Putting the Talent Management Challenge in Context

Corporate Research Forum: Rethinking Talent Management Putting the Talent Management Challenge in Context 7th July 2016

The Talent challenge: Three recent BCG reports have looked in detail at different dimensions 1

Global Workforce Crisis • Workforce supply and demand throughout 2030 • 25 major economies incl. the G20

1

2

3

2

3

Decoding Global Talent

Creating People Advantage

• 200,000 job seekers from 189 countries • Talent mobility and job preferences

• 3,507 executives from 101 countries • 62 interviews with senior HR leaders

CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

1

Europe's working age population over the last 200 years ...

European working age population

Time 1800

1900

2000

2050

Source: "The Global Workforce Crisis"; BCG analysis CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

2

... Now reaching an historic inflection point ...

European working age population

Time 1800

1900

2000

2050

Source: "The Global Workforce Crisis"; BCG analysis CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

3

... Even with an increasing retirement age

European working age population

1

Time 1800

1900

2000

2050

1. Assumed extension of working age to 70 years in 2050 Source: "The Global Workforce Crisis"; BCG analysis CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

4

Developed countries will experience demographic decline Economically active population CAGR '08–'20, '20–'30

2008 (M) CAN USA MEX BRA SWE UK FRA GER POL ESP ITA TUR EGY RSA UAE RUS IND CHN INA KOR JPN AUS

19 160 46 100 5 31 28 42 17 22 25 26 25 18 3 76 475 799 115 24 65 11

0.2%

0.5% 0.7%

0.8%

1.4%

0.5%

1.3%

0.2% 0.3% 0.1% 0.3% -0.2% -1.3%

1. 2030 figures assumed the same participation rate by sex and age groups as the ones in 2020 Source: UN, ILO; BCG analysis CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

0.8%

0.0%

-0.1% -0.9%

-0.6% -0.4%

0.3%

-0.9%

0.0% 0.6%

1.0% 1.6%

1.9%

0.7% 0.7% 1.4%

1.9%

-0.9%-0.7% 1.3%

-0.2%

0.4% 0.9%

-0.5%

1.8%

1.5%

0.4%

-0.7% -0.7% 0.4% Labor supply CAGR '08–'20 '08-'20

0.9%

Labor supply CAGR '20–'301 5

When you model demand into the picture, significant talent shortages forecast in many countries Forecast labour shortage / surplus

Europe

Americas

Asia

2020

2030

6%

-1%

-4%

-23%

8%

-4%

17%

-3%

6%

-1%

-7%

-33%

6%

-8%

10%

4%

7%

-3%

6%

1%

Specific examples

Germany • Shortage of up to 2.4m workers by 2020 • Shortage of 10m by 2030 Brazil • Shortage of up to 8.5m workers in 2020 • By 2020, could increase nearly 5x to 41m

China • Surplus of 55-75m workers in 2020 • Could reverse sharply, with shortage of 24.5m by 2030 United States • Surplus of 17-22m people in 2020 • Forecast to still have surplus – min 7m – by 2030

1. Assumed extension of working age to 70 years in 2050 Source: "The Global Workforce Crisis"; BCG analysis CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

6

Different pictures in different places Labor supply vs. demand Germany

Labor supply vs. demand USA

No. of people (M)

No. of people (M)

52

180

Labor supply

170

Demand 20-y.

160

Demand 10-y.

48 Demand 10-y.

Demand 20-y.

