07/17/2014

Brazilian resilience – it’s not just about football

Evandro_CarrerasAuthor: Evandro Carreras, Partner, PwC Brazil

What’s the penalty for not being prepared? The Brazilian football team learned the hard way in the FIFA World Cup semi-final last week. For faced with the loss of their most valuable talent, and then a competitor that made the most of every opportunity, the team was totally unable to change its game to recover.

As a business leader, chances are that you can sympathise somewhat with the Brazilian team managers, right? Talent shortages, inability to adapt, competitive surprises, lack of agility in a fast-paced game… these are challenges we all deal with daily. So what can we learn from Brazil’s downturn in football fortunes?  Make sure you’re resilient enough to handle the risks of a totally changed game.

Nation deflated
Commenting on the defeat, the Brazilian President Dilma Rousseff urged Brazilians to "Get up, shake off the dust and come out on top". In other words, she was calling on their resilience. Resilience includes the ability of an organisation (a business, a nation, or a sports team) to be ready for crises, so that they can recover speedily and come out ahead. Nobody had expected the team to find itself in the situation it faced going in to the semi-final. So when the German side rapidly took the lead, the Brazilians were unable to bounce back.  The team, and consequently the nation, was left in shock, deflated. How will they pick themselves up from this?

Unready for risks
Crises and the resulting disruption come in many forms. They can hit at home or away. They can be expected risks or totally unforeseen. And they are often followed by aftershocks. For Brazil’s national football team, the “catastrophe” as their coach Luiz Felipe Scolari put it, started when one of their key players was injured in the quarter-finals. Next came the suspension of the team captain in the same match. Suddenly, valuable resources were no longer available. It happens in the business world too – strategies risk stalling because of a shortage of key skills. Indeed, in PwC’s 17th Annual Global CEO Survey, 63% of CEOs say they are somewhat or extremely concerned about the availability of key skills.

Football fans around the world, soccer for the American fans, wondered how the Brazilian team managers would react. Would they stick to plan A, and address the gap with a “stock replenishment”?  Or were they ready to re-assess the new reality, adapt their strategy with agility to capitalise on their remaining strengths, and switch to an alternative, but rehearsed new team constellation? Sometimes crises inspire innovation, a chance to surprise the competition, new ways to play the game, but nevertheless need a prompt response.

Unbeautiful game
They opted for replacement, but with a different kind of player, an underworked business continuity plan if you will. The German team read the new situation accurately and Brazil was in crisis management mode. The crisis management plan seemed to be missing though. There was no apparent leadership on the pitch. Nobody took responsibility for corralling and re-focusing the team on the most urgent priorities – no more goals. Communication between players seemed non-existent, with each man trying to fix the problem for themselves, rather than pulling together, using the strengths and assigned responsibilities of the whole team.

When disasters hit, rehearsed crisis plans have to kick-in, leadership needs to be immediate, communication clear, information shared, and reactions speedy - but agile - as the situation develops rapidly. These factors strengthen resilience and help you recover. None of them were present and goals three, four and five went in. Brazil’s defence wasn’t prepared for the attack, their team spirit was gone.

Fit for the match
Never before has a team with the resources or perceived skills of Brazil been in this situation in a World Cup match. Brazil had not seen itself in this situation in almost 100 years. But just because something has never happened, it doesn’t mean it never will. Resilient organisations constantly look out for the unpredicted and the unknown. They know that disaster doesn’t discriminate – it can strike anybody. They run the scenarios, size up the risks and prepare their organisation for them, with rigour, structure, planning, training and skills. This is what Germany illustrated. According to their coach, the German team had a “clear and consistent game plan.” But even this result must have been unexpected for them. They stayed in control of the situation, they demonstrated professionalism, ability, knowledge and preparedness.

Leading organisations don’t leave resilience to chance. However, observing their inability to bounce-back, one can only wonder if this is exactly what the Brazilian team had done. They lacked their best talent, they were overpowered by a better-prepared competitor, and they couldn’t react when crisis struck.

