There is no doubt that family businesses are prominent across the Gulf Co-operation Council (GCC) in various industries. From small to renowned multinational corporations, family owned and managed companies are the foundation of the modern country. Many of these businesses have been in existence for five decades and still exist today. As the first-generation of individuals begin to step down, we're seeing a shift to second and third generation ownership. It is estimated that, in the Middle East, approximately $1 trillion in assets will be transferred to the next generation of family owned companies over the next decade.1 The transition from the first to the second generation, and increasingly, the second to third generation, will have tremendous implications on the sustainability and growth of these companies. As a result, legacy and succession planning are becoming an increasing concern for the region, as many businesses stand in a position to pass the baton over to the next generation. While existing leaders prefer to keep the business within the family, there are many challenges that can arise if there is no preparation done well in advance of the transition. This lack of preparation is common, as it's easy for leaders to be so involved in the day-to-day running of the business that they lose sight of longer-term, more strategic priorities. The penalty for failing to tackle leadership or ownership changes can be significant. Lack of a clear, strategic succession plan can cause disruption, conflict and uncertainty within the business, making it vulnerable to an acquisition or takeover. The long-term survival of a business and the preservation of the wealth that has been built, will likely depend on getting ahead of those changes through legacy and succession planning. Have a Strong Internal Talent Strategy Planning can have many benefits. The priority is to ensure leadership continuity, which is an important factor in keeping employees engaged and ensuring retention. It also allows time to hire internal candidates for key positions, therefore avoiding the cost of external searches. Internal candidates know the organization better and tend to have a better chance of success than external hires. Additionally, promoting internally helps retain good people, because they see opportunities for growth and will stay on to pursue them. A strong talent strategy can also fill leadership positions quickly, not only avoiding the potential cost of unfilled positions and errors from a lack of leadership, but helping to circumvent legal consequences from potential missteps. Evaluate Your Operating Structure and Execute in Phases Leaders often first look at the current reporting structure and organizational chart to evaluate who the next leader(s) may be. However, it is also important to think of an organization's operating structure and how it may change over time. Leaders must consider how functional activities will evolve as the business grows, while also looking at the experience of the shareholders during this significant change. These factors need to be reviewed before selecting the people who will take over the function. As part of this process, it's critical that succession planning is done in phases. Firstly, it is important to identify the roles critical to the business and the pool of successors that best fit the organization's requirements. Ensuring the right assessments to determine readiness levels can solidify the next generation of company leadership. Multiple assessments methods are suitable, including looking at historical measures of performance, 360 leadership behaviors tests and predictive measures of potential. Involve Executive Leadership Lastly, executive leadership involvement is essential in the succession planning process. The organization's top leaders should be fully on board with the plan to bring in the next generation and meet frequently to discuss strategic talent management issues. The ultimate results of a business succession plan depend on the adherence and commitment to it from the organization. It requires a high level of engagement and continuous efforts to keep the succession moving forward over time, despite inevitable interruptions of operational needs and unexpected changes. To learn more about succession planning for family businesses, visit us here. 1Augustine, Babu, "Middle East's Family Businesses Get Serious on Sustainability" Gulf News, November 7, 2015,https://gulfnews.com/how-to/your-money/middle-easts-family-businesses-get-serious-on-sustainability-1.1614502.
Imagine you're tasked with creating a brand-new city from scratch. A broad, meandering river cuts through a level plateau of arable land, and you're responsible for whatever's to come. What do you do first? Lay out a street grid? Install emergency services? Block off land for preservation and development? Think wisely, because your next decision may determine the fate of your city's inhabitants for generations to come. At its core, this is the same decision that local leaders of the world's emerging megacities face today. They may not be starting from scratch, but tomorrow's megacities face a similar potential for dynamic growth and expansion as yesterday's frontier boom towns. What should be their number-one priority when focusing on future development? People. According to a recent report from Mercer titled, "People First: Driving Growth in Emerging Megacities," we must prioritize humans (not robots) for a competitive advantage. We must design technology with humans at the center. To quote Pearly Siffel, Strategy and Geographic Expansion Leader, International, at Mercer, "In the future, work will be less about 'using' technology and more about 'interacting' with technology." 1. Technology Is Fungible, People Are Not The well-worn axiom that AI will transform the future of work is more true today than ever before, but it misrepresents how the future will be transformed. What may start as a race to adopt and leverage AI in the workplace will inevitably end in a saturation of technology: As soon as one firm unlocks the full potential of automation, it'll be a matter of time before their competitors replicate the model. Who wins in a world where AI is in every office? The organizations with the best talent. Consumer and workforce demands will inevitably adapt to an AI-empowered future, and the real differentiator will be the human skills, such as critical thinking, emotional intelligence and creative problem solving, paired with technology. A recent report by the World Economic Forum outlines the 10 skills humans will need to create value in an increasingly automated world, and it's a great reminder that peoplemust remain the focus if we're to build anything that works in the future of work.1 Tamara McCleary, Founder and CEO of Thulium, summarized this point well in a recent conversation we had: "If we are distracted by all that glitters with the promise of a frictionless future with AI, then we will surely miss the mark. While technology may be an economic accelerator in the future of work, people are still the core drivers of sustained productivity." 2. When AI Is Everywhere, People Will Still Go Somewhere Everyone's familiar with the dystopic tomorrow-lands depicted in literature and film: techno-centric, automated megacities serviced by an army of robots where people are undervalued. This is not how I envision the future of work. The proliferation of AI may mean some jobs will be automated, but those displaced workers still represent remarkable potential to cities, employers and economies. McKinsey estimates that disruption from digital transformation, automation and AI will force approximately 14% of the global workforce — 375 million workers — to find new career directions.2 However, as the economy of the future becomes less murky and reskilling/upskilling becomes a staple of every career path, there will be a massive scramble to find talent to plug newly created roles in the workforce. This new economy is why people-skills will be so sought after in the future of work, according to April Rudin, CEO and Founder of The Rudin Group. "AI will be a tool to empowerhumans instead of replace them, enabling people to spend time on the things they do best: making relationships, exercising judgment, expressing empathy and using their problem-solving skills." Those cities that remain people-focused will be the ones with talent on-hand, and they'll be the ones to succeed. 3. A Clean Start Provides a Leg Up Think about the investment that today's economic powerhouses have made in their broader commercial infrastructure. Think about public transportation systems, electrical and IT networking, private development and public zoning districts. Billions of pounds, dollars, yen, renminbi, rupees, euros and more spent on getting those cities ready for the economy of today. How will those investments pay off in the future of work? Today's emerging megacities are "unencumbered by the legacy systems of their larger and more established brethren," according to Mercer's People-First research. While it may require massive investment to install the building blocks of a future-focused economy, there's none of the wasted expense or necessary compromise that comes with retrofitting an outmoded city for the tech-enabled future. Those cities can focus time and resources on building attractive, people-centric cities where employees will want to live, work and raise families in the future. "It's hard to fathom the competitive advantage a modern, mass transportation system gives a city," says Walter Jennings, CEO of Asia Insights Circle. "When economic reforms started in China, Shenzhen was a fishing village of 50,000 people. Today, there are estimates of 12–16 million residents." What's Next? Let's return to the city planner. You're overlooking your parcel of land, and you're trying to envision the ideal city of the future. We may not know the street names, but we have a better sense of the guiding principles for your soon-to-be booming metropolis. I leave you with my three takeaways, just one lens through which to explore the opportunities which lay ahead with people, technology and the emerging megacities that will power global growth. 1. Build your city (or company) around people. 2. Don't discard valuable assets. There will always be a place for good talent in good places. 3. Look for what will carry you into the future, not what's carried others in the past. 1Desjardins, Jeff, "The Skills Needed to Survive the Robot Invasion of the Workplace," Visual Capitalist, June 27, 2018, https://www.visualcapitalist.com/skills-needed-survive-robot-workplace/. 2Illanes, Pablo, Lund, Susan, Mourshed, Mona, Rutherford, Scott and Tyreman, Magnus, "Retraining and Reskilling Workers in the Age of Automation," McKinsey Global Institute, January 2018, https://www.mckinsey.com/featured-insights/future-of-work/retraining-and-reskilling-workers-in-the-age-of-automation
Over the years, we have witnessed the truly remarkable transformation of women in the workforce in Saudi Arabia. The Royal Decree of 2017 recognizing women's right to drive was a monumental step toward enabling the mobility of female employees. However, significant changes began shaping the nation much earlier — from the appointment of the first female Vice Minister in 2009 to welcoming female members in the Shoura Council in 2013. The transformation has primarily been driven by an overall focus on educating women. In fact, in 2008, it was announced that Princess Noura University in Riyadh was the largest university for women in the world.1 These steps are just the tip of the iceberg as Saudi Arabia sets the stage for equal participation on the world stage, which will prove to be a crucial factor in the success of Vision 2030.2 From a global perspective, the Kingdom of Saudi Arabia is part of a wider dialogue taking place in the workforce. This conversation includes the issue of equal pay in North America, the lack of female board representation in Europe and everything in between. In fact, Mercer runs a campaign in collaboration with the World Economic Forum, which features a study called When Women Thrive. According to the study, at the current rate of change, it will take 217 years to close the global economic gap between the genders. At the same time, it is becoming increasingly clear that gender equality and the participation of women in the workforce must be taken into account for growth in business and society as a whole. The report also suggests that a diverse workforce is a business imperative proven to boost the bottom line. Organizations around the world are realizing the benefits and making a conscious effort to increase representation in senior leadership and enable the upward progression of women. From a local perspective, leading up to Vision 2030, there have been many announcements from notable organizations, including the government and private sector, appointing females in leadership, executive and board of director positions. Recently, Saudi Aramco, the world's most profitable oil company, appointed its first woman to the board, while Citigroup appointed a female as the head of their business in Saudi. Companies are making sustained progress in increasing representation in senior leadership, enabling the upward progression of women and closing the pay gap. They are hiring and promoting talent based on competence, as talent and capability are the determining factors in operational success, and women are ready to lead the way. So, how exactly can organizations in Saudi Arabia ensure women thrive, thereby driving Vision 2030? Today, almost 50% of the population in Saudi Arabia is female, but currently, only 20% of the workforce is female.3 At the same time, females tend to hold a greater percentage of higher education degrees. There is room for utilizing this talent by unlocking the enormous potential of women in Saudi Arabia. The When Women Thrive study outlines ways in which organizations can facilitate gender equality. For example, analyzing workforce data allows employers to see which career experiences have higher developmental value and assess whether or not women have equal access to those opportunities. Employers can then take into consideration reskilling opportunities and optimally deploy talent in a way that ensures female employees are satisfied with their learning. As a result, organizations benefit from having motivated employees that deliver value in new ways. With the large scale of transformation in Saudi Arabia, people and skills will be key to the success of Saudi Arabia's Vision 2030, as people are the driving force behind all great change. Given the recent advancements in opportunities for women and the knowledge and skills they will bring to an increasingly diverse workforce, sustainable growth is dependent on harnessing the right talent to fuel the future. The result is positioning Saudi Arabia from a country that was once oil-driven to one that is talent driven. Over the coming years, it will be fascinating to see how women continue to shape growth in Saudi Arabia to unleash the Kingdom's true potential on the world stage. 1"World's Largest University for Women Launched in Saudi Arabia", Arab News, May 2011,https://www.edarabia.com/21384/worlds-largest-university-for-women-launched-in-saudi-arabia/. 2"Our Vision: Saudi Arabia, the Heart of the Arab and Islamic Worlds, the Investment Powerhouse and the Hub Connecting Three Continents," Saudi Vision 2030, https://vision2030.gov.sa/en. 3Trading Economics, 20 Million Indicators From 196 Countries,https://tradingeconomics.com.
In Japan, female career development, reform of working practices and diversity have become popular trends. In September 2015, the Active Women’s Act was enacted, and in June 2018, a reform of working practices was enacted. On top of that, a number of other factors have also played into women's social advancement in Japan, including labour force declines (due to low birth rate and longevity), improvement of work consciousness (supported by the rising university advancement rate), and low economic growth (which has led to a decline in male income), as well as a steady increase in the number of female employers. As a result, it became clear that women's social advancement into society was inhibited by childbirth and childcare, but the so-called "M-curve" has improved in recent years — even though it has not yet lessened when compared to foreign countries. However, the M-curve is reducing due to the spread of childcare leave systems and the development of childcare centres. Now, it is becoming more possible for women to continue to work, largely thanks to the increase in irregular employment of women. Women can choose low-income, non-regular work for specified reasons, such as: "can work in their own convenient time" or "easy to co-exist with family circumstances, such as housework, childcare and nursing". Moreover, in Japan, the percentage of women in executive officer and management positions is still low. Women’s employment is gradually progressing, but their professional duties remain in supporting roles, and they face many challenges in terms of career formation and development. Hereafter, Japan will likely confront an unprecedented shortage of labour, along with a workforce decline. Therefore, it is a must for Japanese companies to secure not only women but also employees of all generations and various nationalities and promote their activities over the short and long term. Not only can diverse employees co-exist in the company or organization (diversity), each one should also be respected as a member of the organization and participate in organizational decision-making and activities (inclusion). This increases every employee’s willingness to contribute voluntarily and display their power (improvement in engagement), which can directly increase the competitiveness and productivity of an organization. There are various initiatives in Japan to improve inclusion and engagement, but they are entangled together. Even if individual efforts are implemented, it’s often not possible to see the effects. In order to link these efforts together and reconstruct a company's competitiveness, we need to follow three steps: ① build trustworthy relationships, ② encourage time/location flexibility, ③ respect diversity and individuality. ① Will it be helpful to build trustworthy relationships at work? "Workplace" rather than "company" plays an important role in increasing inclusion and engagement in an individual. At the workplace, each and every employee can be oneself; in other words, they can freely express their thoughts, which allows for a sense of security and a trust to be heard — huge factors when it comes to promoting inclusion. This is similar to "psychological safety," which is the key to productivity improvement. For example, various forms of open communication and information sharing or other efforts, such as visualization of work and role allotment at a workplace, should help in building a trustworthy relationship between an organization and its people. Also, building a trustworthy relationship is more important than anything — it brings out the ability and creativity of each and every employee, and this can lead to increasing the productivity of the entire team. ② Do you want to improve flexibility? In Japan, traditionally, organizational operation has been carried out by relying on employees who can accept the "3 unlimitedness” rule: the unlimitedness of job content, work location and working hours. However, in recent years, with the increase in employees who work while nursing or caring for children, the increase of dual-income households and the increase of employees who have health and mental problems, the number of employees who can accept this "3 unlimitedness" rule is decreasing. When superiors speak of approving and promoting long working hours, employees who cannot deliver due to various circumstances feel that "I am not 100% permitted in this workplace," and it prevents them from displaying ability and creativity. Moreover, when information is shared only with people at the workplace, employees who work from home or remotely feel alienated. Increasing the flexibility of when and where an individual works — and by promoting environment and work process improvement to increase participation awareness of employees who have various circumstances — can transform an organization into one that empowers everyone. ③ Have you included a point of view that respects diversity and individuality? In the structure of employee management and personnel systems, we have redefined diverse needs of employees from a broad perspective to actively support the career and ability development, work-life balance, health, etc. of each individual. i. For example, in some Western companies, so-called "no rating" has been introduced. Rather than linking evaluation results to numbers, evaluations aim to frequently give feedback, promote development and growth, and emphasize individuality of employees. In Japan, the idea of linking evaluation results to numbers is still strong, but more companies are looking to try out this new evaluation system to encourage the growth and career development of the individual employee. ii. In terms of compensation, rewards don’t always need to be viewed monetarily. A reward should provide opportunities for career and ability development and encourage the display of creativity and ability of employees, which will increase engagement. In handling measures to increase inclusion and engagement, it is extremely important to justify objective facts and data on the issues in your current organization, what they should be and which areas should be prioritized. Moreover, advanced management is required for future leaders who want to innovate. For inclusion and engagement efforts to be successful, the existence of inclusive leadership is also essential. Moving forward, you should aim to construct trustworthy relationships between your employees and your organization and maintain an environment for working flexibly. You should also build a workforce on diversity and individuality; this is the largest safety net for individuals. In an organization like that, individuals will work on their own, with a high willingness to contribute. With such highly engaged employees, your company will become a stronger, more competitive and resilient organization.
The ongoing evolution of the global economy is a reflection of powerful changes occurring within the human population. Economies once historically sidelined by political headwinds, poor infrastructure and underutilized workforces are using digital technologies and access to interconnected resources to build unprecedented wealth and influence. But growth economies are doing more than catching up with traditional markets. They're now leading profound changes in the future of work and throughout the global economy. India has surpassed the U.S. and Japan as the leader in artificial intelligence (AI) and robotic process automation (RPA) technologies;1 Latin America's once stalled economy expects stable growth throughout 2019;2 and the purchasing power of China's middle class has forever changed e-commerce and how consumers find, purchase and acquire products and services.3 Business leaders, understandably, can feel overwhelmed by the pace and scope of modern change and what it means for their organizations and workforce dynamics. These three leadership qualities can guide them to success in an uncertain future. 1. Demonstrate Emotional Intelligence & Soft Skills "I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel." — Maya Angelou Leaders must be truthful to their own feelings while acknowledging the feelings of others. The era of lifetime employment and guaranteed pension plans is ending in many regions, which means employees around the world harbor fears about job security and long-term financial well-being. Moreover, Mercer's 2018 Global Talent Trends report shows that employees are increasingly searching for roles that allow them to work with purpose, putting additional pressure on leaders to connect with their workforce on a deeper level. Business leaders who internalize this reality and take meaningful steps to curtail their employees' anxieties command the respect of workers. Candidness is the cornerstone of true communication. Leaders must actively develop their emotional intelligence (EQ) and soft skill quotients, so they can inspire individual employees and entire workforces by speaking to their emotions while always delivering the truth. Reality always prevails. People respect leaders who treat them with respect and prepare them with information that will impact their lives. Emotional intelligence and soft skills should become priorities for business leaders who wish to thrive in the future of work. Being able to relate to the aspirations, sensibilities and challenges of other human beings requires a concerted effort to listen, understand and take action. As workforces, especially in growth nations, gravitate from rural areas to emerging megacities, leaders must proactively address their concerns about finding affordable childcare and transportation, accessing financial investment opportunities and pursuing professional development programs. Soft skills allow leaders to communicate information instead of dictating information. This connection builds strong relationships and productivity among workers who then feel critical to the business' objectives and success. Because, in truth, they are. Genuine appreciation is a powerful motivator. 2. Have a Passion for Technology Leaders who feel they have "made it" are doomed to irrelevance. The image of a business leader in a corner office with teams of employees to carry out their orders and promulgate their communications is becoming obsolete. Technology is always evolving, and business leaders cannot rely on others to fill the gap when it comes to proficiency with modern digital devices, platforms and strategies. Learning new technologies takes time, and for many leaders, time is a precious commodity. Digital transformation, however, demands that business leaders passionately engage with developing technological innovations and trends that impact business operations, consumer engagement and sales strategies. The future of work requires leaders to have the technical ability to communicate across the latest digital ecosystems and media channels. This acumen demonstrates their understanding of how technology is evolving and how it drives business in a hyper-interconnected world. Business leaders should regularly ask employees and outside vendors (and even competitors) to "show me" or "teach me," because these questions demonstrate a passion for learning and an emotional intelligence that appreciates the need to stay informed and relevant. Being technologically savvy also allows leaders to connect the dots in terms of operational resources, workforce skillsets and the need to pivot priorities and growth investments. When in doubt, there is no shame in asking how to use the latest application or device. The future waits for no one. 3. Know All Growth is Global Think about your smartphone. It probably contains lithium from Chile, indium from China and coltan from Rwanda.4 Even the most local business relies on the global economy, and leaders who can contextualize business opportunities with an international mindset are poised for success in the future of work. In 2025, the world's population will reach 8.1 billion people — which represents a historic level of business opportunity, untapped markets and revenue sources waiting to be discovered.5 Growth is the result of forward-thinking initiatives that plan for where business is heading. As western economies continue to struggle with political turmoil — from the implementation of Brexit to uncertain U.S. international trade dynamics — growth economies can wield increased influence across all industries. Growth-focused leaders, however, face the challenge of building consensus and securing buy-in from various stakeholders. From C-suite executives and employees to investors and shareholders, leaders must be able to communicate a vision and strategy that captures the potential of the future of work. Leaders must always think in terms of a globalized economy, because that is where the opportunity resides — in the hearts, minds and needs of an expanding population. This will continue to propel businesses in the future, so long as leaders provide a vision moving forward. Growth economies offer business leaders more than lucrative sales markets. They provide valuable supply chains and investment opportunities in assets ranging from infrastructure and manufacturing to human capital and digital technologies. In a globalized world, the future of work belongs to leaders who understand that opportunities will come from economies on the rise and leaders who understand the influence EQ, technology and a global mindset will have on their ability to succeed. 1Some, Kamalika. "India Leads US and Japan in Driving RPA and AI Based Technologies." Analytics Insight, 2 Oct. 2018, https://www.analyticsinsight.net/india-leads-us-japan-driving-rpa-ai-based-technologies/. 2"Latin America Outlook 3Q18." BBVA Research, https://www.bbvaresearch.com/wp-content/uploads/2018/08/Latin_America_Outlook_3Q18.pdf. 3Riming, Nie. "How China's Middle Class Will Dictate the Future of E-Commerce." Sixth Tone, 16 Jan. 2018, https://www.sixthtone.com/news/1001560/how-chinas-middle-class-will-dictate-the-future-of-e-commerce. 4Olingo, Allan. "Minerals in Your Mobile Phone." The East African, https://www.theeastafrican.co.ke/business/Minerals-in-your-mobile-phone-/-/2560/2739730/-/xveeqw/-/index.html 5Olson, Alexandra. "U.N.: World Population to Reach 8.1B in 2025." USA Today, Gannett Satellite Information Network, 13 June 2013, https://www.usatoday.com/story/news/world/2013/06/13/un-world-population-81-billion-2025/2420989/.
