The Global Quest For Talent: The Prospects Are … Mixed

Interview with Executive Director for Global Indices at INSEAD, Bruno Lanvin

It’s well known that, to be effective in any undertaking, you first have to be able to measure it. But that requires the right tools. For policymakers charged with cultivating, growing, and retaining their national pool of talent, such a tool exists – and it is showing us a picture of mixed global trends, as Bruno Lanvin explains.  

Hello Dr Lanvin. Thank you so much for taking the time to answer our questions!  First of all, can you tell us a bit about your career path leading up to becoming the Executive Director for Global Indices at INSEAD, and beyond? 

After receiving a French education (BA in maths/physics, MBA from HEC, and PhD in Economics from La Sorbonne), I had the opportunity to enrich it at INSEAD and MIT.  

I started my international career as an economist in 1979 at the UN, first in New York, then in Geneva, specialising in international trade and development issues. In 2000, I resigned from the UN to join the World Bank in Washington, DC, where I focused on ICT, e-government and the evaluation of national economic performances. This led me to develop the first global index on technology readiness (GITR, with the World Economic Forum). In 2010, I left the World Bank to join INSEAD and create my own consultancy company with offices in Geneva and Singapore. In 2007, we launched the Global Innovation Index (GII) and in 2013 the Global Talent Competitiveness Index (GTCI). Currently, I am a distinguished fellow at INSEAD, and the President of the Smart City Observatory (which produces the Smart City Index under the auspices of IMD, in Lausanne).  

The Global Talent Competitiveness Index 2022 was released just last week. What have been the biggest insights and surprises in making this year’s index and report? 

In the 2022 rankings, countries such as Switzerland (1) and Singapore (2) maintained their lead as the most talent-competitive countries, and many European economies (especially Nordic ones) kept their spot in the top 10. Smaller economies continued to display top-notch talent performance. This year, for example, Denmark outpaced the United States and entered the top three of the index. And, for the first time, Estonia entered the top 20.  

Middle-income countries also showed remarkable individual and regional performances. China (36) continued to climb the rankings and is now the most talent-competitive upper-middle-income country. For the second year running, Chile (34) represented the region of Latin America and the Caribbean in the top quartile of the GTCI. 

However, stability and encouraging signs in the rankings are no cause for celebration, as there are worrying trends beginning to permeate. The report underlines that new “talent divides” are appearing, which could rapidly become larger. This is why we chose to subtitle this year’s edition “The tectonics of talents”. If we project on a world map the main differences detected in terms of talent performance, we can identify some of the fault lines of current talent tectonics. The report shows that most of Africa and significant parts of both Latin America and Central Asia have a high concentration of countries that are on the wrong side of the talent divide.  

Can you tell us a bit about the method you use to rank countries? What parameters do you use?  

The model and methods used by GTCI have been remarkably stable since the creation of the index in 2013. This year’s model includes 69 variables, and covers 133 countries, representing almost 98 per cent of the world’s GDP and more than 93 per cent of its population. Improvements continue to be made continuously to the GTCI model, based on further discussions with academics and business and government leaders, as well as feedback from users of the GTCI.  

In the context of the GTCI, talent competitiveness refers to the set of policies and practices that enable a country to develop, attract, and empower the human capital that contributes to productivity and prosperity. The GTCI is an Input-Output model in the sense that it combines an assessment of what countries do to produce and acquire talents (Input) and the kind of skills that are available to them as a result (Output).   

The Input pillars of the GTCI are inspired by the Attract-Grow-Retain framework used by corporations to steer talent management. Multinational corporations frame talent management in these terms, defining talent management as an organisation’s efforts to attract, select, develop, and retain talented employees to meet their strategic needs. The GTCI focuses on efforts by countries and thus the model is fed by macroeconomic and country-level variables. Attracting talent, in the context of national competitiveness, is viewed from two perspectives: (1) as a draw towards external (i.e., foreign) valuable resources – both productive businesses (through foreign direct investment and the like) and creative people (through high-skilled migration) – and (2) as an internal attraction that is focused on removing barriers to entering the talent pool for groups such as those from underprivileged backgrounds, women, and non-native people. Growing talent has traditionally meant education, but its definition should be broadened to include apprenticeships, training, and continuous education, as well as experience and access to growth opportunities. (Although we may acknowledge that most skill development occurs through experience, much remains to be done to conceptualise and measure its role.) Retaining talent is necessary, because the more talented the person, the wider the global opportunities he or she can find elsewhere. Two key components of retention are sustainability (both personal and national) and quality of life. In addition, the regulatory, market, business, and labour landscapes within a country facilitate or impede talent attraction and growth; the GTCI classifies these elements as parts of the Enable pillar. Together, Enable, Attract, Grow, and Retain constitute the four Input pillars of the GTCI model. 

