jobs than just competitive compensation: they are looking for well-being. And the benefits go both ways. A recent study by BrightHouse, an ideation and branding company within BCG that helps companies become more purpose driven, found that companies with a culture based on shared values outperformed their competitors in revenue, profit, employment growth, and stock performance.
Businesses such as Google, Chevron, and JPMorgan Chase are already implementing such programs and realizing benefits, including fewer sick days, lower insurance premiums, and more-productive employees. Moreover, they will need to begin defining their organizations in terms of a unique purpose and work to ignite a passion for that purpose. In the future, organizations will be judged not just for the quality and price of their products but for who they are—in relation to their customers, their employees, and society as a whole.
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