The UAE is going through a transformative phase. The 2021 Vision has chartered a plan to diversify the economy and move away from oil dependency1. Automation and new technology is a crucial part of this vision. This imperative is driving the advancement of digital technologies, big data and machine learning across the country. As a result, organizations have been investing heavily in technology to stay ahead of the competition. The increase in digitization has created a demand for relevant skills, resulting in a surge of new jobs in the field. In a region where 60 percent of the population is young, traditional and new companies in the GCC are increasingly asking how they can tap into this technology-savvy demographic while competing against tech giants and disruptors globally. We’ve seen a big shift in the expectations and career goals of the workforce over the years. Previous generations tend to place a higher value on security and tradition while millennials and Gen Y are more motivated by personal happiness, achieving life aspirations and recognition. Working with a sense of purpose is becoming paramount in employment choices. Autonomy and flexibility are essential to these generations who also place a heavy emphasis on work-life balance. These employees are increasingly communicative about the expectations of work arrangements and career development. Employers in the UAE and around the world should recognize the importance of these needs to millennials and tailor the culture and career opportunities to meet these needs or risk losing them to the competition. What are the most important factors that make organizations employers of choice for millennial talent? Here are four we believe are critical. Keep Your Promises First and foremost, keep your promises. Employers should be accountable for the promises they make during the recruitment process. In today’s world, it’s hard for companies to get away with not delivering on their commitments. Meeting the status-quo isn’t sufficient either. Companies that deliver on valuable experiences, go beyond what they promise, and communicate those actions effectively, find more success in attracting talent in the new age. Listen (Actively) Just as companies actively listen to customers and design solutions to tackle their issues and needs, they should also be willing to listen and crowdsource ideas from existing employees. What differentiates a talent value proposition from the others is actively engaging current and potential employees to shape the workplace together. Actively listening and learning also leads to understanding both the surface needs of employees and what drives their behaviors. Companies equipped with this information can identify the right resources in building propositions that support and align with employees’ values and purpose. Align Value Proposition with Career Interests It is also essential to align the company’s proposition with the career interests of the young workforce, to keep them engaged. HR functions are based on old principles and processes like annual salary reviews and performance cycles. Employers who want to attract millennials must challenge these norms and adopt a more holistic and modern approach to people management. Create an Open and Diverse Environment Employees also need the freedom to be authentic and creative. A thriving work environment allows employees to bring their true self to the workplace, share ideas openly and deliver their best. They want their voices to be heard and to know that they have made a difference through their work. Presenting them with opportunities that enable this will keep them engaged and motivated. To successfully retain talent, companies need to offer a wholesome experience – a sense of purpose, well-being, a differentiated career, and competitive compensation and benefits. This must all align with the company’s vision, business strategy and operating model. The millennial population in the UAE is becoming increasingly technologically savvy, globally aware and operationally agile. Creating an effective talent value proposition is crucial for tapping into this talent. In this rapidly changing landscape and increasingly connected world, the only way to gain a competitive edge is to deliver experiences that are personalized and responsive. A company’s workplace culture and recruitment process can shape its reputation. To stay ahead of the talent game, it’s important to act now, before it’s too late. To learn more about attracting millennials and adopting more holistic and modern approaches to people management, visit us here. 1https://www.vision2021.ae/en.
Culture matters. It is a simple, enduring message that applies to virtually everything in today’s world, but it could not be more relevant than when it comes to driving economic value for stakeholders and shareholders of merger-and-acquisition deals. When integrating the workforce of a newly formed organization and protecting reputation risk, ignoring culture is not an option. In a workforce context, culture is about individual behaviors that deliver business outcomes and how operational drivers can be leveraged to reinforce those behaviors. Cultural alignment is critical for effective organization change in M&A. This alignment calls for a clear business strategy, an understanding of deal rationale and the requisite integration risks in order to successfully execute any transaction. Culture establishes the foundation for the operating model, which in turn defines the requirements for the talent platform — such as the skills required, expected behaviors, and drivers like pay and rewards plans. Outcomes and results are what matter, so they must be measured to direct any actions required to mitigate integration risks. New research from Mercer has revealed the importance of mitigating culture risk to drive M&A deal value, with key findings from 1,438 voices from 54 countries who collectively worked on 4,000+ deals on both the buy and sell sides in the past 36 months. Insights were gleaned from four stakeholder groups — M&A Advisors, Business Leaders, HR Professionals and Employees. In all, these stakeholder groups work for companies employing more than 43 million people around the world. Mercer’s survey found that 43 percent of M&A transactions worldwide experienced serious cultural misalignment which caused deals to be delayed or terminated, or purchase prices to be negatively impacted. In addition, 67 percent experienced delayed synergy realization due to culture issues. In addition, 61 percent of respondents selected “How leaders behave, not just what they say” as the number one driver of organizational culture. “Governance and decision-making process” (53%) and “Communication style and transparency” (46%) also ranked highly. Deal makers also said that 30 percent of deals fail to ever achieve financial targets due to problems arising from cultural misalignment, including productivity loss, flight of key talent and customer disruption. Leadership Steps to Engage the Workforce during M&A change Significantly, 36 percent of the participants (from 47 countries) identified the Top leadership opportunity to create stronger cultural alignment in M&A and engage the workforce. These Top 5 actions are in rank order and make up 86 percent of these responses. Additionally, from Mercer’s work on more than 1,200 deals annually (60% cross-border), leadership’s ability to embrace change, adopt agile decision-making and prioritizing timely execution is emerging as the key organizational and cultural competency of successful acquirers. It all goes back to people and behaviors and their understanding of precisely what they’re supposed to do differently in the new organization. Management Pressure, National Patterns There is significant pressure on management during M&A transactions. As a result, leaders are frequently distracted from timely follow-through on stated business strategies and goals. It is also not uncommon for leaders and senior managers to poorly communicate the deal rationale to the “rank and file” employees. These tendencies can and do negatively impact financial performance. Key executives can collectively agree on any number of critical integration objectives, but if any one of them acts counter to the plan they settled on as a group, it can seriously derail execution. Corporate culture is, of course, predicated on many things: a company’s nation of origin, the type of talent it calls for, the industry it is part of and so on. Mercer asked a panel of M&A advisors who collectively have over 200 years of experience working on global transactions about particular national buyer patterns and behaviors across geographies. The objective was to better understand different national characteristics to cultural behavioral patterns that would affect integrations and impact the likelihood of deal success. The focus was on four key areas that impact integration: risk tolerance, retention of management post-close, clearly assigned governance and decision-making rights, and alignment of rewards with business outcomes. The panel identified several national characteristics that have implications for cross-border M&A. For example, Japanese and Chinese buyers display an enormous risk tolerance to put forth a winning bid. These same buyers are very reluctant to take proactive steps to create immediate post-close (operations and/or structural) change, being more comfortable with the status quo. Most buyers adopt a 100-day change plan immediately post-close, whereas Japanese buyers are more comfortable with a 1,000-day change plan. This research -- and client experience -- reveals a proven path to mitigating culture risk in M&A. Buyers can position senior leadership and deal teams to better understand the financial risk embedded in cultural misalignment of a target by adopting the following principles: Recognize cultural misalignment as an operational and reputational risk Set and socialize a clear deal thesis, complete with intended operating competencies and talent gaps to be acquired from the target with all stakeholders involved in your diligence process. Insist on cultural diligence when you are in exclusives with a seller, including “one on one” time with senior target management who are aware of the potential transaction. Document and quantify target operating “red flags” and inconsistencies (say vs. do), pricing them into the deal. Exhibit a willingness to walk away from cultural “deal breakers,” as you would financial irregularities. Indeed, the evidence is strong that senior management stumbles over cultural issues in M&A. However, in today’s competitive M&A markets, select business leaders are prioritizing culture during due diligence and integration, leveraging a disciplined, analytical and practical approach. Those same leaders are better positioned to identify realistic synergies between the two companies and the best timing for integration into the acquiring company. As a recent report of the NACD Blue Ribbon Commission on Culture as a Corporate Asset put it, it’s vital to recognize that if culture is left to chance, it can absorb precious energy and put the brakes on the new organization’s achieving its purpose and strategic goals. But if led and managed well, culture is the rocket fuel for delivering value to stakeholders.
The employee turnover rate in the automotive industry is alarmingly high. In fact, according to research by the US National Automobile Dealers Association, some dealerships report turnover rates as high as 70–80%. This trend should concern everyone in the industry, as employee churn is often the symptom of a more serious and troubling array of issues. Happy people do not leave good jobs. Something is clearly wrong. So, what is going on, and what can be done to fix it? Focus on the employee experience To start, companies must place employees at the heart of the organisation. Though this may seem easy to do in theory, the reality is much different. Most companies, judging by their decisions and actions, focus more on their finances than on their people. Businesses are designed to make profits, so this regular focus on examining and analysing sales figures makes sense. But how many times a year do automotive businesses hold performance discussions? Maybe once or twice a year? Most organisations prioritize sales figures over performance evaluations because it is in the DNA of their operations—a practice that often comes at the expense of their most important asset: their people. A commitment to change To reduce turnover, the automotive industry must first acknowledge the need for change and then commit to a strategy that will produce change. There needs to be a paradigm shift from where the industry currently is, where it wants to go in the future. To start, the automotive industry must ask the following questions: 1. How should work be organised? 2. How can value be created? 3. How do we ensure employees thrive in an evolving environment? Mercer's 2018 Global Talent Trends Study identifies the five top trends that can turn around the turnover problem in the automotive industry: 1. Change@speed 2. Working with purpose 3. Permanent flexibility 4. Platform for talent 5. Digital from the inside out Change at speed Companies must have the ability to change, and change at speed. The world is constantly evolving and progressing forward. If an automotive business is not proactively embracing change—at the speed that change is occurring—it will be left behind. Change, however, creates uncertainty in employees. Change impacts critical matters in life such as job security, financial health and the human need for an inspiring workplace and rewarding career. This is where leadership becomes imperative—by bringing certainty to times of uncertainty. Businesses that are able to provide employees with consistent, decisive and certain leadership are poised to thrive in times of change. In fact, the ability to change at speed becomes a differentiating organizational competency. Working with purpose Employees remain loyal to companies they connect with in terms of values and culture. Typically, culture is driven by the leaders within an organisation, and it is the responsibility of those leaders to clearly establish the values and purpose of the company. Mercer’s study found that thriving employees are twice as likely to work for a company with a strong sense of purpose. Embedding a higher sense of purpose into the Employee Value Proposition unlocks individual potential and spurs employees to be change agents. Automotive companies can differentiate their brands from the competition by cultivating a workforce of engaged and inspired employees. Permanent flexibility Two percent of HR leaders in the automotive sector say that flexible work schedules are visibly present in their organisations—even though 50% of employees want their company to offer more flexible work options. However, more than 40% of employees are concerned that flexible work schedules will impact their opportunities for a promotion.1 Leaders in the automotive industry must seek innovative ways to increase flexibility for employees. Flexibility isn’t simply about working wherever or whenever, but about rethinking what work is done, how it is done, and by whom. Getting the most out of employees means working with them to build desirable schedules that prioritize productivity and availability. Platform for talent Automotive organisations must evolve into platforms that encourage in-house talent to develop their skills and thrive as professionals. By linking the creativity and ambition of employees to the evolving needs of an industry where skills sets and work demands are constantly advancing, automotive companies can become places not only of employment, but professional development. Thirty-six percent of HR leaders provide analytics on the effectiveness of buy, build and borrow strategies.1 Industry professionals and employees want job security, workplace safety and the confidence that the future of the industry will never outgrow their skills and knowledge base. If companies serve as a platform for employees to nurture meaningful careers, that investment in human capital will help the company to thrive and increase its bottom line. Digital from the inside out For the automotive industry, and the world, the digital economy is already here. Companies that talk of “going digital” lag far behind the digital transformation learning curve. AI and automation will continue to unlock human potential by revolutionizing businesses on every level—from how they operate and source materials to how they develop workforces and provide solutions to evolving customer needs. Fifty-six percent of employees say having state-of-the-art digital tools is key to achieving their professional objectives.1 Leaders in the automotive industry must leverage technology in ways that place employees at the heart of what they do. Put your people first, and profits will follow. 1People First: Mercer's 2018 Global Talent Trends Study https://www.mercer.com/our-thinking/career/voice-on-talent/people-first-mercers-2018-global-talent-trends-study.html
Expense accounts. Three martini lunches. Company cars. What do these three things have in common? Well, if recent news is any indication, they’re all things of the past. But are companies around the world really pulling the plug on their car programs? Maybe not. But it does appear that corporate car programs are changing, and the programs of today are not nearly as simple as they once were. Here are some of the emerging trends we’re seeing in company car programs around the world: Green Car Policies “Green” car policies are those that aim to limit the environmental impact of a company’s car program, and they can look different in different regions of the world. For instance, companies located in Europe tend to favor limiting vehicle options to those with lower CO2 emissions, while those in the Americas, Middle East, and Africa aim to reduce emissions by simply limiting the number of vehicles in their fleet. Companies may be making the change to take advantage of tax credits, to exercise corporate responsibility, or engender goodwill within their communities. Alternate Transport Options Going hand-in-hand with the green car approach, alternate transport policies are becoming increasingly prevalent. These solutions demonstrate how benefits are evolving from “car” programs to transportation programs, where employees are encouraged and incentivized to opt for bicycles or public transit as their main means of transport. As jobs move closer into metropolitan hubs and millennials become a greater component of the workforce, companies will continue finding new ways of moving their employees in and out of the office. Car Allowances Company car programs can be exceedingly expensive, and it’s more than just the cost of the vehicles; companies have to worry about all the administrative and staffing costs of actually implementing a car policy. More and more companies around the world are recognizing these expenses as unnecessary, and many have moved to a simple car allowance policy. Under this type of program, employees simply get a monthly or annual stipend for their transportation costs, and the company gets to sit back and focus on other issues. Conclusion Though it may seem like car benefits are beginning to disappear, they’re really undergoing an evolution. This transition from a blanket policy for all employees above a certain career level to a customized solution for each market and job role is progressing at different rates in different regions of the world, but one thing is clear: car benefits will last as long as employers need to move their employees from point a to point b. Don’t miss your chance to participate in our 2019 Car Benefit Policies & Alternate Transportation survey. In addition to traditional car benefits, this global survey now collects information on alternate transportation benefits such as parking, shuttles, personal car and driver, public transportation subsidies and walking or cycling allowances.
Culture is how people make sense of the world. From the cacophonous streets of Mumbai and sultry beaches of Brazil to the neon lights of Tokyo and rhythms of Mexico City, culture gives us our identity. Culture is also scalable. Nations, regions and workplaces have cultures that define their collective individuals. When groups of people behave according to a shared understanding of values and sensibilities, they are contributing to a culture. Businesses in growth economies must act now to establish prosperous internal business cultures that embrace the emerging opportunities of a digitally transforming world. Build Consensus Throughout the Business The evolving global economy presents growth nations with unprecedented access to a borderless international marketplace. The rapid pace of change, however, has many business leaders at odds regarding the value and role of culture to their financial success. This lack of consensus can muddle a company's vision, as well as confound a business' workforce and consumer base. C-suite executives, managers and HR professionals — in businesses throughout the world — often have different interpretations of what internal culture means to profitability. The high-level takeaways from Mercer's research report, "Mitigating Culture Risk to Drive Deal Value," which focused on the mergers and acquisitions industry, offers businesses throughout growth economies valuable insights into the complexities of building consensus around culture: C-suite executives rate governance and decision-making processes as the most important components of culture (60%). Independent advisors believe performance management (measurement) can and should play a role in driving organizational change and defining culture (45%) — only 18 percent of HR professionals agree. Corporate development professionals (41%) think that risk tolerance and management can undermine a transaction. HR professionals rate collaboration (69%) and empowerment (54%) as the most important components of culture. Businesses in growth economies should be proactive about defining who they are as a culture. Does the culture value technological innovation and input from employees, or is it risk-averse and strictly hierarchical? Does the company stress individual effort or teamwork? Is it focused on international growth or regional prominence? Is it rebellious and irreverent or humble and serious? What is the definition of success, and how are the employees and customers factored into that definition? An effective corporate culture begins with building consensus throughout the leadership, workforce and operations. Clearly Articulate a Reason for Being Every business leader and employee must be able to answer the question: Why do we work here? The response to this self-reflective ask compels the people within a business — from top decision-makers to workers at every level — to internalize the reason the business exists. This understanding provides meaning and context as to why an individual elects to be part of the business and its mission. Next, business leaders must articulate that reason for existence into strategic objectives illustrating the market value the business offers to whom and how. The strategic goals must accommodate the budget and timeline as understood by all employees — unifying everyone in a collaborative journey pursued within a shared value system. In Asia (excluding Japan), according to the "Mitigating Culture Risk to Drive Deal Value" report, 67 percent of respondents believe collaboration is a top behavior in "high-performing" work cultures. In Latin America, 65 percent of respondents agreed. However, "collaborative" did not make the top five list of drivers for high-performing work cultures among Japanese respondents. It is critical for businesses in growth economies to establish strong internal cultures before attempting to make an impact in the competitive global economy. That internal culture, however, can be inspired by a variety of influences — including geography. Hangzhou-based Alibaba, for example, has a very different culture than Shenzhen-based Tencent. A strong culture empowers businesses to differentiate themselves from competitors and effectively respond to adversity, risk and uncontrollable swings in the economy. Deciding how to approach risks and navigate challenges not only reveals the cultural values of a business but gives its employees and stakeholders a common cause that builds cohesion. A clearly articulated internal culture is key to longevity. For businesses looking to establish and strengthen their cultures in different geographies, having a fundamental understanding of geographical nuances, like collaboration, for example, can prove critical to setting and successfully achieving your strategic goals. Empower Leaders Who Live the Promise Leadership is the foundation of every prosperous internal culture. In fact, the Mercer report reveals that, in Asia (not including Japan), 69 percent of respondents indicated "how leaders behave" was the number one "top driver" in a healthy organizational culture; in Latin America, the response was 64 percent. Japan led the group with a pronounced 74 percent response affirming the importance of leadership to workplacecultures. The success of businesses can often be directly linked to leaders who embody and communicate an organization's values to employees and customers. Both Alibaba and Tencent are renowned for their respective leaders, Jack Ma (now retired, of course) and Pony Ma. Leadership supplies vision, energy and direction. Assessing and selecting leaders who best represent a business' values and promises are critical to corporate cultures. This does not always mean choosing the most accomplished or most popular businessperson, but the one with the best chemistry, as in any relationship — the one who delivers inspiration, creativity and motivates others to push themselves. Effective leaders demand accountability from every employee, including themselves. CEOs, C-suites and managers must behave according to the values and standards of the business they represent. Leadership legitimizes culture by exercising the vision and expectations of the culture. Hypocritical leaders who do not lead by example demotivate employees and undermine the public's respect for the entire brand. A culture that values the fair distribution of accountability creates rapport and stewardship among its workforce. When people feel they belong to something meaningful and bigger than themselves, they transfer that goodwill into their work. Strong cultures create quality products, services and customer experiences. Align the Vision With People & Operations Culture is the intangible force that bonds great companies. The ethereal nature of culture, however, makes it frustratingly elusive to many businesses — especially in growth economies where those cultures are entering a new era of global pressures and digital transformation. I explained in a webcast about the report above, "Culture is like the weather. We like to talk about it, complain about it and we blame it for things. But we really have no intention of doing anything about it or frankly don't know what we can do about it." To explain that businesses cannot afford to treat culture like the weather, because tremendous amounts of money and value are being left on the table. Culture, at its core, is an operational platform for people to work together. It is the epicenter of an organization's collective power. Though business cultures may be intangible, they can be easily recognized in the eyes and behaviors of employees and customers. Culture is everything from a workforce that understands its purpose and a single employee who feels professionally fulfilled to loyal customers who return again and again. Culture is when people come together and do something that gives them meaning. Culture is the reason a business exists.
