SCIENCE

In a dramatic shift of workforce investments, growth market companies – led by the twin forces of China and India -- are increasingly hiring in North America and Europe, according to the findings of a major new IBM study of over 700 Chief Human Resource Officers (CHROs) and senior executives from 61 countries and 31 industries worldwide.

Unlike the traditional pattern of movement – in which companies in mature markets seek operational efficiency through headcount growth in emerging economies – the study shows workforce investment is moving both ways. The findings suggest that as companies expand globally, the need to identify workforces with the creativity, flexibility and speed to capitalize on growth opportunities is becoming a priority, leading to an increase in their workforce presence in North America, Western Europe and other mature markets. The IBM study indicates that:

• 45 percent of companies in India plan to increase their headcount in North America and 44 percent will expand in Western Europe
• 33 percent of companies in China plan to increase headcount in North America and 14 percent will grow in Western Europe.

Conducted by the IBM Institute for Business Value, the 2010 IBM Global Chief Human Resource Officer study, titled "Working Beyond Borders," found that while organizations continue to develop and deploy talent in diverse areas around the globe at an accelerated rate, the rationale behind workforce investment is changing.

"The silver lining of globalization is that the shift toward expansion will require companies to redirect their workforce to locations that provide the greatest opportunities, not just the lowest costs, and at the same time, re-imagine their management strategies to reflect an increasingly dynamic workforce," said Denis Brousseau, Vice President, Organization and People, IBM Global Business Services. "More than ever before, competitive success will depend the leadership talent to assimilate information and share insights among a diverse group of employees around the globe."

Another major finding of the study is that while social networking and collaboration may be regarded by many as a "soft" skill, study data suggests it can have bottom-line consequences:

• Financial outperformers (as measured by EBIDTA) are 57 percent more likely than underperformers to use collaborative and social networking tools to enable global teams to work more effectively together.
• Respondents indicated they most frequently employ collaboration tools to enhance the effectiveness of corporate communications and learning programs and to target and recruit external candidates.
• 21 percent of companies have recently increased the amount they invest in the collaboration tools and analytics despite the economic downturn.
• 19 percent of respondents regularly use collaborative technologies to identify individuals with relevant knowledge and skills, 23 percent to preserve critical knowledge, and 27 percent to spread innovation more widely.

Investing in Leadership

According to the study, companies struggle to both find and nurture effective future leaders, and less than one in three executives interviewed rated their companies as adept at leadership development – a surprisingly low number given its relative importance.

However, even during the height of the global recession, 33 percent of respondents in mature markets and 43 percent in growth markets increased their investment in leadership development, significant numbers despite the cost containment initiatives many companies instigated at the time.

The ability to develop effective leadership, strategically build and deploy the workforce, and stimulate knowledge sharing and collaboration frequently hinges upon the information available to make evidence-based decisions regarding the workforce. However, for many organizations, this level of insight continues to be elusive. Only seven percent of respondents say they are very effective at using analytics to make workforce decisions.

Many companies have the capability to use analytics to look backward to identify historical trends and practices within their organizations. Yet few are adept at using information to develop scenarios and predict future outcomes. Only in developing future leaders and business strategy did more than a quarter of the CHROs interviewed use analytics for forward-looking analysis.