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Only 19 Percent of Business Leaders Say They Are Ready to Lead the Social Enterprise

MD Staff

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Amid rapid technological, economic and social change, it is important for organizations to move beyond mission statements and social impact programs to put humans at the center of their business strategies.

In its “2019 Global Human Capital Trends” report, “Leading the social enterprise: Reinvent with a human focus,” Deloitte examines ways organizations can reinvent themselves on a broad scale, including interacting, motivating, and personalizing experiences with the workforce to help build identity and meaning for workers.

Completed by nearly 10,000 respondents in 119 countries, Deloitte’s ninth annual Global Human Capital Trends report is the largest longitudinal survey of its kind. In the report, respondents said the role of the social enterprise is more important now than ever and noted a positive link between leading the social enterprise and an organization’s financial performance. In fact, 73 percent of industry-leading social enterprises expect stronger business growth in 2019 than in 2018, compared to only 55 percent of those where the social enterprise is “not” a priority. However, only 19 percent of respondents reported being “industry leaders” in their organization’s maturity as a social enterprise.

Today, more than 4 in 10 (44 percent) of respondents said social enterprise issues are more important to their organization than they were three years ago, and 56 percent expect them to be even more important three years from now.

“There is a lot of discussion about organizational purpose and while I agree that it is important, what’s missing for many organizations is the focus on the individual and the day-to-day challenges that workers are facing,” said Erica Volini, principal, Deloitte Consulting LLP, U.S. human capital leader. “The reality is that while technology is helping organizations gain competitive advantage, if not managed appropriately, it can simultaneously mean that workers lose their identity in the workplace. We see a call to action for organizations to reinvent their approach to human capital with the worker in mind to create opportunities for continuous learning, accelerated development, and professional and personal growth.”

The future of the workforce
As organizations look to effectively lead the social enterprise, they must adapt to the forces restructuring work and the implications to the workforce – both in composition and capability – while embedding a meaningful experience for workers.

This focus on the workforce comes as more than 86 percent of respondents cited reinventing the way people learn as important or very important – the No. 1 trend for 2019. Leading organizations are empowering individuals’ need to continuously develop skills by investing in new tools to embed learning not only into the flow of work, but the flow of life. With the need to sustain 50-60 year careers as part of a 100-year life, lifelong learning has evolved from a matter of career advancement to workplace survival. However, even with this emphasis on learning, only 10 percent of respondents said their organizations are “very ready” to address this topic.

Amplifying the need for continuous learning is the ongoing adoption of automation technologies as 64 percent of respondents said that automation is important or very important. Yet even with these advancements, human skills remain critical to augmenting the value of this technology. In response, organizations should consider redesigning work into a new category of “superjobs,” which combine the work and skill sets across multiple domains, opening up opportunities for mobility, advancement and the rapid adoption of new skills desperately needed today.

But even as part of the workforce reorganizes into superjobs, Volini shared, lower-wage-work across service sectors continues to grow, along with non-traditional contract, freelance, and gig employment – and it is imperative that these jobs are not left behind. “There is no ‘one-size-fits-all’ when it comes to the workforce of the future. Organizations need to explore all options and create the culture and infrastructure where everyone has a place. That will be part of how organizational inclusion will be defined in the future,” said Volini.

The future of the organization
In the age of the social enterprise, organizations are being challenged to up their game when it comes to the employee experience. This emphasis comes as only 49 percent of respondents believed that their organizations’ workers were satisfied or very satisfied with their job design and only 42 percent thought that workers were satisfied or very satisfied with day-to-day work practices.

As organizations look to provide technology to support employees’ work, only 38 percent of respondents said that they were satisfied or very satisfied with the current work-related tools and technology available. Finally, only 38 percent of respondents thought that they have enough autonomy within their jobs to make good decisions, providing further evidence that significant reinvention is required.

“Over the last five years, issues related to productivity, well-being, overwork and burnout have grown,” said Jeff Schwartz, principal, Deloitte Consulting LLP, U.S. future of work leader. “As a result, organizations need to shift from the traditional employee experience to a new category we call ‘human experience,’ where relationships are enduring, learning is continuous, and work has meaning centered around human identity.”

Creating this human experience requires a different type of leader. Eighty-one percent of survey respondents believed that “21st-century leaders” face unique challenges and requirements, making it critical for organizations to extend leadership pipelines to find and build leaders from within the organization. Developing new leaders from within can help them hone critical skills, including managing through influence, promoting transparency, and thriving in a more collaborative and connected world.

Underlying this shift is the continued reinvention of the traditional hierarchical organizational model. One-third (31 percent) of survey respondents said their organizations now operate mostly in teams within a hierarchal framework and another 46 percent said that they are somewhat team-based. However, most C-suite leaders, tools, cultures and incentives are still struggling to adopt and support the team-based model. With the advent of new technology, organizations can use data and insights to complete this shift.