Digital technologies in India are driving sweeping transformations throughout workforces and operational processes across a spectrum of industries. These changes, however, have employers and employees wondering how automation and modern technologies will impact not only employees’ jobs and lives, but how employers engage with the needs of an evolving workforce. Let’s explore the trends that are revolutionizing workforces in India: How will technology-led disruption define the future of work? The accelerated advance of technology in India will influence the human-work dynamic in significant, and unexpected, ways. The relationship between people and machines will be a constantly evolving association that will balance the benefits of automated processes and machine learning with human emotions and intelligence. Research shows that innate cognitive human abilities—such as emotional intelligence and capacity to innovate—cannot be replaced by machines. Future workforces will be shaped around this reality. For example, while most banking transactions in India are possible online, the human element is still key to investment advice and interactions with wealth relationship managers. Future technologies will automate tasks and enhance productivity while also elevating the impact of human relationships. How has digital transformation changed the workforce? Traditionally, tech firms in India set the tone for the hiring season by employing large numbers of graduates from engineering schools that are assigned to a pyramidal organizational structure. The first three layers of the pyramid, organized according to years of experience (1-3 years, 3-6 years, and 6-9 years), contributed to roughly 80 percent of the total headcount. However, from a budgetary perspective this number represented no more than 30 percent of the total non-executive wage bill. This organizational structure has changed significantly as pyramid designs were replaced with diamond architectures where some entry-level work is automated, improving margins and streamlining efficiencies by having mid-level engineers focus on building technical skills that will deliver value well in the future. Tech jobs in roles such as IT support and project management are the first to be automated, resulting in decreased headcounts of more than 15 percent in some companies. Other tech fields are a mixed bag of increased or reduced headcounts based on experience levels. Tech jobs are being automated in the areas of remote infrastructure, software testing and release, and applications development. However, headcounts are increasing in data services, UI/UX, cloud computing, and solutions architectures that bring together domain/functional knowledge to create solutions for clients. In fact, jobs in these areas are increasing by more than 100 percent and help drive an organizations non-linear growth. Companies are also disrupting organizational structures by dipping into nontraditional talent pools such as freelancers, part-time/contingent works, crowdsourced talent and lesser-known coopetition models. What will it take to engage workforces of future? With changing business models and declining overseas opportunities, technology players in India are focusing on quality and content to drive value proposition. Tech businesses naturally focus on innovation, and value environments where technological innovation and human collaboration thrive. Employee engagement has moved beyond the base level of Maslow’s needs into the self-actualization orbit where workers seek a sense of purpose and personal fulfillment from their jobs. Significant changes are occurring in workforce engagement models throughout India. Curated learning experiences, for example, offer new career development opportunities to flex and gig workers. Career paths for full-time employees, which traditionally foster vertical trajectories, are evolving to include customized growth experiences based on various personas defined by specific demographics, mannerisms, goals, aspirations, interests, and communication styles. These initiatives create value through the sustained and frequent reinforcement of goal-oriented rewards for high achievers who are inspired by different motivations. Leave benefits, for instance, could align with popular national days in India. New entrants could use leave time for “Propose Day,” while managerial employees could use their leave time for “Annual Day” or other childcare-related holidays. Free agents and gig employees may apply their leave times toward attending social networking events. If we were to extend this persona-based proposition to allowances, new entrants may find value in “dating allowances,” and manager-level professionals may appreciate an “entertainment allowance” that pays for meals with family and friends. Allowances may also extend company benefits or product discounts to an “uberized workforce.” New app-style benefits in India are taking employee engagement beyond learning opportunities. Benefits include wellness services through health portals, health and psychological counselling, and the personalization of rewards through online crediting and the redemption of rewards points. The future of employee engagement will feature flexible and customized benefits that cater to individual needs, from carpooling to stress management. Workforces of the future will redefine the meaning of employee engagement through the personalization of benefits and passions—ensuring that personal fulfillment remains an important part of professional success in India.
Businesses around the world are entering an age of disruption. Starbucks, for example, is changing its business model to accommodate payments made via mobile devices, which now account for 30% of transactions in U.S. stores. Disruptions driven by digital transformation are re-shaping business models and human resource structures in just about every industry. Mercer’s 2018 Global Talent Trends Study – Unlocking Growth in the Human Age revealed that businesses that self-identify as a digital organisation are twice as likely to report high scores on change agility as a differentiating organisational competency.1 A continent of different nations While the world embraces a shared and on-demand economy, many countries in Africa continue to grapple with an old and entrenched world order. In fact, many African countries prefer familiarity over change. This mindset prolongs the influence of legacy issues that impede the advancement of labour policies in Africa, and impacts the continent on every level, from political and economic to cultural and legislative. Interestingly, the legislative policies and culture of individual countries and nationalities shape important factors such as employee compensation and reward structures. Throughout Africa there are two distinct payment structures: Francophone (which involves multiple cash allowances) and Anglophone (which is a consolidated approach including a salary, bonus and benefits). If you compare Nigeria to Kenya, for example, the payment structures differ vastly. Nigeria’s Francophone-style market demands various allowances and remunerations based on existing practices and employee expectations, even though the nation attempted to implement legislation that would consolidate compensation through a structure based on tax benefits. Kenya, in contrast, offers few cash allowances and can be characterized as Anglophone in nature, where the salary and other benefits are consolidated. Africa’s labour market How will disruption affect Africa’s labour market? Ultimately, it is vital for employers to take cultural nuances into account in order to hire with purpose. According to our 2018 Talent Trends study, embedding a higher sense of purpose into the Employee Value Proposition (EVP) unlocks individual potential and spurs people to be change agents. To find purpose, employees crave professional development, learning opportunities and experimentation. If employees do not experience these motivating forces, they will look for inspiration elsewhere. In fact, 39% of South African employees satisfied in their current jobs still plan to leave due to a perceived lack of career growth and opportunity.1 Embracing the pace of change Some countries in Africa are embracing disruption better than others. For example, Ethiopia—the second most populous country in Africa—has seen massive growth since it opened up its borders twenty-five years ago. By creating more investment opportunities, Ethiopia has attracted foreign investors who now recognise the tremendous potential that lies within the consumer market, as well as the benefits of lower labour costs throughout the country. Rwanda is another notable example of an African nation embracing digital transformation, as it continues to make significant investments in technology and transitions towards smarter cities. According to the report, the African countries at the forefront of disruptive technologies are all being transformed by the speed at which businesses are adopting change. In fact, 96% of these businesses are planning an organisational redesign in the next two years, and 46% of HR executives are planning to reskill current employees for new roles. Aligning skills with opportunities The intention and ability to embrace change is vital to business ecosystems. Fifty-three percent of executives believe at least one in five roles in their organisation will cease to exist in the next five years. However, only 40% of those executives are increasing employee access to online learning courses, and only 26% are actively rotating workers within their business.1 To take advantage of opportunities that arise from disruption and transformation in Africa, nations should invest in the potential of other revenue-driving industries. For instance, previously war-torn Liberia could develop more tourism-related businesses and enterprises—following Dubai’s example, which transitioned from a primarily oil-based economy into a tourism-based economy. Innovation and workforce skills development are critical to the future of Africa. The human capital resource strategy of “managing a pipeline of talent” is becoming obsolete as employees seek new, aspirational approaches to developing skills that are aligned with the future of business in a digital age. Though Africa faces a number of legacy challenges, it understands the need for change. By focusing on digital transformation, the continent—and the nations that comprise it—could usher in a new era of prosperity for their economies, businesses and people. 1 Global Talent Trends Study 2018: https://www.mercer.com/our-thinking/career/global-talent-hr-trends.html
The Urbanization of the Global Population - Nearly half of the world’s GDP growth will come from about 400 cities across growth economies in the next ten years. Urbanization continues to profoundly shape the cultural and economic dynamics of modern societies, especially as today’s skilled and talented employees gravitate toward the professional, personal and cultural amenities provided by contemporary metropolitan areas. In fact, urbanization increased from 13% to 55% in the last century and is projected to grow to 70% by 2050. This growth, however, is providing overlooked urban areas with opportunities to leapfrog established megacities that were once the de facto homes to the world’s most successful employees and businesses. A lack of highly skilled workers means that cities and companies must compete with increasing ferocity for the talented workers who will lead their businesses into the future. These highly desired employees are setting new trends in urbanization as they prioritize a confluence of human and societal factors when deciding where to work, live and raise their families. A new landmark Mercer study, People First: Driving Growth in Emerging Megacities, explores why “satisfaction with life” ranks as the most important factor to workers in 15 emerging megacities—and analyzes how safety, security and other key professional and hyper-local considerations factor into landing top talent. The survey focuses on 7,200 workers and 577 employers across seven countries: Brazil, China, India, Kenya, Mexico, Morocco and Nigeria. The Mercer report investigates the prevailing needs of today’s workers, and the motivations and concerns that inform their decisions regarding where to work, and why. The report also analyzes the ability of employers and megacities to fulfill the needs of workers and their families. In an increasingly urbanized world where highly skilled talent is scarce, employers and cities are asking important existential questions: What makes professionals move to and stay in a particular city? How can employers and cities retain talented workers with the high-level skills demanded by rising start-ups, upcoming unicorns and global brands in emerging hot spots? What, exactly, do productive employees want from an employer and home city? The Desire to Live Well in the Cities of Tomorrow Mercer’s report reveals the importance of acknowledging and internalizing the priorities of people. Companies too often operate under the assumption that creating career and job opportunities (ranked #1 by employers) is key to unlocking growth potential throughout their business and host city. Businesses are also under the impression that job satisfaction (ranked #3 by employers) is another key contributor that compels cities to flourish. These misleading conclusions can be profoundly costly to businesses and megacities and undermine their ability to compete in the modern global economy. As part of the research, Mercer conducted an employee-focused segmentation analysis based on each respondent’s demographics, life stage, career progression, predisposition to life-long learning, aspirations and levels of financial security. The report contextualizes worker’s “satisfaction with life” through four key metrics: human, health, money and work. Identifying the specific needs and values of each unique employee segment provides employers and planners in high-growth cities with valuable insights needed to attract and retain highly skilled talent. Though career opportunities and job satisfaction are important to financial well-being, employees are placing more emphasis on the importance of family, security and environmental influences that impact emotional stress, lifestyle affordability and personal health. The chart below illustrates the remarkable discrepancies in how employers and workers perceive the various components of “satisfaction with life”: Leapfrogging Established Power Hubs From Shanghai to Seoul, the world is very familiar with the influence powerful megacities have on the global economy. However, the incredible success of these cities also contributes to the challenges that may limit their growth in the future. Skyrocketing rents and costs of living, unwieldy population and pollution rates, limited access to affordable family-care services and education, increasing commuting times and aging infrastructure all serve to undermine the very amenities modern employees seek when deciding where to live and raise their families. Emerging and next-generation cities, in contrast, are better situated to accommodate and grow with—not in reaction to—the needs of modern workers. A business or megacity is only as strong as its people. To compete against established power hubs and build a formidable presence in the global economy, emerging megacities must proactively accommodate the full scope of professional, personal and cultural demands from skilled employees. Although the study’s 15 current and future megacities share some commonalities, it did reveal key differences regarding performance when addressing the human, health, money and work categories. The report classified the cities into three groups based on their abilities to fulfill worker expectations—advanced, progressing and approaching. Theses 15 emerging megacities have a collective population of more than 113 million people, strong projected GDP, more than $4 billion of foreign direct investment annually and a population growth trajectory expected to reach one billion new consumers over the next decade. These growth economies represent the forefront of the emerging global economy. If the business leaders, government policymakers and infrastructure planners in these 15 cities align their resources and incorporate the “voice of the employee” into their decisions and planning processes, they can successfully manifest the human and social factors that drive residency decisions. With a greater understanding of the specific human needs, wants and motivations of each segment of the employee population, businesses can tailor their offerings and programs to better attract and retain the best talent—and leapfrog over established hubs, one employee at a time. A New Era of Collaboration Neither employers nor next-generation megacities can deliver “satisfaction with life” alone. Skilled employees demand resources that will require the combined efforts of businesses and city governments. Corporate thought leaders and policymakers must create and implement new policies and frameworks that accommodate digital transformation, globalization, modern healthcare and the educational environments valued by forward-thinking families. Empowering a new era of collaboration begins with elevating the voices and concerns of individual workers and the collective workforce. Employers and emerging megacities must appreciate how employees want to live their lives, work, earn, and learn. Of course, not every employer or megacity is the same. The needs of workers can vary based on their surrounding communities, seasonal changes, personal situations (such a health concerns), life aspirations, and even factors like the proximity of their home to their workplace or school. Thinking beyond traditional business dynamics and prioritizing the complex needs of employees demands a fresh mindset. Stretch assignments, retention bonuses and travel allowances have a limited impact. Businesses and megacities need to create a nurturing environment for workers, where they pursue lives that offer new ways to work, support their families and connect with their communities. Effective public-private partnerships can facilitate improvements and accelerate progress at scale. By creating environments in which workers and their families can thrive, companies and governments can create sustainable economic growth for everyone and address the future needs of the employees they are trying to attract. For example, a lack of affordable housing, regional transportation challenges, access to childcare and elderly care directly impact the life satisfaction of employees. To address the depth and scope of such elaborate challenges, employers and next-generation megacities should seek collaborations with other businesses, civil societies and support organizations to develop strategies that serve employees and their families. Those that don’t, may get left behind. To access more insights and practical advice on how companies and municipalities can accelerate their people strategies and realize commercial gains, download People First: Driving Growth in Emerging Megacities.
Globalization continues to shape the financial services industry, requiring firms to internationalize their operations and expand their footprints across the world. In the post-Global Financial Crisis era, most financial services companies took a hard look at their corporate structures and global footprint. More recently, Brexit, and a looming trade war, have financial services firms considering non-traditional site selection locations that could shake up an industry built on the power and prestige of long-standing traditions. Venerated financial hubs such as London, New York City, and Tokyo have storied reputations and street credibility, but they are also incredibly expensive and congested in a world that is becoming increasingly cost-conscious, nimble and decentralized. Another important element that has accelerated this trend is the development of the fintech industry, which promises to disrupt traditional business models and ways these companies have interacted with their customers thus far. FinTech is poised to revolutionize mainstream banking and consumer engagement through advanced platforms and apps that will streamline mobile payments, peer-to-peer loan transactions, and modernize how people invest in stocks, cryptocurrencies, and conduct other Internet-based financial transactions through their smartphones. This decentralization of the industry presents unprecedented opportunities especially for growth or emerging economies. Determining exactly where, and how, to establish a new presence in different states, countries, or cultures requires a complicated mix of critical factors that could—without notice—devastate not only the expansion venture, but the entire brand and enterprise. The key to understanding any complex situation is to break it down into its core elements and examine it, from every angle, how those elements are connected and create either success or failure. For financial services firms, effective site selection requires a cohesive team that offers a diverse array of expertise and competencies in everything from real estate and international tax laws to environmental engineering and supply chain logistics. Navigating this level of sophistication requires extraordinary diligence. Below is a list of seven site selection challenges financial services firms must resolve to avoid costly expenses, if not permanent damage to their brands. 1. Cultural Differences: Cross-cultural communications pose a variety of unseen and unexpected challenges as different people can experience the same interaction and yet walk away with entirely different impressions and conclusions. Site selections require in-depth discussions about elaborate topics such as local licensing rules and regulations, construction and utility issues, and other culturally sensitive matters regarding labor laws, political matters, and financial protocols. Every site selection team must have members who are fluent in the language and cultures of the selected geographies. 2. Poorly Defined Requirements: Every site selection is unique and presents its own particular sets of challenges and obstacles. Too often financial services firms overlook important details in their fervor to expand their footprints and impress stakeholders. Smart site selection teams rely on built-in checks and balances to ensure requirements are clearly defined and prioritized throughout the process, from discovery to final negotiations. Simultaneously considering multiple sites helps teams abide by a definitive scope of requirements that must be confirmed with each site assessment. If the initial requirements are not clearly defined and delineated, the entire project is put in jeopardy. 3. Lack of Transparency: Site selections involve a dizzying number of people, opinions, and professional insights that do not always align or connect in productive ways. Communication breakdowns can impact every level of the process, and result in costly mistakes that may require unbudgeted time and money to correct. Site selection teams must ensure that protocols are in place to guarantee all criteria are measured through objective facts and data. All human beings are fallible, so site selection teams must follow strict guidelines that protect the integrity and transparency of data sources, research procedures, and the dissemination and analysis of information. 4. Incomplete Research: Site selections impact an extensive spectrum of stakeholders, and each of them must be carefully consulted. Most instances of incomplete research are the result of failing to solicit the full involvement of all of the stakeholders—and not just the readily obvious ones. In addition to the decision-makers and inhabitants of host nations and municipalities and their respective regulatory bodies, site selection teams must consider neighboring municipalities, labor and economic development organizations, and other relevant community, political, or industry groups. Addressing the priorities of these stakeholders early on is key to a successful site selection. 5. Underestimating Full Operational Impact: Site selection is a resource-intensive endeavor, and it is easy for companies to underestimate the full impact the process can have on existing priorities and operations. Even the smallest reallocation of human capital, technology, or other assets can reverberate throughout a company and its external partners in ways that disrupt important routines and relationships. Before initiating the site selection process, companies should perform a stress test that identifies the people and processes most likely to be impacted by site selection procedures. 6. Inadequate Oversight: Effective leadership is key to running a successful site selection project. The numerous groups and individuals that contribute to site selection decisions make the operation highly susceptible to workflow silos, data fragmentation, and neglected performance benchmarks. Site selection teams must have an entity responsible for accountability on every level—from defining requirements and evaluating communities to tax/real estate analysis and the final site acquisition. Oversight mechanisms must be implemented from the very beginning to prevent corrupted data or processes from contaminating ensuing discussions and decisions. 7. Brand Integrity: Expanding operations to increase a financial services firm’s global footprint is a very public, costly, and high-profile pursuit. News of a site selection failure quickly spreads throughout the industry, and across the world. Financial services firms that “get it wrong” suffer catastrophic damage to their brand identity, and become associated with perceptions of incompetence, poor management, and bad decision making. Site selection teams should work with media companies to lead the narrative regarding the efficacy and benefits of the site selection. Firms that “get it right” elevate their brand above the competition and can build future business and profits based on a well-orchestrated site selection operation. In conclusion, financial services firms must remember that each site selection project is a singular endeavor that will require flexibility, foresight, and a willingness to learn. Using the same strategies and asking the same general questions is a recipe for failure. However, implementing an unbiased, dynamic, and comprehensive strategy will identify challenges early on, enable realistic solutions, and optimize the entire process. Situational awareness must be observed at all times, from every member of the team. After all, successful site selections are the ones where people take precedence over the place.