Can they bounce back?
What will happen now? We can expect aftershocks. Given Brazil’s recent political turbulence, some people fear that the collective disappointment might prolong political and economic unease. But the nation’s people have every reason to shake off the dust and be proud anyway. They staged a successful tournament, and have received much praise as hosts to the largest world sporting event. Brazil’s resilience is about to be put to the test. 

 

Evandro Carreras is the Advisory Risk Leader and a partner at PwC Brazil. He specialises in the financial services industry. Evandro has more than 25 years of auditing and risk consulting experience and has worked with industrial and financial clients domestically and internationally.

07/10/2014

Recruiting and retaining new talent in the digital age

Megan Brownlow photoAuthor: Megan Brownlow, Principal, PwC Australia

Across many industries, we’re seeing digital transformation erode the old dividing-lines between sectors. From financial services to retail and from utilities to communications, traditional barriers are falling and new players entering the fray.

Virtually every client I speak to says that this blurring of industry boundaries is impacting not just their strategy and operations, but also their talent needs. And nowhere are the impacts on talent and skills more profound than in entertainment and media - an industry that’s right in the front line of digital disruption.

Digital drives collisions and convergence
That’s why I believe that entertainment and media can provide some valuable lessons around talent leadership and retention for CEOs in other sectors, as digital technologies trigger collisions and convergence across more and more industries.

As highlighted by PwC’s recent Global Entertainment and Media Outlook 2014-2018, the industry's former ‘cool’ cachet in the employee marketplace is eroding, as the barriers with formerly distinct sectors such as technology and communications continue to dissolve. This change is coinciding with a dramatic rise in the importance of digital technologies and analytics-driven data insights. As a result, entertainment and media companies need new talent with different skillsets – something which my colleague, David Lancefield, explores in more detail in this video.

Two challenges to tackle
These shifts we’re seeing in the entertainment and media industry are being mirrored to varying degrees in many other sectors – and in my experience, they raise two related challenges. One is a need to recruit, integrate and retain new skillsets from adjacent industries – in the case of entertainment and media, top-end talent in data analytics – where competition in the recruitment market is increasingly intense.

The second challenge is harder to address: a need to stop recruiting on the basis of ‘similarity attraction’ on the part of the existing management, and start recruiting people who are very different from the current workforce. In entertainment and media, a history of recruiting and promoting from within has seen businesses become dominated by ‘right-brained’ people who are creative and intuitive. In other sectors such as technology, the dominant type has been ‘left-brained’ logical and analytical personalities.

Abandoning the stereotypes
In my view, digital blurring means successful businesses in all sectors now need to break away from their embedded recruitment stereotypes, and ensure they develop or buy both types of talent. Whichever type they need, my experience suggests that the best solution is to make diverse recruitment easier, through five specific actions:

  • First, raise the HR function to a higher status in the organisation with more resources, capabilities and influence, to reassess the business’s talent needs and provide a better understanding of how external changes are affecting skills availability.
  • Second, invest in social enterprise technology and collaboration tools, which younger recruits now expect as the core of their workplace experience.
  • Third, bring new talent into the heart of the business through steps such as co-locating new and existing employees, and discrete social monitoring to make sure new people are not ‘ground down’ by the incumbent culture.
  • Fourth, incentivise everyone in smarter ways more tied to the business’s outcomes than the traditional flat salary, bonus, or incentive plan.
  • Finally, take on board the growing power and importance of trust and integrity, by setting the right tone from the top and embedding a culture of ‘doing the right thing’ to rebuild employee engagement.


In the digital world, companies need new talent that’s fundamentally different to their current workforce. But to recruit and – more importantly – retain it, they’ll also need a new culture. And, in my experience with clients, that’s the hard part.

To learn more, take a look at the article, Time to look to adjacent industries for new talent – and new ways to keep it on board.

 


Megan is an entertainment and media industry specialist at PwC Australia, where she performs strategy, due diligence, forecasting, and market analysis work for clients. In 2013, Megan was named by industry journal, AdNews, as one of the top 20 most influential women in media and advertising in Australia.

