Lynda Gratton - The Future of Work

The Skill Gap: Asian Style

One of the paradoxes of contemporary business life is that, just as unemployment soars, the number of unfilled vacancies increases. In the USA right now there are over 3 million unfilled jobs, while in countries like Spain, youth unemployment stands at a jaw dropping 47%. The extent of the gap between what employers need and what the labour market provides in terms of skills and talents seems to be continuously widening.

 

Why the skill gap is here to stay.

This is not a surprise. There are three trends that we believe will only gather momentum and, as they converge, will continue to impact on the extent of the skill gap. None of these trends will go away fast; in fact, our research suggests that they will only accelerate in their velocity.

The most obvious creator of the gap is technological advancement within work. This has been felt most in semi-skilled work, where business analytics have replaced many clerical activities, while much service work has been outsourced from the high-cost West.

Historically, these were jobs that those with minimum educational qualifications could perform.  But it’s not just about technology replacing semi-skilled work. Increasingly, the knowledge and skills that high value jobs demand has shifted to engineering, IT and the sciences. This is good news for countries like Germany and India, where these disciplines are considered a good professional choice – but bad news for the UK and the USA, where fewer students take these options. To make matters worse, the Asian students who fill the science classrooms of the West are increasingly likely to take the first plane back after graduating, rather than staying and filling those vacancies as they might have in the past.

Demography is also playing a hand in the skill gap: Over the next decade, the largest workforce cohort the world has ever seen - the Baby Boomers - will rete in their millions. Many will take with them the deep tacit knowledge that has come from a lifetime of experience, and which they have often failed to bequest to those members of Gen X who follow them. This demographic time bomb is particularly deadly in sectors such as aerospace and pharmaceuticals, which have traditionally had long apprenticeships.

 

The Asian Response

Anxieties about the skill gap are no less prevalent in Asia. With 15% compound growth rates and, in many countries, a missing management class, companies across the region are deeply aware that this could prove a significant barrier to growth.

However, what is interesting is the speed, depth and complexity of their response. Take Singapore: here is a country, with few resources save its people, with aspirations to play a significant role in the industrial life of Asia. For them, closing the skill gap is crucial. This is achieved by actively creating close ties and a constant information flow between the key stakeholders, be they in companies, the government or educational establishments. The Ministry of Manpower and the Economic Development Board have the role of coordinating this flow of information, and provide the resources to  ‘nudge’ when necessary. This could mean, for example, supporting Unilever’s opening of a major leadership campus, funding scholarships in high value skills, or working closely with pharmaceutical companies and Western universities to build a cluster around bioengineering.

In India, the speed and scale of the response has taken a very different form, spearheaded not by government, but by the private sector. Indian companies face a huge potential skill gap for, while the technical education in the Indian Institutes of Technology is of a high level, the general education standards across the country are poor. For Indian’s rapidly growing IT sector, represented by companies such as Wipro, Infosys and TCS, this could be a disaster. Yet instead of accepting this, these companies have reached out into communities across the continent to significantly impact the development millions of youngsters. Executives at Wipro, for example, work with tens of thousands of colleges across India to train teachers to develop IT skills, build state-of-the-art curricula, and encourage students to become what they term ‘work-ready’. With a recruitment target in 2011/12 of 60,000, the teams at TCS play a similar role in helping young people across India understand from an early age what the most valuable skills for the future are, and how best to acquire them. Like Infosys they also work closely with hundreds of thousands of teenagers to actively increase their skills.

The global skill gap is here to stay for as long as technological advances, globalisation and demography continue to redefine work. For some countries, it will be the government that takes the initiative to bridge the gaps. For others, it will be companies themselves who will step up to the challenge. What is clear is that, if neither of these stakeholders are actively engaged nor prepared to put significant resources into the problem, the unemployment rates now seen in Spain could become the norm for many countries in the West.

When Generations Fight

I have a fascinating insight into the future of work through the 45 corporations across the world we are studying as part of the Future of Work Research Consortium. Last month we asked 2,500 executives from these companies to rate the areas they believed would  be critical for the future, together with the extent to which they believed their company was currently competent. We gave them a list of 20 areas that an earlier study had shown would be important for the future. This list included for example ecosystems, open innovation, flexible working and networked leaders.

What was extraordinary is that almost a quarter rated ‘intergenerational cohesion’ as the most significant risk their company faced, and many more rated it as one of the top three risks. This was not an isolated area of risk, but rather was seen to be a risk by executives in both West and Asia companies, and indeed across all industrial sectors. Their concern was that the potential differences and conflicts between the generations could lead to poor cooperation and knowledge sharing, but might also flare into more open sources of conflict and dissatisfaction.

Five Unique Generations at Work. 

The potential opportunities and conflicts that are arising between generations are a recent phenomena and are a factor of both demographic changes (particularly around reducing birthrates and enhanced longevity) and accelerating technological and societal trends (particularly around the use of social media and family experiences). Over the next two decades, many companies will have potentially five distinct generations in the workforce: The Traditionalists (born around 1928 to 1945); the Baby Boomers (born around 1945 to 1964); Generation X (born around 1965 to 1979); Gen Y (born around 1980 to 1995); and Gen Z (born after 1995).

Generations fight for a number of reason. They don’t understand each other, they have differential access to resources and power, their working style and use of technology is in conflict, or they are not really sharing knowledge and experience with each other.

