There are two ways to extend a business. Take inventory of what you’re good at and extend out from your skills. Or determine what your customers need and work backward, even if it requires learning new skills. Kindle is an example of working backward. Jeff BezosYears back I worked on a project at British Steel, Ebbw Vale, Wales. At that time, British Steel employed over 200,000 people all over the UK and as the weeks went by it became clear that few people on site were from beyond the Valleys – a local factory for local people. Looking back, in terms of skills, jobs and training; this was the world we have lost.
The Plant was laid out over 3 kilometres like a supply chain. Raw material came into the Pickler – an acid bath to sort out the molecules; moved on to Annealing and, the Temper Mills; then, the Roll Shop and out through the vast warehouses to clients such as Metal Box and the canning factories; on to the bottling plants to end up on a shelf as a can of Coke or whatever. Recycling was a long way off back then.
The workforce and their skills progressed in a similar way. Kids in the valleys went to Primary schools to be taught by teachers that had taught their parents and grandparents. The clever kids went to Grammar School and many of the best boys went on to study Metallurgy at the University of Wales – girls would become teachers or work in the civil service; others went through the Secondary School system to start as apprentices at the Steel Mill. The late developers would study at night school and climb the ranks from foreman to supervisor and maybe manager. And chances were that if you were good at Rugby you would become a maintenance fitter on the night shift – few people checked if you were there and that would allow for training and playing for the local team. This was not skiving. It was an integral part, along with the social clubs and the works choir, of a stable community. Meanwhile, Thomas Woodward changed his name to Jones – it was not unusual!
Back then, British Steel knew their place in the global pecking order and output was stable enough to guarantee an equally stable workforce. In Ebbw Vale, this meant a steady number of young people could enter at the lowest levels enabling others to move up to replace those retiring in the various Departments each year on that vast workplace that dominated the valleys around it. Ebbw Vale has long gone and these days the Tata owned Steel producer that was British Steel employs around 20,000 with more output than back in the 1980s. This scenario was true of countless towns in the developed world such as the shoe trade in Jack Kerouac’s home town of Lowell, Massachusetts; the fishing trade of Hull, England or the textile mills of a Springsteen song. Then, came the harsh competitive winds of globalisation and the rest is history.
Now, carbon copies of these one trick towns emerge in the developing world: Changchung or Chennai for Detroit; Coimbatore for Lowell. So, what happens in terms of skills and the building of a workforce fit for purpose? Peter Cappelli’s book Talent on Demand (2008) develops a supply chain analogy to describe the talent pipeline. He uses examples from IBM – with their 15 year business plans that integrated their talent requirements; the Defence industry with even longer time horizons. And yet, the supply chains – and talent management model – has been transformed. No longer the post WW2 “push” model based on stable markets and rigid forecasting to supply – or top up – the skills that are needed. The Oil crisis of the 1970’s put a stop to such certainties and, by the 1980’s outside hiring and, poaching became the norm. Uncertainty in the market encouraged short termism and a more pragmatic and opportunistic approach to assembling a workforce. Supply Chains, like talent development, have changed. They have moved from Just-In-Case inventory to Just-In-Time delivery and now, Built-to-Order. In other words, skills are hired as needed. Cappelli argues that the need these days is to use a hybrid approach of developing talent as well as hiring in talent from outside.
Let’s turn to the skills deficit in Emerging and Developing markets to explore how talent is found and developed. For example, the Confederation of Indian Industries estimates that India needs over 450 million skilled workers to be trained and available by 2022. Currently, the capacity to train all levels of skills from operator to manager stands at no more than 3.2 million a year and the need is to increase this to over 40 million to meet the target. Indian, the Young Republic, has a demographic dividend that China does not have and other emerging and developing markets are finding that a lack of skills is proving to be the constraint that an obsession with the built environment had not catered for. For example, Governments can set up Special Economic Zones and lay the necessary infrastructure. However, leaving aside the managers that are all too often shipped in from elsewhere, where are all of the operators and drivers going to come from to make the showcase economic zones work. You can have a Ferrari but it won’t move without a driver – with the licence and the skills to handle a high powered machine.