 

06/16/2014

Exciting times ahead for mobile advertising

Colin Light_5181Author: Colin Light, Partner, PwC China

Walk along a crowded thoroughfare anywhere in the world, and you’ll see a pattern of behaviour that would have been regarded as plain weird just two decades ago: people walking along with their eyes fixed on a mobile device, only looking up to avoid bumping into other pedestrians. What’s more, studies show they continue to scrutinise these devices even when they’re at home watching a larger screen.

The message is clear: eyeballs are being dragged away from print media and larger screens to smartphones and tablets. Naturally, advertising spend is following suit: in the five years to 2018, our Global entertainment and media outlook 2014-2018  projects that mobile advertising will grow at a CAGR of 21.5%.

But this migration involves more than a shift in revenues and devices, which I reflect on in a recent video blog. It also transforms advertisers’ ability to measure effectiveness and returns, by tailoring and targeting ads to the ‘audience of one’ and gaining instant feedback on what consumers do in response to their ads.

However, companies looking to turn this vision into reality face one potentially deal-breaking hurdle: the concerns over privacy that make many consumers hesitant to share personal data – especially when the outcome is pseudo-personal (and sometimes intrusive) mobile promotions.

At PwC, we recently surveyed consumers globally to find out what data they would be willing to share. A hierarchy emerged, ranging from information they’d prefer to keep to themselves (such as social security number), to information they’re willing to ‘trade’ for value (such as gender). 

Mobile advertising strategies
However, a closer look reveals some interesting contradictions between what people say and do. For example, they say they’re unwilling to share personal mobile contacts. But several highly successful messaging apps ask people for access to their contacts on sign-up, and this hasn’t put many users off.

Why the anomaly? In my view, it largely comes down to how you ask the question. “Would you like to receive ads on your mobile every day?” Of course not. But, “Would you like to receive tailored location-based offers and recommendations of what apps your friends are using?” Yes please!

Building on this, we’ve developed an approach to mobile advertising that we’ve termed EI2, because it unites the three attributes of Engagement, Identity and Insight:

  • Engagement – Deep engagement with consumers drives the economic exchange inherent in mobile advertising. Advertisers can build it by providing people with value and a positive user experience, through relevant, convenient offers and messages that reflect their interests and context.
  • Identity – Consumers need to feel the advertiser knows who they are and respects their identity, privacy and individuality. This means enabling them to opt in or out, to decide what they’re willing to share or keep private, and to trust the company not to use their information for anything they haven’t agreed to.
  • Insight – This involves informing consumers about choices made by other like-minded people, and recommending products and services that enrich their lives, driving both transactions and engagement. This might happen once a month or five times a week – but either way, it’s much appreciated.


In our view, mobile advertising that embraces EI2 will be best-placed to generate consumer trust and purchases – creating higher and more measurable value for advertisers in all sectors. 

To explore this topic further, take a look at the full article: Exciting times ahead for mobile advertising: the EI2 route to success – Engagement, Identity, Insight.

 

 

Colin is a partner in PwC China and Hong Kong’s Consulting practice with over 15 years’ global experience, specialising in commercial and technology strategy in digital services including social media, mobility, data analytics and cloud services. Read more

 

06/04/2014

As growth goes digital, advertising leads the way

MarcelFenez0609JPGAuthor: Marcel Fenez, Global Entertainment and Media Leader, PwC

In my everyday conversations with entertainment & media CEOs across the world, I often hear that the consumer is leading the charge to all things digital. To an extent that’s undoubtedly true: if consumers weren’t migrating with such speed and enthusiasm to digital behaviours, devices and services, then companies wouldn’t invest in them.  Yet surprisingly, as our Global Entertainment & Media Outlook 2014-2018 confirms, growing digital revenues in the consumer segment over the next five years will be a tougher challenge than in the other two key segments of advertising and internet access.

In my new video blog, I talk through some of the key themes from this year’s Outlook. And in terms of advertising’s leading position in the migration to digital revenues, our growth projections speak for themselves: Outlook - Figure 2

  • Digital revenue from advertising has already surged from 14% of total global advertising revenue in 2009 to 25% in 2013, and will hit 33% by 2018, supported by mobile Internet penetration reaching 55% in that year.
  • Digital revenue from consumers – excluding Internet access spending – accounted for just 10% of consumer entertainment & media revenue in 2013, and will edge up to 17% in 2018.
  • The fastest growth in spending will be in the third segment – Internet access – which will see its share of total global entertainment & media spending grow from 25% to 30% over the five years.


