trust

The End of Globalisation? How Global Companies Can Reverse That Trend

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4a5e4-6a019affbb02b7970b019affc09e79970d-piOne of the most interesting articles I’ve read recently was a well thought out piece in The Economist on the retreat of the global company, which explores the idea that multinationals are decreasing in importance, with falling profits and ROEs causing sales to grow at a slower rate than domestic companies.

The article also points out that multinationals are now seen as agents of inequality, with the rise of protectionism providing one reason why the global operating model is under pressure. Also, the data show that nearly one in two of the general population agree that free trade agreements hurt a country’s workers, while 72 percent favour government protection of jobs and local industries, even if it means a slower-growth economy.

It’s clear that over the past few years, some, even high-profile, multinationals have contributed to the deteriorating image of globalisation. In fact, they have tended to let it down due to the market-driven and short term arbitrage of procuring resources where they are cheapest here and now and due to their aggressive approach to tax minimisation.

Other than the obvious and hugely worrying protectionist trend, the current retreat towards a more regional or even local approach seems to me to have a lot to do with people seeking trustworthy institutions to believe in and identify with. As neither countries and their governments nor regional supranational institutions such as the EU are fulfilling this role, there is scope for businesses to fill this void: an opportunity – and a responsibility. According to the latest Edelman Trust Barometer, those who
 are uncertain about whether the system is working for them tend to trust business more than government.

Further good news is that three out of four general population respondents from Edelman’s Trust Barometer agree that ‘a company can take actions that both increase profits and improve the economic and social conditions in the community where it operates’. Thanks to their size, reach and financial might, multinational companies have the potential to play a major, positive role, provided they appreciate what it is that makes people trust them.

One way in which multinational companies can build trust is in easing people’s anxiety about their future, particularly in terms of job losses and employability. Anxiety is mounting, and according to the Edelman Trust Barometer, these are the five key fears pertaining to job loss:

  • 60% Lack of training/skills
  • 60% Foreign competitors
  • 58% Immigrants who work for less
  • 55% Jobs moving to cheaper markets
  • 54% Automation

These are all fears that companies can address, and my guess is that if companies decided it is a strategic priority to help their people maintain or improve their employability, the rest of the fears would largely dissipate. What might this look like? It could be to build learning platforms that cater for a broad range of skills and a variety of learning preferences. This is is doable for huge companies – and a lot less for smaller, local companies.  Being proactive in helping staff reskill in the light of automation including when that means helping them become employable somewhere else is another example of what foresighted companies are already doing.

So let’s not write off global companies just yet – they can still decide to become a ‘business force for good’. As long as they make a conscious decision to do so.

5 Trends to Watch in 2014

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Lynda - Hot Spots Movement - Portrait by LK - web size 72dpi

By Lynda Gratton
The start of a new year is a natural point for thinking ahead and planning for the future.  Just before 2013 ended, I sat down for an interview with the BBC’s Peter Day, continuing a conversation he and I have been having for over 20 years.  During the interview I talked not only about the changes I’ve observed since he and I last spoke, but also about the five trends I see emerging in 2014 and beyond.

The shade of your future depends on where you are

Something that has become abundantly clear in recent years is that whether your future seems bright or dim depends on where you live. Young people in Europe, for example, are facing an extremely tough time and face the prospect of being less prosperous than their parents generation. But for their counterparts in India or China, expectations are entirely different, with many of them looking forward to a higher income than their parents.

It’s my belief that the youth unemployment we see affecting many countries is structural not cyclical. The past few years have been marked by the hollowing out of work, by which I mean that the  middle-skilled jobs traditionally taken on by graduates have been outsourced or being replaced by technology, leaving only low-skilled jobs or  high-skilled jobs which require more experience and education than the average twentysomething has to offer. This can leave young people adrift, without that very first job role from which to move upwards.

Online education

One major game-changer which I see having a huge impact in 2014 is online education. Online courses are becoming widely available – and they are revolutionising the scope of what people can aspire to. Suddenly, people all over the world are enrolling on courses that were previously only available to affluent individuals in specific locations. I saw a living example of the impact this is having at the World Economic Forum at Davos in 2013.  There I watched a panel with Bill Gates, the head of Stanford, the head of MIT – and a 13 year-old Pakistani girl. If you’re wondering why this girl was invited to join these eminent figures, the reason is simple: this young teenager came top in Stanford’s online examinations. This struck me as an outstanding example of how the world is changing: here is a girl who even five years ago would have had no opportunity to leave Lahore, but thanks to a world-class university putting its courses and examinations online, she has the world at her feet. There is no doubt that this will create huge competition for young people in the West.

Quotas for women?

It’s astounding to think that while 50% of graduates are women and 30% of managers are women, only 10% of business leaders are women. For someone who thought that the glass ceiling was about to shatter 20 years ago, this is extremely disappointing. Despite all our hopes to see more women at the top of leading organisations, the speed of change has been glacial. It seems that large organisations remain hierarchical, bureaucratic and have a tendency to pay lip service to the concept of having women in the boardroom. Frequently, they are not places where women feel comfortable holding senior positions. One solution that has been put forward is that of female quotas, but this is an issue which divides opinion amongst senior women. For my part, I’m on the side that thinks quotas are a good thing. The way I see it, if you are in a situation where nothing seems to be moving, a shock is what’s needed.

The business side of social media

I also think we’ll start to see organisations using social media within their businesses as elegantly as people use it in their everyday lives. A trend that has emerged in the last year or two is that there is technology that connects every single person in an organisation in a very sophisticated way. For example, I’ve seen this happening at Tata Consulting Services, a business that employs over 150,000 people under 24 and connects them to each other using social media. The result of this is that people naturally form communities to get things done, to discuss ideas, and to have fun. Since their Knome platform was launched, TCS employees have formed themselves into 3,500 communities. My team at the Hot Spots Movement helps companies do this in a more targeted fashion with their FoWlab jams: facilitated online conversations which companies can use to engage their employees on issues as diverse as brand values, job design and meaningful work.  I see this becoming a model that many other companies will follow. 2014 promises to bring some interesting organisational changes led by technology, particularly the kind that allows people to communicate on a many-to-many basis. This kind of communication model will have a huge impact on how people work together – and on the role of leaders.  In fact, it has the potential to change the very nature of what we call leadership. After all, if information is flowing easily and horizontally – what does a leader do?

Reconsidering trust

Both online education and social information sharing rely enormously on trust – something that will prove challenging for some. For those of us who are Baby Boomers or from Gen X, building trust has always been based on face-to-face interaction – and building trust in a virtual environment can prove challenging. People from younger generations, on the other hand, have grown up working online and playing games virtually, which gives them the advantage of being able to develop trust easily without the need for face-to-face contact. A workforce is emerging where humans can build trust in a virtual environment and this promises to revolutionise how information is shared and how knowledge and expertise flow within organisations.