Deloitte Study: When Resilience Can Determine Organizational Survival, Only 16% of Business Leaders Expect to Significantly Increase Investment in the Continual Reinvention of the Workforce Over the Next Three Years
With COVID-19 creating urgency around workforce reinvention, it’s clear that while organizations have doubled down on investments in technology over the past decade, many have significantly underinvested in how humans could adapt to and embrace new ways of working.
Only 17% of respondents are making significant investments in reskilling to support their AI strategy with only 12% using AI primarily to replace workers;
At a time when workforce shifts are happening at warp speed, only 1 in 10 respondents are producing workforce insights in real time;
Just 27% of respondents have clear policies and practices to manage the ethical challenges resulting from the future of work despite 85% of respondents saying the future of work raises ethical challenges;
Three-quarters of leaders are expecting to source new skills and capabilities through reskilling, but only 45% are rewarding workers for the development of new skills; and
Only 45% of respondents are prepared or very prepared to take advantage of the alternative workforce to access key capabilities despite gig workers being likely to comprise 43% of the U.S. workforce this year according to the Bureau of Labor Statistics.
The need for a human focus has catapulted well-being and belonging into top concerns for organizations as the No. 1 and 2 trends, respectively, this year.
Twenty-six percent of respondents are not confident in HR’s ability to step-up and lead effectively, providing HR with the opportunity to demonstrate their strength to help organizations navigate the new normal created by the COVID-19 crisis.
Why it matters to business leaders
With the onset of COVID-19, organizations have had to take immediate actions in reaction to the pandemic, such as the shift to remote and virtual work, the implementation of new ways of working and redirecting the workforce on critical activities. Now organizations should be thinking about how to sustain these actions by embedding them into their organizational culture and DNA.
In its 10th annual 2020 Global Human Capital Trends report, “The social enterprise at work: Paradox as a path forward,” Deloitte examines ways to create that level of sustainability by finding the intersection between humans and technology and defining the core attributes that need to be embedded in the organization to create and sustain that integration. Having surveyed approximately 55,000 business leaders over 10 years, this is the largest longitudinal study of its kind.
Social enterprise at work and bringing purpose to the forefront
In just a few short years, the concept of the social enterprise has evolved from an intriguing new concept into a concrete business reality. This year’s report focuses on how the social enterprise can find the integration between technology and humanity at a time when humanity is in the spotlight as a result of the COVID-19 pandemic. This integration will enable lasting value and provide workers with an increased sense of belonging and well-being. In fact, almost half of this year’s respondents categorized their organization’s purpose as broadening extensively to include all stakeholders, including the communities they serve and society at large.
Based on our research, the three characteristics that need to be embedded into a social enterprise’s DNA to help them prepare for the future are: purpose (deepening the mission and values connection amongst teams, individuals and the work itself), potential (tapping into workers’ capability to contribute in new ways) and perspective (making bold decisions at a time of persistent change). Each requires significant shifts in workforce strategies and programs, but offers a clear path that organizations can follow to enable them to recover and thrive.
Worker well-being as an organizational responsibility through belonging
Although historically organizations were only responsible for workers’ safety, today nearly all respondents—96%—say that well-being is an organizational responsibility. Though 80% of respondents identified well-being as an important or very important priority for their organization’s success, 61% are not measuring the impact of well-being on organizational performance.
Well-being extends beyond physical health to employees feeling a sense of purpose and belonging. When asked how creating a sense of belonging supports organizational performance, 63% answered that it does so by enhancing alignment between individual and organizational objectives. Twenty-eight percent of respondents said that feeling aligned to the organization’s purpose, mission and values, and being valued for their individual contributions, are the most impactful ways to help ensure a sense of belonging.
Finding potential through the convergence of humans and technology
With the rapid integration of artificial intelligence (AI), workers are facing new realities of how they can work together with technology to bring out the best in one another. This year’s report found that only 12% of respondents said their organizations are primarily using AI to replace workers, while 60% said their organization was using AI to assist, rather than to replace, workers. Furthermore, 66% of respondents believed that the number of jobs would either stay the same or increase as a result of AI’s use in the next three years.