Differing dynamics
So, why the disparities? It’s not that consumers are holding back from spending on digital content and services. Rather, the growth differential springs from the contrasting dynamics in each sector. As advertisers’ digital options and channels expand and proliferate, they’re migrating their budgets toward digital at breathtaking speed: by 2018, global Internet advertising will be poised to overtake television as the largest advertising segment. In contrast, shifting consumer revenues to digital, by rolling out new services and getting people to buy them, is a much longer haul.

Meanwhile, revenues for Internet access will continue to benefit from its position as a ‘gatekeeper’ to the digital services consumers want. In light of this role, the growth of ‘24/7 access’ and micro-transactions suggest that the key to monetising the digital consumer is to adopt flexible business models that offer more choice and better experiences. Electronic home video over-the-top streaming and digital music streaming will be two of the fastest-growing consumer sub-segments over the next five years.

Opportunities across industries…
In our increasingly digitised society, I believe these growth trends – and the changing consumer behaviours that are driving them – have implications that go far beyond entertainment & media. To illustrate why, here are just some of the tipping-points that the Outlook finds are now within sight:

  • In 2009, TV advertising revenue globally was double that of Internet advertising – but in 2018 Internet advertising will be a mere US$20bn behind TV advertising.
  • Internet TV advertising will double its share of total TV advertising revenue in the next five years.
  • Mobile advertising will overtake classified Internet advertising in 2014.

For advertisers across all sectors – from consumer products to automotive, and from financial services to retailing – the rapid expansion in digital and mobile advertising underlines the scale of the opportunity to reach more people in ever more engaging ways, and give them more choice and possibilities than ever before.

…with ads tailored to mobile
However, to do this successfully – particularly in mobile advertising – companies will have to do much more than simply migrate ads from the big screen to mobile. While this might be a viable first step, long-term revenues from mobile advertising will demand the development of formats that take advantage of the medium’s native characteristics.

Examples include ads that achieve higher relevance for consumers by using their mobile device’s GPS sensor –building a view of their location over time, and taking advertising effectiveness to a new level. These ads would achieve this by boosting all three key success factors highlighted in the Outlook’s ‘hot topic’ article on mobile advertising: Engagement, identity and insight -  or EI2.

As advertising spearheads the migration to digital and mobile revenues, companies in all industries should follow the money. In my view, it’s an opportunity no business can afford to ignore.

 

Marcel is the global leader of PwC’s Entertainment & Media practice with over 20 years experience of working with and advising companies within the industry. Read more.

06/02/2014

Developing tomorrow’s CEO today

Ken-FavaroAuthor:  Ken Favaro, Senior Partner, Strategy&

Who will be leading your company in 2040? That’s when today’s graduates will be stepping into the CEO position, and he or she (that’s right, we expect one-third of 2040’s incoming CEOs to be women) will need skills for the complex environment of a quarter century from now—skills companies aren’t necessarily looking for, or cultivating, today. How can you begin your search for tomorrow’s CEOs?

First, consider the future landscape. As the chief executive class of 2040 climbs the corporate ladder, a major shift will occur: most companies will become either ‘integrators’ or ‘specialists’. Generally speaking, integrators will be large-scale organisations with distinct, solutions-based value propositions, while specialists will provide the individual products and services the integrators sell. This division of the corporate landscape suggests the need for a new breed of highly entrepreneurial, highly focused CEOs. Integrator CEOs will focus on dependable, reliable execution; superb supply chain management; and deep understanding of customers. The CEOs of specialty firms will need to be even more sprightly, shape-shifting entrepreneurs, adept at shifting strategies and entering and exiting businesses rapidly—tomorrow’s version of Silicon Valley’s ‘serial CEOs’.

Next, think about the passport stamps these young people will be acquiring throughout their educations and careers. Based on the analysis we conducted for Strategy&’s 2013 Chief Executive Study, we suggest searching out men and women who began developing their leadership, entrepreneurial, and collaborative skills in school. They should have experiences leading and working in teams, and spent time in at least one place that’s dramatically different from their home region. They may well be fluent in several languages, including programming languages.