Far too many businesses underestimate the need to develop a clear skills and development programme to complement their capital investment strategies. Take a Special Economic Zone or, a Concession to manage a Port in an Emerging or Developing market. We need to set out the skills requirement like a supply chain from industry entrants (at all levels) through to retaining and improving the skills of those we need. Few football teams prosper from buying in the talent required and those that do – take Barcelona; Arsenal; Manchester United – grow their own over time.
In the Emerging and Developing world, we need to distinguish between the adhocracy of the initial project to construct a city; develop a regional infrastructure or an SEZ from scratch – a project mentality – from the ongoing skill requirement to ensure that the factories and support services are running at optimal effectiveness and efficiency. They say a picture paints a thousand words, but sometimes a few figures do the trick. Unpack the World Bank estimates for investments in Infrastructure 2006-15 and you will note that 53 per cent of the projected $18.2 billion is allocated to maintenance and NOT to ad hoc new builds. Maintenance is an ongoing challenge best handled by locally trained and retained personnel.
At the height of the Dubai boom, the UAE had a workforce made up of 97 per cent foreigners.This is the difference between a nomadic circus and a settled community of skills. One can be achieved with hired hands on limited contracts versus the need to retain and develop a workforce that will be part of the benefits case for future FDI strategies to work. No company will build a factory in a region or SEZ with a poorly trained or unstable workforce. And, in the developed world, few companies will remain in a location if there is no strategy in place to upgrade and future proof the workforce.
There are other socio-economic and cultural factors to take into account such as the dominance of the informal or shadow economy. Take Peru – 90 per cent of the SMEs; 85 per cent of urban transport; 60 per cent of the fishing fleet and 60 per cent of grocery distribution operate in the shadow economy. Take Haiti or any other place after an Emergency. The supply and demand for skill in these markets does not dance to the beat of formal and regulated governance. This workforce will live in shanty towns or slums; there will be no bank accounts and, gender issues will mean a marginal existence for women in the workforce. Child labour may have a role in family size and structure. Illiteracy will be a factor to be understood and dealt with. For example, warehouses may need voice activated order picking systems to direct unskilled operatives to the right location to pick a box off a shelf. And I have been in warehouses in India where local villagers wrecked conveyor belts because they see them as a threat to employment – better a human chain of villagers than a robotised alternative.
The context for supply chains and, skill development strategies have been transformed and far more needs to be done to explore the best way forward. Peter Cappelli raises important questions but, this work on white collar talent needs to be translated into more research on blue collar skills. This is the territory where jobs have to become careers and where training in a classroom has to give rise to more emphasis on short high impact training – 3 minute long English lessons downloaded off a mobile phone or simulator based training on all types of materials handling equipment from a quayside or tower crane to a construction digger; a fork lift or a truck.
Back in 1938, the Pilgrim Trust had a close look at the long term unemployed in the UK and concluded that “unemployed men (and women) are not simply units of employability who can be put in cold storage and taken out again immediately they are needed.” The same is true of Projects and the transition to sustainable growth for ports, cities and business sectors all over the Emerging and Developing world – right now. It is not enough to just hire (and fire) from a migrant labour pool to complete the project. These skills are not just to be brought out of cold storage from someplace else. It is time to plan ahead and, embed the skills agenda in a local context.
All too often Globalisation suggests that all markets will end up the same when the reality is that local context and local solutions are the only way to a sustainable future. You can buy an entire football team but it is no substitute for developing a squad over time. And the way forward is to ensure that each local skills strategy offers solutions on three time horizons. Horizon 1 is all about short term needs and can mean hiring from overseas; Horizon 2 is about making sure that the capacity is in place to build on the needs of the future and, Horizon 3 is looking at ways in which to retain and future proof the workforce in place or, develop the skills that can be exported elsewhere. Emerging and Developing markets should not be so sensitive to over supply in specific skills if their own economy takes a hit. After all, globalisation has generated far more labour mobility and excellence in training and skills development could even become an Export business in itself. It is time to transform the skills agenda.