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.”
Reforms in Latvia must result in stronger enforcement to tackle foreign bribery
Latvia has continued to improve its framework against bribery of foreign public officials and subsequent money laundering but the reforms need to translate into further effective enforcement, according to a new report by the OECD Working Group on Bribery.
According to the Working Group, which is composed of 44 countries, Latvia’s enforcement results are still not commensurate with the country’s exposure to foreign bribery and subsequent money laundering. Since Latvia joined the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 2014, no foreign bribery case has been prosecuted and three foreign bribery investigations are ongoing. Proceeds of foreign bribery have been laundered through some Latvian banks and other corporate entities in at least two multijurisdictional bribery cases. However, while waiting for the outcome of recent prosecutions in court, the money laundering conviction rate remains low. The Working Group also regrets that the Minister of Justice’s repeated and open criticism of the Prosecutor General risks creating political interference into the operation of the Public Prosecutor Office.
The Working Group has just completed its Phase 3 evaluation of Latvia’s implementation of the Convention and related instruments. In order to improve Latvia’s implementation of the Convention, the Working Group has recommended that Latvia take certain measures, including that it should:
Provide sufficient resources and expertise to its authorities to effectively investigate and prosecute foreign bribery and subsequent money laundering cases;
Step up its enforcement actions against companies, especially against Latvian financial institutions and other corporate entities involved in foreign bribery schemes, where relevant;
Reinforce coordination between Latvia’s anti-corruption law enforcement body (KNAB), the State Police and the prosecutors and implement a strategic approach towards foreign bribery and subsequent money laundering investigations;
Strengthen detection of Latvian individuals and companies involved in foreign bribery;
Ensure the efficient operation of the banking supervisory body (the FCMC), to contribute to the prevention and detection of foreign bribery and subsequent money laundering.
The Report highlights positive aspects of Latvia’s efforts to fight foreign bribery. Latvia took steps to strengthen KNAB’s functional independence. Latvia also adopted comprehensive legislation on whistleblower protection and increased sanctions against individuals for foreign bribery, money laundering and false accounting offences. A lower evidentiary threshold to prove money laundering has been introduced and the number of cases prosecuted has increased. Reforms have been implemented to enhance the Financial Intelligence Unit’s operational capacity. Latvia’s efforts to upgrade its legislative and regulatory framework to prevent money laundering in the financial sector are welcome together with Latvia’s financial sector supervisor’ efforts to renew its approach to supervision of financial institutions. Whether these developments will substantially contribute to more detection and enforcement of the foreign bribery offence remains to be tested in case law and practice.
Latvia’s Phase 3 Report was adopted by the OECD Working Group on Bribery on 10 October 2019. The Report lists the recommendations the Working Group made to Latvia on pages 82-88, and includes an overview of recent enforcement activity and specific legal, policy, and institutional features of Latvia’s framework for fighting foreign bribery. In accordance with the standard procedure, Latvia will submit a written report to the Working Group within two years (October 2021) on its implementation of all recommendations and its enforcement efforts. This report will also be made publicly available.
Growth in South Asia Slows Down, Rebound Uncertain
In line with a global downward trend, growth in South Asia is projected to slow to 5.9 percent in 2019, down 1.1 percentage points from April 2019 estimates , casting uncertainty about a rebound in the short term, says the World Bank in its twice-a-year regional economic update.
The latest edition of the South Asia Economic Focus, Making (De)centralization Work, finds that strong domestic demand, which propped high growth in the past, has weakened, driving a slowdown across the region. Imports have declined severely across South Asia, contracting between 15 and 20 percent in Pakistan and Sri Lanka. In India, domestic demand has slipped, with private consumption growing 3.1 percent in the last quarter from 7.3 percent a year ago, while manufacturing growth plummeted to below 1 percent in the second quarter of 2019 compared to over 10 percent a year ago.
“Declining industrial production and imports, as well as tensions in the financial markets reveal a sharp economic slowdown in South Asia,” said Hartwig Schafer, World Bank Vice President for the South Asia Region. “As global and domestic uncertainties cloud the region’s economic outlook, South Asian countries should pursue stimulating economic policies to boost private consumption and beef up investments.”
The report notes that South Asia’s current economic slowdown echoes the decelerating growth and trade slumps of 2008 and 2012. With that context in mind, the report remains cautiously optimistic that a slight rebound in investment and private consumption could jumpstart South Asia’s growth up to 6.3 percent in 2020, slightly above East Asia and the Pacific, and 6.7 percent in 2021.
In a focus section, the report highlights how, as their economies become more sophisticated, South Asian countries have made decentralization a priority to improve the delivery of public services. With multiple initiatives underway across the region to shift more political and fiscal responsibilities to local governments, the report warns, however, that decentralization efforts in South Asia have so far yielded mixed results.
For decentralization to work, central authorities should wield incentives and exercise quality control to encourage innovation and accountability at the local level. Rather than a mere reshuffling of power, the report calls for more complementary roles across tiers of government, in which national authorities remain proactive in empowering local governments for better service delivery.
