Working in the Global Era

By Sam L. Palmisano and Jesse Ryan

Globalization has been scrutinized as a far-reaching shock to the United States’ labor force contributing to growing income inequality and structural underemployment. Members of Generation Y, also known as Millennials, are especially sensitive to this concern as they are entering and navigating the marketplace. The evolution of corporations from multinational firms to Globally Integrated Enterprises (GIEs) has produced increased global efficiencies that allow companies to tap into new labor sources. The emergence of new tools that are expanding access to education is further leveling the playing field for prospective hires around the world and challenging the relevance of curricula of traditional academic institutions. Just as the corporate and education sector need to adapt to these new global supply and demand patterns, employees of the 21st century must also learn to differentiate themselves in order to succeed.

 

The characteristics of globalization, including trade expansion and the democratization of the Internet, have facilitated the growth of a middle class around the world but they have also had domestic repercussions. Direct investment and strategic capital allocations by global corporations in emerging economies have provided access to skilled labor with lower cost structures. U.S. domestic investment over the last decade has been “one fifth of that in the 1980s and less than one tenth of that of the 1990s.”[1] Furthermore, the opening of new international markets is heightening the competition for jobs among the U.S. workforce. For example, since China joined the WTO in 2001, U.S. employment has dropped from a high of 64.7% in April of 2000 to 58.9% in April of 2014.[2] To prosper under these conditions, companies must transition from hub and spoke models to leaner, more decentralized globally integrated enterprises to allow for greater flows of IP and commerce. In this era of unprecedented transparency, companies and leaders will need to learn to form meaningful relationships with societies and build trust to operate within foreign borders. The business leaders who are able to overcome those imbalances in various cultural and political environments will be best positioned to compete in this restructuring global economy.

 

The Millennial generation in the United States faces unique difficulties in the marketplace as recent graduates are confronted with student debt, stagnant wages, and structural underemployment. While the Millennial generation is the most-educated in history, a college degree no longer guarantees entrance into an oversaturated and specialized labor force. In 2012, 70% of college students graduated with an average of $29,400 in student loans.[3] Real average student debt in 2013 was over 200% higher than that in 1993 without significant wage growth. According to the Pew Research Center, inflation adjusted median annual earnings have increased by only $4,000 since 1965, or 13%.[4] The job market for individuals that do not advance their learning beyond high school is even more challenging. The United States’ current trajectory towards an increasingly driven service-based economy has created a bifurcation of labor demand that reinforces the need for a specialized workforce. In 1965 manufactured goods represented 76% of total exports; however, in 2013 manufactured goods represented less than 70%.[5] While there is demand for skilled employees, the excess supply of highly educated workers in the labor market makes it difficult for prospects who do not possess the desired skills to compete. Just because individuals are highly educated does not mean that they are qualified. Millennial unemployment was 8.2% in 2013 for all workers and a steep 12.2% for those with only a high school degree, roughly double 1965 levels.[6] Such structural changes are permanent and the Millennial generation’s ability to maintain a value proposition that withstands these shifts in domestic supply and demand patterns will be vital.

 

Traditionally, enrolling in graduate school was a decision individuals made in order to distinguish themselves in the marketplace. A master’s degree today, even in business administration, no longer guarantees a short-term return on investment. In the U.S., the number of accredited business schools has outgrown demand and many programs are producing graduates that are underprepared to lead global businesses. It is true that “B-schools” equip graduates to manage transactions, but whether or not they sharpen the communication, critical thinking, and collaboration skills students need to engage in international commerce is up for debate. In addition to the content of curricula, the proprietary model of many top-tier schools is being increasingly challenged by the emergence of vocational training programs and online learning tools. As a result, B-schools face disruptive change as technological deployments are changing the way education is delivered and how students learn. While the B-school industry teaches cutting edge theories about entrepreneurship, management, and innovation, academic institutions themselves don’t embrace these practices and many operate as silos. Similar to how corporations need to push beyond organizational resistance to change and embrace technology to drive new efficiencies, educational institutions need to become more adept at anticipating opportunities. For instance, business schools can work to meet the need for management education in developing countries by developing low cost models to scale, or they can reach students who cannot afford tuition by offering online courses that lead to degrees. Recruiters in top U.S. companies are already beginning to place less emphasis on where individuals were educated and focus more on knowledge application when it comes to screening prospective hires. Lazlo Bock, the Senior Vice President of People Operations at Google, has stated that “the proportion of people without any college education at Google has increased over time.” He continued to reveal that for some teams “you have 14 percent of the team made up of people who’ve never gone to college.”[7] With attention turning to what candidates can do beyond earning degrees, the business schools that will remain relevant are those that combine academic wisdom with corporate pragmatism inside and outside of their classrooms to produce socially responsible leaders.

 

As globalization accelerates our capacity to work around the world, businesses, Millennials, and schools will need to make conceptual and structural adaptations to compete. New efficiencies in supply chains, technology, and capital deployments will continue to drive shifts in global supply and demand patterns. To succeed under these market dynamics, it is important to apply a forward-looking strategy to leverage the opportunities available on a macro-level. Globalization promotes economic growth, creates jobs, lowers prices for consumers, and improves living standards. It is in the best interests of society to support and enable this innovation-based growth. In this increasingly competitive environment academic mechanisms, corporations, and Millennials must embrace these new realities and integrate themselves across institutional, geographical, and industrial borders if they expect to thrive in this interconnected and evolving global landscape.

 

Sam Palmisano graduated from Middlebury College in 2011 with a BA in Economics and works in Fixed Income at Citigroup as an Associate. He currently resides in New York City.

 

Jesse Ryan is a 2013 graduate of Lafayette College and works as an Associate at Mercator XXI, LLC, an international management consulting firm. She resides in Washington, DC.

 

[1] Luke A. Stewart and Robert D. Atkinson, October 2013, “Restoring America’s Lagging Investment in Capital Goods,” The Information Technology and Innovation Foundation (http://www2.itif.org/2013-restoring-americas-lagging-investment.pdf)
[2] Bureau of Labor Statistics, U.S. Department of Labor, Accessed June 2013 (http://data.bls.gov/pdq/SurveyOutputServlet)
[3] The Institute for College Access and Success, December 2013, “Student Debt and the Class of 2012” (http://projectonstudentdebt.org/files/pub/classof2012.pdf)
[4] Pew Research Center, February 2014, “The Rising Cost of Not Going to College” (http://www.pewsocialtrends.org/files/2014/02/SDT-higher-education-FINAL-02-11-2014.pdf)
[5] U.S. Census Bureau, Foreign Trade Division, 2013, “U.S. Trade in Goods and Services – Balance of Payments (BOP) Basis(http://www.census.gov/foreign-trade/statistics/historical/gands.pdf)
[6] Pew Research Center, February 2014, “The Rising Cost of Not Going to College” (http://www.pewsocialtrends.org/files/2014/02/SDT-higher-education-FINAL-02-11-2014.pdf)
[7]Adam Bryant, “In Head-Hunting, Big Data May Not Be Such a Big Deal,” The New York Times, June 19, 2013 (http://www.nytimes.com/2013/06/20/business/in-head-hunting-big-data-may-not-be-such-a-big-deal.html?_r=1&)
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