Human beings are naturally predisposed to cultural bias. Found in all human sciences—including economics, psychology, and anthropology—cultural bias is defined as “the process of judging and interpreting phenomena by standards inherent to one’s own cultural preferences or by norms of a particular culture.” Cultural bias is why in some cultures averting eye contact can be interpreted as being evasive or shy, and in other cultures, a sign of respect. It’s why people born in Argentina likely wear jerseys that honor Lionel Messi unlike their football peers across the Atlantic who revere Portugal’s Cristiano Ronaldo. Why soup slurping in Korea is the norm, when it can be considered bad table manners elsewhere. And why we read English text from left to right, whereas other scripts, like Arabic, make sense if read from right to left. Our surrounding environments have a powerful influence on how we see and interact with the world. But what happens when a major global industry, like computer programming, is dominated by a singular cultural perspective? The U.S. is an international leader in computer programming, yet, according to a recent Stack Overflow survey, 85.5% of computer programmers in the U.S. are male, and the vast majority of those males are white men. Considering that these programmers are creating code at the forefront of AI, does this mean that the experiences and sensibilities of white men will define the future of our digital world and the AI universe? Yes, and no. Programming’s Homogeny Proble When a straight, white male develops an algorithm, inevitably that AI sees the world through that developer’s particular perspective. This original programmer’s intellectual DNA is now the foundation on which this AI project will continue to develop, process input and data, and learn. Much like people, limited life experience can be a significant detriment in an increasingly globalized world, full of unexpected problems and challenges. Cultural bias lurks in unexpected places. For example, when Walmart expanded into China, the retailer’s vision of serving the country’s 1.3 billion people soon faltered as it discovered Chinese consumers, unlike American consumers, had very different needs and preferences in different cities and different parts of the country. The retailer could not find the right product mix to offer in the 117 cities it served. This, along with unforeseen political and infrastructure difficulties, disrupted the company’s heralded, efficient supply chain system.  Cultural bias persists in just about every nuance of cultures across the globe, from the history questions asked on high school exams to what makes people laugh at a joke or even their definition of beauty. As machine learning and AI continue to proliferate and influence our societies, we—meaning industry professionals, business leaders, and government entities—must be very careful about the role homogeny will play in defining our sensibilities, perspectives and priorities. Project managers and coordinators must establish protocols that prevent the corruptive impact of cultural bias from ever gaining a foothold in the programming process. Prioritizing diversity at the forefront of strategy discussions is critical. Often, cultural bias is quiet and nearly invisible, but years later is exposed by a startling lack of foresight, awareness and empathy. The ultimate damage can be costly. According to Mercer’s Accelerating for Impact: 2018 Gender Inflection Point, “Research has shown that unconscious bias is a normal feature of being human, but can lead to decisions about men and women and their careers that do not align with the organization’s goal of rewarding for merit, skill and talent.” Think of how many political and business policies and “cultural norms” from as recently as the last 10 or 20 years have not kept pace with society’s increasing demand for diversity and the inclusion of every race, gender, and cultural background. The business of business is constantly changing. Savvy and forward-thinking companies know that the strongest antidote to cultural bias is diversity—a diversity of minds, experiences, backgrounds, beliefs and perspectives. This combined richness of intellect and creativity builds a synergy of influence that restricts the ability of cultural bias to determine the end result of the programming. Simply put, diversity is key to long-term AI success. Solutions Must Start from the Beginning There are steps employers can take to prevent the homogeny of programming. Firstly, employers must acknowledge that a lack of diversity in programming is a liability, as a deficit of forward thinking vision will translate into a diminishing ability to compete. Updated internal policies and protocols should align business objectives with AI capabilities and its impact on industries and customers. This means building diversity throughout programming operations so that a vast scope of talents, perspectives and ideas are constantly being compared, improved upon and brought to life. Next, employers must leverage the power of the technology itself. With machine learning, businesses can create datasets that teach computers to make up their own algorithms using “AI training.” The machine then generates completely “new” and original compositions, based on what the machine has been taught. In short, diversity at the outset results in diversity in output. When a business has a diverse and inclusive development community, it builds tools that are more reflective of a diverse set of problems—problems that can potentially impact underserved or overlooked organizational issues or opportunities. To mitigate the trappings of homogenized programming, start at the very beginning. In Conclusion: An Inclusive AI Universe for All The convergence of people and technology will define the future of work, but the human element will always light the path forward. Establishing a competitive advantage in this ever-evolving landscape means evaluating the influence people have on technology and remembering that humanity is what guides human behavior. Effective digital transformation requires a commitment to the power of the diverse perspective and an understanding of how human beings, and the human experience, will evolve as we become increasingly connected to the AI universe—an inclusive realm without barriers. After all, when people with different perspectives and experiences collaborate to solve a problem, the results can be magic. Diversity is key to the creative process and the cross-pollination of ideas that drives modern discovery. Every programmer can be an intrepid explorer, and the discoveries they make should be connected to the talents and contributions from programmers from all over the world. 1 Understanding the Phenomena Of Cultural Bias With Examples https://psychologenie.com/understanding-cultural-bias-with-examples 2 Stack Overflow Developer Survey 2017 https://insights.stackoverflow.com/survey/2017#overview 3 Here's Why Walmart Stumbled on The Road To China http://fortune.com/2016/02/21/why-walmart-stumbled-on-road-to-china/ 4 Accelerating For Impact: 2018 Gender Imperative https://www.mercer.com/our-thinking/when-women-thrive-accelerating-for-impact.html
Homemade soup dumplings, lovingly knitted socks for the grandchildren, and a one-woman e-marketing firm specializing in AI storytelling for global brands. Being a grandparent isn’t what it used to be. Many nations have already seen a steady increase in the median ages of their workforces, and this trend is largely expected to continue into the coming decade. Retirement-savings gaps (the difference between retirement costs-of-living and savings for retirement), are widening dramatically throughout the world, due to longer life expectancies and inadequate retirement savings programs. Analysis of this phenomenon shows that this gap stood at $70 trillion globally in 2015 and is projected to reach $400 trillion by 2050. These wide gaps are a powerful motivator behind older workers returning to or remaining in the workforce. While well-documented statistics about people living longer and healthier lives abound—the retirement gap is real—commonly overlooked, is the evolving relationship aging people have with work—actually, perhaps not work, but life. A New Era of Relevance The image of an aging worker blowing out candles in a bland conference room and reading heartfelt memos scribbled on a “Congratulations on Retiring!” card belongs in the past. Save the applause. Forget the cake. There may be no speech. Older workers are increasingly opting out of the ceremonies designed to mark their passage into the “golden years”. The elderly are forging their own futures and disrupting one of life’s most harmful clichés: aging is a process of declining relevance. Today’s aging population thinks differently. While financial reasons are the most common motivation, older workers also frequently cite non-financial reasons for remaining in the workforce, including the desire to stay healthy and active, and taking pride and finding self-fulfillment in their work. Almost 60% of workers aged 45-plus are investing in new skills for work, with the majority reporting positivity and excitement about their jobs. The idea of retirement is blasé, if not downright insulting. What does it say about a person who celebrates retirement because they’ve spent the last 45 years doing something they’d prefer not to be doing? Sure, few people like waking up and trudging off to work on a Monday morning, but this small act of self-determination connects them with millions of other workers who share the same experience. That connection brings relevance, dignity and a sense of purpose. Older people know that going to work is a blessing, not a curse. And workers around retirement age are discovering that employment—and the relevance it brings—is now, more than ever, something they can customize to suit their lives. Inspiration Is Ageless Inspiration is not exclusive to youth. American Charles Flint founded IBM at the age of 61. French post-impressionist painter Cézanne created his most valuable work in his late 60s. After discovering early retirement wasn’t for him, tech entrepreneur Bob Parsons started the Internet domain registrar and web hosting company, GoDaddy at age 47. The same dreams young entrepreneurs have of making a profound impact on the world are the same motivations that drive older entrepreneurs. It is human nature to want to make a difference, to be respected, to matter. Now, with advances in technology connecting people and opportunities more than ever, aging employees are exposed to career options that didn’t exist 20, or 10, or 5 years ago. Technology keeps changing, and older people—contrary to popular opinion—are better equipped to navigate change because they’ve seen it and lived through it. Few of the world’s most renowned entrepreneurs achieved success without having to endure struggles and challenges. Steve Jobs was fired from his own company. Jack Ma, cofounder of Alibaba, was rejected from 30 different jobs that he applied for—including a position at Kentucky Fried Chicken, which was founded by Harland David Sanders at the age of 65! Inspiration arrives via many ways and in many incarnations—as a fleeting thought while taking a shower or as the result of decades of grueling work in a particular industry. Regardless of the means or the circumstances, inspiration has never—despite cultural assumptions—been determined by age. The reason many older people do not act on their inspired moments is because society expects less—or perhaps something different—from them. Times are changing. The Essentials of Entrepreneurship Entrepreneurialism requires three essential attributes: confidence, ability, and perspective. Older workers possess copious amounts of each. Younger people may exhibit confidence, but that bravado is often rooted in hopeful exuberance—and probably some naiveté—from not knowing how closely misfortune looms. (Luck is more arbitrary than anyone cares to admit.) Older people offer confidence rooted in knowledge gained through time and experience. Real confidence. The kind that comes from having enjoyed the best, and survived the worst, of times. Aging workers also possess true abilities and can prove it by reflecting on long careers that taught them skills, talents, and ways of thinking that can only be gained through experience. People who think older people do not have the ability to learn new technologies are practicing ageism—which is not only a myopic perspective, but illegal in many countries. Finally, entrepreneurship requires a bold perspective—to take risks, to close your eyes and let go. Prevailing wisdom states that younger people, especially people in their 20s, are naturally open to risk because they have more time and fewer responsibilities; if a business venture fails, they can rebound. But nothing opens up the human soul to risk more than the knowledge that mortality is real, and looming. Aging workers are increasingly empowered to take control of their own destinies. After the Great Recession of 2008, countless older workers opened their laptops, created websites, and started their own businesses, consultancies, and organizations. It is only a matter of time before the next aging worker becomes inspired and changes the world in unprecedented ways. Older people know that anything can happen in life. Just ask Jack Ma, who at 53 years old could be selling fried chicken in his hometown, but is instead the co-founder and executive chairman of Alibaba Group, a multinational technology conglomerate, and one of the most admired companies by Fortune. As people prepare for uncertain times ahead, it is crucial organizations also plan for the demographic changes that parallel. Older people are indeed becoming more willing and able to engage in meaningful work, and companies would do well to incorporate older workers into their workforce of the future strategies. 1World Economic Forum (2017). We’ll Live to 100 – How Can We Afford It? 2Asia Pacific Risk Center (2017). Aging Workforce 3Lynda Gratton and Andrew Scott (2016). The 100 Year Life 4European Commission (2015). Employment of older workers; The Centre on Aging & Work at Boston College (2005). Older Workers: What Keeps Them Working?
Digital transformation is here, and it is affecting companies in various degrees, across a number of industries. For an organization to succeed in adopting technological solutions, they must find ways to engage their workforce in this digital transformation or they will fall behind their competitors. To help determine the best practice approaches towards advancing digital transformation, we recently interviewed managers and employees at the forefront of the digital revolution. We uncovered two distinct findings. The first finding is that the digital revolution is still in its early stages and has yet to have the profound positive or negative effects that many predicted. In one way this first finding can be seen as an advantage since our second key takeaway from interviews is that the strategies and processes for managing the technological changes are not yet well developed in many organizations, so problems and risks related to the digital transformation and the corresponding engagement of the workforce remain prominent. If companies want to truly improve their productivity, improve their rate of return and produce positive work outcomes through technology, they must first adjust their management of technological innovations. A new integrated process for designing the workforce for the future The traditional management process organizations have followed for years has a very sequential pattern. The digital technology strategy design (defined by managers or vendors) flows into the implementation stage, after which the workforce is trained, and workforce adjustments are made (by HR departments). This approach is reactive and often displays a divergence between business targets and workforce strategies –the HR departments are not involved in the design of the strategy, defined by the managers, while the managers are not engaged in the detail of the workforce strategies defined by the HR departments. While this approach can work in some cases, to prepare for the digital revolution – with its fast-paced and more complex changes – we believe a more dynamic and more aligned approach is necessary. We propose a new integrated model where processes are interrelated and HR and the workforce itself has input in designing technology solutions. The objective of this process is to link the design of the digital strategy with the design of the workforce for the future, from the beginning. Rather than a sequential approach with definite steps, the whole model functions as a continuous circle, without a concrete beginning or end point. A fundamental difference for this model is that workforce and HR both have a say in the technological problem definition and solution selection as well as the related workforce adjustments. The belief behind this system is that if we want to improve the workforce of the future, we must leverage their input and shape the digital revolution around their needs. Five key elements for a successful digital transformation Companies benefit from designing and implementing technology in a thoughtful, integrated way that engages the workforce. By involving in the early stages of problem definition design workers who best understand the processes that can be improved, streamlined, or even eliminated, companies can avoid the changes and bottlenecks that later add costs, reduce continuous improvements, and inhibit user buy-in. Moreover, adhering to sequential technology design-implementation processes, the “old model,” diminishes further innovations that can put technologies to new, unanticipated uses that increase an organization’s digital capacities. Plus, leaving end users/workers out of the early stages increases the likelihood that the new digital landscape will widen the gap between winners and losers in the digital transformation process. Our interview findings indicate that a successful digital transformation incorporates the following five key elements in a new, holistic model: 1. Chief Digital Officer (CDO) as a key enabler of transformation: The CDO serves as the system integrator and change process facilitator. 2. Proactive workforce upskilling: Sufficient workforce training and investments made before the implementation process help to ensure the workforce has the skills and the cultural willingness to work effectively with digital technologies. 3. Collaborative technology design: Vendors, internal firm managers, and workers jointly define the problems/opportunities that digitization might address. 4. Augmenting human input with Artificial Intelligence (AI): Consider systemic process changes via AI (pure AI processes but also AI augmenting humans). 5. Integrating technology into workflows: Staff closest to soon-to-be-digitized work brought into the design right from the start. Not only consider automation of existing processes but also think about the process itself (and optimize it). It is imperative for companies to act swiftly so that their organization does not fall behind the best collaborative competitors in their industry. Deep-dive: The role of the Chief Digital Officer (CDO) As business operations change and adapt to the digital revolution, the need for a new executive position becomes readily apparent. Enter the Chief Digital Officer (CDO). The role of the CDO has been created by some companies to design and lead strategic digitization. Yet, some uncertainty surrounds the role’s responsibilities, given inevitable overlaps with the duties of the Chief Information Officer (CIO) and the Chief Technology Officer (CTO). While no two org charts or reporting arrangements look the same, the CDO, in general, should be understood as a more evolved role, combining elements of the CIO and CTO roles to achieve a mandate of overarching digital transformation throughout the organization. The CDO will need to be a digital integrator. Beyond extensive technical expertise, he or she must also understand operations and organizational considerations. Such a mix of skills will allow the CDO to approach technology from a design perspective and convert data into a strategic asset. In our findings, we’ve determined that CDOs must have the following three traits to be effective in their role: 1. They must have curious minds and continuously challenge the way an organization operates, plus direct solutions towards the identified challenges. 2. They must have advanced technical knowledge so they can select and implement the correct technological innovations. 3. They must understand technology and human interactions to manage the ongoing integration and change processes of the new technology. Many organizations have not yet defined the CDO position, choosing to spread the responsibilities across departments and executives. To compete in the digital revolution, however, companies should begin to consider how a dedicated CDO could impact their technical innovations and workforce engagement. Case Study THE SITUATION: A large global utilities player headquartered in Singapore faced disruptive headwinds from both within and outside of their organization. IoT-enablement of plant equipment meant an exponential increase in both the volume and velocity of big-data sets from multiple sources that they were expected to integrate and analyze. This situation was exacerbated by ambiguity around data security, connectivity, access, and ownership. The proliferation of new technologies and the acquisition of new assets (plants) resulted in a situation where the organization had multiple, incompatible platforms. Their organizational structure also raised some red flags. Their information technology (IT) department was viewed as a cost-center and reported into Finance. The IT team comprised predominantly of generalists, while the specialist services were outsourced. THE SOLUTION: Mercer was tasked with designing a new structure for the IT department, as part of a broader digital transformation strategy. Part of our recommendations included the creation of the Chief Digital Officer (CDO) role to drive alignment of their IT and operations technology (OT) objectives and teams. The CDO’s role was designed to develop a digital strategy and elevate digital transformation in C-suite conversations, both from an internal (business analytics and decision making) and external (customer facing platforms and interfaces) perspective. One of the key objectives of the CDO’s role was to ensure that senior executives not only had a holistic view of the ownership and impact of technology decisions but were also invested in driving the outcomes that would deliver returns from these decisions. 1 Engaging the Workforce in Digital Transformation https://www.mercer.com/our-thinking/career/engaging-the-workforce-in-digital-transformation.html
For decades, organisations have recognised — and have tried to realise — the benefits of a highly engaged workforce. According to a recent study, DNA of Engagement: How Organizations Create and Sustain Highly Engaging Cultures, conducted by Mercer | Sirota in partnership with the Engagement Institute™, nine out of 10 senior leaders think engagement is important, and eight out of 10 organisations have a formal engagement programme already in place. Clearly, engagement is a vital area of focus: It’s estimated that organisations spend close to a billion dollars annually on promoting higher levels of employee engagement. Despite this huge investment in employee engagement, and even with the many different approaches to driving employee engagement that are available, most organisations are still frustrated with their progress in overcoming their engagement challenges. In fact, results from the study show that only 50% of HR leaders feel that managers know how to take action on engagement survey data to help achieve their desired results. So what’s the problem? Is it a lack of relevant data and insights? An inability to hear employees’ voices and truly understand their concerns? Or is it that organisations are just sitting on data and neglecting to execute their well-intentioned action plans? In talking with many different stakeholders (including business leaders, HR leaders, frontline managers and employees), we’ve noticed that despite significant differences in how highly engaged organisations approach their people challenges and the myriad ways in which they choose to engage their employees, one thing remains the same: Highly engaged organisations anchor their engagement approach in a critical value— empathy. But some might ask, “Aren’t we being empathetic when we conduct employee engagement surveys to better understand our employees’ experience at work?” Well, yes, to a certain extent — but in reality, the survey is only the first step. The principle of empathy should apply not only to the survey process, but to all aspects of the employee engagement journey, especially to post-survey-related activities such as action planning. Be Empathetic by Adopting Design Thinking An empathetic approach to employee engagement may sound fairly simple as a concept, but ensuring it’s executed effectively requires a major shift away from the more traditional methods that most organisations have adopted. To better understand how to achieve the goal of an empathetic and highly engaged organisation, we have worked with leading organisations that are setting the standard for high employee engagement by adopting human-centred design thinking to address their engagement challenges. Although there are numerous frameworks for design thinking (devised by Stanford and IDEO, most notably), they all share three key stages of developing an employee-centric approach— exploration, generation and realisation. The three stages are outlined below: Exploration Stage o Learn more about employees, other key stakeholder groups in the organisation and the context of problem o Synthesise learnings gleaned from discovery and from listening to various points-of-view Generation Stage o Conduct iterative ideation to push past stereotypes to get to breakthrough ideas o Build prototypes to learn, providing a foundation for making ideas better o Test ideas and prototypes with actual users, or in this case employees Realisation Stage o Implement the chosen solution and maintain a focus on continuous improvement Exploration Stage There are two phases in this initial stage: discover and define. - Discover. Using an employee engagement survey to collect employee feedback helps organisations explore the unique needs of their employees and discover what their people value. Employee engagement survey results serve as the foundation for providing the necessary insights organisations need to be empathetic and to design meaningful actions that not only meet business objectives, but also truly address employee needs. Another important element of this phase is creating a compelling problem statement. A well-developed employee engagement survey identifies the core elements of the problem to guide the future direction. The core elements include the following: Who — identifying specific demographic segments for which the problem/issue is most relevant What — understanding the impact of the issue and/or problems caused When — conducting multiple rounds of study to identify when certain workforce trends, whetherpositive or negative (attrition or turnover, for example), are happening Where — pinpointing the geography (or geographies) where the issue is taking place Why — using statistical analysis to identify key drivers of employee engagement - Define. Organisations need to synthesise the insights they gather — this is how they make sense of what they’ve learned, identify patterns, find meaning and develop an overall picture of their own workforce trends. In this phase, organisations also begin to lay the foundations for an overall employee engagement architecture. By translating the findings into an employee experience story, they can identify the root of the challenge and clarify how to move forward. The story can be simple: for example, a technology company I worked with recently, successfully engaged its employees by providing them with a high level of autonomy and embedding an experimental approach into company’s processes. This resonated with employees who tended to be more motivated by having opportunities to innovate instead of by achieving financial rewards alone. A key part of an organisation becoming more empathetic is by strengthening its analyses of the employee experience through journey mapping and blueprinting — to illustrate the journey of an employee over time. Other components are sometimes added, such as high points (moments that garner the highest reception from employees), breakdowns (areas that likely may receive varying degrees of receptiveness, leading to lower positive perception from some employees), emotions (employees’ psychological reactions to certain changes, which employers can anticipate by defining employee personas) and touchpoints (the connection between the various parts of a holistic employee experience within an organisation). This helps us understand the building blocks of engagement that are unique to each organisation, and reveal the processes that are delivering highly engaging experiences for employees. It also enables us to connect the various components of the employee experience to one another, from frontstage (involving direct interaction with employees) to backstage (including all the behind-the-scenes preparation required to implement a successful engagement programme). An effective journey map and blueprint should be able to: Provide a clear overview of the employee experience and the systems in place (like performance management, and learning and development) Facilitate communication across dimensions (for example, total rewards versus agility) and related organisation groups (managers and employees, for instance) Spot where certain things are not working, highlight opportunities for greater enhancement and support decision-making to identify the most suitable options Generation Stage While most organisations are open to listening to employees’ voices and needs, action planning is typically still a “closed door” activity and thus not truly empathetic. The generation stage is about the divergence and convergence of ideas, and about building on the outcomes from the exploration stage to identify possible solutions in a collaborative way. The three phases of this stage — ideate, prototype and test — function as an iterative cycle. - Ideate. To be truly empathetic in idea generation, highly engaging organisations are adopting a participatory design approach by involving employees in their action planning. These organisations recognise that employees have important insights to offer and can best articulate, when given the appropriate tools to express themselves, how their needs should be addressed. The ultimate aim is to prompt employees to tell their unique stories about their experience in the organisation. This serves as a core component of the design of an effective employee engagement programme and offers numerous benefits: Enhances the potential for being innovative by going beyond existing solutions Leverages diverse perspectives and the collective wisdom of employees Uncovers unexpected knowledge worthy of exploration Generates greater volume and flexibility in innovation options Creates a sense of ownership of the ideas that are generated There are many ideation techniques — brainstorming, mind-mapping, sketching, among others. But no matter which techniques are adopted during ideation, postponing the evaluation of the ideas that are generated during the ideation phase is critical. When employees know that the merits of their ideas will not be immediately evaluated, it allows their imaginations and creativity greater freedom, and also demonstrates an organisation’s flexibility in aligning employee input on engagement actions with its overall business strategy. - Prototype. After ideation for employee engagement action planning is complete, building a prototype will be crucial — to avoid losing the potential for empathy and innovation while focusing on the most viable ideas, and to answer questions that will help bring an organisation closer to the best solution. A prototype for employee engagement action can take any form, as long as it encourages employees to interact with it: It could be a storyboard of a concept, a game employees play or a gadget they put together, or a role-playing activity, to name a few examples. The prototype can be simple — it need not be very detailed; it only needs to include a few points to describe the solution or outline the steps that need to take place. The key is that for a prototype to support the idea of empathy, it must be something the employee can experience. Four principles should guide the prototyping process: 1. Get started — don’t delay. If you lack a clear picture of what to do about employee engagement or don’t have all the details in place, don’t let it stand in your way. Just having some notes and ideas is enough to get the process going. 