Meeting the Challenge of Deglobalization

March 1, 2023 – Beyond the health crisis it created, COVID-19 in many ways changed the world. In business and our work lives, the pandemic sparked and accelerated shifts that had already been stirring, driving them to the forefront, from the rise of technology and remote work to a greater emphasis on work-life balance. Concern about supply chains, meanwhile, is driving a move away from dependence on China for manufacturing and a spreading deglobalization. World events, like the war in Ukraine, have only created more uncertainty, leaving leaders at companies urgently trying to understand the ramifications and how, armed with ever-growing sheaves of data, they can best respond.

Executive search firms have been key partners in helping compa- nies find their way, both in identifying and placing the right talent and as advisors. “When we say deglobalization, this is not about whether globalization is done with or whether the world has turned a page, for better or for worse,” said Kennon Kincaid, COO of Odgers Berndtson. “As the world has changed over the last few years in particular, COVID was a catalyst to changes that were already underway pre-pandemic. What we have around us now is a more fractured world. We have geopolitics at play every day. We have wars on different fronts, some that have ended and others that have begun. We see governments making policies that are impacting the decisions of companies. And we see countries that were once really on the rise maybe finding their sun setting a little earlier than it had before.”

“All of these changes have had significant impacts on the world of work and on the corporations that are trying to create opportunity for those around us,” said Mr. Kincaid. “What do these shifts mean? And more importantly, what do we do about them? How can we advise our clients and help them navigate these different and in some ways unsettled waters? You should also remember that in times of crisis or uncertainty, there’s also great opportunity. Things are changing. They are impacting the decisions of leaders. And our job as human capital professionals is to be there to help them make better decisions going forward.”

Redefining Location
“Then there’s the question with ongoing labor shortages, labor crises, especially around some of these really critical roles — think nurses and healthcare systems, for instance,” said Melissa Swift, leader of transformation services for human resources consulting firm Mercer. “How can we solve for some of these issues differently? For a long time, there was kind of a race for the lowest cost of talent. But if you talk to some of our folks that do workforce analytics consulting today, they’ll tell you that organizations are now saying, ‘Well, maybe it’s highest skilled ecosystem that’s more important instead of lowest cost of talent. And so some of that stuff’s going on, even before you get to the conversation about regionalization. There’s just a fundamental rethink on what is a location?’ And what do I need from it?”

Integral to this is a need for resiliency when labor problems arise. Ms. Swift speaks of a hypothetical factory in a small town with a low cost of labor, which finds that a “big online retailer that starts with an A” has just built a warehouse in town and its sudden effects on the factory’s workforce. “You have to really start to think about how to buffer some of those labor shocks,” she said. “And we see companies making the decision differently from one another. It might be OK, in one region I need a bunch of small offices, or I need a big location in one region, or maybe I need to be really geographically diffused. There’s not a right answer to it. But we are seeing a real rethink on these issues around resiliency, around labor supply, and around thinking what the location even is.”

Workers today have much more opportunity of choice than those before them. Different generations also have different values and different requirements. Meeting the challenge that these changes create is not easy for companies, but data can help provide solutions, says Cameron Ireland, co-founder of Ireland Consultancy Services in London and former CEO of global data company BoardEx. Mr. Ireland’s extensive global background in strategic, commercial, and operating roles within SaaS technology and data solutions, brings a different perspective to the issue.

“One aspect of it is, what is an organization’s understanding of their workforce and what the candidate pool is for a relative function that they’re really struggling to fill, and does it need to be done in the location they’ve always done it in? Well, that may no longer be a choice if you do have a very low-cost workforce that suddenly decides, ‘Well, actually, I’ve got a much better job over in a call center than being a factory worker.’ How do you identify if that is going to happen? And I think what you need to be doing is combining a much greater understanding of the data around what the candidate pools are at a regional level and a national level, and also a global level.”

The Value of Data
“When I look at some of the questions that over the years I’ve asked myself about where am I going to place my workforce, one of the big choices was, in which country am I going to create a data collection center?” said Mr. Ireland.

“We went through a list of 10 different countries. And when we evaluated each of those countries, each had a complete variety of skill-sets that tended to veer either towards manufacturing or much more service providers. In actual fact what we identified was that there was a central core of individuals in each of those countries that was highly talented in what we needed to do. And then it came down to more of the practicalities of how we could bring it all together. So what are the cultural differences? How do you set up an office? How do you actually get the data flowing within the organization? But if we hadn’t actually pulled the data together in the first place and done an evaluation, we would never have known.”

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