Building off last year’s chapter on “superjobs,” the concept of “superteams” combines people and machines, leveraging their complementary capabilities to help solve problems, gain insights, and create value—addressing a renewed sense of potential and creating new possibilities for the future.
Beyond reskilling and investing in resilience
With the “half-life” of technical skills decreasing, the use of forward-looking workforce metrics is critical for boards and investors to gain insights into the reskilling of workers. Yet organizations are least likely to collect workforce metrics in several critical areas, including the “status of reskilling,” with only 14% of respondents collecting analytics in this area. Organizations recognize that reskilling is important, with 53% of respondents saying between half and all of their workforce will need to change their skills and capabilities in the next three years. Yet, only 16% of business leaders expect to make a significant investment increase in the continual reinvention of the workforce over the next three years. With technical skills becoming outdated so quickly, organizations should be investing in longer lasting capabilities like creativity, collaboration, critical thinking and emotional intelligence that can keep their workforce relevant.
Although organizations are trying a variety of strategies to future proof their workforce, 68% of respondents report their organizations are currently making only moderate investments in reskilling or no investment at all. Thirty-two percent of respondents identified lack of investment as the greatest barrier to workforce development in their organization, with only 17% of respondents expressing confidence “to a great extent” that their organizations can anticipate the skills their organizations will need in three years.
Leaders must initiate and lead the dialogue around tech-related ethical concerns and the alternative workforce
A wide majority (85%) of respondents believe there are ethical concerns related to the future of work, including the maintenance of privacy, control of workers’ data, and the treatment of alternative workers. Twenty-seven percent of respondents say their organizations have clear policies and leaders in place to manage ethics in the context of the future of work, though 73% of respondents are either not addressing it, starting to develop their approach, or dealing with it on an ad hoc basis.
Organizations may be failing to recognize the importance of alternative workers, even as this workforce segment rapidly grows. For example, just 21% of organizations say their well-being strategy includes alternative workers. Looking ahead at the next decade, 80% of respondents rated “the radical shift in work, careers, and jobs due to AI and new employment models,” as important or very important. However, only 45% said they are prepared or very prepared for this shift—the lowest preparedness score for any of the issues surveyed as emerging challenges in the next 10 years. The ability to effectively tap into the alternative workforce can help organizations access scarce capabilities in rapidly changing work and job markets.
Closing the generational gaps through purpose
Age and career progression can no longer be seen on a linear path in the age of the “perennial.” With five distinct generations in the workplace, jobs have become more dynamic and complex than ever before. Leaders are taking notice: more than half of this year’s survey respondents (52%) report they consider generational differences to some or to a great extent when designing and delivering workforce programs. However, only 6% of respondents strongly agree their leaders are equipped to lead a multi-generational workforce effectively.
This year’s report revealed that respondents believe some generational gaps will become less pronounced in the next three years (views on work/life flexibility, expectations of loyalty/job security, and expectations of advancement), while others will become more pronounced (degree of technology-savvy, agility to shift roles, expectations of social impact).
Are we on track to meet the SDG9 industry-related targets by 2030?
A new report published by the United Nations Industrial Development Organization (UNIDO), Statistical Indicators of Inclusive and Sustainable Industrialization, looks at the progress made towards achieving the industry-related targets of Sustainable Development Goal (SDG) 9 of the UN 2030 Agenda for Sustainable Development. The report is primarily based on the SDG9 indicators related to inclusive and sustainable industrialization, for which UNIDO is designated as a custodian agency, showing the patterns of the recent changes in different country groups.
Six years after the adoption of the 2030 Agenda for Sustainable Development and its 17 SDGs, there has been increasing demand for information on whether the SDG targets could be reached, and what actions should governments take to accelerate progress. The UNIDO report introduces two new tools developed by UNIDO to help countries measuring performance and progress towards SDG9 industry-related targets: the SDG9 Industry Index and SDG9 progress and outlook indicators. The SDG9 Industry Index benchmarks countries’ performance on SDG-9 targets over 2000-2018 for 131 economies. In addition, the report develops two measures to answer the main questions:
- Progress: how much progress has been made since 2000?
