According to the PwC’s 15th Annual Global CEO Survey for 2012, CEOs are dealing with a lot of uncertainty – economic crises, environmental disasters, and other challenges are causing business leaders to become a bit less optimistic than they have been in the past.
They are also eyeing growth markets like China, India, and Brazil to help boost revenues while the US and Europe continue to deal with unpredictable markets and economic turmoil. In his introduction to the report, PwC’s US Chairman and Senior Partner Bob Moritz writes:
“Customer demand is the primary driver of corporate strategy this year. Success involves understanding customer segmentation within various markets—such as rural-urban and high income-low income—and the dynamics driving it. That is why integral to CEOs’ global expansion strategies is the need to reconfigure operations at very local levels. That includes getting the product and service portfolio right across markets, nurturing talent in different locations, and encouraging free flow of ideas and innovations regardless of where they originate.”
The uncertain economic environment is driving companies to develop a global strategy – by diversifying, they can better weather the challenges erupting I specific markets. According to PwC, that means they are also building a new global talent strategy as well.
Need for Talent
The report polled 1,258 CEOs in 60 countries, with 160 in the US. Despite the challenges in western markets, CEOs reported still having trouble finding the talent they needed to meet business demands. The report explains:
“Future prospects for the US economy are unlikely to improve without a long-term solution to talent shortages that exist today. Even in a weak labor market, more than 40% of US CEOs say their talent-related expenses rose more than expected, a reflection of the acute skills mismatch problem they face: talent shortages amid high unemployment.”
In fact, 60 percent of US CEOs said they planned to hire this year, and they are having trouble specifically around the recruitment and retention of high potential middle managers and younger workers. “Almost a quarter of US CEOs say they were unable to pursue a market opportunity and another fifth were unable to innovate effectively because of talent constraints,” the report says.
The firm says that the solution is retraining workers and easing restrictions on global mobility is needed, and business, government, and academia will need to work together to come up with a solution.
CEOs are looking to grow their businesses in developing markets like Brazil, India, and China the report showed, and many are looking to access the home-grown talent base in these markets. For example, 82 percent of CEOs with operations in China are looking to access local talent, while 85 percent of CEOs with operations in India are looking to access local talent. And almost all (97 percent) of the CEOs with operations in Brazil are looking to access local talent.
Companies are also building products and strategies to meet local demand in these growth markets, the study explained.
“Almost all US CEOs are revising their innovation strategies, with 72% focusing on creating new products and services within existing business models. This emphasis on new products and services for local markets is also leading to the phenomenon of ‘reverse innovation,’ or flow of ideas, processes, and innovation from fast-growing to mature markets.”
Interestingly, many Asian and Latin American CEOs said their companies are working to break in to the US market. “Seventy-one percent of all CEOs who want to enter or expand in the US intend to increase their customer base, 46% are seeking access to talent, and 30% are building internal service delivery capabilities.”
More than anything, the report showed that today’s business environment is truly global – when companies are unable to expand at home, they are eager to look elsewhere to improve their fortunes. More and more, companies are acknowledging that they will have to tap into local talent markets as well. Due to the current talent shortfall, this should cause companies to see the link between talent strategy and growth. After all, those companies that have invested in global talent management capabilities will be able to better handle the push into growth markets, which CEOs report are critical for their own companies’ wellbeing.