The future of HR
In this 10th year of the economic recovery, organizations are finding themselves in a job-seekers’ market as the war for talent rages on. “As organizations’ workforce needs drastically change, leaders should shift from focusing on acquiring talent to accessing capabilities. While the change may seem nuanced, taking a more expanded view of where skills can be found – whether it’s in automation, the gig economy or current employees – can pay dividends in today’s fast-paced and high-demand business environment,” said Volini.

As a result, the importance of internal, enterprise-wide talent mobility has become paramount. In 2019, three-quarters (76 percent) of survey respondents believed new tools and models for careers, and internal mobility are important or very important. Beyond mobility, organizations are finding that they need to look at the technology provided by the cloud as a launchpad, not a destination. But despite investing billions in HR technology, 65 percent of respondents report that this technology is inadequate or only fair at achieving its overall objectives.

With new talent approaches, the way many organizations compensate and reward workers has fallen out of date. Today, only 11 percent of respondents felt that their rewards systems are highly aligned with their organizational goals and nearly one-quarter (23 percent) do not feel they know what rewards their employees value.

“The combination of shifts in the work, the workforce, and the organization have created a new mandate for HR to shape the future,” said Heather Stockton, principal, Deloitte Global, global human capital leader. “But HR cannot do this alone. The entire organization, led by the symphonic C-suite, needs to come together to help organizations truly take the lead in the future of work.”

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Russia Among Global Top Ten Improvers for Progress Made in Health and Education

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Russia is among the top ten countries globally for improvements to human capital development over the last decade, according to the latest update of the World Bank’s Human Capital Index (HCI).

The 2020 Human Capital Index includes health and education data for 174 countries covering 98 percent of the world’s population up to March 2020.

Russia’s improvements were largely in health, reflected in better child and adult survival rates and reduced stunting. Across the Europe and Central Asia region, Russia, along with Azerbaijan, Albania, Montenegro, and Poland, also made the largest gains in increasing expected years of schooling – mainly due to improvements in secondary school and pre-primary enrollments. The report also shows that over the last 10 years Russia has seen a reduction in adult mortality rates. However, absolute values of this indicator remain high in the country with this progress now at risk due to the global Covid-19 pandemic.

Human capital contributes greatly to improving of economic growth in every country. Investments in knowledge and health that people accumulate during their lives are of paramount concern to governments around the world. Russia is among the top improvers globally in the Index. However, challenges persist and much needs to be done to improve the absolute values of Index indicators,” said Renaud Seligmann, the World Bank Country Director in Russia.

The HCI, first launched in 2018, looks at a child’s trajectory, from birth to age 18, on such critical metrics as child survival (birth to age 5); expected years of primary and secondary education adjusted for quality; child stunting; and adult survival rates. HCI 2020, based on data up to March of this year, provides a crucial pre-pandemic baseline that can help inform health and education policies and investments for the post-pandemic recovery.

Of the 48 countries in Europe and Central Asia included in the 2020 Human Capital Index (HCI), 33 are among the upper-third in the world, and almost all are in the top half. However, there are significant variations within the region.

In Russia, a child born today can expect to achieve 68 percent of the productivity of a fully educated adult in optimal health. It is at the average level for Europe and Central Asia countries and the third result globally among the countries of the same income group. There is a stark contrast between education and health subscales in Russia. While the education outcomes of the country are high and outperform many high-income peers, its health outcomes are below the global average.

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Accelerating Mongolia’s Development Requires a Shift “from Mines to Minds”

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A new report by the World Bank estimates that out of every dollar in mineral revenues Mongolia has generated over the past 20 years, only one cent has been saved for future generations. The report argues that to break this cycle, Mongolia should use its mineral wealth to invest in people and institutions, while gradually reducing its dependence on the sector.

This is particularly true as demand for key minerals is likely to tumble due to climate change concerns, a shift of investors’ preference toward sustainability, China’s ambitious goal to reduce coal consumption, and persistence of the COVID-19 shock, according to Mongolia’s Mines and Minds, the World Bank’s September 2020 Country Economic Memorandum for Mongolia.

Since the advent of large-scale mining in 2004, Mongolia’s economy has grown at an average rate of 7.2 percent per year, making it one of the fastest-growing economies in the world. Growth has translated to rapid decline – although at times partly reversed – in the incidence of poverty and improved quality of life. The report also notes that Mongolia enjoys relatively strong human capital, and its infrastructure capital has improved for the last few decades, though remains scarce given the size of the country and low population density. This performance has been made partly possible through a generous but inefficient social assistance system and a large public investment program supported by mineral revenues and external borrowing.

However, a number of enduring challenges have grown in the shadow of this success. Mongolia’s rapid growth has been obscured by its extreme macroeconomic volatility and frequent boom and bust cycles. Growth has almost entirely come through capital accumulation and the intensive use of natural capital rather than through sustained productivity growth. Meanwhile, the country has not only consumed almost all its mineral outputs, but has also borrowed heavily against them, bequeathing negative wealth to the next generation.