2. Look for a clear indicator. A prototype is critical because it enables you to answer specific questions with certain variables (for example, whether to link performance ratings to salary increments or to a percentage of an employer’s contribution to employee pension funds). These variables will serve as the anchor to support the next step or action (whether it be further strengthening the variables or deciding to change direction). 3. Be ready to let go. A prototype is not meant to be a guaranteed solution. There are many different ways to engage employees: Organisations should not let themselves get too attached to any one idea or solution, and should be open to exploring other options. 4. Stay focused on employees. Continue to ask, “What do employees want?” The answer(s) to this question will help focus the prototyping by collecting meaningful employee feedback that can inform iteration and guide next steps. - Test. To ensure a prototype can become a viable solution, it needs to be tested: eliciting feedback on the prototype from employees creates additional opportunities for empathy, reinforcing the focus on employee engagement. Testing is also crucial to supporting the iteration cycle and, of course, identifying the most suitable solution. An empathetic approach to testing collects employees’ feedback during the iteration process to help shape the employee engagement action plan design. “Micro-piloting,” a hot choice and one of the latest market trends, is a great way to capture employee feedback. There are many different ways to conduct a micro-pilot — below are some examples drawn from my experiences in working with highly engaging organisations. Crowdsourcing Campaign: A company might encourage employees to participate in budgeting decisions for its people programmes (for example, a company outing or a wellness programme) by asking employees to “vote” for a specific event or initiative by using a virtual token that has no direct monetary value, but instead has an internal currency. For example, if senior leaders have budgeted $100 per person for people programmes, they might issue a $50 virtual token to employees to enlist their help in identifying the most promising programmes and determining how much the company should allocate to these programmes. This engages employees by giving them the opportunity to show how they think the organisation should use its funding, allowing them to have a more direct influence on budgeting and to have a say in what experiences will deliver the best outcomes and most value. False Door: A false door is typically a webpage that includes a simple call to action to promote an employee engagement initiative or programme — often employees are prompted to click a button to “understand more” or “sign up to participate”. Organisations can then track employees’ actions and responses to various engagement programmes, allowing them to determine, for example, which programmes have the highest click rate or most visits, providing organisations with valuable data that helps them understand what serves their employees’ best interests. Wizard of Oz: In this scenario, employees don’t know that they’re participating in an employee engagement initiative; instead, their feedback is being collected behind the scenes. For example, in a retail company I worked with recently, employees wanted an enhanced training approach to improve their customer service skills and support their ongoing development, so the company designed a new online programme to test how the training could best be delivered — they wanted to more closely assess their use of technology to determine, for example, the optimal number of interactions for employees. As employees moved through the online programme, their behaviours and responses (for instance, how they navigated from one page to another within the programme) were guided, observed and recorded to help shape and refine the design and the delivery of the training. By testing against different variables and adapting the design of the training accordingly, the retail company succeeded in customising the training to fit their employees’ needs. Realisation Stage To maintain a strong focus on empathy in the execution phase of any employee engagement programme, deployment must be consistent and all stakeholders must adopt a continuous learning approach. Organisations that have been successful in the realisation stage understand that for an empathetic approach to have real impact, employee engagement efforts must not be built just for show — they must be authentic. And more importantly, employee engagement programmes must be “built to run” and “built to learn”. - Built to Run. Being empathetic is not just about “branding” improvement actions; it’s about ensuring follow-through. Employee engagement must be managed in a holistic and enduring way. To achieve this goal, highly engaging organisations have defined a clear governance model to ensure their employee engagement action plans are executed in a consistent and empathetic way. When it comes to employee engagement, good governance is defined by six characteristics — employee engagement efforts should be: Participatory: Employees are involved in the implementation. Ownership-driven: It’s not only leadership and HR who have accountability for driving employee engagement; this critical responsibility is also delegated to more junior employees. Transparent: Employees have a clear picture of all the different aspects of the employee engagement programme. Responsive: The employee engagement programme is designed to capture moments that matter (for example, those involving communications around bonus awards, promotion decisions or departures from the company). Inclusive: Employees feel they have a stake in the organisation’s engagement journey; no one feels excluded. Rules-based: A fair policy framework is put in place to enforce actions, with incentives and consequences, to help ensure the identified employee engagement actions have been properly implemented and the desired impact is achieved. - Built to Learn. Iteration with the goal of continuous improvement is a key aspect of adopting a design thinking methodology and a lab mind-set in promoting employee engagement: Indeed, employee engagement is not a one-off initiative, but an ongoing journey. To excel in this journey and ensure they keep learning, highly engaging organisations adopt the mechanism of progressive survey design in their employee engagement studies. What is progressive survey design? High-engagement organisations do not issue an employee engagement survey as a one-time exercise; instead, they conduct engagement surveys regularly to chart progress and ensure employee voices are continuously heard. Because the number of survey questions is often limited to ensure a better survey experience, selecting the right questions to reflect the current moment is crucial. Each survey questionnaire should be designed to align with the overall strategy, keeping longer-term objectives in mind, while mirroring the natural evolution of change within an organisation. If senior leaders want to understand how an organisational transformation is impacting their employees, survey questions must be designed to reflect and capture employee responses to progressive change. For example, survey questions might evolve as the organisational transformation unfolds, moving from initially asking questions about employees’ awareness of the change to later posing questions in subsequent rounds of the survey about employees’ understanding of and commitment to the change. In Closing It’s clear that an organisation that succeeds in engaging its employees in this age of increasing disruption creates a competitive advantage. And to win this increasingly competitive war for talent, organisations need to reinforce and model the principle of empathy by adopting design thinking to design employee experiences that are meaningful and enriching. When organisations truly empathise with their people and literally put themselves in their employees’ shoes, and when they take an iterative approach to employee engagement initiatives with a focus on continuous learning, they succeed in building a thriving workforce — and a thriving business follows naturally. 1 Mercer | Sirota and Engagement Institute study, DNA of Engagement: How Organizations Create and Sustain Highly Engaging Cultures, 2014. 2 Ibid.
Growth economies are making a proverbial splash on the business world and the ripple effect will leave no organization untouched. While conventional business philosophies will help some leaders navigate the rough waters, truly succeeding in this rapidly changing landscape, goes far beyond any business school curriculum. Whether you’re a leader of a startup or a Fortune 500 company, we are all grappling with rapid and borderless news cycles, accelerating urbanization, new technologies, the creation of global marketplaces, and an abundance of cheap capital. In the midst of it all, we are working to solve the same core problem: how can we be relevant in a fast-paced world? Some will turn to business school principles for the answers, but finding solutions for this deep-seated question goes beyond a change in operations, technology adoption and business structure. It requires a less tangible solution. Leaders and companies seeking to be relevant must adopt a growth mindset and culture—the foresight, courage and ingenuity to identify and take hold of novel opportunities and do it sustainably. Step 1: Recognize the Need for Change The Western powerhouses that have historically dominated the world economy are “passing the baton” of global economic leadership to the growth economies of Asia, the Middle East, Africa, and Latin America. These economies are turning the business world on its head. It’s phenomenal to consider these regions have contributed more than 80 percent of global economic growth since the 2008 financial crisis. By 2050, they will dominate the world’s top 10 economies. In addition to where the world is doing business, we’re experiencing major shifts in how business is done. Digital, mobile and social media are transforming the customer experience, disrupting industries and businesses and creating new ones, and workforce skills and demographics need to change in tandem. The growth of mobile technology and solutions in Asia and Africa alone is staggering. It is fundamentally changing not just payments but whole systems of social and business interaction. The bottom line is the world is changing. Fast. Leaders with a growth mindset want to amplify strategic choices and fuel innovation. They know with a clear purpose and by keeping people at the core, they can use the external environment to their advantage. Leaders inspired by unleashed potential, new terrain and competitive possibilities, and who are undeterred by the challenges that accompany it, will be the ones who succeed. Step 2 : Adopt a New Way of Thinking At its core, a growth mindset is a deeply engrained belief that influences how decisions are made. Those with a growth mindset feel emboldened by challenges; they perceive them as opportunities to expand their point of view, learn something new, and better themselves from the experience. And by doing so, they find profitable business growth in even the most difficult environments. On the contrary, those lacking this mindset are threatened and paralyzed by uncertainty. Take for example, Carol Dweck’s case study of fixed mindset CEOs in Mindset: The New Psychology of Success. In the book, she explains how the fixed mindset helps us understand where egos come from and why they become self-defeating. Referencing fixed mindset CEOs, Dweck says they start believing some people are superior, and have a need to prove and display their superiority by using their subordinates to feed this need, rather than fostering the development of their workers. By not embracing diversity of thinking or inviting controversial views, in the end, fixed mindset leaders have sacrificed the long term success of their companies or worse, drove them to extinction. In order to incite meaningful change and remain competitive on the expanding global stage, successful leaders do not fall victim to a finite mindset. They must continue to seek alpha, agitate for growth and have a bias toward relentless execution. Step 3: Cumulative Leads to Exponential – Share the Love & Rally your team Really successful leaders say it takes ‘1,000 good decisions’. What this refers to is the cumulative effect over time of out-competing the opposition making the highest quality decision at every turn. An open growth mindset applied consistently across a business portfolio and sustainably over time, will lead to exponential growth. Like the power of compound interest, growth decision on growth decision on growth decision and so on, across an organization, will lead to accelerating competitive advantage. Though the concept of a growth mindset is simple in nature, fostering this mentality consistently among employees is a challenge. Mercer research conducted among 800 organizations, across 57 countries and 26 industries, found only two in five employees say their company has a compelling, differentiated value proposition. Based on this research, Mercer developed the Thrive Model: How to Win in an Age of Disruption. This model emphasizes that in changing times, organizations need to develop a ‘growth-focused’ culture or growth mindset – empower their employees, focus on inclusiveness, connectedness, and innovation. For leaders, advancing and nurturing this perspective must be a priority. Studies indicate employees in a growth mindset culture expressed 47 percent more trust in their company than those in fixed mindset companies; are 34 percent more likely to feel a sense of ownership and commitment to the future of their company; are 65 percent more in agreement that their companies support risk taking; and are 49 percent more in agreement that their companies foster innovation. Developing a growth mindset and culture starts with talking about it. Passion is contagious. Great leaders inspire others by sharing their visions. Through a compelling storytelling approach, leaders can provoke change not by executive order, but by standing for something bigger, going beyond the profit narratives and articulating the why. As Simon Sinek said, “If you talk about what you believe, you will attract people who believe what you believe.” Step 4: Achieve Exponential Growth The potential inherent in being relevant to our changing world is extraordinary. Growth economies account for 90 percent of the global population under the age of 30, which means 85 percent of the global work-age population will be in growth economies by 2030. It’s no wonder growth economy multinationals on the Global Fortune 500 list increased by 240 percent between 2005 and 2013; or that these markets are set to account for nearly 60 percent of the world’s GDP by 2030. Having a growth mindset opens doors to opportunities in existing markets and to many new frontiers. Companies, and leaders, who anticipate and meet market needs in the rapidly growing corners of the world will reach and inspire many more people. They will demonstrate their value—not just at home, but across the globe. To quote Rwandan author Bangambiki Habyarimana, “Break to pieces whatever indoctrination and programming that holds you hostage. The world is yours. Get possession of it.” Today’s business leaders have the opportunity to create a future that was previously inconceivable. As technology and globalization dissolve the boundaries between us, we must also dissolve the boundaries of our own thinking. The time for a growth mindset and culture is now. 1 International Monetary Fund. (2016, February 04). The Role of Emerging Markets in a New Global Partnership for Growth by IMF Managing Director Christine Lagarde. https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp020416#P27_3292 2 PWC. (2015). The World in 2050 Will the shift in global economic power continue?. https://www.pwc.com/gx/en/issues/the-economy/assets/world-in-2050-february-2015.pdf 3 Dweck, Carol S. Mindset: The New Psychology of Success. New York: Ballantine Books, 2007. Print. 4 Mercer. (2017). Thrive Model: How to Win in an Age of Disruption. https://www.mercersignatureevents.com/ASIAHR2017/hongkong/agenda.html 5 Senn Delaney. (2014). New Study Findings, Why Fostering a Growth Mindset in Organizations Matters http://knowledge.senndelaney.com/docs/thought_papers/pdf/stanford_ agilitystudy_hart.pdf 6 Euromonitor International. (2014, May 30). Emerging Markets Account for 90% of the Global Population Aged Under 30. http://blog.euromonitor.com/2014/05/emergingmarkets- account-for-90-of-the-global-population-aged-under-30.html 7 Lam, David. (2014). The Demography of the Labor Force in Emerging Markets. https://www.kansascityfed.org/publicat/sympos/2014/2014Lam.pdf 8 GE Reports. (2014, June 20). The Rise of Emerging Market Startups. https://www.ge.com/reports/post/93343731983/the-rise-of-emerging-market-startups/ 9 OECD. (2010, May 26) Economy: Developing countries set to account for nearly 60% of world GDP by 2030, according to new estimates. http://www.oecd.org/dev/pgd/economydevelopingcountriessettoaccountfornearly60ofworldgdpby2030accordingtonewestimates.html
One of the most interminable and perhaps charming aspects of human nature is a near constant dissatisfaction with the status quo. In the context of work, pay and benefits are often the targets of dissatisfaction employees are most vocal about. In the future of work, employees want greater control over their careers, they want to be rewarded accordingly, and they want to know they are doing something that matters. To build a thriving workforce, human resources (HR) and leaders, throughout the organization, should use people analytics to glean insight into what they need to do to create a thriving work environment – an environment where employees feel empowered about their development, connected to their work and confident that their core needs are being met. In today’s digital era, nurturing engaged thriving workforce is not a destination, but a journey. When organizations make positive transformation a business imperative, employees who are fully invested in the mission — not just fully engaged in their work — will carry their organizations through. Through people analytics, organizations can use employee feedback programs to find out how their employees feel about their career paths and gauge connection to their work. Reason #1: People analytics uncovers what empowers your employees As new technologies make it faster and easier for people managers to funnel huge amounts of information and demands to their employees, there is an equal rise in expectations from employees. These days people want control, or at least a say in how, where, and when they do their job. Often, frustration ensues if employees do not feel they have a role in this decision making process. Consequently, workplace flexibility has become a top priority in today’s market, as evidenced by 44% of respondents from the World Economic Forum’s The Future of Jobs report, and 51% of respondents from Mercer’s Talent Trends 2018 report who note flexibility as a top workplace trend or essential. Further, employees and organizations alike, are re-assessing what they want their futures to look like and what it means to have a “successful” career or business. There is growing recognition that successful organizations are made up of workforces that continually develop, learn and expand their capabilities. Tangentially, employees are increasingly starting to understand how critical it is to develop skills that are responsive to future business needs. Why? Because by 2020, 36% of jobs will require complex problem solving skills, and 19% will require social skills like emotional intelligence, negotiation and collaborating with others. Unsurprisingly, the World Economic Forum also predicts that by 2020 “more than a third of the desired core skillsets of most occupations will be comprised of skills that are not yet considered crucial to the job today.” This explains why many individuals will need to be more focused on learning how to learn and perhaps how to unlearn – and why so many organizations need to empower their employees to do so. Reason #2: People analytics connects your employees’ work with a sense of purpose The Talent Trends 2018 report also found that 75% of thriving employees work for a company with a strong sense of purpose. Indeed as employee expectations evolve, many are starting to look for more meaningful, flexible, and enriching experiences at work. This is especially true for workplaces where technology has disrupted jobs to the extent that people feel extreme uncertainty about their futures. Companies that focus on using analytics to provide meaning and purpose and help their employees navigate the volatile and uncertain environment toward finding their North Star. Data from Mercer-Sirota surveys shows that while 1 in 3 employees strongly agree with questions about their engagement at work, only 1 in 6 strongly agree that their company is responding effectively to changes in its external business environment. The latter may be a reflection of how most employees do not feel their individual sense of purpose is aligned to that of the organization. To help kick start this effort, some organizations have started to use analytics to personalize work to help employees feel more connected to the company’s purpose. The intention is to design workplaces where people can say: 1. I’m confident. I have what I need to do my job, and I know where to find people and information to help me take action. 2. I get it. The work process is simple. This experience feels as modern and familiar as the consumer tools and sites I already use. 3. I feel appreciated. I know how to contribute, and I can see the value of working here, both now and in the future. Reason #3: People analytics improves internal and external user experience There is no doubt that organizations are looking for ways to tap into a consistent stream of insights on their people. Indeed, 46% of organizations plan to introduce a continuous feedback tool in the year ahead, and many are exploring tools for real-time feedback on key initiatives. As organizations move toward talent platforms and skills-based employment, many need to utilize smarter employee feedback analytics, usually combining surveys and other methods that provide consistent feedback and drive greater agility. Digital solutions that help companies engage their talent ecosystem and support their employees’ health, wealth, and careers will be essential in the future of work. These changes have caused many HR leaders to start thinking of employees more like customers. Like marketing functions that use data driven approaches to learning about their customers, HR functions are beginning to use similar approaches with employees. For example, employee feedback and behavioral data can be used to learn how to improve the employee lifecycle – from the onboarding process all the way to the exit interview. Thriving companies incorporate their employee survey findings across the employee life-cycle to implement changes and improvements, and they do this exercise often, not just once a year. While this sounds appealing, the area where HR usually struggles most is in designing compelling user experiences for employees and managers – ones that support user engagement. I would argue that HR has a responsibility to use technology to improve the feedback process, simplify workflow and tailor employee experiences. The most effective feedback surveys are streamlined to collect employee opinions in a way that helps leaders and HR keep a finger on the pulse of the organization. When done well, employee surveys are a trove of information and insights that can be used to set or adjust strategy. Keep in mind this last, but perhaps most important note: there is no point in using people analytics or employee feedback programs unless it helps drive organizational changes and improvement. For example, Google in Ireland responded to employee feedback about work-life balance by implementing a “Dublin Goes Dark” initiative. In this campaign employees were asked to leave their devices at work to encourage them to truly disconnect and switch off. This is an example of how Google uses employee feedback (or people analytics) to build a thriving organization where employees feel heard, respected and empowered. Reason #4: People analytics unlocks the full potential of your workforce Effectively building a thriving organization means using people analytics to find out what you do not know about your employees. Employee engagement surveys are morphing into more streamlined processes that can help leaders and HR keep a finger on the pulse of their organizations. Seeking regular feedback helps companies stay aligned to core employee needs and engagement. It can also highlight what gaps need to be plugged and what potential issues may arise. Feedback even allows organizations to adjust when new needs emerge. By checking in regularly and implementing responses, organizations can create an environment that unlocks the full potential of their workforce. 1 The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution | World Economic Forum http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf 2 Global Talent Trends Study 2018 https://www.mercer.com/our-thinking/career/global-talent-hr-trends.html 3 Sirota's Normative Database https://www.sirota.com/improve-your-performance/action-practices-and-tools/best-practices-database/sirotas-normative-database/ 4 Google's Scientific Approach To Work-life Balance (and Much More) Laszlo Bock - https://hbr.org/2014/03/googles-scientific-approach-to-work-life-balance-and-much-more
The evolution of performance management and the debate surrounding the efficacy of this traditional management tool continue globally. In the year since several bellwether employers such as General Electric announced that they were scrapping annual performance reviews, many companies have been reevaluating their current performance management philosophies. The myth that annual performance appraisals are synonymous with performance management is now closer to being busted than ever before. Here’s how these developments are playing out in Asia. At a time of increasing economic volatility in the wake of a slowdown in trade and certain political events, companies in the region and around the world are desperately looking for new avenues of growth. Being able to hire, motivate and retain high-performing talent to fuel this growth is therefore crucial. The question for human resources leaders has shifted from “To rate or not?” or “Should we link performance rating with rewards?” to “What do we hope to accomplish with our performance management system?” A recent Mercer survey of more than 1,000 companies in 53 countries found that companies still share the practices of beginning-of-the-year goal-setting and year-end performance-rating, which in turn link to a rating-driven bonus. This seems to belie the rhetoric around the widespread changes underway to the performance management process. The survey also revealed that 95 percent of managers and employees are dissatisfied with the current state of performance management. That probably explains why the rhetoric around the subject continues unabated. In our work with clients in Asia, we find enough anecdotal evidence to suggest they are indeed closely observing the global trends and exploring how they could be making performance management more meaningful. We find that some progressive Asian companies are also placing greater importance on an ongoing feedback loop on the one hand and on evaluating potential in addition to performance on the other. Another interesting cultural nuance that HR leaders have to be cognizant of in Asia is that, unlike their counterparts in the West, a large segment of employees in this part of the world actually appreciate and expect performance ratings. Having often come out of highly competitive academic environments, employees expect to receive ratings for their performance at work. Although staying away from any radical steps, HR leaders in Asia are perhaps better positioned to seek user cases of demonstrated success elsewhere in the world, especially around “how the ratings are arrived at.” Establishing the purpose of performance management and what it is meant to deliver is a good starting point. And this needs to be informed by the strategic direction of the business and how that may be evolving in the current macroeconomic environment. For instance, if the organization is shifting focus from absolute growth to profitability, then individual sales targets in isolation of the cost of acquisition may not be a good reflection of the contribution of value to the business. These objectives are often in conflict, however. High-performers must be motivated and a limited rewards pool equitably distributed, whereas underperformers must be checked. The purpose in Asia is usually determined by the nature of ownership of the organization. It is subject to significant variation depending on whether an organization is a state-owned or public enterprise or part of a large, family-owned Asian conglomerate where long-term value often takes precedence over quarterly earnings growth. HR leaders need to work very closely with stakeholders at the executive level first to agree on what the underlying purpose of performance management ought to be. Once a long-term philosophy has been agreed upon, HR leaders can look at how performance is tracked, particularly whether the link between organizational and individual performance has been established for all levels and functions in the organization. The next stage of designing or repurposing the performance management system to deliver on the purpose is putting employees at the center. This may be the most difficult part of delivering on performance management in Asia. Employee focus groups can deliver mixed results at best, as a significant proportion of Asian employees aren’t as vocal or expressive as their Western counterparts. The underlying guide, therefore, should be how the design fosters collaboration and encourages feedback, particularly from peers and subordinates. Transparency and trust in the system can be built over time with a focus on establishing multiple channels of communication. The underlying technology needs to support such a design by being intuitive and nimble, focusing on delivering an excellent user experience to both employees and managers. As with the rest of the world, employers in Asia have yet to find any magical solutions for “fixing” performance management. Companies in Asia and other growth economies have been slow to undertake radical and far-reaching reform of their performance management systems — but this may be a positive thing. HR leaders in Asia can marry emerging best practices with the sociocultural context of their talent, keeping the employee at the heart of this evolution. Once the underlying philosophy is grounded in aligning the business purpose with individual motivations, robust performance management can become the “true north” of strategic HR management.