Look for curious and innovative young people, who have invented something or who have a passion for nanotechnology, advanced robotics, or new energy and transportation ideas—and have turned that interest into a bona fide business.

An MBA will be de rigueur, as well as early-career international corporate assignments or perhaps a stint in a mission-driven service organisation. The CEO class of 2040 will need a worldliness, a respect for the power of diversity, an empathy, and emotional intelligence that far outpaces what today’s CEOs had at their age, and likely possess even now.

In preparing for the CEO class of 2040, we recommend taking the broadest view of talent development. Look far and wide; support schools and programmes that offer the best, most applicable experiences to tomorrow’s leaders; offer the widest and deepest possible array of experiences to promising young people; encourage women; and focus on deepening bench strength in the special skills that the future leadership of your company requires. And remember that CEO tenures are only about five years now—so with every CEO you choose between now and 2040, you’ll have a chance to move closer to this ideal.

 

 

Ken Favaro is a Strategy& Senior Partner responsible for enhancing the firm’s capabilities and reputation in value based management, strategic management, and organic growth, working closely with the organisation and change leadership team. His focus is on the consumer, healthcare, and financial industries. Read more.

05/23/2014

India: looking to the future

Bharti-gupta-ramolaAuthor: Bharti Gupta Ramola, Markets Leader, PwC India

India has voted in a party with a simple majority for the first time since 1989 in the sixteenth general elections. This election has resulted in many firsts: the first non-congress majority of independent India, the largest electorate turnout of 550 million people (66.8% of the 814 million total), and the highest number of women winners (although still only a lowly 11%). The Prime Minister-elect, Narendra Modi, exulted, “India has won”.

The Indian bourses began their celebrations early, in anticipation of a growth-oriented government, as the six week poll process got underway. For a look at some of PwC’s pre-election commentary, see the May edition of Global Economy Watch. You may already have seen the many asks of the new government as well as the many predictions about which actions the Narendra Modi-led government will prioritise. I’m going to add to this list by dipping into the results of PwC’s 17th Annual Global CEO Survey, looking specifically at what CEOs in India are most concerned about and what action they’d like the government to take.

CEOs in India listed exchange rate volatility, inadequate basic infrastructure, over-regulation and a lack of key skills as top threats to growth. Not surprisingly, when asked to name government priorities, 79% unanimously chose improving infrastructure (electricity, water supply, transport, housing, and broadband).

The CEOs in India also felt that the government had been ‘ineffective’ or ‘greatly ineffective’ in developing an innovation ecosystem which supports growth, addressing the risks of climate change and protecting diversity, and maintaining the health of the workforce. Regulations were seen as an added burden that increased their cost of operations and made it more difficult for them to attract a skilled workforce. 

The new government will need to build trust with corporations. The CEO Survey found the level of trust between government and companies in India to be at the lowest level among all stakeholders (customers and clients, providers of capital, supply chain partners, employees, media, local communities and NGOs).

Last, but not the least, the new government will need to work overtime to feature India among the top investment destinations once again. The 17th Annual Global CEO Survey revealed that India had dropped from fifth position in 2013 to sixth position in 2014.

Clarity on government priorities and the way forward will be apparent as the newly-elected government presents its first budget to parliament in June. In the meantime, let’s enjoy the current optimism and hope that this ‘win’ for Narendra Modi is indeed a win for India.

 


Bharti joined PwC India in 1984. She's the Market Leader for PwC India and a member of the Indian Leadership team. Her previous leadership roles have included Transactions Leader and Financial Advisory Services Leader. Bharti is also a member of the Global Diversity and Inclusion Council of PwC.