44

150 140

40 130 Labor supply

36 2015

2020

2025

2030

120 2015

2020

2025

2030

Note: Labor supply = forecast of the total population (age 15+, 5 year age groups) Ă— labor force participation rate (per 5 year age group) Labor demand is defined as number of people required to be employed to produce a desired amount of economic output (GDP) based on a given output per person (labor productivity) Sources: UN population database; ILO LaborSta database; EIU country data; The Boston Consulting Group analysis CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

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Global—skills shortage 38% of global employers reported a talent shortage in 2015: highest % since 20071

World shortage of 56.5 million skilled workers predicted by 20252

63% of global CEO’s state they are concerned over a lack of key skills3

India: IT sector will face a shortfall of 3.5 million skilled workers by 20204 Japan already has more workers exiting the workforce compared to those entering it each month 1. Manpower Global Talent Shortage Survey, 2015 2. Ernst & Young 3. PWC's 17th annual CEO survey 4. India Skills Report CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

8

The Talent challenge: Three recent BCG reports have looked in detail at different dimensions 1

Global Workforce Crisis • Workforce supply and demand throughout 2030 • 25 major economies incl. the G20

1

2

3

2

3

Decoding Global Talent

Creating People Advantage

• 200,000 job seekers from 189 countries • Talent mobility and job preferences

• 3,507 executives from 101 countries • 62 interviews with senior HR leaders

CRF-Global Talent Crisis-07Jul16-v1-NS.pptx

9

Decoding Global Talent: Survey of 200,000+ individuals from almost 200 countries

Americas Mexico United States Brazil Argentina Venezuela Canada Peru Trinidad and Tobago Chile Jamaica Nicaragua El Salvador Barbados Guatemala Honduras

14,758 12,050 11,282 7,075 3,675 3,595 3,419 2,806 1,792 1,755 384 272 263 225 125

Fewer than 50 50–100 101–1,000 1,001–5,000 5,001–10,000 10,001 or more

Middle East and Africa Algeria Nigeria South Africa Morocco Ghana United Arab Emirates Israel Tunisia Saudi Arabia Qatar

2,505 2,433 2,047 1,886 1,073 327 289 275 224 167

Asia and Pacific India Kazakhstan Indonesia Malaysia China Philippines Taiwan Vietnam Singapore Australia Pakistan

4,947 4,892 4,610 4,127 3,618 2,587 1,687 607 394 365 150

Europe Germany Turkey United Kingdom Italy Spain Hungary Russia Switzerland Bulgaria Ukraine Sweden France Slovenia Estonia Austria Ireland Latvia Denmark Belgium Greece Bosnia and Herzegovina Portugal Serbia Slovakia Romania Finland Luxembourg Belarus Czech Republic Malta Croatia Lithuania Poland Netherlands

16,220 8,627 6,363 5,546 5,293 5,144 5,085 4,414 3,769 3,641 3,474 3,214 2,940 2,698 2,105 1,984 1,870 1,658 1,282 1,235 1,216 1,168 1,159 1,120 729 681 441 427 400 287 284 209 183 162

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: Responses to question "Which country do you live in?". Listed are the 70 countries with > 100 responses. 3,418 respondents did not specify a country.

DGT-NS presentation-26Feb15-v2.pptx

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Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Sample size: 203,756

Two thirds of respondents willing to work abroad

Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Global average = 63.8%

Percentage of participants from each country who are already living abroad or are willing to move to a foreign country for work

>70%–80% Barbados

<50% Denmark Germany Ireland Latvia Russia U.K. US

50%–60 % Argentina Austria Belarus Belgium Canada Finland Greece Hungary Italy Malta Slovakia Spain Sweden Turkey

>60%–70% Brazil China Czech Republic Estonia Kazakhstan Lithuania Malaysia South Africa Trinidad and Tobago Ukraine Vietnam

Bosnia and Herzegovina Bulgaria Chile Guatemala India Indonesia Israel Luxembourg Morocco Nicaragua Portugal Serbia Singapore Slovenia Switzerland

>80%–90% Algeria Australia Croatia El Salvador Ghana Honduras Mexico Nigeria Peru Philippines Poland Romania Taiwan Venezuela

>90% France Jamaica Netherlands Pakistan Qatar Saudi Arabia Tunisia United Arab Emirates

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: Total sample size was 203,756; listed are the countries from which there were more than 100 responses.

