ICGF ConferenceMiami, May 21, 2010
Nadereh ChamlouThe World Bank
Emerging global talent crisis and its root causes
Solutions to talent crisis: skills upgrading, labor mobility, and off-shoring to labor abundant locations
“Brain waste” due to widespread gender gap caused by traditions, conservative attitudes and social norms
Bridging gender gap is good business, not just for fairness
Conclusion: talent crisis cannot be met without narrowing of gender gap
2
Global economy will face demographic shock of a scale not yet observed
Despite the significant workforce transformation – more educated, more mobile, and more diverse than ever before – we are at the dawn of an unparalleled skills crisis as the working-age population of many developed economies starts to decline.
By 2050, the global population of 60+ projected to exceed <15 cohort for first time in history; developed economies will not find enough employees in home markets to sustain profitability and growth.
Challenge will be broad-based and affect all stakeholders and organizations.
Human capital shortage will surpass financial and natural resource constraints and will slow down the economic engine of the future
Source: Stimulating Economies through Fostering Talent Mobility (World Economic Forum)3
Current high unemployment levels have not disguised talent shortages and employing the unemployed is not a solution
Need for effective collaboration among business, NGOs, government, and universities – issues broad-based and universal
Emerging consensus on solving the talent shortages:
Education, skills upgrading, and innovation Talent mobility and new talent environment of
“brain circulation” Outsourcing/offshoring core knowledge functions
to labor abundant markets4
Crises pinpoint inefficiencies. Yet, prescriptions discussed earlier to deal with the global talent crisis are insufficient
A critical shortcoming: BRAIN WASTE – defined as “women and minorities BEING underutilized in the work place”
Diversity and inclusion are part of the TALK, but not quite yet part of the WALK within organizations/businesses Diversity & Inclusion still perceived as “doing good” rather
than as serious business needs
Gender gap in economic opportunities remain despite impressive female gains in education is THE persistent “brain waste” that cuts across
ethnic groups, nations, and cultures 5
Gender is Smart Economics (The World Bank, 2009)
The Bottom Line: Connecting Corporate Performance and Gender Diversity (Catalyst, 2004)
Stimulating Economies through Fostering Talent Mobility (World Economic Forum, 2009)
The Gender Corporate Gap report (World Economic Forum, 2009)
While causality between number of female managers and share price cannot be proven, studies suggest that better talent management, may also lead to better management of other assets/operations
6ICGF Conference
Companies with a higher percentage of women in top management experienced better financial performance than companies with lower women’s representation
This finding holds for Return on Equity (ROE), which is 35% higher, and for Total Return to Shareholders (TRS), 34% higher
In the 5 industries analyzed, companies with highest women’s representation in top management experienced higher ROE than companies with lowest women’s representation
In 4 out of 5 industries, companies with highest women’s representation in management experienced a higher TRS than companies with lowest women’s representation
Study replicated in Canada, Europe, and OECD countries with similar conclusions.