Regarding Output, the GTCI differentiates between two levels of talent, which can be broadly thought of as mid-level and high-level skills. Mid-level skills, labelled Vocational and Technical Skills (or VT Skills), describes skills that have a technical or professional base acquired through vocational or professional training and experience. The impact of VT Skills is measured by the degree of employability to which they lead. Employability is measured by indicators of skills gaps and labour market mismatches and by the adequacy of education systems. High-level skills, labelled Global Knowledge Skills (or GK Skills), deal with knowledge workers in professional, managerial, or leadership roles that require creativity and problem-solving. Their economic impact is evaluated by indicators of innovation, entrepreneurship, and the development of high-value industries. Together, VT Skills and GK Skills constitute the two Output pillars of the GTCI model. 

The technical annexes to the report provide additional details on the definitions, indicators, variables, and sources used, both for the overall rankings and for the detailed country profiles included. A strong comparative advantage of GTCI is its ability to offer consistent time series, which is critical in order to analyse and refine national strategies.  

It’s a key finding in the report that there’s growing inequality in the global talent landscape. Can you tell us a bit about the link between various global crises – COVID, the war in Ukraine, inflation and food scarcity – and the growing inequality in talent? 

Last year, GTCI warned of the possibility of a “K-shaped” recovery after COVID. It anticipated the possibility that the pandemic would widen inequalities between workers well equipped and trained to contribute on-line and those that were more dependent on physical assets and equipment. This prediction proved right. 

Since then, three indicators show that inequalities are growing, and that talent inequalities are at the core of this phenomenon. First, poverty is back. The World Bank estimates that, over the last two years, an additional 70 million people entered a state of living in extreme poverty. This is a devastating setback, occurring after almost three decades of continuing success in poverty reduction. Second, the war in Ukraine has also created additional tensions in food and energy markets, for both of which many poor and emerging economies have to rely on external supplies. Third, the resumption of inflation is generating price and supply distortions that typically affect lower-income people and nations more.   

The report dwells on two types of inequalities for which action is urgently required: gender and education. 

While gender divides have been highlighted in previous editions of GTCI, this year we examined three new indicators: economic empowerment of women, gender parity in high-skilled jobs, and leadership opportunities. Despite encouraging signals, we found that gender divides remain prominent on the talent scene and that the COVID-19 pandemic has drastically impeded recent progress.

The pandemic has also had a devastating impact on children’s education in impoverished countries. The percentage of children in low- and middle-income countries unable to read and understand a simple text by the age of 10 has risen from 53 per cent to 70 per cent, according to the World Bank.  Some of the shocks created by the COVID-19 crisis may be irreversible. One striking example is that of children, especially girls, who didn’t attend school for one or two years. Many of them may never return to a classroom. 

Do you see the internet and the growing online gig economy as something that can help ameliorate the tendency of growing talent inequality by enabling young people from lower-ranking countries to partake in a global rather than local economy?  

GTCI data and analysis show that the response to this question remains ambiguous. On one hand, gig-economy behaviours and practices have added flexibility and fluidity to labour markets and allowed more young talents to participate actively in the workforce. On the other hand, as underlined earlier, inequalities in access to technologies and communication infrastructure, as well as inequalities in education and training, have been amplified by the rapid growth of inline interactions. 

Previous editions of GTCI have underlined and measured some of the facets of this ambiguity. This was particularly the case of GTCI 2020, devoted to “Global Talent in the Age of Artificial Intelligence”, but also in GTCI 2021, which explored the emergence of the “K-shaped recovery” mentioned before. 

One important element that has started to affect deeply the global talent landscape is the change in demands and expectations from younger generations (X, Y, Z, Alpha). They are more comfortable with the notion of temporary and flexible employment (gig-type), and seek more value and impact in their daily work, while aiming at a healthy work-life balance. This is a central topic of my latest book (The Future Is Young), as well as of the 2022 edition of the Network Readiness Index and Report, released on 15 November under the title “Stepping into a new digital era – How and why digital natives will change the world”.  

For policymakers reading this interview, what is the best advice you can give them to help their country rank higher in the competition on talent? 