DGT-NS presentation-26Feb15-v2.pptx

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Younger people (21-30 year olds) in the UK and US more adventurous than their country average 21-30 year olds' mobility above or below country average (in percentage points)

Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

>20–25 United States

>15–20 United Kingdom

Canada Sweden

>10–15

>5–10

>0–5 Russia

Germany

Spain

Belgium Austria Turkey

Italy Malaysia Brazil South Africa

Greece China

Ukraine Vietnam

Slovenia Indonesia India Switzerland Morocco

Mexico Algeria

Bulgaria

Ghana Nigeria Philippines

-5–0

Less than 50

> 50–60

> 60–70

> 70–80

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: Only includes countries from which more than 250 people ages 21 to 30 responded.

DGT-NS presentation-26Feb15-v2.pptx

> 80–90

Jamaica France

> 90

Mobility of job seekers ages 21-30 (%) 12

Top ten countries where foreigners say they would work 1

US (42%)

2

U.K. (37%)

3

Canada (35%)

4

Germany (33%)

5

Switzerland (29%)

6

France (29%)

7

Australia (28%)

8

Spain (26%)

9

Italy (25%)

10 3 1

2 4 65 8 9

7 Less than 5% 5%–10% >10%–15% >15%–20% >20%–25% >25%–30% >30%–35% >35%–40% >40%

10

Sweden (23%)

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: Total sample size was 203,756.

DGT-NS presentation-26Feb15-v2.pptx

13

Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

Country's rank as a potential work destination (% of respondents willing to move there)

1 London 16.0%

2 New York 12.2%

3 Paris 8.9%

4 Sydney 5.2%

5 Madrid 5.0%

6 Berlin 4.6%

7 Barcelona 4.4%

8 Toronto 4.2%

9 Singapore 3.9%

Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

London, New York, and Paris are seen as the most appealing

10 Rome 3.5%

11 Dubai

3.4%

16 Amsterdam

2.5%

21 Montréal

2.1%

26 Santiago de Chile

1.7%

12 Los Angeles

3.2%

17 Vienna

2.5%

22 Oslo

2.1%

27 Melbourne

1.7%

13 Tokyo

2.8%

18 San Francisco

2.4%

23 Vancouver

2.1%

28 Copenhagen

1.6%

14 Munich

2.8%

19 Stockholm

2.4%

24 Dublin

1.9%

29 Lisbon

1.5%

15 Miami

2.6%

20 Zurich

2.2%

25 Brussels

1.7%

30 Geneva

1.5%

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: The question asked was “Which cities would you consider working in abroad? Please indicate up to five answers.”.

DGT-NS presentation-26Feb15-v2.pptx

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UK: Non-UK employment % up from 4.4% to 10.3% since 2000 Number of EU nationals working in UK up from 500k to 2.1M over last 15 years

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

UK Employment by Nationality (2000-2015) UK Employment (Millions) 32 EU national employment has grown by 1.5M to 2.1M over last 15 years, Non-EU national employment has grown 500k

32 3.8%

Non-EU

30 29 29

6.5%

EU27

89.7%

UK

4.1% 3.4% 28

28

2.6%

4.2%

94.0%

91.7%

2005

2010

2.5% 1.9%

95.6% 0 2000

2015

Source: ONS DGT-NS presentation-26Feb15-v2.pptx

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75% of the increase in EU nationals employment in the UK is from non-EU14 countries

UK Employment (Millions) 2.0

Other EU EU8

1.6

EU14

1.5

EU2 Romania & Bulgaria

1.8

EU2

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

2.1 Other: Cyprus, Malta & Croatia

EU 8 Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic and Slovenia.

1.4

1.3 1.2 1.0 1.0

1.1 1.1

0.9 0.7

EU 14 Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and Sweden.