05/14/2014

Ms CEO: increasing the odds that one of your successors is a woman

Authors: Per-Ola Karlsson and Gary L. Neilson, Strategy&

Mary Barra, Meg Whitman, Virginia Rometty. Female chief executives are still relatively rare—in 2013, they were only 9 out of 291 incoming CEOs at the world’s largest 2,500 public companies. But the companies they lead are increasingly notable in sheer size, global reach, and financial might—do we need to mention that Barra, Whitman, and Rometty run General Motors, Hewlett Packard, and IBM, respectively? And women’s ranks are growing—by 2040, female CEOs will comprise one-third of incoming CEOs, a ten-fold increase, we project in Strategy&’s 2013 Chief Executive Study.

For 14 years, our study has analysed the ebb and flow of chief executives at the world’s largest public companies; the 2013 study took a special look at our data on women CEOs over the past 10 years. We found women already running companies in all industries and all regions, though still only 2.2% of all CEOs in the past 10 years have been women.

We were surprised to find only two statistically significant differences in the professional backgrounds and tenures of men and women CEOs. First, female CEOs are more likely to be recruited from outside their companies than male CEOs (35% vs. 22% over the past 10 years), because companies aren’t doing a good enough job building their leadership pipelines. And in what may be an indicator of the challenges that female—and outsider—CEOs face, women are forced out of their jobs significantly more often than men (38% vs. 27 %).

 

Strategy& Hiring women CEOs
 

What can you do today as a CEO to ensure your company is giving its women their chance to get the top job and stay in it?  It seems clear that companies have not been able to cultivate enough female executives in-house and are losing the few they have to competitors. So you must lead an active approach to finding, retaining, and preparing your future women CEOs for leadership. You can start now with programmes such as sponsorships (in which senior leaders adopt women throughout the organisation and make sure to coach them, support them and find the right opportunities for them to develop).  And doing so may well have benefits beyond winning a skirmish in the talent war: companies that are able to hire more women CEOs from inside may also benefit financially, since our research shows that on the whole, insider CEOs generate higher returns over their tenures than outsiders.

 

Per-Ola Karlsson• Contact Per-Ola Karlsson

Per-Ola Karlsson is a Senior Partner with 25 years of consulting experience, based in Dubai. His main areas of expertise include strategy formulation, organisation development, corporate centre design and governance. Read more

 

Gary Neilson• Contact Gary Neilson

Gary L. Neilson is a Senior Partner based in Strategy&’s Chicago office. He has 30 years of experience with the firm, focused on helping Fortune 500 companies with operating model transformation challenges.
Read more

 

 

05/09/2014

China overtakes the US – a symbol of shifting global economic power

John Hawksworth photoAuthor: John Hawksworth, Chief Economist, PwC UK

According to one measure of economic size, GDP at purchasing power parities (PPPs), China could overtake the US as early as 2014 according to new estimates by the World Bank published last week. This is three years earlier than projected in our own World in 2050 study in January 2013, and five years earlier than previous IMF estimates.

The reason for this earlier overtaking date is not, however, that China is growing faster than expected or that the US is growing slower. Rather it reflects new estimates of the relative price levels in the two countries, suggesting that average price levels in China, compared to the US, were comparatively lower in 2011 than had previously been estimated.

As a result, the purchasing power of Chinese national income (GDP at PPPs) is now estimated to have been around 87% of US levels in 2011, compared to previous estimates of just under 70% of US levels in that base year. Since Chinese real GDP growth has been around 7-8% per annum since 2011, with US growth only around 2-3% per annum, calculations by the FT suggest that China could narrowly overtake the US on this measure as early as 2014, with a clear gap emerging in 2015.

This is all rather technical, and if we were to use current market exchange rates, rather than PPPs, to compare GDP levels, we would find that the Chinese economy is only around 60% of the size of the US, with takeover unlikely to happen until the late 2020s. Since businesses have to operate with market exchange rates, rather than PPPs estimated by economic statisticians, this means that the size of the Chinese market in dollar terms will still be quite a lot smaller than the US for a decade or more to come.

Furthermore, since China’s population is more than four times as great as the US, its average income levels (even measured using PPPs) are less than a quarter of those in the US. While there are increasing numbers of wealthy individuals in China, as well as a burgeoning middle class, it’s still not a rich country and may not reach current Western levels of average incomes until the middle of the century.

