ICGF ConferenceMiami, May 21, 2010

Nadereh ChamlouThe World Bank

Emerging global talent crisis and its root causes

Solutions to talent crisis: skills upgrading, labor mobility, and off-shoring to labor abundant locations

“Brain waste” due to widespread gender gap caused by traditions, conservative attitudes and social norms

Bridging gender gap is good business, not just for fairness

Conclusion: talent crisis cannot be met without narrowing of gender gap

2

Global economy will face demographic shock of a scale not yet observed

Despite the significant workforce transformation – more educated, more mobile, and more diverse than ever before – we are at the dawn of an unparalleled skills crisis as the working-age population of many developed economies starts to decline.

By 2050, the global population of 60+ projected to exceed <15 cohort for first time in history; developed economies will not find enough employees in home markets to sustain profitability and growth.

Challenge will be broad-based and affect all stakeholders and organizations.

Human capital shortage will surpass financial and natural resource constraints and will slow down the economic engine of the future

Source: Stimulating Economies through Fostering Talent Mobility (World Economic Forum)3

Current high unemployment levels have not disguised talent shortages and employing the unemployed is not a solution

Need for effective collaboration among business, NGOs, government, and universities – issues broad-based and universal

Emerging consensus on solving the talent shortages:

Education, skills upgrading, and innovation Talent mobility and new talent environment of

“brain circulation” Outsourcing/offshoring core knowledge functions

to labor abundant markets4

Crises pinpoint inefficiencies. Yet, prescriptions discussed earlier to deal with the global talent crisis are insufficient

A critical shortcoming: BRAIN WASTE – defined as “women and minorities BEING underutilized in the work place”

Diversity and inclusion are part of the TALK, but not quite yet part of the WALK within organizations/businesses Diversity & Inclusion still perceived as “doing good” rather

than as serious business needs

Gender gap in economic opportunities remain despite impressive female gains in education is THE persistent “brain waste” that cuts across

ethnic groups, nations, and cultures 5

Gender is Smart Economics (The World Bank, 2009)

The Bottom Line: Connecting Corporate Performance and Gender Diversity (Catalyst, 2004)

Stimulating Economies through Fostering Talent Mobility (World Economic Forum, 2009)

The Gender Corporate Gap report (World Economic Forum, 2009)

While causality between number of female managers and share price cannot be proven, studies suggest that better talent management, may also lead to better management of other assets/operations

6ICGF Conference

Companies with a higher percentage of women in top management experienced better financial performance than companies with lower women’s representation

This finding holds for Return on Equity (ROE), which is 35% higher, and for Total Return to Shareholders (TRS), 34% higher

In the 5 industries analyzed, companies with highest women’s representation in top management experienced higher ROE than companies with lowest women’s representation

In 4 out of 5 industries, companies with highest women’s representation in management experienced a higher TRS than companies with lowest women’s representation

Study replicated in Canada, Europe, and OECD countries with similar conclusions.

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Based on CAC 40 listed companies, the more women in management, the lower the share price decline during 2008/2009 financial crisis CAC 40 declined by 43%, while corporates with high gender diversity lost less

Hermes rose 17% Sodexho decreased 8% Danone fell 30%

In contrast, companies with mainly male management decreased more than CAC 40

Lucent fell by 70% Renault fell by 81% Arcelor Mittal fell by 67%

Similarly, in banking, BNP Paribas with higher management diversity fell 39% while Credit Agricole with less diversity fell by 62%

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Report on 6,000 companies in 16 major economies, employing between 1,000-30,000

Women largely concentrated in entry or middle level positions Except for Norway where board diversity is mandated by law,

the higher the levels of responsibility the lower the percentage of women

Closing the male/female employment gap is estimated to boost US GDP by 9%, Eurozone GDP by 13%, Japan GDP by 16%, suggesting:

economies benefit by better integrating female talent pool particularly positive correlation between gender diversity in

leadership and company financial performance diverse backgrounds – rather than homogeneity – key to

understanding markets and risks 9

Female labor force participation considerably below potential and below world average

