Meeting the Challenge of Deglobalization

The pandemic, and other crises, have sparked a growing shift in how companies must do business, heightening their talent needs. Executive search firm Odgers Berndtson’s Kennon Kincaid, along with Melissa Swift of Mercer and Cameron Ireland, former CEO of BoardEx, share their insights about how organizations are responding to a world in flux.

December 20, 2022 – 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 companies 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, chief operating officer of Odgers Berndtson US. “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.”

One expert who knows this terrain particularly well is Melissa Swift, leader of transformation services in the U.S. and Canada for human resources consulting firm Mercer. Leaders, she says, are rethinking the concept and meaning of location for their businesses. “With an increasingly virtual, hybrid remote workforce, there’s the question of ‘If we’re in a location, do our people have to be in that location? That fundamental tie has been cut a bit,” she said.

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 Ms. Swift. “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.”

Talent Management in a Hot Market and What CEOs are Thinking
Talent management – the strategy behind recruiting, developing, and maintaining employees, especially top-performers – has been important to companies for decades. But since COVID upended workforce norms, talent management has become priority No. 1. With personnel in the driver’s seat, it’s a hot market, say executive recruiters. As the pandemic edged toward an endemic, people reassessed their lives, their goals, and their jobs, according to a new report from IMSA Search.

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 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.”

Fast forward a decade, says Mr. Ireland, to today’s workforce, which has become used to working remotely, with a hybrid model increasingly in place. “It makes it a lot harder to differentiate between how are you going to identify this as a potential problem. And one of the biggest problems we’ve got revolves around someone who has to go to their place of work because they’ve got no choice, because it’s a very hands-on position, vs, ‘Oh, I don’t need to go anymore, I can work at home.’ So how does an organization create that incentive plan to say, ‘This is a great place to work?’ And that is one of the things that my clients are actively looking at, particularly in the professional services arena, where it’s becoming a big, big problem between hybrid working and the need to come into the office or not. So there’s a long way to go. I think data is critical to this. And with all of these things, it’s just going through that data and getting the right data points to create the visibility needed by the senior leadership team to say, ‘We can make a viable strategic decision to combat this problem,’ and not doing it as a reactive exercise but being proactive about it.”

Ms. Swift says that when it comes to generational differences, some of Mercer’s more intriguing research findings involved the unmet needs of employees. “For everybody below age 55, mental health was a top five unmet need, and then fell out of the top five entirely,” she said. “And there’s something a little bit scary about that because if you think about who the CEOs and board members are, a lot of them are in that 55-plus category. So they’re sitting on the other side of a big divide in thinking and prioritization. That’s why it’s really important to do that employee listening work with your workforce, because what you may intuitively see as a need may not be the needs, be it generationally, or by gender, or by ethnic group, or whatever.”

Listening Better

Then, says Mr. Kincaid, there is the problem of the “talent cliff” and the loss of any given company’s employees for any number of reasons, only exacerbated by a rapidly aging population around much of the world. “That term ‘talent cliff’ itself sounds frightening,” he said. “But maybe it should be frightening. On one hand, we’re seeing the demography around the world shift in a way that is quite scary as we think about reproduction. And it’s nothing we can fix overnight. Everybody says, ‘Well, how do governments fix this?’ And I think the answer is that they can’t. Certain countries are better positioned than others as we think about the future. The U.S. is uniquely better off than many places, but still not great when we think about demography.”

Mr. Ireland says that companies have to work harder at listening to their employees and making them feel comfortable with providing feedback. “You need to get the trust of employees so that they feel ‘OK, I can contribute, and I know that I will be listened to, and should I want to discuss an issue with a member of senior management, there is a path for me to do that,’” he said. “I spoke with a managing partner from a very successful accountancy practice in the U.K. who pride themselves on really focusing on the ESG agenda broadly speaking. One of their aims was to ensure that their employees felt they had a complete forum to discuss this. And they ensured that every discussion had all of the different age ranges so that the company and the leadership team could get a really clear sense from the data what they needed to do. Have they been successful? Well, the CFO was very open and they certainly are more successful than others. But they also realized that it’s still quite a big mountain to climb. But they have done something about it. And what I saw in this particular meeting was that there were probably 10 other CEOs and managing partners all nodding their head saying, ‘That’s brilliant, I have a direction that I can now take. Fantastic.’ So it’s not an easily solved problem, but let’s take the first step and get that transparency going and really encourage our employees to start talking.”

Related: Retaining Your Employees During the Great Resignation

It’s not just the younger and mid-career employees, however, that companies should be paying attention to. Mercer’s Ms. Swift points to research her firm conducted not long ago that found that with all else being held equal, age doesn’t correlate one way or the other to employee performance, but tenure does. “So there’s a virtue to retaining the folks you have,” she said. “And then when you match that up with that natural demographic cliff, there’s some anxiety about losing that group of older workers, because there’s a true performance benefit to their tenure. So we’ve seen some interesting strategies that organizations are employing, such as making that off-ramp a softer one. So maybe it’s not just that I hit age 65, or whatever age it would be these days, and retire. Instead, it could be that I work half-time, or I coach, or I mentor. And it’s nice, because it does hit some of the needs we’re hearing articulated from the younger populations of ‘I want presence, I want coaching, I want mentoring, I want real time feedback.’”

Tapping Older Workers

It can be hard to get that kind of support from workers charging through their 40s and 50s. “But maybe somebody in their 60s or 70s can get involved and be a better part of that equation,” said Ms. Swift. “I see that as a really constructive solution to some of these demographic issues. And again, providing greater degrees of flexibility really helps. If a worker can, for instance, move to a retirement community somewhere in the southern part of the United States, and continue to work remotely, that helps. There’s all sorts of ways to make that happen, and really continue to include that older group in the workforce, because there’s an acknowledgement that they have a huge amount to contribute. And again, it’s moving away from that mentality of a strict everything’s driven by costs, and they’re expensive and get them out the door. Instead, it’s about value. And that group has a huge amount of value.”

Mr. Kincaid agreed, adding that this concept reaches beyond the C-suite and into the subject matter expert space as well. “We’ve had clients that have spoken to us about advanced engineering talent, for example, saying, ‘We don’t yet have the muscle memory of the up and coming workforce to do what we need; can we potentially go out into the retiree workforce and incent some of them to come back and almost to serve in that bridge capacity?’ So, I think it’s really interesting and potentially more opportunity-laced for everyone else, because another piece of the deglobalization issue is that people are living longer. And we do have potentially more benefit in very commercial terms to extract from a wiser part of the workforce and time to do it.”

These changing times can also create opportunities for companies “to engage parts of the workforce that have historically been marginalized or left out of the equation,” said Mr. Kincaid. Companies like Amazon, says Ms. Swift, are removing college degree requirements from their job descriptions. Other under-utilized populations include the formerly incarcerated, and veterans. And Mr. Ireland often asks his clients if they have looked hard enough within their own company or the network that can be tapped from within the organization.

“So there are all kinds of groups just hiding in plain sight,” said Ms. Swift. “Then what you have to do is, first, change your lens on talent to make sure that you’re not formally blocking folks from applying, and that also your talent acquisition process supports them applying, which is a different thing than just not excluding them. And then you have to change your view on what training and upskilling means, that it might be a coding bootcamp, it might be an English language bootcamp, it might be how to navigate a modern flat structure organization when you spent the last 10 years in a highly hierarchical prison. There are all kinds of different ways that we can reskill and upskill people and the more creative you get, basically, the more great workers you get access to.”

Related: Hiring Top Talent in Unprecedented Times

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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