0.6 0.5 0.5 0.6 0.6 0.5

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

0.0

Source: ONS DGT-NS presentation-26Feb15-v2.pptx

16

DGT-NS presentation-26Feb15-v2.pptx

80.0 Sales & Customer Service Occupations

Administrative & Secretarial Occupations

60.0 Managers, Directors & Senior Officials

40.0 Associate Professional & Technical Occupations

20.0

Professional Occupations

0.0 Skilled Trades Occupations

15.0

Caring, Leisure & Other Service Occupations

Source: ONS

Process, Plant & Machine Operatives

Elementary Occupations

100.0

75% of EU8/EU2 employees work in comparatively low skilled occupational groups

10.0

5.0 UK

Non-EU

0.0 EU2

100.0 EU8

EU14

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

High proportion (75%) of EU8/EU2 employees work in low skilled labour professions EU Nationals employment met by occupation group (2015)

% Employees

17

EU nationals are concentrated in certain sectors ~50% work in manufacturing, accomodation & food service, wholesale and health / social

300

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

# EU Nationals employed in sector (â&#x20AC;&#x2122;000s)

Manufacturing

Wholesale, retail, repair of vehicles

200

Accommodation and food services

Health and social work

Construction Education

Admin and support services

Prof, scientific, technical activ.

100

Transport and storage

Information and communication Financial and insurance activities Mining and quarrying Other service activities Arts, entertainment and recreation Agriculture, forestry and fishing Electricity, gas, air cond supply Extraterritorial organisations

Public admin and defence

0

0

2

4

6

8

10

Households as employers

12

14

% Employees that are EU nationals

Source: ONS DGT-NS presentation-26Feb15-v2.pptx

18

1

Broaden personal experience

65%

2

Acquire work experience

65%

3

Better career opportunities

4

Overall attractive job offer

5

Improved salary prospects

6

Better standard of living

7

Opportunity to live in a different culture

8

Challenging yourself

9

Learn a new language

10

Meet people/build new networks

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

Top reasons for considering a foreign work assignment

59% 58% 56% 55% 54% 53% 47% 45%

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: Total sample size was 203,756; multiple answers were allowed.

DGT-NS presentation-26Feb15-v2.pptx

19

1

Appreciation for your work

2

Good relationships with colleagues

3

Good work-life balance

4

Good relationships with your superior

5

Company's financial stability

6

Learning and career development

7

Job security

8

Attractive fixed salary

9

Interesting job content

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

Happiness on the job: Most and least important factors

Compensation package Work environment Job content and opportunities Company reputation and image

10

Company values

... ... ...

22

Opportunities for travel

23

Flexible work models

24

Additional benefits

25

Family support programs

26

Company car

Source: 2014 BCG/The Network proprietary web survey and analysis.

Note: Based on responses from all survey participants; total sample size was 203,756.

DGT-NS presentation-26Feb15-v2.pptx

20

The Talent challenge: Three recent BCG reports have looked in detail at different dimensions 1

Global Workforce Crisis Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved.

• Workforce supply and demand throughout 2030 • 25 major economies incl. the G20

1

2

3

2

3

Decoding Global Talent

Creating People Advantage

• 200,000 job seekers from 189 countries • Talent mobility and job preferences

• 3,507 executives from 101 countries • 62 interviews with senior HR leaders

DGT-NS presentation-26Feb15-v2.pptx

21

Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

Talent management: Most organisations find it hard to do it well â&#x20AC;&#x201C; but those that do reap the benefits

DGT-NS presentation-26Feb15-v2.pptx

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Back-up

Poland accounts for ~30% of EU nationals resident in the UK UK Resident by EU Nationality (2014) # EU Residents in the UK Copyright Š 2014 by The Boston Consulting Group, Inc. All rights reserved.

1,000 853 800

600

EU8 & Other EU

400

331

EU14

175

200

175

170

160

155

131

131

160 108

85

82

143

79

Ireland

Romania

Portugal

Italy

France

Lithuania

Germany

Spain

Latvia

Hungary

Netherlands

Slovakia

Other EU14

Other EU

% Total

Poland

0

29%

11%

6%

6%

6%

5%

5%

4%

4%

4%

3%

3%

3%

1%

<1%

Source: ONS DGT-NS presentation-26Feb15-v2.pptx

24