20 March 2020
Econ 4.0: Trying times for talent?
Here is a modern recruitment fable. A post-millennial candidate just out of college applies for a position as a data analyst. He is called for an interview and asked what starting salary he expects.
The young candidate confidently replies, “I expect the equivalent of US$100,000 a year, but it depends on the benefits package. What benefits does your firm offer?”
The recruiter thinks for a moment. “Well, what would you say to a package of a paid four-week vacation, 15 public holidays per annum, full medical and dental benefits, a company car and free food?”
The candidate’s eyes light up. “That is awesome! Are you kidding?” The recruiter replies, “Yes. But you started it.”
Whether that sounds funny, or not, depends on which side of the table you are on. Quite a few fresh graduates — as well as many with post-graduate and doctorate degrees — are either setting up new ventures while still in, or just out of, college or are asking top dollar to join tech companies.
On the other side of the table, traditional firms and human resources (HR) departments baulk at “young punks” with no working experience demanding to be paid as much as middle or senior management. This is especially true in the four hot ABCD tech areas of artificial intelligence (AI), blockchain, cybersecurity and data governance.
The top 10 highest paying jobs are all in AI, according to a report in TechRepublic. A principal AI scientist’s average salary is US$138,000 per annum. A machine learning expert can get US$135,000. Data scientists can earn US$130,000 on average and an engineer with AI programming skills can start at US$104,000. High salaries are not just being offered in the US but also in parts of northern Europe and in pockets of Asia-Pacific.
In today’s rapidly changing digital landscape, some companies that understand their talent needs and are willing to pay top dollar for them may have a competitive edge. The problem? “In most companies, IT recruiting is typically a slow process. The HR department creates and posts a job description for a potential role. If it is lucky, it finds a mid-level employee in six months (and it will take another four weeks until he is productive). For an organisation undergoing an aggressive digital transformation, that is too slow. So says McKinsey & Co.
“Over the next five years, large companies will invest hundreds of millions of dollars on average — and some more than a billion dollars — to transform their business to digital. Given that top engineering talent, for example, can be anywhere from 3 to 10 times more productive than the average engineer, acquiring top talent can yield double-digit investment savings by accelerating the transformation process by 20% to 30%,” it points out.
“But such talent is hard to find. In the next five years, we expect the demand for top tech talent to outstrip supply. For agile skills, the demand could be four times the supply. For big data talent, it could be 50% to 60% greater than the projected supply.”
The race for talent is just about picking up steam. Gartner Inc says most HR leaders will focus on five key measures this year to continue driving business outcomes: building critical skills and competencies, strengthening the current and future leadership bench, incorporating organisational design and change management, driving digital business transformation and enhancing the employee experience.
“HR leaders’ priorities reflect the critical needs that organisations have to tackle to successfully operate in today’s uncertain conditions. While digital transformation has already generated skill gaps and strained leadership capabilities, most companies lack the skills needed to restructure their businesses and manage change. Our research shows that only 9% of chief HR officers agree that their organisation is prepared for the future of work,” says Leah Johnson, vice-president of advisory at Gartner’s HR practice
A major crisis is coming, a seismic shock that will impact organisations and economies around the world. A global labour shortage of 85.2 million skilled workers is projected by 2030. This will result in lost revenue opportunities of US$8.45 trillion — the combined GDP of Germany and Japan.
That prognosis comes from Korn Ferry, which analysed the manpower data of 20 countries, including Malaysia, Singapore, Australia, China, Hong Kong, India, Indonesia and Japan, as well as countries in the Americas, Europe and the Middle East. “A global talent crunch with looming skilled labour shortages affecting both developed and developing economies could ultimately shift the global balance of economic power by 2030 if left unaddressed,” it warns.
Many countries have set up expert groups to find ways to train, nurture and retain talent. Malaysia seems to have taken an early lead in this. In March 2016, the World Bank officially launched its Global Knowledge and Research Hub in the country. The new hub is the first of its kind, serving both as a field presence in Malaysia and as a global knowledge and research hub. It focuses on sharing the country’s development expertise and creating new and innovative policy research on local, regional and global issues.