“Decentralization in South Asia has yet to deliver on its promises and, if not properly managed, can degenerate into fragmentation,” said Hans Timmer, World Bank Chief Economist for the South Asia Region. “To make decentralization work for their citizens, we encourage South Asian central governments to allocate their resources judiciously, create incentives to help local communities compete in integrated markets, and provide equal opportunities to their people.”
In Afghanistan, with improved farming conditions and assuming political stability after the elections, growth is expected to recover and reach 3 percent in 2020 and 3.5 percent in 2021. However, the outlook is highly vulnerable and may be affected by deteriorating confidence due to uncertainty around international security assistance, election-related violence, and peace negotiations with the Taliban.
In Bangladesh, GDP is projected to moderate to 7.2 percent this fiscal year and 7.3 percent the following one. The outlook is clouded by rising financial sector vulnerability, but the economy is likely to maintain growth above 7 percent, supported by a robust macroeconomic framework, political stability, and strong public investments.
In Bhutan, GDP growth is expected to jump to 7.4 percent this fiscal year with the commissioning of Mangdechhu, a new hydropower plant, and the completion of the maintenance of Tala, another one. Growth in fiscal year 2021 is forecast just below 6 percent on the base of strong tourism growth and increased revenue from the existing power plants.
In India, after the broad-based deceleration in the first quarters of this fiscal year, growth is projected to fall to 6.0 this fiscal year. Growth is then expected to gradually recover to 6.9 percent in fiscal year 2020/21 and to 7.2 percent in the following year.
In Maldives, growth is expected to reach 5.2 percent in 2019, due to a slowdown in construction following the completion of the international airport and a connecting bridge. However, with support from new infrastructure investment and the expansion of tourism, growth is expected to pick up again to an average of 5.6 percent over the forecast horizon.
In Nepal, GDP growth is projected to average 6.5 percent over this and next fiscal year, backed by strong services and construction activity due to rising tourist arrivals and higher public spending.
In Pakistan, growth is projected to deteriorate further to 2.4 percent this fiscal year, as monetary policy remains tight, and the planned fiscal consolidation will compress domestic demand. The program signed with the IMF is expected to help growth recover from fiscal year 2021-22 onwards.
In Sri Lanka, growth is expected to soften to 2.7 percent in 2019. However, supported by recovering investment and exports, as the security challenges and political uncertainty of last year dissipate, it is projected to reach 3.3 percent in 2020 and 3.7 percent in 2021.
Oil Market Report: Back to business as usual
Oil markets in September withstood a textbook case of a large-scale supply disruption as the attacks on Saudi Arabia temporarily affected about 5.7 mb/d of crude production capacity. On Monday 16 September, the first trading day following the attacks, after an initial spike to $71/bbl Brent prices fell back as it became clear that the damage, although serious, would not cause long-lasting disruption to markets. Saudi Aramco’s achievement in restoring operations and maintaining customer confidence was very impressive. This is reflected in the fact that as we publish this Report, the price of Brent is close to $58/bbl, actually $2/bbl below the pre-attack level.
Intuitively, the precision attacks on Saudi Arabia and the possibility of a repeat should keep the market on edge. There should be talk of a geopolitical premium on top of oil prices. For now, though, there is little sign of this with security fears having been overtaken by weaker demand growth and the prospect of a wave of new oil production coming on stream – Norway’s big Johan Sverdrup project started up this month and will reach 440 kb/d by mid-2020.
In this Report, for both 2019 and 2020 we have cut our headline oil demand growth number by 0.1 mb/d. However, the reduction for 2019 mainly reflects a technical adjustment due to new data showing higher US demand in 2018 which has depressed this year’s growth number. This year is seeing two very different halves. In 1H19, global growth was only 0.4 mb/d but in 2H19 it could be as high as 1.6 mb/d with recent data lending support to the outlook: non-OECD demand growth in July and August was 1 mb/d and 1.5 mb/d, respectively, with Chinese demand growing solidly by more than 0.5 mb/d y-o-y. The OECD countries remain in a relatively weak state, although as we move through 2H19 y-o-y growth returns helped by a comparison versus a low base in the latter part of 2018. Demand is supported by prices (Brent) that are more than 30% below year-ago levels. For 2020, a weaker GDP growth forecast has seen our oil demand outlook cut back to a still solid 1.2 mb/d.
The renewed focus on demand and supply fundamentals does not mean that the attacks on Saudi Arabia can be shrugged off as being of little consequence. Further incidents of this nature in the strategically important Gulf region could happen and cause even greater disruption. A key lesson from recent weeks is that the world has a big insurance policy in the form of stockholdings. The market is the first responder to a supply crisis and OECD commercial stocks in August increased for the fifth consecutive month and are now close to the record 3+ billion barrels level we saw during most of 2016. IEA members hold an additional 1.6 billion barrels of strategic stocks, and the prompt response by the Agency to consider an emergency stocks release helped to calm markets. Commercial and strategic inventories go a long way to offsetting the lack of spare crude production capacity outside of Saudi Arabia, limited mainly to 1 mb/d in Iraq, UAE, Kuwait and Russia. We might have quickly returned to business as usual, but security of supply remains very relevant.
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