- Outlook: how likely is it that the target will be achieved by 2030?
The global COVID-19 pandemic has inevitably had a negative toll on the progress towards reaching the SDG9 indicators, but the extent of the long-term impact remains to be seen. Industrialized countries continue to dominate global manufacturing industry, but their relative share has gradually declined over the past decade. In 2010, industrialized economies made up 60.3% of global production, which has decreased to 50.5% in 2020. China has been the largest manufacturer, now accounting for 31.7% of global production. This is a trend that has been reinforced by the pandemic.
Progress for the least developed countries (LDCs), at the heart of the 2030 Agenda, is a different story. While economic theory and countries’ experiences across the world have established that industrialization is an engine of sustainable growth, progress among LDCs remains very diverse. Asian LDCs are poised to double their share of manufacturing in GDP and thus meet SDG target 9.2, but African LDCs have stagnated.
SDG9 Industry Index
The SDG-9 Industry Index, consisting of five dimensions, covers three targets and five indicators and assigns a final score to countries. In 2018, the top ten consisted of exclusively industrialized economies, with Taiwan, Province of China, Ireland, Switzerland, the Republic of Korea and Germany making up the top five. In general, industrialized economies perform best in all dimensions of the Index.
The countries at the bottom of the ranking are LDCs, in particular those located in sub-Saharan Africa. Although some African countries have been displaying impressive growth rates, growth has been driven by an extended commodity boom and foreign capital inflows, while industrialization and structural transformation have stagnated. Additionally, substantial data is lacking for a significant amount of the countries. In the SDG9 Industry Index, only 24 out of 54 African countries are included, from which only eight are LDCs. It is clear that national statistics offices need strengthening, as data availability helps countries formulate, review and evaluate their development plans and programmes.
ASEAN Survey Calls for Joint Action for an Inclusive and Sustainable Digital Economy
The World Economic Forum launches today the ASEAN Digital Generation Report 2021, a special edition of its annual ASEAN youth survey report series, which examines the impact of the pandemic on personal income, savings and the role of digitalization in the region’s economic recovery. The report’s survey, conducted with close to 90,000 participants from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam, also flags the gaps needed to build a more inclusive and sustainable economy, namely: access to technology, digital skills training for all generations, and measures to enhance online trust and security.
The survey’s findings confirm e-commerce’s role as the key driver of growth in the ASEAN region. Wholesale and retail trade sector had the highest proportion of people starting new businesses (50%), while the logistics sector had the highest share of people finding new jobs (36%).
Notably, respondents from these two sectors are among those who also reported a decline in income. This could be because when people experienced a fall in income, they started new businesses in the wholesale and retail trade sector to leverage e-commerce opportunities.
A majority of respondents have adapted to the challenges of the coronavirus pandemic through significant digital adoption. Across ASEAN, 64% of respondents have digitalized 50% or more of their tasks, as have 84% of respondents who are owners of micro, small and medium enterprises (MSMEs). Respondents who reported greater levels of digitalization of their work and business reported lower levels of income decline. Similarly, business owners with an online presence were more likely to report an increase in savings (24%) and income (28%) compared to those without one (18%).
However, the benefits of digitalization are unevenly spread across the region. Those who are less “digitalized” found further digital adoption less appealing. As in 2020, respondents continued to point to expensive or poor internet quality or digital devices as the top barriers to digital adoption. While less digitalized respondents pointed to lack of digital skills as a key additional obstacle, more digitalized respondents pointed to trust and security concerns instead.
The identified obstacles were consistent across all six countries surveyed. As such, multistakeholder and regional joint actions are needed to unlock the full potential of ASEAN nations in the digital age and narrow these gaps.
“Through this annual survey, we wanted to understand the views, priorities and concerns of the digital users in ASEAN and gain statistical insights that will help inform and shape relevant regional policy,” said Joo-Ok Lee, Head of the Regional Agenda, Asia-Pacific, World Economic Forum. “The survey showed improving the quality and affordability of ASEAN digital infrastructure, equipping the ASEAN workforce with appropriate skills and enhancing people’s trust in the digital environment are crucial to bring ASEAN over the tipping point for inclusive and sustainable digital transformation.”