In 2014, Malaysia set up a Critical Skills Monitoring Committee (CSC) to identify key skills gaps in strategic sectors. The CSC produces an annual Critical Occupations List (COL) to serve as a platform for coordinating human capital development policies.
The COL maps skills requirements across 18 sectors and lists the top three skill sets required. For example, for ICT managers, the top three would be communications skills, knowledge of English and expertise in project management. For app programmers, it would be knowledge of SQL, English and .Net.
Malaysia is not the only one with a COL. The World Bank says 16 Organisation for Economic Cooperation and Development (OECD) countries compile skills shortage lists. The OECD currently has 36 members, mainly from the developed world, including Japan, South Korea, Australia and New Zealand.
Governments use the COL to identify short and medium-term occupational and skills gaps. Some seek to fill the gaps via immigration, others direct resources to training programmes. Australia and Ireland use the COL to enhance education and training schemes. New Zealand and the UK use the COL to plan which kinds of skilled immigrant talents to attract.
“The COL is primarily concerned with identifying skilled labour shortages in Malaysia’s growing knowledge-based economy. It focuses on identifying occupations that are (mid or highly) skilled, as per the Malaysian Standard Classification of Occupations. The COL also determines whether there are mismatches between employers’ demand for certain occupations and the supply of skills associated with those,” notes the World Bank.
More than 60% of Malaysia’s GDP will come from digital trade by 2022. “As the country moves towards digital transformation (DX), its ideals have paved the way for more IT spending. Data centre services, cloud computing, data analytics and mobile tech have become mainstream and Malaysia is finding itself in an exploratory world of technology,” says Sudev Bangah, managing director of International Data Corp Asean.
The key concern? “While these discussions have become dominant, the intent is stronger than its actions. Only one in two CEOs in Malaysia are under pressure to successfully execute their DX strategy,” he notes.
“More than 87% of organisations in Malaysia do not have ‘ready talent’ to face the digital economy. The fundamental issues go beyond funding, incentives or allocations. What it truly boils down to is the need for re-invigoration and innovation to take the country to the next level.”
The future of work
The future of work is being shaped by two powerful forces — the growing adoption of AI in the workplace, and the expansion of the workforce to include both on- and off-balance-sheet talent. What changes could be in store for the workplace, the workforce and the nature of work itself?
“To be effective in an increasingly technological workplace, workers must know not just how to use digital tools, but when and why to use them. Critical to this ability is the judgement and confidence required to navigate and be effective in unfamiliar digital environments,” says Deloitte.
Is there something akin to a digitally ready worker? Yes. A worker’s ability to build, access and curate his personal mental library is becoming more important to his digital readiness relative to just increasing his knowledge, skills and competences.
“Therefore, what attributes does the worker need to be able to build, access and curate a personal library of appropriate questions and strategies — before, during and after the work or project? Rather than focusing on knowledge and skills, it is important to focus on attitudes and behaviours. If workers are to do something before, during or after the work, then they must value the outcome of their actions enough to invest the required time and effort (attitudes), as well as actually take those actions (behaviours),” says Deloitte.
So, what should a company’s HR department focus on this year? To achieve real progress, Gartner says HR departments must become a trusted driver and adviser on DX by doing the following:
Become experts in digital business
Collaborate with the C-suite to address digital goals and ensure they are consistent with the company’s strategy.
Leverage talent processes
Track employees’ skills to develop and refine the company’s digital plans and prevent execution blind spots.
Deliver functional support
Motivate HR teams to make meaningful contributions to DX and review HR strategies to stay consistent with the changing needs and expectations of employees and business leaders.
Since we started on an amusing note, let’s end on one. A young, fresh graduate applies for a sales role and gets called for an interview. The hiring manager hands him a laptop and says with a smirk, “I want you to try to sell this to me.”
The young punk accepts the challenge, grabs the laptop and walks out of the building. The harried manager calls the candidate’s mobile phone and barks, “What the hell? Bring back my laptop!”
The candidate coolly replies, “Great that you want to buy the laptop from me, sir! Pay me US$300 and it is yours.”