World average

10

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

1980

2000

2005

Countries below the line underutilize investments in female capacity

relative to actual FLFP

-

Still, women’s entrepreneurship is on the rise

Share/size of female-owned firms in developing regions

Source: World Bank Enterprise Survey Data

% of Female-Owned Firms across region (by size)

20%

24%

13%

10%

3%

20%

0

5

10

15

20

25

MNA AFR EAP SA ECA LAC

Micro (1-9) Small (10-49) Medium (50-99) Large and Very Large (100+)

10

24

20 20

13

3

0

5

10

15

20

25

30

Africa ECA East Asia South Asia MENA LAC

Female-

owned f

irms (%

of total)

11

Source: World Bank Enterprise Survey Data

0%

20%

40%

60%

80%

100%

Female-owned firms

Male-owned firms

8.47 11.46

45.2849.25

13.8015.41

32.4523.88

% of

firms

large medium small micro

0%10%20%30%40%50%60%70%80%90%

100%

Female-owned firms Male-owned firms

29.58 35.26

13.94 11.57

40.1 41.18

13.94 9.75

2.44 2.24

textile agro-food other manufacturing services other12

Export as much More so Egypt (30% women, 20% men), Jordan (50%

women, 30% men), and Morocco (65% women, 50% men)

Attract as much Foreign Direct Investment

Use Websites and E-mail AS OFTEN

And, hire as educated and skilled workers as male firms, with one exception …

FEMALE-OWNED FIRMS hire more women (25% vs 22%), but more IN professional and manageMENT POSITIONS 13

Investment climate is difficult for allInvestment climate is difficult for all(but more so for women)(but more so for women)

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Source: World Bank Enterprise survey Data

Change in firm workforce, by gender

-1

-0.8

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

Egy

pt

Egy

pt

Jord

an

Jord

an

Leba

non

Leba

non

Mor

occo

Mor

occo

Sau

diA

rabi

a

Sau

diA

rabi

a

Syr

ia

Syr

ia

Wes

t Ban

k &

Gaz

a

Wes

t Ban

k &

Gaz

a

Yem

en

Yem

en

% o

f fi

rms Female-

Ow ned

Male-Ow ned

20 40 60 80

8060 4020 i

ncre

asin

g d

ecre

asin

g

15

Source: World Bank Enterprise Survey Data WORLDWIDE, 24% of workers are women Female-owned firms hire more women, IN GENERAL MENA is lowest – but, THERE TOO, female-owned firms hire more

women

% of female workers in total employment in male and female-owned firms across Regions

21

42

28

47

3226

32

18 1822 1824

0

20

40

60

Allcountries

East Asia &Pacific

Europe &Central Asia

LatinAmerica &Caribbean

Middle East& NorthAfrica

Sub-Saharan

Africa

%

Male-owned firms Female-owned firms

World average

16

Source: World Bank Enterprise Survey Data

World average

% of women in professional and managerial positions

(as % of total non production workers)

37

48 51

33

42

26

37

42

3435

0

20

40

60

All countries East Asia &Pacific

Latin America& Caribbean

Middle East &North Africa

Sub-SaharanAfrica

%

Male-owned firms Female-owned firms

17

26 24 2713 15

37

74 76 7387 85

63

0

20

40

60

80

100

Sub-Saharan Africa

Europe and Central Asia

East Asia and Pacific

South Asia Middle East and North

Africa

Latin America and the

Caribbean

%

Share of female-owned firms across Regions

Female-owned firms Male-owned firms18

Source: World Bank Central Database and Edstats (September 2009)19

20

21

22

23

24

Ultimately, Human Capital is the most indispensable driver of economic growth and THE foundation of innovation

Tapping into global talent pool – through migration, skills upgrading, off-shoring of core functions is necessary, but insufficient without due attention to gender diversity

Bridging the gender gap at all levels is critical for talent management and a stop to the brain waste

MENA has potential to become a future talent hub, particularly by absorbing the growing number of female university graduates

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