Instead of maximizing the benefits of its mineral wealth for diversified and inclusive growth, Mongolia has increasingly become more addicted to it. At the same time, human capital has been underutilized and institutional capital has eroded.” said Andrei Mikhnev, World Bank Country Manager for Mongolia. “Such inability to capitalize on the country’s endowments has resulted in limited diversification of outputs and exports and has further amplified its vulnerability to the swings of the global commodity markets. Breaking this gridlock calls for a fundamental shift in approach that puts investing in minds on an equal footing with mines.”

The report recommends key policy actions to build the foundation of a diversified and sustainably growing  economy. These include:

  • Implement countercyclical fiscal and monetary policies – supported through transparent fiscal rules, an independent fiscal council, a market-driven exchange rate, and a well-functioning stabilization fund – to smooth consumption over the business cycle rather than maximize current consumption.
  • Undertake bold investment climate reforms to enhance competition, secure investor rights, and create a more level playing field that enables productive firms to invest and grow.
  • Move away from the mindset of diversifying products to expanding endowments, especially in terms of better utilization of Mongolia’s young and educated, especially female, labor force.
  • Accelerate the implementation of fundamental governance reforms (especially on the government effectiveness and control of corruption) to reduce political interference, increase transparency, and improve regulatory quality throughout the economy.

“Fortunately, there are many encouraging signs of improved macroeconomic management in 2017-19, providing the new government an opportunity to advance its reform efforts,” said Jean-Pascal Nganou, World Bank Senior Country Economist and lead author of the report. “Some impressive fiscal outcomes were achieved not by introducing new reforms but by effectively implementing existing ones. They demonstrate that with the right political will and leadership, similar improvements are possible in other areas including monetary and exchange rate policy, the financial sector, the business environment, and the labor market. The new administration has, therefore, an opportunity to institutionalize these reforms and avoid policy regression in the future.”

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Nearly 9 in 10 People Globally Want a More Sustainable and Equitable World Post COVID-19

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In a new World Economic Forum-Ipsos survey of more than 21,000 adults from 28 countries nearly nine in ten say they are ready for their life and the world to change.

72% would like their own lives to change significantly and 86% want the world to become more sustainable and equitable, rather than going back to how it was before the COVID-19 crisis started. In all countries, those who share this view outnumber those who don’t by a very significant margin (more than 50 percentage points in every country except South Korea). Preference for the world to change in a more sustainable and equitable manner is most prevalent across the Latin America and Middle East-Africa regions as well as in Russia and Malaysia.

Next week’s World Economic Forum Sustainable Development Impact Summit will address the achievement of the sustainable development goals and the appetite for transformation which will drive the “decade of delivery”.

Clear majority ready for a more sustainable and equitable world

Globally, 86% of all adults surveyed agree that, “I want the world to change significantly and become more sustainable and equitable rather than returning to how it was before the COVID-19”. Of those, 46% strongly agree and 41% somewhat agree, while 14% disagree (10% somewhat and 4% strongly).

Russia and Colombia top the list of countries that strongly or somewhat agree with that statement at 94%. They are followed by Peru (93%) Mexico (93%) Chile (93%) Malaysia (92%), South Africa (91%) Argentina (90%) and Saudi Arabia (89%). The countries that are most change averse – disagreeing somewhat or strongly disagreeing with the statement – are South Korea (27%), Germany (22%), Netherlands (21%), US (21%) and Japan (18%).

Dominic Waughray, Managing Director, at the World Economic Forum said, “The Great Reset is the task of overhauling our global systems to become more equitable and sustainable, and it is more urgent than ever as COVID-19 has exposed the world’s critical vulnerabilities. But the technology to transform things tends to outpace the human will to change. In six months, the pandemic has systematically broken down this cultural barrier and we are now at a pivot point where we can use the social momentum of this crisis to avert the next one.”

Ready for significant personal change

Across all 28 countries, 72% want their lives to change significantly rather than returning to what it was like before the COVID-19 crisis (30% strongly and 41% somewhat) while the other 29% disagree (21% strongly and 8% somewhat).

Latin America stands out for its optimism, with Mexico, Colombia and Peru in the top five countries strongly or somewhat agreeing. Agreement is also high South Africa (86%), Saudi Arabia (86%, Malaysia (86%) and India (85%). By contrast, at least two out of five adults in the Netherlands, Germany, South Korea, Japan, Sweden, the US, UK and Canada long for their life to just return to how it was before the pandemic.

MethodologyThese are the results of a 28-country survey conducted by Ipsos on its Global Advisor online platform. Ipsos interviewed a total of 21,104 adults aged 18-74 in United States, Canada, Malaysia, South Africa, and Turkey, and 16-74 in 23 other countries between August 21 and September 4, 2020. Where results do not sum to 100 or the ‘difference’ appears to be +/-1 more/less than the actual, this may be due to rounding, multiple responses or the exclusion of don’t knows or not stated responses.

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