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Based on CAC 40 listed companies, the more women in management, the lower the share price decline during 2008/2009 financial crisis CAC 40 declined by 43%, while corporates with high gender diversity lost less
Hermes rose 17% Sodexho decreased 8% Danone fell 30%
In contrast, companies with mainly male management decreased more than CAC 40
Lucent fell by 70% Renault fell by 81% Arcelor Mittal fell by 67%
Similarly, in banking, BNP Paribas with higher management diversity fell 39% while Credit Agricole with less diversity fell by 62%
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Report on 6,000 companies in 16 major economies, employing between 1,000-30,000
Women largely concentrated in entry or middle level positions Except for Norway where board diversity is mandated by law,
the higher the levels of responsibility the lower the percentage of women
Closing the male/female employment gap is estimated to boost US GDP by 9%, Eurozone GDP by 13%, Japan GDP by 16%, suggesting:
economies benefit by better integrating female talent pool particularly positive correlation between gender diversity in
leadership and company financial performance diverse backgrounds – rather than homogeneity – key to
understanding markets and risks 9
Female labor force participation considerably below potential and below world average
World average
10
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
1980
2000
2005
Countries below the line underutilize investments in female capacity
relative to actual FLFP
-
Still, women’s entrepreneurship is on the rise
Share/size of female-owned firms in developing regions
Source: World Bank Enterprise Survey Data
% of Female-Owned Firms across region (by size)
20%
24%
13%
10%
3%
20%
0
5
10
15
20
25
MNA AFR EAP SA ECA LAC
Micro (1-9) Small (10-49) Medium (50-99) Large and Very Large (100+)
10
24
20 20
13
3
0
5
10
15
20
25
30
Africa ECA East Asia South Asia MENA LAC
Female-
owned f
irms (%
of total)
11
Source: World Bank Enterprise Survey Data
0%
20%
40%
60%
80%
100%
Female-owned firms
Male-owned firms
8.47 11.46
45.2849.25
13.8015.41
32.4523.88
% of
firms
large medium small micro
0%10%20%30%40%50%60%70%80%90%
100%
Female-owned firms Male-owned firms
29.58 35.26
13.94 11.57
40.1 41.18
13.94 9.75
2.44 2.24
textile agro-food other manufacturing services other12
Export as much More so Egypt (30% women, 20% men), Jordan (50%
women, 30% men), and Morocco (65% women, 50% men)
Attract as much Foreign Direct Investment
Use Websites and E-mail AS OFTEN
And, hire as educated and skilled workers as male firms, with one exception …
FEMALE-OWNED FIRMS hire more women (25% vs 22%), but more IN professional and manageMENT POSITIONS 13
Investment climate is difficult for allInvestment climate is difficult for all(but more so for women)(but more so for women)
14
Source: World Bank Enterprise survey Data
Change in firm workforce, by gender
-1
-0.8
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
Egy
pt
Egy
pt
Jord
an
Jord
an
Leba
non
Leba
non
Mor
occo
Mor
occo
Sau
diA
rabi
a
Sau
diA
rabi
a
Syr
ia
Syr
ia
Wes
t Ban
k &
Gaz
a
Wes
t Ban
k &
Gaz
a
Yem
en
Yem
en
% o
f fi
rms Female-
Ow ned
Male-Ow ned
20 40 60 80
8060 4020 i
ncre
asin
g d
ecre
asin
g
15
Source: World Bank Enterprise Survey Data WORLDWIDE, 24% of workers are women Female-owned firms hire more women, IN GENERAL MENA is lowest – but, THERE TOO, female-owned firms hire more
women
% of female workers in total employment in male and female-owned firms across Regions
21
42
28
47
3226
32
18 1822 1824
0
20
40
60
Allcountries
East Asia &Pacific
Europe &Central Asia
LatinAmerica &Caribbean
Middle East& NorthAfrica
Sub-Saharan
Africa
%
Male-owned firms Female-owned firms
World average
16
Source: World Bank Enterprise Survey Data
World average
% of women in professional and managerial positions
(as % of total non production workers)
37
48 51
33
42
26
37
42
3435
0
20
40
60
All countries East Asia &Pacific
Latin America& Caribbean
Middle East &North Africa
Sub-SaharanAfrica
%
Male-owned firms Female-owned firms
17
26 24 2713 15
37
74 76 7387 85
63
0
20
40
60
80
100
Sub-Saharan Africa
Europe and Central Asia
East Asia and Pacific
South Asia Middle East and North
Africa
Latin America and the
Caribbean
%
Share of female-owned firms across Regions
Female-owned firms Male-owned firms18
Source: World Bank Central Database and Edstats (September 2009)19
20
21
22
23
24
Ultimately, Human Capital is the most indispensable driver of economic growth and THE foundation of innovation
Tapping into global talent pool – through migration, skills upgrading, off-shoring of core functions is necessary, but insufficient without due attention to gender diversity
Bridging the gender gap at all levels is critical for talent management and a stop to the brain waste
MENA has potential to become a future talent hub, particularly by absorbing the growing number of female university graduates
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