By Shahrizal Mohammad Suffian, Korn Ferry
A major crisis is looming over organisations and economies throughout the world. According to Korn Ferry’s Talent Crunch study, by 2030, demand for skilled talent will outstrip supply, resulting in a global talent shortage of more than 85 million workers. Left unchecked, the financial impact of this talent shortage amounts to US$8.5 trillion in unrealised annual revenue globally.
Most APAC economies will experience the same talent crunch, especially at highly-skilled and mid-skilled level. With Industry 4.0 or the Fourth Industrial Revolution shifting and reshaping work across sectors, industries, geographies and all layers of organisations, disruption is inevitable and will create uncertainty on what critical skills will be required for the future and where and who it will come from.
If the talent crunch is not defused, it will severely impact the growth of markets across APAC, with an imminent talent deficit of more than 12.3 million workers by 2020, rising to a shortage of 47 million workers and US$4.238 trillion in unrealised annual revenue across the region by 2030.
Malaysia will also face a severe talent shortage especially at highly skilled and mid-skilled levels, with a deficit of close to 94,000 workers in 2030 and a total unrealised output of US$6.1 billion.
Financial and business services in Malaysia are forecasted to have a talent deficit of close to 173,000 workers at the highly skilled level resulting in unrealised output of close to US$1 billion by 2030.
One of the main reasons for severe talent shortage across industries especially in the financial and business services industries in Malaysia is greater mobility of talent in the region.
Malaysia dropped seven places to 28th among 63 countries ranked for their ability to retain and attract local and foreign high-skilled workers, according to the World Talent Ranking (WTR) 2017 survey released by Swiss-based Institute for Management Development (IMD).
Malaysians are also generally open to take up a job overseas with close to 71% citing that they are willing to relocate overseas if given the opportunities according to a report by a global recruitment firm in early 2018. Countries such as Singapore, Hong Kong, Australia and UK are deemed more attractive in terms of salary and career development opportunities compared to Malaysia.
There is also a significant talent deficit in Manufacturing and Technology, Media and Telecommunications (TMT) especially at highly skilled level (close to US$1 billion of unrealised output combined).
World Bank’s 2014 report on Malaysia said that 308,834 of Malaysians with high technology skills migrated overseas in 2013, while Malaysia’s population is more than 30 million. The numbers have been growing, again due to greater talent mobility in the region and more attractive salary and compensation packages outside of Malaysia.
Besides developed nations, there are also growing career prospects in rising developing countries such as Vietnam and Myanmar in the areas of Manufacturing and TMT.
In Malaysia, digital transformation is expected to contribute US$10 billion to the country’s gross domestic product (GDP) by 2021 and increase the growth by 0.6% annually according to a joint business study by Microsoft and IDC Asia Pacific.
The study predicts a dramatic acceleration in pace of digital transformation across Asia’s economies. In 2017, about 7% of Malaysia’s GDP was derived from digital products and services created directly using digital technologies, such as mobility, cloud, Internet of Things (IoT), and artificial intelligence (AI).
Thus, organisations who do not take actions now to address talent crunch will face serious competition moving forward especially in retaining and attracting talent at mid-skilled and highly-skilled levels.
Based on a Korn Ferry Future of Work study published in 2017, leaders globally have bet heavily on technology for future growth with 67% of CEOs believing technology will be their chief value generator in the future of work. It seems they have discounted the value of human capital.
Misalignment between automation, AI, machine learning, and other technological advances and the skills and experience talent needs to leverage the full potential of those advances is a main factor contributing to growing global talent deficits. It is pivotal to ensure leaders understand the implications of their beliefs.
Some governments in APAC for example Malaysia and Singapore are also starting to take actions to address the anticipated talent crunch.
In January 2018, the Prime Minister of Malaysia launched the “National Workforce Human Capital Development Blueprint”, which outlines strategic initiatives to address workforce challenges associated with Industry 4.0, digitisation, and automation. However, it is too early to gauge if these initiatives would be effective and sustainable.
Despite the buzz about digital transformation, industry revolution 4.0 and the future of work, Malaysian leaders are still lacking understanding of digital transformation and the implications of digital disruption for them and their organisations.
Korn Ferry’s study of Digital Leadership in Asia Pacific – published in early 2018 – shows that Malaysian leaders have significant gaps when compared to the global benchmark. The study reveals that Malaysian leaders have a strong preference for structure.
This suggests the confidence of Malaysian leaders is restricted to operating in process-driven environments with a high-degree of certainty, thus hindering innovations and creating barriers for improvements.
Leaders will need to find ways to unlock their confidence in more ambiguous situations to enable them to become more adaptable, curious and take more risks in the face of uncertainty.
What steps can Malaysian leaders take now to prepare for the talent crunch?
Recalibrate and Define Clarify Amongst Leaders
Malaysian leaders will need to start re-thinking and re-establishing their personal objectives, aligning to the outcomes and milestones they would want their organisations to achieve. Culturally, the strong adherence to hierarchy and lack of open communication is inhibiting Malaysian leaders’ ability to engage and inspire their people and empower their teams to create novel and breakthrough solutions.
Thus, leaders need to adopt a more humble and approachable style to engage their people. Building connectivity both inside and outside of the organisation will assist leaders to guide their teams and create an engaging vision for the future.
Manage the Workforce
The right talent is the greatest competitive advantage there is for an organisation. In the face of such an acute talent crunch, managing the workforce and having a comprehensive understanding of the talent pipeline are critical. Leaders need to understand the type of workforce the business needs and start building an agile workforce now to sustain the talent pipeline.
With effective strategic workforce planning, organisations can define their current workforce and identify areas where agility can be better utilised. Strategic workforce planning will help leaders optimise their workforce for today, prepares organisations for workforce change and how they can make the change happen including identifying gaps to be closed between the workforce that the organisations need and the people they have.
Create Communal Value through Partnerships
Organisations – as part of their community responsibility – should consider partnering with public and private institutions of higher learnings to frequently assess and review their syllabuses to ensure future graduates have knowledge and skills to fit the needs of the economy.
Such partnerships will allow transfer of knowledges and provide various avenues for public and private institutions of learnings to build a pipeline of highly skilled talent which can contribute significantly to the Malaysian economy.
Understand and Engage the Workforce
Leaders need to understand what drives the different segments of their workforce. They need to build on strengths and critical skills such as problem solving, agility and the ability to manage ambiguity starting now.
Organisations will need to provide avenues for their workforce to develop and grow within and outside of the organisations. For example, millennials recognise the value of purpose as key driver for success.
Thus, to engage millennials, organisations need to provide opportunity for such talent to contribute outside their organisation, bringing value to their community commercially, socially and economically and to give them opportunities to participate in work they deem challenging.