“One of the key findings was that digitalization has a ‘flywheel’ effect wherein users who had first experienced the benefits of technology were more eager to deepen their levels of digitalization,” added Santitarn Sathirathai, Group Chief Economist at Sea, a Singapore-based global consumer internet company.“It is critical for the public and private sector to work even more closely to lower any friction and barriers, which may prevent the positive digitalization momentum from taking place. Through this, digitalization can enable post- pandemic recovery in an inclusive and sustainable way.”
Between July and August 2021, the survey polled participants from Indonesia, Malaysia, the Philippines, Singapore, Thailand and Viet Nam. Some 77% of respondents are youths aged between 16 and 35, 56% female and 10% business owners.
This year’s edition continues tomonitor the impact of the pandemic on respondents, explores how the ongoing digitalization has benefited their life and society in the real economy, what stands in their way of further digitalization and maximization of such benefits, and how to tackle the identified obstacles.
Trade can play a pivotal role in addressing climate change
Economies in the Asia-Pacific region need to urgently reduce greenhouse gas emissions, including to maintain their trade competitiveness as carbon taxes at borders threaten to rise, according to a new United Nations report.
Around 16 million new jobs could be created in clean energy, energy efficiency, engineering, manufacturing and construction industries in the Asia-Pacific region, more than compensating for the estimated loss of five million jobs by downscaling industries.
The Asia-Pacific Trade and Investment Report 2021 was jointly launched on Monday by the UN Economic and Social Commission for Asia and the Pacific (ESCAP), the United Nations Conference on Trade and Development (UNCTAD), and the UN Environment Programme (UNEP).
Climate-smart policies have a significant cost, particularly for carbon-intensive sectors and economies, but the cost of inaction is far greater. Some estimates are as high as $792 trillion by 2100, if the Paris Agreement targets are not met.
Risks and competitiveness
Launching the report, Armida Salsiah Alisjahbana, Executive Secretary of ESCAP, remembered that key trade partners are considering border taxes on carbon.
Ms. Alisjahbana said this causes “strong concerns on the effects on the developing countries since many economies in the region are at risk of being pushed out of key markets”.
For her, the roll-out of COVID-19 recovery packages could provide opportunities to invest in low-carbon technologies and sectors.
Room for improvement
The Asia-Pacific region is currently the largest emitter of greenhouse gases, but the new report reveals significant room to make these economies greener.
For example, there are still more barriers to trade in environmental goods than in carbon-intensive fossil fuels and fuel subsidies continue to exist.
According to the report, the “timely abolishment” of these two policies, and replacement with more targeted measures, could provide much-needed finance and reduce emissions.
Other proposals are trade liberalization in climate smart and other environmental goods, transition to climate friendly transportation, incorporation of climate issues in trade agreements, carbon pricing and carbon border adjustment taxes.
For the Bangladesh Commerce Minister, Tipu Munshi, Honourable, these measures “are very much befitting given the crises” the world is facing.
Positive and negative effects
In a joint message, New Zealand’s Minister for Trade and Export Growth, Hon Damien O’Connor, and the Minister of Climate Change, Hon James Shaw, said that “one of the most substantial roadblocks in the way of cutting emissions is fusil fuel subsides”.
UNCTAD chief Rebeca Grynspan, highlighted “the links between trade, investment and climate change are complex”.
She explained that “the key is to ensure that the positive effects of trade and investment are maximized, such as by promoting trade and investment in renewable energy and low-carbon technologies, while minimizing the adverse effects, like by digitalizing trade and transport systems”.
According to the report, regional trade agreements can also help, and this change has started to happen. The report points to a general trend towards more environmental provisions in these agreements.
The Asia-Pacific Trade and Investment Report 2021is the first to examine the impact of upcoming border carbon adjustment in the region.
It is also the first time an index evaluates climate-smart trade and investment policies.
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