To stay competitive and reap top talent, small businesses will need travel beyond the borders of the U.S. for employees and learn to work effectively with workers on a global scale.
We are living in an era in which leaders, from managers to executives, in both large and small organizations, must possess a truly global outlook. A large and increasingly important part of this involves building and managing international, diverse and increasingly remote workforces.
Most recruiters had it easy before 1995. Relatively high unemployment and a steady, if small surplus of talent combined with low turnover made it a cushy job. The "War for Talent" between 1995-2000 created a new recruiter--far more aggressive, far more technologically savvy, and far more connected. After a four-year lull, the game is again changing for recruiters. For a short while, some may get away with a provincial, shortsighted view of talent. But while they're tapping an ever-decreasing pool of U.S.-based talent, their colleagues and competitors will be nurturing global relationships and building their networks into the farthest reaches of the planet. Needless to say, the latter will ultimately prevail.
In the April issue of Leadership Excellence: The Journal of Human Capital Management, (pg.5) Mike Eskew, CEO of UPS says, "... there is no more pressing ethical issue today than preparing people for a world that is coming closer together through trade." 1 He goes on to say that 95% of worldwide population growth over the next 10 years (over 1 billion people) will take place in the cities of developing countries. By 2015, only one U.S. city, New York, will be in the top 20.
The worldwide workforce is coming together rapidly, but it is doing so in ways that will challenge the assumptions of the past two centuries. Due to post 9/11 security measures, a lackluster job market between 2001 and 2004, and the efforts of other countries to hold on to their top talent, far fewer scientists, engineers, academics, and entrepreneurs are entering the U.S. today. As workforce growth declines and the U.S. population grows older, the attraction of foreign skilled workers will be of paramount importance but it will fall far short of what's needed.
According to David Heenan, author of Flight Capital, in 2004, "... the number of foreigners with advanced degrees or exceptional skills allowed into the U.S. plummeted 65% while international student enrollments fell for the first time since the early 1970s." 2 Australia, Canada, and parts of Western Europe, on the other hand, have seen foreign student applications increase by more than a third since 2001.
In Dr. Richard Florida's 2004 book The Flight of the Creative Class,3 he warns against a scenario in which the world's top scientific, IT, economic and creative talent stop aspiring to ply their trades in the U.S., indeed, stop even wanting to hold their conferences here. As Yale professor Paul Kennedy puts it in The Rise and Fall of Great Powers, the reversal of America's two hundred year brain gain is "Worldwide, ominous and growing."
Of course, organizations will also need to look at diverse and less tapped segments of the domestic workforce to overcome talent shortages--older workers, new immigrants, native Americans, the disabled and others. And to make matters more difficult, managers will have to cope with four distinct generations of workers--Gen Y, Gen X, Baby Boomers and the WWII/Depression era cohort--each with its own preferences and quirks. But in the longer-term, the biggest challenge will be building, keeping, and managing remote, global and incredibly diverse teams.
For those of us who are finding it difficult to recruit and hold on to top talent today, and those who found it nearly impossible during the heated economy of the late 1990s, much worse is yet to come. From Ireland to India and China to South Africa, the global war for talent has started, and the U.S. is no longer the clear destination of choice. This means organizations will have to source their talent globally and, in many cases, manage it remotely. This will require new skills and different approaches, expertise that is in short supply.
Culturally, small and mid-sized organizations may have an advantage over their multinational counterparts in the global war for talent. Patrick Lencioni, in his article, "Profiles in Humility" (Leadership Excellence, April, 2006)4 talks about the importance of modesty and openness among leaders. He profiles three world-class organizations, each of which has much to boast about, yet is extraordinarily humble. This lesson is among the most important for global leaders.
There is no place for arrogance in building an international company, particularly now that they must be built on global talent. There is no longer a place for organizations that hope to implement a global corporate monoculture to dominate local ones. Small and mid-size companies have long understood the importance of fitting in with the bigger culture and norms in which they operate, this will serve them well as they build global workforce capacity.
In Flight Capital, David Heenan recommends that "Every American leader should buy a plane ticket to China and India to see firsthand the economic supernovas rising in once isolated locales."5 Having returned from a three-city tour of India a week ago, and now writing this editorial from Johannesburg, South Africa, I would go further. Witness first hand the rise of the East but accept and embrace it also. Start building the relationships today that will help you understand and tap overseas talent, and start building global workforce management skills among your leaders.
Small companies benefit from having a global perspective, from building an international workforce and from extending their products and services into new markets at least as much as "enterprise-scale" operations do. But time is not on our side in the race for top global talent. The time to act is now.
1 See www.humancapitalinstitute.org for information about the journal and the cited article
2 Flight Capital, David Heenan (Davies-Black Publishing, October 25, 2005)
3 The Flight of the Creative Class, Prof. Richard Florida (Collins, April 12, 2005)
4 Leadership Excellence: The Journal of Human Capital Management, April, 2006, pg.7
5 Flight Capital, David Heenan (Davies-Black Publishing, October 25, 2005)