As underlined in the previous editions of the GTCI, countries are competing globally to grow better talent, attract the talent they need, and retain those workers who contribute to competitiveness, innovation, and growth. Countries seek to put economic and social policies in place that will facilitate this. In such a context, governments, businesses, and various other stakeholders need quantitative instruments that can inform their decisions (as investors, employers, employees, or jobseekers) and can help them design and implement better policies in areas such as education, employment, and immigration, to name a few. This is the purpose of the GTCI.  

Decisions regarding the development, attraction, and empowerment of talent are remarkably complex and multi-layered. They involve a multi-disciplinary endeavour to tackle talent dilemmas that have been raised in the fields of economics, education, human resource management and organisational behaviour, entrepreneurship, innovation, and strategy. At the policy level, this complexity is compounded by emotional dimensions and the international consequences of choices to be made in terms of immigration, social equity, and fiscal incentives, among other issues. 

Faced with such intricate issues, decision-makers – both public and private – need quantitative tools that will enable them to benchmark the efforts made and results obtained in different socioeconomic environments in terms of talent management and talent competitiveness. The GTCI has been designed to help address this challenge by providing a composite view of talent competitiveness applicable to a large number of countries (133 this year). Although several composite indices concerning skills, talent, and human capital have been developed in recent years, both private and public players in the field see the need for a neutral, global, and respected index that would enable them to assess the effectiveness of talent-related policies and practices, identify priorities for action in relevant areas, and inform international and local debate in this arena. 

The GTCI report provides a composite view of talent competitiveness – the set of policies and practices that enable a country to develop, attract, and empower the human capital that contributes to productivity and prosperity. Private and public decision-makers use the index to assess the effectiveness of these policies and practices and identify priorities for action. 

Europe is the stand-out continent in this ranking, with 15 countries in the top 20. What makes Europe stand out when it comes to talent? 

The prevalent position of European economies at the top of GTCI is not a surprise. On one hand, if we look at the global dataset of GTCI, we see a strong correlation between income per capita and talent performance: rich countries are better at growing, attracting, and retaining talents. On the other hand, we also see a strong presence of smaller economies at the top of GTCI rankings. This is largely due to the fact that those economies have historically had to compete without significant natural resources or territorial advantages Relying on talent was often their only way out of isolation and poverty, and being open economies was a condition of their growth. So, if we put these two ingredients together (being rich and being small), it is clear that most of the countries combining both are to be found in Europe. (Rare exceptions include Singapore, and possibly New Zealand and some countries in the Persian Gulf.) 

But European countries have clearly relied on the appropriate policies to strengthen that advantage by combining it with the pursuit of four strategic priorities: education, innovation, infrastructure (ICT), and openness.  

While European countries are doing well in the ranking, when it comes to cities, US has three in the top four. What makes some American cities perform so well? 

When ranking cities, the 2022 edition of GTCI  shows a mix of large and small urban centres, ranked on their reputation and growing footprint in attracting global talent. It is among the former that US cities shine, greater San Francisco and Boston being two key examples. Both offer a rare combination of high-level universities on one hand and a vibrant innovation ecosystem on the other.  

Altogether, however, the GTCI rankings of cities are (like country rankings) largely dominated by European cities, which accounted for more than one-third of the total coverage (68 out of 175). Smaller cities prove highly competitive in terms of talents. The example of Swiss cities (Zürich, Lausanne, Geneva) is remarkable in this respect. 

There’s been talk about cities’ potential to lure talent for decades now. Do we see a situation where cities play such a big role in luring talent that it creates talent inequality not just between countries, but also inside countries?   

Globally speaking, talent hubs are much more cities than nations. Cities are more agile and can offer better conditions to the workers they want to attract or retain (fiscally, but also in terms of access to key services and quality of life). Innovation clusters are particularly clear examples. 

As the world enters times of higher economic, social, and political uncertainty, talent hubs will be better equipped to weather the storm. Cities that appear well positioned to be future-ready include medium-sized cities (with a population of between 200,000 and 2 million), as well as those that mobilise digital transformation, offer attractive work environments to younger generations, and contribute to national strategic goals and objectives. 

One may add here that, in a global economy that is growing increasingly digital, talented workers become less dependent on specific production locations. Most can operate anytime from anywhere. In such a context, quality of life is a strong contributor to talent attraction. Europe’s dense tissue of medium-sized cities helps it significantly in this regard. 

This article is originally published on November 21, 2022.

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