Of course generational conflict could also be great – really create innovation, remove some old style thinking, bring creative tension. However, if companies are to move to creative rather than destructive tension, it seems to me they have to ask themselves three key questions:

1. Does technology favour one generation? The generations communicate with each other differently and one potential source of tension is that corporate communication typically favours the Baby Boomers’ preferred mode of communication rather than the younger generations. Typically, Gen Z and Y use social media such as MySpace, Facebook, LinkedIn, and Ning to access information instantly, to multi-task, and to build valuable networks and stay connected; typically Gen X use portals; whilst Baby Boomers are most comfortable with e-mail as their primary technological communication tool. Yet many companies have banned Facebook and social media, which is the lifeblood for the youngest generations and by doing so have inadvertently favoured one generation over another.  

2. Has flexibility become embedded? Each generation would value greater flexibility. Gen Y would like greater work/life balance in jobs that can be overwhelming; younger Gen X’s would like maternity and paternity leave and time off to spend with their young children, the possibilities of sabbaticals, and to temporarily step away from frontline into less demanding roles, and older Gen X’s can find themselves with ageing parents who need care; whilst Baby Boomers would like sabbatical breaks and the opportunities to work more flexibly nearer the time of their retirement through part-time and reduced hours. What is clear is that the inflexibility of work will create ever greater conflict across the generations as those that need it most (typically Gen X) are denied it. There are many reasons why the rhetoric of organizational flexibility has rarely been delivered in practice: a focus on being present rather than making results, few if any senior role models prepared to work flexibly, and under- designed and over complicated jobs. But if generations are to work together, flexibility has to be a reality.

3. Is cross-generational mentoring taking place?  There are important exchanges to be made between generations; Gen Y in particular are keen to build strong functional skills and industry knowledge and insights that those more experienced can help develop and yearn for feedback; whilst Baby Boomers want to develop their expertise in the use of social media and newly developed technology. These can be crucial issues as Baby Boomer retire taking with them valuable knowledge, insights and connections. However, too often mentoring does not take place because executives are too busy, too stressed and feel overwhelmed and under skilled. Yet the generations have so much to teach each other if only the time and resources could be focused on this.

It seems to me that the creative tensions between the generations can be a real source of innovation and excitement. Have you experienced tensions between generations – and what do you think can be done to ensure these tensions are creative rather than destructive?

 

 

 

Asia and the West Differences? - the four reasons why it’s a tough question

As I move back and forth from Europe and the USA, to Singapore and India – one of the questions I encounter is ‘what are the differences between Asia and the West?’ The subset of this broad question is– are employees different (more cooperative, more skillful, more educated, more determined?) – are leaders different (more authoritarian, more inward looking, more specialized?) – are companies different (more hierarchical, more global, more innovative?) This question becomes ever more crucial as we look forward to the next couple of decades.

This question of Asia and the West arose again as we launched the Pan-Asian Hub of the Future of Work Consortium in Singapore this week. With over 50 people at the launch and another 60 expected at the London launch in November, this is a great crowd to play this question through.

But the more I get to think about the future of work – the less I can really answer this question of Asia and the West without falling into old stereotypical responses. It’s becoming increasingly clear to me that one of the profound impacts of the Five Forces we are exploring in our research, is that trends such as ever increasing technology and globalization are making it almost impossible to make any broad statements about the difference. Here are four reasons why:

Multinational Champions. Across Asia we are seeing the emergence onto the world stage of the multinational champion able to fend for itself in this world stage. Whether it’s Wipro, TCS or Infosys in India; Singapore Airways and Olam in Singapore; or Lee & Fung and Nanjing Automobile Group Corporation in China, these companies have world-class leaders, world-class systems and world-class processes. They are barely indistinguishable from their Western competitors and each have their own unique ‘signature’ that goes way beyond any Asian stereotype.

Global Talent Pools. It’s clear to me that the most talented Gen Ys in India, China or Malaysia are nearer in ideals, values and mindset to their peers in California, Moscow or Munich … than to their own parents. This is the world’s first truly ‘joined up’ global generation with skills and values that span the world. So you thought that ‘work-life balance’ was a western phenomenon of Gen Y? Then talk with the youngsters in Mumbai and you will hear many of the same issues. Technology and globalization has connected this generation to such an extent that to talk of differences is to miss the enormous similarities.

Regional Differences. Demography plays a key role in our research on the Future of Work – both in terms of the creation of talent pools and consumers, and indeed with regard to aging and pensions. With regard to demography, one of the Asian stereotypes I hear is that ‘ Asian families are bigger’. Well yes, they are in rural India (though rapidly declining) – but they are not in Japan, and certainly not in China. Or a western stereotype such, as ‘western managers are less hierarchical than their Asian peers’. Well perhaps in Finland and some UK companies, but not in many German or French companies that stick resolutely to their hierarchies. Broad sweeps – such as ‘Asia’ or ‘The West’ are just too general to pick up the huge variation between countries, and even within regions.

Families, Governments and Local Companies. Finally, it’s really hard, even within a single region, to make any broad sweeping generalization about ‘ leadership capabilities’ or ‘management practices’. The reason is simply that companies in the same location come in so many different types and varieties. Take family firms for example. Japan and Europe have some of the oldest family firms in the world, where resources have been carefully handed down for centuries. These family firms, which are prevalent across Asia – just as they are in the USA (Mars or Cargill for example), and Europe (Fiat or Banco de Santander) have typically their unique governance structures, managerial practices and resource allocation measures. They are different from the ways that state owned companies are lead and governed. The implication is that even for firms within a single location, the history of the firm is likely to play an even greater part than where it is located.


It is of course attractive to fall back on broad generalizations, particularly those associated with ‘Asia’ and ‘The West’. But as we learn more about the variety within regions and countries, these broad generalizations really have very little foundation. So much so, that when people ask me ‘what are the differences between Asia and the West’ I end up looking rather blank and saying ‘well it depends’

Am I being particularly blind about this? Are there differences between these parts of the world that you think hold up to scrutiny – I’d love to hear your views.