November 18, 2015
A program like IMD’s Orchestrating Winning Performance is filled with executives looking to develop leadership skills. And, on the subject of development, with the third edition of OWP taking place in Singapore, it made for the perfect setting for IMD’s World Competitiveness Center to release its 2nd annual World Talent Report ranking.
While the ranking showed a stronghold on talent for Northern Europe, it also revealed an enormous amount of potential for nations in Southeast Asia.
In recent years the BRICS nations have captured a lot of attention for growth and investment, but IMD Professor Arturo Bris said it’s time to look elsewhere.
“BRICS nations have failed to reform during the good times of progress when it mattered most to develop a talent pool, infrastructure and health care,” said Bris. “They have fallen behind and recovery will not come easy.”
Yet, China, one of the BRICS, increased slightly in its talent ranking from 43rd to 40th place. Nevertheless, Bris said such a small move is relatively insignificant and that China’s strength remains in its economic power not in its talent pool.
“While China has done amazing things with infrastructure, it is still a labor intensive country,” Bris said. “If it wants to move more into technology, capital and innovation, it will need to change how it develops talent.”
Looking more closely at Southeast Asia, some countries, like Indonesia and Malaysia were much bigger losers, both making significant falls in the talent ranking.
In the case of both countries, Bris said he isn’t too alarmed. The decline is due to perceptions from an executive survey that is used to develop the ranking. Due to many economic factors including currency fluctuations, falling oil prices and even terrorism, the sentiment in Indonesia and Malaysia was more pessimistic in 2015.
“Perceptions are often a close reflection of reality,” Bris said. “But in the case of Indonesia and Malaysia, both countries are receptive to perceptions and do take action. We should remember, the ranking is merely a statistical exercise and in their case, high or low isn’t as important as how they will perform over time. I’m confident these countries are responsive.”
Bris notes that the talent ranking was developed to help provide governments with a real tool that they can use to take action in improving their competitiveness, as talent development is one of the most important components of overall competitiveness. Unlike the more general notion of competitiveness, talent development is more tangible and is something countries can directly impact and change.
One nation that is continuously taking action and advice to improve its economy is Singapore. The star of Asia, Singapore is the region’s talent powerhouse. Ranking 10 in this year’s report, it is the only Asian nation in the top 10.
Among the top 10, Singapore has a unique situation where the public sector is pulling the private sector promoting business conditions and the attractiveness of the country.
“Each country is different and must approach how they do things to improve talent differently,” said Bris. “For now the public sector is pulling along business, but this is something that is likely to change as the country’s economic environment matures. It is neither good nor bad, but is right for the country.”
Hong Kong, ranking 12, also shares some positive qualities with Singapore. When looking into more detailed criteria of their rankings, both score well in retaining talent and avoiding brain drain.
“Hong Kong and Singapore are far from perfect in their educational systems. However, both countries are overcoming these pitfalls my making themselves extremely attractive to foreign talent and investment,” Bris said.
Unlike the BRICs, Bris sees encouraging signs and much more proactivity in Southeast Asia. However, and as much as he encourages talent development and emphasizes it as a key pillar for economic competitiveness, he also cautions executives on the impact of their decisions.
“While we know that talent development leads to better innovation and technology, we also know that innovation is known to suppress jobs,” Bris said.
Larger studies have been done showing the number of industries being disrupted because of technological innovation. Even an economist has a 45% chance of losing his/her job in the future.
“While every country wants to improve, it is a challenge for leaders to balance and guide the best way forward,” Bris said. “Economic strength and progress tend to widen the gap of wealth. We must always consider the impacts of our actions.”
Arturo Bris is IMD Professor of Finance and Director of the IMD World Competitiveness Center.
Find out more about the World Talent Report 2015.