These caveats are important to note, but they don’t change the bigger picture that global economic power is shifting to the East, as documented in our recent megatrends analysis. This isn’t just about China as these new GDP at PPP estimates also show that:

  • India has risen to third place in the world rankings on this measure, overtaking Germany and Japan since 2005
  • Indonesia has risen to tenth place, only narrowly behind France and the UK and ahead of Italy.

Three other emerging economies (Brazil, Russia and Mexico) also now rank in the top 12 economies in the world on this measure, driven in part by strong demand from China for their exports of oil, gas, food and metals. This is likely to continue to keep global commodity prices high and volatile for some time, though it will also stimulate new sources of supply such as shale gas and shale oil in the energy sector.

It’s also clear that several emerging economies have run into turbulence recently, which is a reminder that these are still relatively high risk places to do business. Businesses and other investors therefore need a nuanced approach to assessing these risks based on a deep understanding not just of economic factors, but also a broader range of social, political, regulatory and cultural dimensions.

This is what we aim to cover in our ESCAPE index, which was published for the first time in February. This index shows that economies like India, Brazil, Indonesia, Turkey, Mexico and Nigeria, despite their great long-term potential, still have a long way to go to get their social, political and legal institutions up to the level needed to graduate to the advanced economy club.

So, yes, global economic power is shifting, but this will not be a smooth, linear process. Businesses need to develop appropriate strategies to tackle the opportunities and the risks presented by China and other emerging markets.

 


John Hawksworth is an economist who specialises in macroeconomics and public policy issues. He is Chief Economist in PwC’s UK firm and editor of our Economic Outlook reports. He is also the author of many other reports and articles on macroeconomic and public policy topics and a regular media commentator on these issues. Read John's full biography.

 

04/15/2014

Why we need adaptable talent

Michael RendellAuthor: Michael Rendell, Global HR consulting network leader

As parts of the global economy start to recover, we find ourselves in a business environment hampered by skills mismatches which are compounded by the multi-speed nature of the recovery.  Worldwide unemployment continues to rise while jobs go unfilled and demographic shifts alter the picture in much of the developed world. Half of all CEOs globally intend to increase their headcount over the next year, but 63% are worried about the availability of key skills curtailing their plans. A real paradox in a world teeming with more people than ever before. 

The capacity of a market to match supply and demand efficiently depends on the ability and willingness of employers and employees to adapt to changing circumstances and align skills with available opportunities. If this alignment is less than perfect, a mismatch occurs, optimum productivity can’t be reached and somebody (or everybody) is discontent.

In a fast-moving world, talent adaptability is critical. So what can employers, governments and individuals do to become more adaptable?

Adapt to survive infographic

Employers: Nurture, celebrate and embrace adaptable people

The organisations which will be the winners of tomorrow will need to be able to react quickly to an evolving business landscape and to innovate, innovate and innovate (and not be afraid to destroy and rebuild their business model repeatedly). Innovation is powered by diverse thinking and experiences so businesses need adaptable people.

There are two essential ingredients to adaptability. First, the ability of employers to look differently at sources of talent - investigating new geographies and sectors, as well as investing in existing employees by equipping them with the necessary skills and motivating them to adapt to meet new challenges.   Secondly, of course, this requires willing individuals who are prepared to embrace change and apply their skills somewhere new.

Employers need to cleverly balance internal mobility – developing and nurturing the adaptable people they already have – with external recruitment strategies that identify the skills they need from a wide range of sources.  Online professional networks give organisations access to a larger talent pool and, critically, access to passive candidates - those not actively looking for jobs.  More visibility, coupled with adaptable talent and broad-minded employers, creates better hiring.

Governments: Create the climate for adaptability
As nations look to support the vitality of their economies in an increasingly competitive global economic market, matching individuals’ skills with employers’ needs in a way that creates the most value for both – and for the economy as a whole – is crucial. Governments should play an active role in shaping a national mind-set that values, supports and nurtures adaptability. They need to use the levers at their disposal, such as tax incentives and immigration laws, and especially the education and training system. This is a long-term investment and one that governments must not subsume beneath short-term political goals.