In the 21st century, digital is the rule, not the exception. Gaming, self-driving vehicles, and the Internet of Things – all of which were once novelties – are all becoming more mainstream. On that note, intuitive, easy-to-use interfaces are expected, regardless of the platform or industry. But how does that translate when it comes to human resources? Organizations are realizing that they need to apply technology to people management. Companies need to be more modern, and they are examining how they can better blend software, employee experience, and organizational strategy. But when companies are large and span many countries, adopting new technologies can be complicated. In the long run, though, adopting better technologies can ultimately help the company be more efficient and better manage data. The Evolution of Tech in HR A study, Future Proofing HR: Bridging the Gap Between Employers and Employees, focused on technology that supports what is referred to as “Core HR” — the software application that manages the employee statement of record. Given an HRIS may address only employment compliance issues, many companies have expanded their systems to manage talent as well. For example, it may support applications for hiring, performance management, and training. Technology has evolved in all areas of employee management, prompting HR departments to adopt new applications. In fact, despite the enormity of the task, Mercer’s recent Global Talent Trends research showed that over half (63%) of participants surveyed are planning new investments in HR technology. Mercer, partnered with Human Capital Media, the research arm of Workforce magazine. They conducted a global survey, the Human Resources Information System Survey, in which close to 500 HR executives in 19 countries were asked about their current or planned HRIS transformation. Out of the 500 participants in the Human Capital Media study, 45% had implemented a new HRIS system within the last five years. Of those, the majority had deployed that system in the cloud, using the increasingly popular Software-as-a- Service (SaaS) delivery model. Thirty-four percent of respondents indicated that they intend to purchase a new HRIS system within the next three years. Drivers for Change No companies are exactly the same, obviously, and their reasons for changing their HR practices or technologies will vary. In most cases, there are several catalysts for this change. Mercer research has found that the predominant driver for change of the HRIS system was the desire for a single system of record for all data globally. Often companies add new applications that are not integrated or have multiple HRIS systems in place — a common occurrence after corporate mergers or acquisitions. Disparate systems across an organization can create data islands, which can lead to employee information existing in different places. This can make accurate reporting and analysis elusive. Aging applications was another driver. On-premise or legacy systems, often heavily customized, can no longer meet today’s needs. With high maintenance costs, and often few updated features, these systems are prime targets for replacement. At a time when an improved user experience is viewed as critical, the unintuitive interfaces in these older systems further speeded their replacement. Whatever the primary driver for deploying a new HRIS, clarity of purpose is a requirement. Technology in and of itself is never the answer, but it can be a catalyst for change. Deploying a new system is an opportunity to simplify existing processes. Keeping things simple is key. If a system needs too much explanation, it is probably over-engineered. To keep things efficient, it’s important to ask, “What is the minimum we can do to get this right?” To make sure it’s intuitive, ask, “How can I do it right without having to be trained?” Roadblocks When implementing a new HRIS, three difficulties typically arise for HR professionals: 1. Transforming or realigning the business processes 2. Deploying the new technology that supports those processes 3. Managing the change Implementation efforts often create surprises. Over 25% of respondents in the Human Resources Information System Survey indicated that the deployment of their technology took significantly more time than anticipated. Some things are predictably difficult in any technology implementation. For example, getting the system to perform as planned and integrating technology is always challenging. Planning can help prepare, but rogue integrations in the previous system are common. Despite hiccups, it took the majority of organizations studied less than 12 months from signing the initial contract to fully implementing their new HRIS system, and half of the organizations took less than nine months, unlike the multi-year implementations of yesteryear. Use of Outside Experts Companies have often relied on outside expertise to design and implement their HR processes. Research found that organizations with more than 5,000 employees tended to use a consultant or implementation partner more frequently than smaller companies. The reasons for engaging an external partner varied: a large majority (76%) used experts for the HRIS implementation, 39% used outside services to redesign HR processes, and 31% for HR service model design and transformation. The Path Forward Organizations that are updating their HRIS systems recognize the need for change. As companies grow and face changing regulations, traditional methods of keeping employee records are no longer sufficient. Moving to a single system allows organizations to leverage technology and improve the employee experience. Without standardized technology, it is complex (if not impossible) for HR leaders to deliver much-needed analytics and global insights. As the future becomes less about talent management and more about talent flow, getting fit for implementation and managing the change journey will have a great effect on the reach and impact of your digital HR strategy. A CASE STUDY Consider this case: A multinational organization with about 130,000 employees and multiple lines of business decided to implement a new Human Resource Information System (HRIS) across the more than 100 countries where they operated. A key driver in this decision was the ability to have an enterprise-wide view of talent. Given how large the company was, these 130,000 employees had 50,000 distinct job titles. Any data analytics would be meaningless without a cleanup. Therefore, the organization redesigned its job architecture and job library with an eye toward the new framework. The company built a job library of about 800 jobs for its new HRIS. The new job library has become integral to the organization, making implementation of the HRIS easier, and helping the organization achieve its talent goals. Today, the library is being used as the underpinning structure for a career architecture that will add value for employees seeking to build their skill portfolio within the company. This will help employees navigate their careers.
Employees are most committed to their organization when they believe in the business and operate in a high-commitment work environment—one where employees are not only engaged in their work, but also committed to making the organization better. For decades, organizational leaders, HR professionals and industrial-organizational psychologists have searched for ways to create high-commitment work environments. Considering the expense and disruption associated with turnover, this makes good sense. One recent study found that turnover costs (e.g., separation costs, replacement costs) range from 90 to 200 percent of the exiting employee’s salary. When turnover increases, the social fabric of an organization weakens, intangible knowledge and skills are lost, operational effectiveness decreases, accidents rates rise, customer service and quality suffer, and customer satisfaction declines7. All of which can negatively impact a company’s financial performance. To increase commitment, many organizations are now trying to build employee-centric work environments. These organizations are spending considerable amount of time, energy and resources identifying employee motivators, assessing employee engagement and enhancing the employee experience. For example, some organizations are using “stay interviews” to help managers ensure they are meeting the critical needs of their direct reports. Others are conducting job-crafting exercises to help employees make their jobs more personally meaningful and satisfying. Based on our experience, these types of interventions can be effective and increase commitment levels. But we’ve found their impact tends to be short-lived, often leading to temporary fixes and local improvements rather than broad organizational change. In fact, engagement building activities can backfire if employees have foundational questions and concerns about the business. When strategies are unclear, work processes are inefficient, performance goals are unclear, and products and services no longer meet the needs of clients and customers, employees become frustrated. As one employee recently stated: “I love this company, but I don’t like the direction we’re headed in. We spend too much time on nonsense. We’re getting away from what we are supposed to do, which is meeting clients and selling.” When faced with organizational frustrations, some engaged employees leave to seek better opportunities elsewhere. In the recent Mercer-Sirota Engagement study, we found that over a quarter of employees who quit were in fact engaged. So if engagement does not guarantee retention, what’s the best way to build a high-commitment organization? New research indicates that individual commitment may be more related to business performance than employee experience. In recent years, researchers have started exploring the relationship between organizational efficacy—the extent to which organizational members feel confident about their collective capabilities, mission and business resilience—and employee commitment and performance. The concept of organizational efficacy can be traced back to the seminal work of Albert Bandura, who argued that the strength of families, communities and social institutions depends, in part, on members’ sense of their collective efficacy—their ability to solve problems and manage challenges together. Building on this initial theory, other researchers have focused on efficacy in organizational settings and found that it is related to a number of important work outcomes. For example, Capone and colleaguesi (2013) found that organizational efficacy has a positive impact on employee job satisfaction, well-being and performance. And Zellars and colleagues (2001)ii found that healthcare workers with a high degree of collective efficacy were more satisfied with their jobs and less likely to quit. Informed by this research, we recently explored the relationship between an employee’s level of confidence in their organization with their commitment and engagement. After gathering data from a cross-company sample of more than 1,700 employees working in small, medium and large organizations, we conducted a series of analyses. Three key findings emerged: 1. Organizational confidence is related to employee commitment. Across a number of diagnostic items, we found significant positive correlations between employee confidence and employee commitment. Employees were more likely to want to stay at their organizations when they felt they were working in a well-run organization with the right products and services for their market. But when employees did not feel confident in the future of their organization, commitment levels dropped precipitously. In fact, over 40 percent of respondents who felt unconfident in the future of their organization intended to leave within the year. 2. Organizational confidence soars in the right work environment Based on statistical analysis, we found four foundational drivers of organizational confidence. First is clear communication. Employees were more likely to feel confident when they understood their company’s goals and felt their organization communicated effectively. Second is a sense of collaboration. When employees experienced a high degree of cross functional teamwork, they were more likely to feel positive about the future. Third is organizational agility. Employees who felt they were working in nimble organizations that encouraged innovation and responded quickly to customer needs were more likely to be optimistic about the future. And finally, effective leadership is paramount. When employees trusted their senior leaders were making sound decisions, they were more likely to feel a sense of organizational efficacy. 3. The most committed employees are both confident and engaged. In addition to finding that confident employees were less likely to want to leave their organizations, we also found that engagement is a strong predictor of employee commitment. In fact, we found that employees were least likely to want to leave when they felt both confident in their organization and engaged with their work. We also found a strong positive correlation between engagement and confidence, suggesting that these two attitudes build on each other in a virtuous cycle, creating a strong sense of energy, effort and loyalty. Statistical analysis showed employees were more likely to feel both confident and engaged when they thought their organizations were efficient, their senior leaders were effective, and their future career paths were promising. Considered together, our analyses show that organizational confidence is a critical factor that impacts employee commitment. For leaders and managers seeking to create a high-commitment work environment, this raises an important question: What’s the best way to increase organizational confidence? Based on our research, we recommend four steps. 1. Forecast the future. These are volatile times in many companies. Amidst competing commitments and shifting priorities, we’re finding that a number of employees feel lost in the shuffle. According to our latest Mercer-Sirota Normative database, just 69 percent of employees report feeling that their senior leaders provide a clear sense of direction. As we found in our recent field study, a lack of strategic clarity undermines confidence. It’s hard for employees to feel optimistic about the future when they don’t know where their organization is headed. If your organization has been going through a lot of changes in recent years, now could be a good time to evaluate the extent to which your workforce understands and supports your strategic direction. 2. Create a culture of curiosity, creativity and collaboration. Culture is the invisible infrastructure of an organization, shaping the way people think, feel and behave on a daily basis. Based on our research, we’ve found that employees thrive when they work in a “partnership culture” in which people work together in highly collaborative relationships. Confidence flourishes in an environment where employees feel safe to take smart risks, pursue novel ideas and question the status quo. But here’s the problem: Partnership cultures require the right kind of leadership. We’ve seen leaders and managers kill creativity and collaboration by building silos, fixating on short-term financials and micromanaging their staff. So if you want to build a collaborative culture, start at the top. 3. Remove performance barriers. Based on our research, we’ve found that most employees are highly motivated when they first join a new organization. But that initial energy often dissipates when employees have to work in environments with excessive rules and regulations, unnecessary bureaucracy and outdated tools and technology. The more hindrances employees encounter at work, the more likely they are to become frustrated, disengaged and even burned out. If you want to build a high-commitment work environment, identify and remove the performance barriers that prevent your employees from doing their best work on a regular basis. 4. Clarify career paths. Our study found that the most committed employees felt optimistic about both the future of their organization and the future of their career. Across clients and research projects, we’ve found that employees who feel they can grow and develop at work are more likely to work hard, stay longer and perform better. But based on our norms, only 57 percent of employees have a clear understanding of the possible career paths within their organization; the rest feel confused or pessimistic. One of the best ways to counter this confusion is to create compelling career frameworks that help employees see how they can develop within your company. We’ve found that well-designed career frameworks can dramatically impact the way employees think about the future of their jobs and their organizations. At the core of these recommendations is a simple premise: You can increase employee confidence by ensuring your leaders, managers and HR professionals are articulating a compelling vision of the future, fostering the right culture, driving performance and creating compelling career paths. That, in turn, will help your organization increase commitment, decrease turnover and improve collective performance. 1 Allen, Bryant, & Vardaman, 2010 2 e.g., Batt & Colvin, 2011 3 Nyberg & Ployhart, 2013 4 e.g., Ton & Huckman, 2008 5 e.g., Shaw, Gupta, & Delery, 2005 6 e.g., Hancock, Allen, Bosco, McDaniel, & Pierce, 2013 7 Heavey, Holwerda, & Hausknecht, 2013 8 e.g., Park & Shaw, 2013; Shaw et al., 2005
Businesses today need to recognize the prominence of emerging market economies and the opportunities that exist. Morgan Stanley Capital International (MSCI), an independent research provider, regularly updates an index on emerging markets. Out of 23 countries listed on the MSCI Emerging Market Index, seven are in Asia. They are: China, India, Indonesia, Malaysia, The Philippines, South Korea, and Thailand. Given this, two things should be top-of mind for leaders: developing business opportunities and localizing talent strategies in these markets. There’s a reason to prioritize being talent-focused: people create the value in today’s organizations. The Fourth Industrial Revolution is ideas-based and leverages technology to further automate processes. To be competitive in today’s market, it is no longer about mass production or harnessing power. Mercer’s recent study Thriving in the Age of Disruption found that thriving organizations reinvent themselves, are agile and resistant, and have a positive impact on society. They also treat talent as an asset to invest in, “not simply [as] a business cost.” A company’s ability to reinvent itself will be key to thriving in the future of work. In fact, according to Talent Trends 2017, organizational redesign is top of mind for executives. Ninety-six percent of executives are planning a redesign in the next two years. Another way to be a company that shows it values talent is by listening to what employees want. Employees today have more options than before, especially in emerging markets. Working in an emerging market often means uncertainty and rapid change. Whether it’s a disruption in the market, or an option to work remotely for a company or job hop for a better opportunity, one way to retain at-risk talent is to ask what they value. Then act on the feedback. For example, many of today’s employees seek flexibility. According to Talent Trends 2017, 56 percent of employees want their company to offer more flexible work options. If your employees give this feedback and you adjust the policy, then your employees will feel valued. If key decision-makers still question the importance, remind them that it matters what employees want. In the recent Mercer study Thriving in the Age of Disruption, the authors explain that “talented individuals are drawn to organizations that continually refresh their systems and processes as well as their strategic initiatives in order to delight customers and outwit competitors. Great companies know that by being agile they can stay in play for many years.” In addition to showing trust by incorporating employee feedback, Thriving in the Age of Disruption also shares that the four components of an effective people strategy are future-focused, data-driven, integrated, and people centric. How to Apply in Emerging Markets It is essential to address both the businesses strategy as well as the actual people in an emerging market. The people strategy can leverage findings from Mercer’s research which includes advice on how to incorporate the four components into an effective people strategy. They are: Future-focused. How can local employees value-add to today while planning for tomorrow? A focus on the future reflects the evolution of the business and work culture. Data-driven. After reflecting on your current talent pool, where are the skills gaps? What can you build and what do you need to buy or borrow? Incorporating data into making decisions on the strategy ensures that insights into the current needs of a company’s workforce are considered. Integrated. While being aware and sensitive to local customs, how can you also ensure that talent development is universal and comprehensive? Work towards having one plan which brings the company’s talent and HR programs together. Aim for removing all silos. People centric. What do you need to know about the local customs? How do you make sure that work is meaningful in the local context? Design work so that it’s more fulfilling and rewarding for individuals. The Thriving in the Age of Disruption report also notes that thriving organizations “systemically analyze and reflect on how they might be exposed to talent-related risks, not only to measure and address their bench, but also to understand what specific practices or interventions will encourage employees to bring their whole selves to work.” A future-focused people strategy will also need to include a contingency plan for emerging market(s). Turnover is likely to be higher, especially for talent with specialist skillsets. An example of a company with a future focused people strategy is DBS, which is well-known throughout the Asian region for its forward-thinking products and focus on human capital. In an effort to remain agile and data-driven, DBS refers to the company as a 22,000 start up where “DBS employees work with industry partners and startups to develop innovative mindsets.” DBS recognizes that talented individuals look for fast-paced organizations and opportunities for continuous learning. Especially as products are more and more idea-based rather than production-based, employers need to engage employees effectively. UOB is another organization that is future focused. By leveraging employee interest and creativity through the 2020 Ideas Contest, employees are encouraged to come up with innovative solutions for the banking industry. This contest also ensures that employees are digital-ready and will be competitive in the future of work. Some even enter The FinLab, an incubator which gives full-time support and funding to employees for three months. Incubators have become common in forward-thinking organizations. Tata Communications’ Shape the Future currently incubates three internal ideas, and just last year publicly debuted the latest internal incubation success. Each of these examples show the return of investing in talent. Initiatives that involve continuous learning and provide support for employees to daydream, brainstorm, and prototype are what the future of work is about. It is always challenging to build up a talent pipeline, and even more so in an emerging market. However, with a focus on creating a responsive and agile workforce, a company can thrive. Ensure that talent is continually upskilled, and determine the necessary skills to remain competitive. Perhaps it’s equipping teams with digital skills or incorporating hackathons regularly so that they become part of the company culture. What is essential is that employees feel valued and that they have trust with the organization. Give employees chances to experiment, and even to fail. As the world of work moves from ideation to automation, talent needs to move from surviving to thriving. 1 https://www.dbs.com/investorday/presentations/Executing_the_digital_strategy.pdf 2 https://www.tatacommunications.com/press-release/tata-communications-internal-incubator-debuts-netfoundry-reinventing-networking-hyper-connected-era/
