8 Billion Business Opportunities – HR goes global
Roland Berger study "8 Billion Business Opportunities – HR goes global": Emerging and developing countries have significant human resource potential for international companies
- 80% of the world's workforce is employed in emerging and developing countries
- Demographic change is forcing European companies to develop new personnel strategies
- In the next 20 years, there will be a shortage of more than 200 million skilled employees in the world
- In the emerging countries, the number of university graduates rose by up to 50% between 2006 and 2011
- But only 10 to 20% of these graduates satisfy international standards, such as having a good knowledge of English
- In the competition for the best talent, companies have to rethink their global HR strategies and invest in diversity and inclusion, further education and employee motivation
"The emerging countries are becoming more and more the center of economic activity, and this is also changing the working world," says Bernd Brunke, Partner and member of the global management of Roland Berger Strategy Consultants. "Companies have to adjust their personnel strategies to this new demographic equilibrium if they want to be sure not to miss important opportunities that globalization offers."
Emerging and developing countries continue to grow
There are about three billion people working in the world today – 80% of them in emerging countries. Not only the populations of these countries are continuing to grow, so are their economies. While Roland Berger experts anticipate a maximum of one percent GDP growth in Europe this year, they expect GDPs in the "Focus 20" countries to increase between 4 and 8%. The Focus 20 countries are Argentina, Brazil, China, Columbia, Egypt, India, Indonesia, Iran, Iraq, Malaysia, Mexico, Nigeria, Pakistan, Peru, Russia, Saudi Arabia, South Africa, Thailand, Turkey and Vietnam.
By 2030 these countries will be responsible for 70% of global GDP growth, and this also means enormous growth for their labor markets: Already in 2010, one-third of all new jobs were created in in China or India. "Conversely, in the Western markets we are currently experiencing an increasing shortage of specialists – a major threat to the growth of many companies," Brunke explains. "The war for the top talent is coming to a head, because companies need well-trained employees if they want to continue to expand."
Lack of qualified staff a threat to growth
Roland Berger experts assume that 200 to 300 million specialists will be lacking around the world by 2030 due to demographic change. The aging population will mean that a Western European country like Germany will be in need of more than 4 million trained employees, and in China around 20 million will be lacking. "Companies will have to rethink their global personnel strategies as a result of the demographic development in Western countries and the huge growth opportunities in the Focus 20 countries," says Tim Zimmermann, Partner at Roland Berger Strategy Consultants. "This is because emerging countries offer Western companies excellent opportunities when it comes to human resources."
For example, between 2006 and 2011 the number of university graduates in emerging countries rose by 30 to 50%, although it must be said that only 10 to 20% of these graduates meet international standards. The English language is one of these standards. "Unlike in industrial nations, where English is taken for granted as the international business language, few people speak English in many emerging countries," Zimmermann explains. "For Western companies looking for well-educated staff, this is an insurmountable hurdle." Exceptions to this rule are rare, such as Thailand, where more than 27% of the population speak English.
"For this reason, Western companies should place more emphasis on the education and vocational training of their local employees," Zimmermann recommends; English-speaking employees are easy to integrate into international business processes.
"Just as crucial are regular exchanges between a company's headquarters and its local offices to foster better intercultural understanding. New technologies such as video conferences can be very helpful here," says Zimmermann.
On the road to success with diversity and inclusion
Diversification within a company is becoming ever more important in the face of global competition, because a staff made up of a balanced mixture of men and women, young and experienced employees and people from different nationalities and cultures offers a company considerable advantages: "They enable companies to make global decisions more quickly, open up new markets more easily and increase the productivity and creativity of their employees," says Roland Berger Partner Bernd Brunke. "This increases their motivation and helps bind them to the company long term, which reduces staff fluctuation and potentially destructive brain-drain."
Companies have long recognized that diversity and inclusion pays off for them. Around a third of the DAX companies now have management board members who are not native Germans. Worldwide, 15 of companies are run by a CEO of foreign origin. It is also becoming ever more important to integrate women into companies. Accordingly, well-educated women from the emerging nations represent an enormous base of potential in the global talent pool. In the UAE, 65% of all university graduates are women, in Brazil this figure is 60% and in China 47%. 86% of the women in Russia between the ages of 18 and 23 are currently in higher education. "Companies that make the most of the enormous potential of excellently trained women will secure themselves a significant competitive advantage on the international market," says Roland Berger Partner Tim Zimmermann.
Salary isn't everything
But if they are to hold onto this competitive advantage over the long term, companies not only have to recruit the best talent, they also have to keep them. And an attractive salary is not the only thing that plays an important role in doing so: "Well-conceived talent management helps companies keep their employees highly motivated and reduce staff fluctuation," Brunke explains.
Talent management encompasses custom-tailored further education options, regular evaluation discussions and transparent career opportunities for international employees. "Top management has to recognize the importance of personnel policy, because it can be a decisive factor in a company's success or failure," Zimmermann sums up.
For more information about the "8 Billion Business Opportunities" publication series, please visit: www.rolandberger.com/GlobalTopics2012 is a year of dramatic economic and social challenges – and one of potential political change, with transitions of power taking place in 60 countries affecting 50% of the world's GDP. With our initiative GLOBAL TOPICS, we assess the most pressing issues and outline possible solutions to leaders.
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