Our recent 17th Annual Global CEO Survey found that although 41% of respondents feel that creating a skilled workforce should be a top priority for government, just 21% believe that their government has been effective in doing so. Talent adaptability drives more value for individuals, companies and national economies and, in my view, should be a key focus of government policy.

Individuals: Embrace adaptability in order to future-proof your career - don't try and predict the future; just be ready for whatever it brings
Individuals should also take a longer-term view of their careers and seek out work environments that will help them to be more adaptable in the future. Remaining open-minded about your career path and embracing change is key here.

And this isn’t something that only concerns the young. People at 40, for example, still need to plan for almost two-thirds of their working life. They need to be as adaptable today as they were on graduation – perhaps more so, given the difference between the skills they nurtured at the start of their career and those needed now.


The world won’t stand still – those who embrace adaptable talent are best placed to survive. Those who don’t may not.

Find out more in our new report, Adapt to Survive, which, for the first time, brings together the two of the most comprehensive sources of talent data in the world: the real-time behaviours drawn from LinkedIn’s 277 million members and employer information from PwC’s Saratoga database of people and performance metrics, which covers more than 2,600 employers across the globe. 

 

Michael is a partner with PwC in the UK and leads the Firm’s Global Human Resources Consulting practice. During his time with the firm, he’s had a variety of roles and client responsibilities – with a particular focus on reward and the deployment of talent globally.  Read Michael's biography here.

04/10/2014

Are we doing enough to promote female leadership?

Dennis Nally photoAuthor: Dennis Nally, Chairman, PwC International Ltd.

This year’s Diversity Week was an important step forward for us at PwC as we look to develop diverse leadership throughout the global business. For the first time, all our firms across the world hosted a wide-scale series of inclusion events. As part of this, I engaged with employees in a live global social media ‘Jam’ to give them the chance to help shape our future Diversity and Inclusion strategy.

For business as a whole, Diversity Week couldn’t have come at a more opportune moment, given the current, timely focus within global companies on the lack of women in leadership. Belatedly, male-dominated executive boards are waking up to the realisation that closing this gender gap isn’t just the right thing to do, it also makes smart business sense.

What's driving this, admittedly, slow march to more inclusive leadership? The opinions of accomplished female leaders like Facebook COO, Sheryl Sandberg, and her recent book, Lean In: Women, Work, and the Will to Lead, are certainly helping to drive the agenda forward.

My colleague, PwC US CEO, Bob Moritz, sat down with Sheryl Sandberg for a livestreamed chat about issues that PwC takes very seriously, including leadership accountability for diversity and an inclusive culture. PwC will partner again with Sandberg to take her message to college campuses all over the world as part of the publicly available Aspire to Lead programme. 

Sandberg’s message is so powerful because it speaks to the aspirations of a new generation of female professionals just starting their careers. These young women are more educated, socially mobile and globally connected than ever before and will be a potent force in reshaping the way we do business.   Creating the right environment for this burgeoning employee base to thrive is crucial for PwC. Half our workforce is female and, by 2016, almost 80% will be millennials.

Are companies creating the right environment to make the most of this talent? Not at the moment say young professionals. As our Next Generation Diversity: Developing tomorrow’s female leaders report found, 82% of the young females said that an employer’s policy of diversity, inclusion and equality was important when deciding which company to work for. Unfortunately, 55% felt that employers fail to deliver on their diversity talk.

So how are we doing? At PwC, we’re very committed to helping our people – with all of their varied backgrounds and experiences – build a rewarding career. We’re also proud of our record on encouraging executive diversity: today women make up more than 25% of our leadership teams in Canada, the UK and the US.

That said, it’s clear we need to do more. I need to do more. PwC and Opportunity Now recently interviewed 25,000 women between the ages of 28 and 40 in the UK. The results of Project 28-40 showed that CEOs and senior leaders, in particular, need to take the lead on women’s progression, moving this from a diversity initiative to a core business priority. I’m more than happy to pick up the baton.

Dennis Nally leads the global network of PwC firms. He has extensive experience serving large multinational clients in a variety of  industries, principally focusing on technology and life sciences. Dennis is also a frequent speaker and guest lecturer on issues affecting the professional services profession and the global capital markets. Read Dennis Nally's full biography.  

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