Amidst the fastest pace of change in human history, thriving organizations are the ones that have realized that people have become more, not less, important as companies look at completely different ways of creating economic value. When manufacturing processes were automated, design skills became more critical. Yes jobs disappeared, but new jobs emerged. The technologies of the Fourth Industrial Revolution will continue to need new skills, while digitization will enable microeconomies to be built locally—driven by people’s imagination, not the economies of globalization. Understanding the impact of these changes and preparing people to ride the crest of opportunity is paramount. And this preparation begins with fostering a culture where people can thrive in the workplace. As Louis Gerstner, the legendary CEO of IBM who turned around the tech behemoth back in the 90’s famously said, “Culture isn’t one aspect of the game, it is the game.” The Historical ‘Deal’ Abraham Maslow famously introduced the theory of motivation in early 1940s. His big idea was that we all have a hierarchy of needs: once our basic physiological and safety needs are fulfilled, we seek belongingness, then self-esteem and prestige, and finally self-actualization. This model did well to explain the evolution of the ‘deal’ or the ‘contract’ between people and employers before the advent of the fourth industrial revolution. In the 20th century, the loyalty contract defined the relationship between employer and employee. Organizations met basic needs through an employment contract, such as pay, benefits, and job security, in exchange for a lifetime of commitment from employees. Over the past 20 years, the engagement contract has been the dominant model. Organizations have been searching for ways to ensure their workforce is fully invested by meeting both their basic needs of pay and benefits, but also to differentiate themselves through career management and employee wellness programs. When transformation is a business goal, the employee value proposition should not be static. This challenges our existing talent processes and how we deliver on a personalized value proposition that resonates with employees. Figure 1. Source: Mercer Thrive Research The New ‘Deal’ Our new perspective of thinking about the new “deal” to enable people to thrive, positions rewards into three primary categories of the employee value proposition continuum: Contractual: This is the traditional compensation and benefit deal. Experiential: This is the way an employee experiences the organization both inside and outside work, from careers to well-being programs, for example. Emotional: This is the connection created through a sense of purpose – driven by the employee’s connection to the vision or mission of the organization as well as its social responsibility initiatives. This includes not only the meaningful impact created through the organization’s products and services, but also the option to provide employees working time and resources to engage in charitable initiatives that provide personal fulfillment. We believe that getting the contractual pieces right is the foundation for an effective rewards program and critical for remaining competitive, but differentiating on these elements can be quite costly. Where differentiation can be more engaging and cost-effective is in the career opportunities and focus on well-being of employees. There is a shift away from work-life to a new concept of well-being, a holistic notion that addresses the physical, emotional and financial health of the people. Facebook is a good example. Facebook’s chief human resources officer defines the deal at Facebook in terms of three buckets of motivators: career, community and cause. When these three are fulfilled, people bring their whole selves to work and create significant economic value and impact. Many companies are creating true uniqueness in their value proposition in the area of purpose. Our engagement research shows that this element can help to create “stickiness” with an employer and has more retentive impact than the traditional rewards elements. Research has also shown that purpose-driven organizations have greater financial success. Here lies the next challenge. “To know what one really wants,” Mr. Maslow argued, “is a considerable psychological achievement.” Businesses and HR functions have thus far relied on anecdotal evidence, market trends and generalizations around employee segments to try and understand what people seek. The Employee Value Proposition Translating the employee value proposition (EVP) or the deal into a compelling experience for each and every employee, however, requires both art and science. The “science” starts with workforce analytics to map internal labor movements and identify “personas”—rather than segments—that represent micropopulations of employees with a unique combination of needs. The “art” of the EVP is, and will remain, the human contact—how managers and coworkers shape the work environment with meaningful personal interactions. And that is how thriving organizations curate distinct experiences for their people, turning the notion of “going to work” into “living one’s purpose.” 1https://hbr.org/2018/02/people-want-3-things-from-work-but-most-companies-are-built-around-only-one.html
Every organization has a vibe, a feeling that is clearly discernible but difficult to pin down, and you can feel this ‘vibe’ the moment you step into a workplace. Some organizations feel hectic and stressful. Others seem cold and sterile, or worse still - dull. But a few—a rare few—are different. Walk inside these organizations and one thing is clear: people are genuinely excited to be there. A perceptible buzz – an undercurrent of energy and vitality – permeates the place. A clear sense of pride, passion and purpose is evident in every interaction with an employee, customer facing or not. And this passion is evident in every product or service, and manifests itself in every customer touch point. These organizations far from being disrupted have become even more resilient amidst digitization, having found newer ways to harness the collective energies of their employees leveraging technology. In a research study recently released by Mercer, we explore just what does it take for organizations to thrive from a people standpoint, as a way to uncover some key attributes of organizations which have been able to create this rare vibe of passion and purpose. The first thing that becomes clear about such organizations is that they have fundamentally transformed the idea of ‘going to work’ for their employees and turned it into a compelling experience, one that is meaningful to each employee individually. After surveying over 800 HR and business leaders, we drew insights around organizational cultures and people practices around the world to understand the underlying themes. ‘Growth’ and ‘Learning’ stood out, as did a sense of ‘equity’ as key drivers for creating a thriving workplace. And we believe that this thriving workplace is the foundation for building businesses which are not only resilient to disruption, but are businesses that can actually thrive today by embracing innovation. We also heard regional differences around what it takes to thrive. Companies in North America placed emphasis on a leader’s style and the importance of their “relatability”, “accessibility”, “their ability to connect with the workforce“. The perceived fairness of talent assessments was also important, i.e. “equal access to experiences”, “clear assessment for development opportunities”, “transparent promotion choices”. In emerging markets such as Asia and Latin America, respondents were most vocal on the criticality of career and development transparency, “clarity around promotion criteria”, “career frames that define the experiences and skills you can gain”. Organizational design was part of the message from Latin America – ‘build flatter structures”, “have less levels”, “move to agile work structures”. European and Asia based companies both shared how they have reaped the return from workforce analytics “data that tracks the progress of diverse groups” “data to know what people want, actually use, might need –linked to life events”. European companies also mentioned the importance of involving employees in the decision making and change actions that are being driven “involving employees in discussions about why we need to change”, “getting people involved with new initiatives early”, “and involving them in innovation”. Additionally, employees also seek to work for an organization whose purpose not only resonates with their own but also one that creates a broader social impact. Various doomsday forecasts around job losses on account of automation notwithstanding, we need to understand the impact of technology on jobs from an employee’s vantage-point. Employees in Asia seek more opportunities to grow their careers and develop isn’t surprising, given the soaring aspirations at the back of technological strides underway in the region. Thriving organizations place a premium on people and invest in their development, especially to make them ‘digital ready’. One of Asia’s leading banks – DBS for example recently announced that it would invest $20 million over the next five years to raise the digital competence of 10,000 of its employees in Singapore. With the advent of new technologies such as artificial intelligence, fostering a culture of continuous learning and meritocracy is paramount for organizations to thrive. They realize that to generate best-in-class performance, they need to attract and retain the best talent pool. Thriving organizations go to great lengths to ensure that their talent management practices not only appeal to a wide range of employees, but resonate with what they want for themselves and their families. They create thriving workforces that are diverse and adaptive, inclusive and growth focused, and are committed to the physical, financial and emotional wellbeing of their employees. To download a copy of Mercer’s Thrive research, click here.
Multinational companies, especially those in North America and Europe, are increasingly looking east at emerging markets, with a focus on Asia, as new engines of growth. With a growing middle-class population and adoption of technology on the rise, these markets present opportunities at a time when growth in other parts of the world may have slowed or plateaued. To be able to enter and scale their presence across these markets, multinationals are presented with the challenge of mobilizing their seasoned executives and persuading them to move to emerging market hubs. Emerging But Unequal Asia With increasing improvements in infrastructure, public services and transportation across Asia, this persuasion is less of a challenge than it used to be a decade ago. However, development in the region has not been ubiquitous or evenly spread and therefore the question of hardship, especially in long-term assignments, invariably arises. The issue of hardship and how an employer can address this concern is often compounded if the assignment entails movement for entire families. Differences in living standards across the region warrant serious consideration for a number of reasons. First, they can create anxiety for the assignee and family, which may lead to reluctance to undertake the assignment. Second, change in living conditions may erode the employee’s morale and affect their performance over time. This could ultimately lead to “assignment failure,” that is, failure to achieve the desired objectives of the assignment and/or a request from the assignee to be repatriated prematurely. Considering the significant financial investment made in deploying an employee overseas, assignment failures are best avoided. Finally, poor planning and preparation for differences in living standards can expose the assignees to a number of risks with potentially harmful consequences. Employers have a “duty of care” obligation toward their employees, which extends to overseas assignments. 2018 Quality of Living Survey According to Mercer’s recently released Quality of Living 2018 survey, Singapore, the most progressive economy, continues to lead the region in terms of ranking. We also see marked improvement in the rankings of other metropolitan hubs in the region, with continued investments in infrastructure and public services by governments in Asia. Five Japanese cities performed well: Tokyo (50), Kobe (50), Yokohama (55), Osaka (59) and Nagoya (64). Other notable cities in Asia include Hong Kong (71), Seoul (79), Taipei (84), Shanghai (103), and Beijing (119). Governments in the region recognize that offering a certain quality of life—making it attractive for Western multinationals to setup and scale their emerging markets or Asia operations—to today’s digital-first and globally mobile talent is the key to attracting trade and investments. Mercer’s proprietary Quality of Living methodology compares living standards in terms of 39 factors grouped into 10 categories for 450 cities around the world. The categories include political and social environment; economic environment; socio-cultural environment; medical and health considerations; schools and education; public services and transportation; recreation; consumer goods; housing; and natural environment. The scores attributed to each factor, which are weighted to reflect their importance to expatriates, permit objective city-to-city comparisons. However, unlike some of the more quantifiable factors mentioned above, quality of life implications are not only monetary, but can also impact employees’ and their families’ entire ways of life. This can make compensation package calculations a bit trickier. For example, an employee working in a high-ranking quality of life city such as Frankfurt probably wouldn’t be excited about relocating to a remote town in a hardship location. Salary data tells us that employees in a higher-ranking market are likely to be paid more due to the local market compensation trends and a higher cost of living and that employees who are relocated to cities with a lower quality of living will want some extra incentives to take on these less-than-ideal assignments. What Can Organizations Do? To be better prepared, multinational organizations looking to send employees to such assignments could consider the following: In terms of planning, the company would need to carefully evaluate the risks, prepare the assignees and provide as much “on the ground” support and advice as possible to help the assignees and families understand the foreign environment, navigate the various challenges and mitigate the risks. This also includes ensuring that adequate insurance cover is provided for medical emergencies, accidents and fatalities. Extra care is required when deploying employees to conflict zones or locations prone to natural disasters, as many insurance policies exclude “acts of war” or “acts of God,” and may therefore require additional policy riders. From a pay standpoint, the company would need to adequately incentivize and compensate assignees to undertake assignments to such difficult locations. Failure to incentivize these moves would ultimately result in high refusal rates and “assignee bias” toward less difficult locations. Companies also need to have a short- to medium-term roadmap for designing assignee compensation, based on their talent requirement and available pool of “assignable” executives. “Attracting and retaining the right talent is set to be one of the key challenges for businesses over the next five years,”  according to Ilya Bonic, senior partner and president of Mercer’s Career business. As with most strategy and policy decisions, there are no silver bullets, and every multinational will need to weigh in their employee mobility decisions in the context of their business and the macroeconomic environment. The talent challenge, however, has meant that evaluating these decisions in light of what employees want has become increasingly important. Learning from the strengths and weaknesses of cities around the world could provide a blueprint for finding the right talent in an increasingly globalized or connected world. 1 Insights https://mobilityexchange.mercer.com/Insights/quality-of-living-rankings 2 Vienna Tops Mercer's 20th Quality Of Living Ranking https://www.mercer.com/newsroom/2018-quality-of-living-survey.html
After five years of weak growth, the global economy has thankfully entered a period of sustained, albeit mild, recovery. Job and capital markets around the world are seeing a positive outlook with the increase in global trade volumes, protectionist fears notwithstanding. The Asia Pacific region has been at the forefront of this recovery with the lowest unemployment and highest GDP growth rates in the world. This growth has been largely driven by improvements in the commodities and manufacturing sectors, along with the positive sentiment around China’s “One Belt, One Road” initiative, which promises to spur capital investments and infrastructure development across the region. A cause of worry has been the steady rise of inflation across the region. Although central banks have been proactive in trying to contain inflation, the cost of doing business in the region could be adversely affected. In the context of this macroeconomic backdrop, the labor market is demonstrating several trends that will affect employers in 2017 and beyond. Labor Market Insights Although the aging workforce is not as pronounced a problem in Asia as it is in developed economies, it is certainly an area of growing concern for businesses. The working populations of Japan, Hong Kong, South Korea, Singapore and Thailand all have a median age of well over 40 years. On the other hand, the younger workforces in India, Indonesia and the Philippines present both opportunities and challenges. The World Economic Forum’s 2016 Human Capital Index rates countries globally on two themes: learning and employment. The employment indicators include but are not limited to labor force participation rates, unemployment, underemployment rates and skills. In addition, the Index includes learning — not only the quantity but also the quality of the available learning infrastructure. Women’s participation in the labor market remains very low in countries like India and Indonesia, and although participation rates may look healthier in other countries, such as the Philippines, deeper systemic issues still need to be addressed. Mercer’s When Women Thrive, Businesses Thrive data show that women currently hold only 25 percent of professional roles in Asia, which is the lowest level in the world and significantly below the global average of 35 percent. Another trend having an impact on labor markets is the growing talent shortage, particularly among roles requiring engineering and sales skills. In Asia Pacific, 46 percent of companies surveyed by Manpower Group this year cited difficulty in filling positions, as opposed to 40 percent of companies globally. In addition to technical skills, behavioral competencies are becoming increasingly important as a reflection of how employees deal with change.[²] The World Economic Forum’s 2016 The Future of Jobs report cites core work-related skills such as complex problem-solving, active learning and cognitive flexibility as increasingly important to all sectors amid the digital disruption of the Fourth Industrial Revolution — a term famously coined by the founder of World Economic Forum, Karl Schwab.[³] Tightened Belts, Long Road Companies across Asia Pacific are currently thinking about how best to reward employees to attract, motivate and retain the talent they need to support their businesses. The link between pay with performance is regarded as one of the top three drivers of employee engagement in Asia, according to the recent Mercer | Sirota research. Employees in Asia care most about a culture of meritocracy and opportunities to grow in their careers. Any conversation around rewards must therefore take into account the specific needs of the talent pool in this part of the world and the motivators that drive these individuals. For this reason, an increasing number of HR departments are beefing up their analytics capability to facilitate evidence-based decision-making, especially when developing a compelling rewards strategy. Look Who Is Hiring Hiring in India, Vietnam and the Philippines is happening at a greater pace compared with other countries in the region — for example, hiring intentions are lower in Singapore, Malaysia and Hong Kong. The overall hiring outlook is bright, however, with five out of 10 companies looking to maintain headcount, including replacements for staff turnover.[⁵] Hiring sentiment is often therefore a reflection of trends in staff turnover in certain countries and industries. The flipside of higher GDP growth and increases in base pay also implies that the staff turnover is higher for those countries. Attrition is higher for industries that have continued to outpace the slowdown we observed in the preceding year. Consumer and retail industries are faced with the highest levels of attrition, whereas the manufacturing industry has some of the lowest levels of attrition in the region.[⁶] As companies prepare themselves for digital disruption, they recognize the need to hire experienced talent — especially in areas that are critical for future success. We find that roles in engineering, finance, sales and marketing functions are particularly difficult to fill in most countries in Asia. Unsurprisingly, the sales function has the hardest time retaining talent.[⁷] Companies have a strong case to develop a sales incentive program that actually works in attracting and retaining key sales talent. Protecting The ‘Pay Base’ The huge spread in base-pay increases across Asia Pacific is a clear reflection of the dichotomy of emerging versus matured economies, but also of dominant industries in the respective countries exerting heavy influence on the overall picture. With Asia increasingly becoming a hub for both research and manufacturing in the life sciences industry, we see the highest salary-increase levels in this sector, followed by higher-than-average salary increases in the high-tech and consumer industries.[⁸] An interesting dynamic that is often overlooked involves pay-increase cycles during the fiscal year. Some companies follow the calendar year, whereas others announce salary increases during April or May. From a talent-retention standpoint, companies need to be aware of the cycles followed by their competitors to be able to ascertain how their pay competitiveness is being perceived by talent both within and outside the organization. According to the recent Mercer Talent Trends research, 47 percent of employees ranked fair and competitive compensation as the number one factor that would improve their work situation — yet only 28 percent of HR professionals plan to focus on ensuring rewards competitiveness in 2017.[⁹] In addition, transparency around pay decisions was called out as an important factor by employees in Asia Pacific. We find that this divide between HR intent and employee expectations can have negative implications on retention, especially in high-growth countries such as India, in high-growth industries such as life sciences and in high-growth skill areas such as sales. Pay equity with regard to reducing the gender gap has also received significant attention recently, as workforce analytics provide greater insight into how gender can affect salary decisions. With salary information increasingly being made available online on job boards and social media, employees are becoming more demanding with regards to transparency and disclosures around senior management pay. Rewards professionals need to reduce ambiguity and discretion in pay-related decisions and leverage empirical data analytics to map the business priorities and how those align with the overall rewards philosophy. With Asia leading the world’s growth, there is no dearth of highly skilled professionals from the western hemisphere seeking opportunities here. As a result, we have seen a significant dip in the traditional expatriate salary packages, with more than 75 percent of the compensation plans designed for foreigners in Asia based on the “local plus” model, which provides certain allowances with the comparable base local pay as the foundation. Conclusion Companies that have tended to take a reactionary or cookie-cutter approach to compensation design find themselves struggling to attract and retain talent. Creating differentiation amid increasing cost pressures isn’t easy, but it is more critical than ever before. Creating a rewards proposition that works for all your employee segments requires an analytical approach that takes all these trends into account and ties them to the desired competitive positioning for the business in this hot talent marketplace. Successful companies tend to have a much more dynamic approach, staying flexible and making changes along the way as new trends emerge. 1 Mercer. When Women Thrive, Businesses Thrive, available at https://www.mercer.com/our-thinking/when-women-thrive.html. 2 ManpowerGroup. Employment Outlook Survey, 2017.³ World Economic Forum. The Future of Jobs, 2016. 4 Mercer | Sirota research, 2017. 5 ManpowerGroup, 2017. 6 Mercer, Asia Pacific Pulse Survey, Q3 2017. 7 Mercer | Sirota research, 2017. 8 Mercer | Sirota research, 2017. 9 Mercer. Talent Trends, 2017. 10 Mercer. Global Mobility Snapshot, 2017.
