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Talent competitiveness and leadership quality | IMD World Talent Report

According to the latest IMD World Talent Report, talent is the set of individual competencies necessary for enterprises and the economy to achieve long-term sustainable value.

There are two components to talent:1) “hard” competencies, which are structural and function as enablers of development – for example, investment in the educational system; and2) “soft” competencies, which are in a sense the outcome of hard competencies and include language skills.These factors go beyond a mere increase in investment and include other elements that boost, for example, the motivation and productivity of the workforce through suitable incentives.

Talent competitiveness is thus the extent to which an economy strikes a balance between hard and soft talent components, which enables it to achieve long-term value creation.

IMD’s talent competitiveness structure – which includes both “hard” and “soft” competences – is presented in Table 1.

Global leadership

The IMD’s Global Leader Index (GLI) is composed of four leadership capabilities or factors: Strategic, execution, stakeholder and personal.

  • Strategic leadership evaluates the capacity of leaders to define strategic objectives.
  • Execution leadership is the ability to implement the organization’s strategy to achieve specific objectives.
  • Stakeholder leadership refers to the capacity of individuals to engage other relevant players to achieve organizational changes.
  • Finally, personal leadership focuses on individual characteristics that allow leaders, for example, to inspire others.

Each of these capabilities is composed of four competencies that were developed through survey questions that evaluate respondents’ leadership practices.

Table 2 introduces the GLI structure.


Talent competitiveness and leadership quality findings

Global leadership capabilities

Highly skilled talent is attracted by the diversity level in the receiving communities.

An increasing percentage of the female labor force (a proxy for workforce diversity) partially drives two leadership capabilities: strategic and stakeholder leadership.

Strategic leadership is also highly influenced by total public expenditure on education, the quality of healthcare, the prioritization of talent attraction and retention, and remuneration.

In addition, strategic leadership is also driven by three indicators of internationalization: availability of internationally experienced senior managers, language skills and student mobility.

Other drivers of stakeholder leadership are expenditure on education, remuneration, language skills, student mobility, and high personal security and protection of private property.

Evidence highlights the fundamental role of expenditure on education for the other two leadership capabilities – execution and personal leadership.

Other drivers of personal leadership capabilities include personal security and private property protection, and student mobility.

Global leadership competencies

At the GLI competence level, the driving innovation competency includes the ability to encourage finding innovative solutions.

Evidence shows that this competency is driven by a greater female labor force, remuneration, student mobility and strong educational achievements (as assessed by PISA).

The quality of a country’s health infrastructure, the cost of living, a limited brain drain and an effective tax system contribute to the clarity and execution of the vision and strategy. International mobility also drives this competency.

The mobilizing stakeholders competency is driven by expenditure on education, the percentage of female labor force and language skills. In addition, the effectiveness of the health infrastructure, remuneration, an effective personal income tax rate and student mobility are statistically significant for stakeholder mobilization.

Evidence suggests that the percentage of female labor force is also significant for empowering others (e.g., delegation of authority to increase others’ efficiency). Attractiveness of the country for foreign highly skilled people and management remuneration also drive this competency.

In a previous IMD study, the criterion of “Females with Degrees” ranges from almost 70% to about 47% and it turns out to be independent of the competitiveness ranking of a country. In fact, the number of women with degrees is higher in the least competitive economies. This has a positive side implying that women with skills are present in all the economies under study.

But, are women able to contribute to the economic performance of a country?

By considering the percentage of women who are members of Boards, this criterion ranges from around 40% to…zero. A clear relationship can be seen in the graph: A high percentage of “Women in Boards” is observed in high ranked economies with respect to competitiveness. The average of the female board members in the ten most competitive economies is almost 21% whereas in the ten least competitive economies is only 7%. Thus, given the availability of women with degrees, economies must integrate the skills and competencies available to them more effectively.

Overall, the evidence shows that the impact of talent competitiveness on high quality leadership results from achieving a degree of harmonization between “hard” elements of talent (e.g., investment in education) and some of their “soft” counterparts (e.g., language skills).

Finnally is worth exploring the potential impact of the innovative capacity of organisations in both talent competitiveness and leadership and digital competitiveness:

3 Drivers of Digital Competitiveness

The IMD World Competitiveness Yearbook’s index incorporates 3 factors:
 1) knowledge dynamics, 2) digital environment and 3) integration mechanisms.
Knowledge dynamics refer to the infrastructure necessary for the production of knowledge. For example, it takes into account the available talent, and the scientific and educational contexts. The digital environment deals with the different frameworks that can facilitate the digitalization of an economy. These include the presence of a supportive regulatory framework, access to capital and the existence of an enabler technological framework. Knowledge production and the strength of the current digital environment would have a minimal impact without the presence of a set of mechanisms that allows for the absorption of new technologies. The integration mechanism incorporates the IT capacity, business practices and the existence of adaptive attitudes.
Among the important integration mechanisms it is worth highlighting, under business practices, the adaptability of companies, their ethical practices and the interactions (e.g., knowledge transfer) between the private sector and academia. In relation to adaptive attitudes, the motivation of the workforce and an “absorptive” value system are essential for digital competitiveness.
Structure of Digital Competitiveness
The highlighted results are indicative of the fundamental role of talent development and innovative capacity for attaining a fair digitalization level. In addition, the drivers of integration mechanisms underline the importance of developing a digitalization strategy that aligns multiple objectives such as the strategic adaptability to market changes, knowledge spillovers and a corporate culture driven by the production of knowledge and high levels of motivation among all levels of the corporate hierarchy. 

Public policies that ensure alignment between both sets of talent components contribute greatly to an economy’s competitiveness.

 

Read more about the recently released IMD World Talent Report.

Arturo Bris

 IMD World Talent Report Research Team: Professor Arturo Bris with Christos Cabolis and José Caballero

Arturo Bris is Professor of Finance at IMD and directs the IMD World Competitiveness Center.
Christos Cabolis is Chief Economist with the IMD World Competitiveness Center
José Caballero is Senior Economist with the IMD World Competitiveness Center.