Choosing Where To Locate Your Workforce
Today’s business environment is as complex as it is unpredictable. Technological disruption is creating new opportunities for businesses to grow and create value, provided they transform and have the skills needed to be competitive today and tomorrow.
The emergence of new talent pools and new employment models mean companies have more options than ever before about how to build their workforce. Permanent workers still dominate, but organisations also want to embrace contractors, gig workers, freelancers, statements of work and more. Employers and workers are both looking for choice, flexibility and alternative ways of working that build resilience for less predictable futures. These non-traditional employment models can deliver precisely that.
At the same time, globalisation means that organisations are increasingly looking to move their operations into new countries and regions. Whether part of a corporate expansion plan or in the pursuit of new efficiencies, numerous factors must be considered before an organisation moves into a new geography. After all, each industry country has unique regulations that restrict when, where and how workers can be engaged, encompassing everything from contract duration limits, to regulations on pay, work hours, invoicing, and more.
Deciding where and how to build a workforce is a complicated task. Shifting legal frameworks, overwhelming amounts of workforce data and constantly changing skill requirements add layers of complexity to decision-making. To execute a precise talent strategy in this ever changing business environment, workforce planning needs to move from an art to a science.
Considerations During Strategic Workforce Planning
When determining whether one country would offer more optimised workforce engagement than another, several key considerations must be made.
Firstly, workforce availability. If the labour market in a certain country cannot meet the volume of talent required by an organisation within a certain skill set, any other benefits the labour market can offer will pale in significance. Cost and productivity are also important factors to examine, but a delicate balance must be struck between the two. In many cases, markets with lower wages may, in reality, become more expensive, due to longer working hours and associated overtime costs. Finally, local regulations can influence productivity and cost-efficiency expectations. When a labour market is highly cost-effective but heavily regulated, it may become more expensive than other markets due to a loss of productivity.
With so many factors to consider, it can be challenging for organisations to find a happy medium between them. This is where the Total Workforce Index from ManpowerGroup Solutions can help. Drawing on a global analysis of more than 90 data points, the Total Workforce Index evaluates skills availability, cost efficiency, regulation and workforce productivity of permanent and contingent workers across 75 countries. The result is a comprehensive report which ranks countries where skills, productivity and labour laws make it most favourable to do business.
Based on real-time, robust data, the Total Workforce Index helps employers address the challenges of workforce planning in today’s dynamic world of work. This includes capacity planning, cost savings, merger investments, mergers and acquisitions, organisational restructuring, and more. It helps organisations to answer critical questions such as ‘How will wage growth in a specific location impact our business?’, ‘Where should we base our new office?’, ‘What should our workforce mix be in this country?’, and ‘Where can I find workers with the skills my business needs?’
Ranking Global Workforce Engagement
Looking at the Total Workforce Index findings at a macro-level, the research suggests that base wages remain the largest individual component of total labour costs, but they no longer form the majority of those expenditures. Increased payrolling taxes, insurance costs, and other statutory burdens, coupled with the cost of turnover and training, often exceed base wages themselves.
The index also reveals that global workforce engagement and productivity are on the rise, despite the increasing retirement age across the workforce. At a market level, the index tracks the rate at which workers are leaving and entering the workforce in various skilled categories, to enable organisations to better balance the sustainability of their global operations. While there is much speculation on how employers should adjust strategies to accommodate generational trends within their workforce, the index focuses on the quantitative impact that these demographics have on a business at a market level.
Many of the top 25 countries for workforce engagement are in Europe. Some, such as the UK, boast a mature market and more flexible regulations. Others, such as Denmark, have a less mature market. Regardless, each of these markets have secured a top- 25 ranking based on above-average performance in two or more categories analysed.
Nonetheless, one size doesn’t fit all, and the index can be adapted to align with an organisation’s specific requirements and priorities. By harnessing tested insight like the Total Workforce Index, organisations can execute a precise talent strategy that’s aligned to their unique needs, but that also future proofs them against a changing world of work.
To learn more, download the 2018 Total Workforce Index.
This article first appeared in the tenth edition of The Human Age Newspaper.