According to a newly-released Mercer study, Talent Trends 2018, more than half of executives believe that at least 20 percent of the roles in their organizations will cease to exist by 2022. What are you doing to ensure your organization has the talent needed to meet evolving business needs? Here’s a hint. Creating a career framework strategy and platform enables core and contingent workers to plug into an organizational structure that matches their evolving skillsets with business needs in real-time. This aligns with findings from the World Economic Forum’s The Future of Jobs report, where 39 percent of respondents said they support mobility and job rotation, and with findings from Mercer’s Thriving in the Age of Disruption report, where 71 percent of respondents said internal mobility is encouraged. Bridging this gap between intention and action can be done through the development of a thriving environment and clarification of an organization’s career framework strategy. Engage employees in a thriving organization Thriving organizations often encompass energy and authenticity, which are core drivers of employee engagement. Studies show employees who feel energized by their projects and comfortable being themselves at work, are 84 percent more likely to express job satisfaction, a desire to stay with their organization, and a willingness to recommend their workplace to others. Further, thriving organizations tend to have a societal impact, embody a culture of trust and an ethos of virtuousness. These organizations are agile and responsive to external changes and offer clear career paths for employee career growth. In these environments, employees feel engaged, empowered and energized. They feel confident about the future, enthusiastic about their job and their desire to stay at their organization. Figure 1. If a thriving organization is critical to employee engagement how do you create a thriving organization? Develop and implement responsive and effective career frameworks Future-focused leaders identify people who can drive the business forward – even if those people are not in a position of influence today or if their future roles are yet invented. This has implications for jobs, roles, and career planning and capability development. Career frameworks are an aspect of crafting a future-focused people strategy where employees understand that they have an impact on their career path. Career frameworks first became popular because of the U.S. Army. It was a way to measure soldiers’ progress and success where competencies could be defined as observable behaviors. In the late 1990s, frameworks evolved to mapping competencies to jobs. However, today, good career frameworks focus more on the employee journey than on assessment; they are at the center of people-related processes; are skills-based with a spotlight on driving greater business success; and they generate excitement among employees. Career frameworks are also becoming flexible and individualized, from both the employee and managerial perspectives. Responsive and effective frameworks allow employees the opportunity to architect their own journey and experiences. On the other hand, managers have insight into their employees’ aspirations. Conversations can go beyond performance-based topics to identify what experiences and competencies employees need to mobilize and grow. At the macro level, career frameworks also provide organizations feedback and insights. They illustrate what the workforce currently looks like and spotlight what capabilities need to be developed. Additionally, career framework platforms democratize opportunity and information. Fuel50, for example, is an intuitive, customizable and AI-driven solution that delivers career path transparency that is scalable and agile. Fuel50’s CareerDrive tool allows users or employees to invest in and manage their own careers, understand the organizational values and how they can align their careers with the business trajectory and expectations of existing and new roles. Figure 2. Career Framework Want to build a responsive and effective career framework? We recommend following these seven steps: Here are six considerations for building robust career framework for your organization: Preparing for the future On a macro level, organizations will need to create a digital infrastructure to support an internal gig economy. This is in line with how workers now contribute skills to projects and teams rather than contributing skills to the company. Individual career management will sometimes be driven by the internal ‘work market’ – where employees bid on projects and serve as internal freelancers. Companies need to provide an infrastructure to support this. It used to be that competencies enabled a robust career framework, and they defined technical job requirements. Now, the focus is on competencies as building blocks for emerging jobs of the future. According to the World Economic Forum’s Future of Jobs report, by 2020 “more than a third of the desired core skillsets of most occupations will comprise skills that are not considered crucial to the job today.”2 Given this, leaders must focus on how they can help employees build agile competencies. Broader skills will drive higher degrees of individual and company success. To be competitive in the uncertain future of work, employees will need to be curious. Another coveted trait will be seeking out new information and experiences, parsing through streams of data for relevant insights which require human judgment. Other in-demand skills will be a growth mindset and critical thinking. With an ever-growing focus on the future, employees are asking how they can equip themselves with the necessary skills to succeed. Employers can and should provide that answer as a way to engage their employees. A thriving workplace and robust career frameworks allow them to do so. 1 Global Talent Trends Study 2018 | Mercer https://www.mercer.com/our-thinking/career/global-talent-hr-trends.html 2 The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution | World Economic Forum http://www3.weforum.org/docs/WEF_Future_of_Jobs.pdf 3 Thriving in an Age Of Disruption | Mercer https://www.mercer.com/our-thinking/thrive/thriving-in-a-disrupted-world.html 4 Career Development Opportunities | Thai Union www.thaiunion.com/en/careers/career-development-opportunities
Growth markets have enjoyed significant gains in economic performance in the past 20 years by attracting investment and improving infrastructure, particularly in China and India. Localized trade, such as that occurring within Asia and Latin America, has also helped boost performance. Speeding these growth economies along on their journeys are improved political stability and vastly enhanced access to technology and education. However, these markets face a major challenge in the form of falling productivity, which threatens to undermine their impressive growth stories. Why is Productivity Failing? Although the majority of major economies have weathered a decline in labor productivity since the Global Financial Crisis of 2008/09, the slowdown has been more dramatic in emerging and growth markets, For example, in Singapore, labor productivity growth plunged from 3.89% (1999–2007) to just 0.77% (2008–2016), according to The Conference Board Total Economy Database. Over the same period, economic powerhouse China has seen its labor productivity fall from 7.74% to 5.82%. Many growth markets experienced strong productivity gains through the introduction of technology that helped them catch up with more developed economies. But the impact of technology on productivity levels has faded, while rising wage pressure, ineffectual leadership and low engagement levels are making gains harder to sustain. Innovation and new technologies can no longer simply be borrowed from more developed countries. Instead, growth markets must invest capital themselves while equipping their workforces with new skills and competencies. Engagement Holds the Key Organizations recognize the importance of employee engagement and its impact on productivity levels. If one group of employees produces less than another possessing equal education and skill, then the logical cause must be inadequate leadership and engagement. In 2011, a group of economists from Stanford University conducted a study of how individual managers impact the productivity of teams. They accessed more than 5.5 million transactions from a data processing company to analyze how supervisors of more than 23,000 employees influenced group performance. From these data, they found that having a great boss was equivalent to adding an extra person to a nine-person team. The way that great bosses did this was by teaching employees more efficient and productive ways of working, and/or by motivating them to be more focused, according to the economists. This simple but sophisticated study helped distill something that management science has known for a long time: Your performance as a leader is more about your ability to grow and motivate others than your own technical prowess or productivity. In the past five years, Mercer | Sirota has asked around 5 million people from all over the world how motivated they are at work. Across this group, 18% have said they do not find work a motivating place to be. For companies with bigger morale challenges, the number can be as high as 35%. This represents a huge waste of talent and time. Ask yourself: Would your company tolerate waste of one-third of any other resource? There are other ways, besides engagement, to boost employee productivity, such as investing in factories and equipment or hiring more employees. But these require substantial capital investment. Cultivating an engaged workforce is far less costly and better positions a company for lasting competitiveness. It also makes better use of an existing resource. For organizations in growth markets, it’s critical to address employee engagement issues quickly. In markets that offer an abundance of growth opportunities, disengaged employees with low levels of productivity can easily result in loss of market share lost, a damaged brand and an opportunity for competitors to seize. Four Ways Growth Markets Organizations Can Engage Employees Here are four recommendations to better engage employees and subsequently boost their productivity: 1. Promote the right people Managers are the critical link between employee talent and group performance. Therefore, a manager should be judged based on his or her ability to transform a group of talented people into a high-performing team — not their technical skills, nor senior leadership’s “gut instinct” or personal opinion about the person. Yet many organizations in growth markets still promote managers based on these criteria, which have no link to effective people management. A better approach is to use well-validated and robust tools to gather data on management’s potential from current employees and new hires. This will allow a company to identify and advance its most talented leaders and, by proxy, drive stronger levels of employee engagement. Using data in this way will also improve transparency and perceived fairness, further enhancing engagement levels. 2. Focus on core employee needs There are many passing fads about what people want from work. However, more than 40 years of research from psychologists at Sirota have shown that people basically want three core things. First, they want to contribute to something meaningful and to be rewarded for their achievements. Second, they want to feel like they belong to part of something bigger than themselves, which they pursue in partnership with their teammates. Third, they want to be treated fairly and valued for what they do. If companies can teach leaders about these needs, people are more likely to show engagement and commitment to their work. 3. Stop putting people in the wrong jobs In the growth markets region, most jobs are still assigned based on technical skills rather than personality and behavioral tendencies. Defining both the behavioral and technical aspects of any job can vastly improve the fit between an employee and the work he or she does. The bottom line is that people are best at work they enjoy. So be sensitive to the skills and interests of your employees as you assign them to jobs. 4. Get better feedback Although many companies continue to run a fairly regular (annual) employee survey, very few collect any useful data. This leads to poorly conceived action plans and a complete lack of leadership attention. But employee feedback is vital for an organization to discover where it stands and what it can do to improve efficiency, innovation and customer experience. If it’s done well, regular feedback can form a key part of an organization’s management information system, driving intelligent decision-making and enhancing managerial effectiveness. The biggest barrier to using employee feedback data is often leadership. If leaders don’t take the views of employees seriously, then nothing will happen. In the vast majority of situations, perception is reality. So if employees see nothing being done with the data or any subsequent improvements based on the survey results, they naturally think their company isn’t doing anything to engage with them.
Around the world, technology is changing the way we work. Emerging trends across diverse sectors, from financial services to retail, range from the more prosaic (digital marketing) to borderline science fiction (3D printing). How does this impact the skills needed in this fast-evolving landscape? Having a conversation about the impact of technology today is difficult without it quickly devolving into an assortment of clichés packaged into the newest management-speak. Almost every organization is “undergoing a technology transformation” or “going digital.” As pervasive as these trends seem to be, oftentimes there is a lack of understanding of these terms beyond buzzwords. In a refreshing moment of honesty, a senior business leader at one of our client organizations recently remarked that her organization wanted to “go digital — but I’m not really sure what that means.” Given the overwhelming amount of information available through multiple communication channels, hers is not the only organization struggling to zero in on the skills it really needs. Exacerbating the situation is the fact that multigenerational workforces have differing levels of exposure, understanding and comfort with technology in everyday life. In the past year, we’ve been asked to help more and more organizations define career frameworks and critical technical skills for the future. We’re finding that rather than seeking industry-specific skills, organizations are shifting toward “technology application within the industry” skills. As an example, our banking clients are starting to use social media as a marketing and distribution channel. Their digital marketing professionals must be able to not only highlight the differentiators of their products but also understand how (and whether!) a sponsored post on Facebook really translates into a purchase decision. In a different industry, a shipbuilding company is looking to develop additive manufacturing — what you and I call 3D printing — skills to their engineering function to improve their prototype-building process. With the endless examples of innovative new technology solutions come the inevitable fears of irrelevance and redundancy. According to The Wall Street Journal, business process offshoring — call centers in particular, which were a mainstay for economies like India and the Philippines in the late 1990s and early 2000s — looks set for a major disruption, with the first level of customer service now being replaced by chatbots. It only takes a call to AppleCare or United Airlines to appreciate how quickly (and well) this technology is evolving. Voice interaction is only expected to grow in the near term, not just in customer service application but also for broader web browsing and online purchasing (think Siri and Alexa). So what are the critical skills organizations and individuals should focus on given these sweeping changes to the way we work? The answer is understandably complex and depends on industry, geography and other variables. The World Economic Forum’s 2016 The Future of Jobs report cites core work-related skills, such as complex problem solving, active learning and cognitive flexibility, as increasingly important to all sectors in the near future. These skills are even more critical in emerging markets, where the evolution of technology impacts jobs faster than in more developed economies. We see this view reinforced in our work with government agencies across countries in Asia. When identifying critical skills at an industry-wide level, ongoing learning, problem solving and creativity emerge across almost all industries, whether in high-tech industries like telecommunications or more traditional sectors like manufacturing. Not surprisingly, the other skill that comes up across industries is information and communications technology or digital literacy — using digital technology, communication tools and networks to access, manage, integrate, evaluate and create information. With the “Internet of Things” (IoT) having a major impact on consumers (think sensors that monitor your heart rate) and industry (sensors that monitor and predict performance of industrial equipment), seemingly traditional businesses are thinking about data architecture and NarrowBand IoT. These technologies also highlight the need for organizations and individuals to better understand information security to prevent cyber-attacks. Recent attacks have ranged from crimes targeting individuals, such as identify theft, to wide-ranging attacks through IoT-enabled devices (like network-enabled cameras and home routers), such as those caused by the Mirai malware in late 2016 that made platforms like Twitter and Netflix inaccessible to millions of people for hours. With ever-increasing “smart” and connected appliances, these attacks are likely to get more frequent and severe. Each of us needs to understand the risks and the actions we can take to prevent becoming targets. An interesting addition to this mix of skills is transdisciplinary thinking: the ability to combine concepts and rules across different disciplines to develop a holistic approach to problem solving or product development. The automation and complexity of production-line equipment is increasing exponentially, which means that process engineers have to expand their knowledge of programming beyond generalized software to automation programming. Fields such as bioinformatics (a combination of computer science, statistics, biology and a few more areas) and the widespread application of analytics to different functional areas are also becoming increasingly commonplace. As with any major change, the impact of technology offers as many opportunities as it does risks. As large swathes of jobs become irrelevant, new skills and jobs emerge at an increasing rate. Jobs based on these emerging skills have the potential to be more fulfilling and interesting than the more routine functions they replace. After all, the industrial revolution disrupted a world dominated by manual labor — and subsequently raised skill levels and quality of life. Having said that, the ability to learn continuously has never been as important as it is today. It’s up to us, as organizations and as individuals, to keep challenging ourselves to grow in new ways and master the skills we’ll need to thrive tomorrow rather than the ones we need to survive today. 1Select Mercer engagements 2 Moss T. “Robots on Track to Bump Humans From Call-Center Jobs,” The Wall Street Journal, June 21, 2016. 3 World Economic Forum. The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution, January 2016. 4 NarrowBand IoT is a low power wide area network (LPWAN) radio technology standard developed to enable a wide range of devices and services to be connected using cellular telecommunications bands (see https://en.wikipedia.org/wiki/NarrowBand_IOT). 5 Perloth N. “Hackers Used New Weapons to Disrupt Major Websites Across U.S.,” The New York Times, October 21, 2016.
For companies in Latin America, as in many other growth economies, landing skilled talent is a challenge. Organizations are finding that traditional methods of recruiting and hiring no longer suffice, particularly for reaching the next generation of leaders: Millennials. Even when applicants are numerous, HR struggles to sift through the pile and locate the resumes that hold promise. Wouldn’t it be easier if there were an automated method of locating the perfect match — without having to get the buy-in of five different colleagues who all have a different “read” of the candidate? The New Way to Hire: Assessments, Not Interviews According to 2014 research by the Harvard Business Review we humans are good at writing job descriptions and asking the right questions. But we’re not so good at making objective decisions based on the results. Even a simple equation leads to a better hire than human decisions, for all levels of the job hierarchy. In traditional hiring, we focus on resumes and interviews — and are inherently drawn to people like us. Despite our best intentions to be objective and focus on the candidates’ qualifications, we can’t help but favor the person we relate to — not necessarily the one who is best for the job. News Flash: The Talent You’re Seeking May Have A Shorter Attention Span Than A Goldfish We all suffer from shortening attention spans in the Internet Age. The issue is even more pronounced among “Generation Z,” the demographic cohort that follows Millennials and will join the workforce in the near future. Goldfish have the ability to focus for nine seconds. The average human attention span has dropped to eight seconds according to a 2015 Consumer Insights study from Microsoft. Generation Z grew up on games, from PlayStation® to Pokémon Go™. It’s a medium that younger generations are comfortable with. But did you know that games can provide employers with the data they need to make the right hiring decisions? The way people talk about themselves is different from the way they actually behave. Games allow us to collect and measure behavioral data without long questionnaires. And they’re fun to play! How it Works To come up with the algorithm for assessing candidates for a certain role, we ask current high-performers in that role to run through the set of games. We then use data science to compare potential candidates to the high performing benchmark. Mercer Match assesses candidates on 80 different traits, both cognitive and emotional. When you play Mercer Match games, there’s no winning or losing — simply differences. The traits required for an IT role, a creative position and a sales function are vastly different. Games like rapidly tapping the screen when a specific color appears will assess attention to details and processing speed, whereas identifying the emotion expressed by an image of a person’s eyes will assess empathy and emotional awareness. Mercer Match isn’t just about finding the right candidate among those who already work in a particular field. It’s also about helping people maximize their potential and tap into their hidden talents. We actively recruit candidates on social media to find Millennial talent and others that haven’t yet found their perfect fit in the job market. Mercer Match in Latin America We’re currently running pilots of Mercer Match with companies across industries in some Latin American countries. In Mexico, for example, we’ve partnered with some of the biggest players in banking to build a profile for the bank teller position. The employers now have access to an ever-growing database of candidates for this high-demand position. Interest in the platform is also growing in Colombia and Peru. It’s clear that the younger generations will change the way our organizations attract and retain talent. They expect to communicate with potential employers in more immediate, digital ways, with opportunities to progress once they land a job. But this also means HR has the opportunity to add real value to the business by using new technologies to make better decisions at a lower cost. The tools are available and the need for change is evident. The question now is whether our organizations are ready to adapt as rapidly as the market demands. Try Mercer Match for yourself. Visit www.mercermatch.com/growth. 1 Kuncel NR, Ones DS, Klieger DM. “In Hiring, Algorithms Beat Instinct,” Harvard Business Review, May 2014 Issue, available at https://hbr.org/2014/05/in-hiring-algorithms-beat-instinct, accessed 8 December 2016. 2 Consumer Insights, Microsoft Canada. Attention spans, Spring 2015.
Over last few decades, globalization has pushed many organizations to turn their focus towards emerging markets in search of new clients and competitive advantage. But the draw of the growing middle-class consumer base is often matched by the struggle to find talent with the rights skills and competencies. The solution is generally to import foreign employees to work alongside local hires, to provide the skills and experience necessary to run the business in the short-term and help build local capabilities for the long-term. But asking an employee to uproot her life and move isn’t an easy sell, especially for assignments of long duration. Add a challenging economic, social or geopolitical environment, and you leave employees with a difficult choice. To bring the whole family with them has clear advantages, but would also mean exposing their spouse and children to the same level of hardship. The alternative—leaving the family behind—brings all the emotional challenges associated with long-term separation. Some organizations offer the intermediate option of stationing the family in a nearby alternative location, reducing the distance between the employee and family members and allowing for more frequent family visits. For example, it’s not uncommon for employees on assignment in some middle eastern locations to relocate family members to Dubai. Irrespective of the situation, differences in living standards deserve serious consideration for a number ofreasons. Firstly, they can create anxiety for the employee and his family, which may lead to reluctance to undertake the assignment. Secondly, living condition may erode the employees’ morale and affect his performance over time. This could ultimately lead to “assignment failure”: the employee falling short of achieving the objectives of the assignment and/or a request to be repatriated prematurely. Considering the significant financial investment made in deploying an employee overseas, assignment failures are to be avoided at all costs. More importantly, poor planning and preparation for differences in living standards can expose employees deployed abroad to a number of risks with potentially harmful or even lethal consequences. Employers have a “duty of care” obligation towards their employees that extends to overseas assignments. There are several factors that can contribute to differences in living conditions when moving between locations. The annual mercer quality of living survey evaluates local living conditions in more than 450 cities surveyed worldwide. Mercer’s proprietary quality of living methodology compares living standards in terms of 39 factors grouped into 10 categories: 1. Political and Social Environment In some countries, the political environment may expose the employee to prosecution for saying or writing the wrong thing. In others, the social environment may be characterized by high rates of violent crime or exposure to terrorist attacks or social unrest. 2. Economic Environment Employees and their families may not be prepared for life in a country going through significant economic stress, or with a less developed economy. 3. Socio-cultural Environment Social and cultural differences can make going about one’s daily routine or making new connections difficult for foreign employees and their families. 4. Medical and Health Considerations Some countries may not have the medical infrastructure in place to meet the needs of employees with health conditions, or to provide reasonable standards of care in case of accidents or emergencies. 5. Schools and Educational Standards Employees with children may be forced to pay for private schooling or overseas boarding schools in locations where international schools are lacking. 6. Public Services and Transportation Infrastructure Others may not be able to drive due to legal or safety concerns, forcing them to rely on poor or still-unsafe public transportation. 7. Recreation Some locations may have very limited recreational facilities, depriving employees of much-needed diversion outside of work. 8. Availability of Consumer Goods Employees deployed to remote locations are likely to find a very limited range of everyday goods, and a shortage of many of their favorite items and brands. 9. Housing Standards Housing standards can vary widely between locations. In many areas it is important to pay particular attention to the security of the premises, as foreigners can be tempting targets for criminals. 10. Natural Environment Certain locations are notorious for natural hazards such as floods, monsoons, earthquakes and volcanic eruptions—unfamiliar occurrences for many employees. It’s easy to see why it’s important to plan, prepare and support the employee to manage differences from the home location to the assignment location. Even the less urgent factors cited above have great impact on employees’ quality of life. We recommend organizations respond on two fronts: In terms of planning, the company needs to carefully evaluate the risks, brief the employee and provide as much “on the ground” support and advice as possible. The company may need to develop crisis management processes and procedures. Proper planning also includes ensuring that adequate insurance coverage is provided for medical emergencies, accidents and fatalities. Extra care is required when deploying employees to conflict zones or locations prone to natural disasters, as many insurance policies exclude “acts of war” or “acts of god,” and may therefore require additional policy riders. From a pay standpoint, the company needs to adequately incentivize and compensate employees for undertaking assignments in difficult locations. Failure to incentivize these moves can ultimately result in high refusal rates and strong bias towards locations perceived as “easier”—leaving the company with the same talent shortage it was attempting to address. What Emerging Markets Can Do To Attract Skilled Talent Having run the quality of living study for 19 years, we observed that infrastructure deserved its own ranking, as there is a strong connection between quality of infrastructure and a city’s attractiveness for global talent. We focused on power and potable water supply, telecom penetration, public transportation and international air travel connectivity with this new ranking. Singapore topped the chart, leading all other cities in the developed world. The correlation between the city state’s world-class infrastructure and the number of foreign workers who call Singapore home—including this writer—is clear. Asia is leading the world’s economic growth today, but also its infrastructure growth. Governments in Asia and elsewhere across emerging markets recognize that investments in infrastructure go a long way in attracting multinational companies and the skilled talent that comes with them. A positive cycle of progress is created as their local economy gets a boost from the new skills and opportunities available. In the meantime, however, organizations in both emerging and developed markets looking to expand must keep in mind the considerations enumerated above as they deploy their talent abroad. There is no such thing as too much planning when it comes to ensuring the safety, happiness and productivity of a mobile employee.