War for Talent is a Statistical Certainty, Not Just Hyperbole!

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Bangladesh is on the verge of a shrinking population!!  Wow – what has this world come to and how did we get here?  According to Doug Sanders, we might be at a tipping point in global population and may have hit “peak people”, just like peak oil (past the declining point of global supply-limn).  He bases his assertions on a number of points which, if you agree with him, has tectonic (pardon the hyperbole) implications.

“People around the world are living longer and having fewer children” according to Sanders.  Everyone remembers the population control policies in countries like China, India etc. etc. which limited the number of children families could have.  Over time, this has led to an imbalance.  Basic needs are being met better than before leading to longer life cycles.  Access to birth control, increased education, more economic independence and a general higher empowerment for women has also led to lower birth rates.

Here are some additional factoids from Sanders:

  • Today, Canada has 5 working age people for every retiree – in 20 years, it will be down to 3!
  • In Japan, retirees will outnumber working age people in this century!!
  • Today 11% of the global population is over 60, in 25 years it will double with a larger component that are over 80!!!
  • In China, 12% are over 60 and in 20 years, that number will be 28%!!!!

The trend is the same globally everywhere you look.  And we are not talking about something that will occur in the nebulous future.  This is already occurring and the full impact will be felt in less than two decades.  The impact on social service costs will be significant (double, triple or even more) and it will be financially supported by a shrinking working population.  A double whammy if you would.  While stronger and bigger economies might be able to absorb these changes, others may not fare as well?  This probably explains some of the push to increase retirement ages all across the globe.

A shrinking working population that has higher economic expectations and has to support a growing number of retires will also demand higher compensation.  Thus, labor cost differentials are already sinking both in China (manufacturing) and India (services) as an example.  If you start normalizing labor costs and eliminating that arbitrage, the implications for Sourcing and Supply Chain organizations are very significant.  For organizations that are leaders/early adopters in Supply Chain arbitrage, that means reassessing their global sourcing strategies and start identifying and planning their next move now.  Change in demographics will also drive the demand side of the equation in terms of what people are looking to buy and who will be making those buying decisions.

The other serious implication is the shift in the supply and demand equation for talent.  People will not be chasing jobs– jobs will be chasing people.  Reverse auctions?  Imagine a situation where every prospective employee has 5-6 jobs to choose from.  And by the way, selecting a job is no longer just an economic decision as we pointed out.  How your organization rates on CSR issues is a bigger factor so you cannot just increase the compensation and hope to win the war for talent.  And this situation is already occurring.  Graduates from the top business schools in India most always graduate with multiple job offers from the leading global companies in the world.  If your Talent Management strategy does not have “peak people” baked in the equation, you may be assuming some significant risk in the very near future.

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Dalip Raheja
Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.
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