DCR Trendline May 2015

innovation as usual | Page 27

It’s almost summer! As the weather starts to heat up, the editorial staff at DCR TrendLine is eager to share our analysis and insights into the hottest trends in the non-employee workforce market. With thorough research and in-depth analysis of data, DCR TrendLine strives to provide you with a pulse of the staffing market.

The DCR National Temp Wage Index focuses on temporary worker wage rates, analyzing the utilization of contingent workers, and tracking related developments in the economy. This month, we look at the top metro areas for temporary employment, examine the increase in wellness program incentives by employers, and look into Colorado’s marijuana tax revenue.

Recently indexes from Bloomberg and Citigroup ranked the U.S. economy as the most disappointing major economy in the world. We look at the reasons behind how these reputable indexes arrived at their conclusion.

Overall, job growth has had an upward trend over the past two years. However, economists argue that wages have not seen the same progress. We look at how variations among industry segment and location impact the perception of wage growth across the United States.

Our industry highlight for May focuses on the automobile manufacturing sector. The DCR TrendLine Automobile Manufacturing Index provides an overview of employment and wage trends in the sector over the last six years. We discuss how the growing imports of car parts from Mexico and China have had an impact on employ-ment in the industry.

What do millennials want? With more millennials occupying leadership positions across the world, organizations are considering how they can best ensure their success and engagement. We look at what it is that millennials want when it comes to leadership and work-life balance.

We’re also continuing our global series, with focus on the ASEAN region. This month, we examine Malaysia and the threat its economy faces due to oil prices.

Our feature article discusses a topic that’s red hot – innovation. We deliberate on the definition of innovation, and provide information on how companies can get started on incorporating innovation into their organizations as a core business function.

This edition’s final article looks at the talent acquisition sector and how it’s been disrupted due to changes in the ways companies access and engage with talent. Keep an eye out for our highlight on companies that are leading the way towards this new evolution of recruitment.

Ammu WarrierAmmu Warrier, President

“NOTE fROM THE EDITOR

INSIDE THIS ISSUE “Although the leading economic index still points to a moderate expansion in economic activity, its slowing growth rate over recent months suggests weaker growth may be ahead.” ~Ataman Ozyildirim, Economist at The Conference Board

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note from the editor..............................................................................................................................................page 1DCR national temp Wage index........................................................................................................................page 2u.s. economy: Disappointing..?..........................................................................................................................page 7Wage growth across the u.s..............................................................................................................................page 9industry Highlight: automobile Manufacturing index...............................................................................page 13What Do Millennials Want?.................................................................................................................................page 17Malaysia: oil Prices Pose threat to economy................................................................................................page 22innovation as usual...............................................................................................................................................page 27Recruiting Disrupted,............................................................................................................................................page 31Methodology........................................................................................................................................................... page 34References................................................................................................................................................................page 35about DCR.................................................................................................................................................................page 36

“DCR NATIONAL TEMP WAgE INDEx

“Raising real wages is a big part of the unfinished business.” ~Tom Perez, U.S. Secretary of Labor

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The United States economy added only 126,000 jobs in March 2015, the lowest since December 2013, and way below the 250,000 new jobs economists were forecasting.

Among the jobs created, health care, business services, and the retail sector had the highest contributions. Professional and business services had the largest gains with

40,000 jobs added; the industry on average has seen 34,000 jobs added each month in the first quarter of 2015. Retail added 26,000 jobs, in line with the industry’s 12-month

average gain, and healthcare added 22,000 jobs. Due largely to the drop in oil prices, employment in mining declined by 11,000 jobs, for a total of 30,000 jobs in 2015 so far.

DCR NATIONAL TEMP WAgE INDEx

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A further disappointment was that wage growth remained sluggish. A year ago, American earned an average of $24.34 per hour, and today that is $24.86 an hour. The federal Reserve Bank of Atlanta forecast the economy remained flat in the first quarter compared to a year ago.

The unemployment rate remained unchanged at 5.5 percent, the lowest since May 2008. A broader guage of unemployment that includes workers who have part-time jobs but would like full-time work dropped to 10.9

Employment growth In Past Year

Source: BLS


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According to a separate forecast by CareerBuilder, nearly 4 out of 10 employers plan to hire temporary or contract workers in the second quarter of 2015, up from 33 percent in 2014. And a third of employers surveyed say they plan to transition some contract or temporary staff into permanent employees in the second quarter.

A new survey from glassdoor and Harris Poll of 515 human resources and business managers in the United States finds that recruiters say that a talent shortage is their number one hiring challenge today. forty-eight percent of respondents said they are having trouble finding qualified canddiates for open positions.

The survey reveals that 52 percent of hiring managers say that “passive recruiting” has been less effective in the past year, and 51 percent believe that canddiates are growing tired of emails from networking sites and responding at a lower late. forty-seven percent indiciate that candidates are not responding to emails, and 44 percent say that they are reluctant to return phone calls as well.

“The brisk hiring anticipated for the second quarter comes against the backdrop of stronger sales, new product development and market expansion among companies of all sizes.” ~Matt ferguson, CEO of CareerBuilder

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Metro

Memphis, TN-MS-AR

grand Rapids-Wyoming, MI

Indianapolis-Carmel-Anderson, IN

Chicago-Naperville-Elgin, IL-IN-WI

Nashville-Davidson-Murfreesboro-franklin, TN

Atlanta-Sandy Springs-Roswell, gA

Louisville/Jefferson County, KY-IN

Dallas-fort Worth-Arlington, Tx

Columbus, OH

Milwaukee-Waukesha-West Allis, WI

Percentage of Temporary Jobs

5%

4.7%

3.9%

3.4%

3.4%

3.2%

3.1%

3%

3%

2.9%

10 Metros with the Highest Percentage of Temp Jobs (in relation to overall employment)

Source: CareerBuilder

A recent CareerBuilder study forecasts that temporary employment will continue on an upward trajectory. The study also found that some United States metros have a concentration of temporary jobs 45-150 percent higher than the national average of 2 percent.

METROS WITH THE HIgHEST PERCENTAgE Of TEMPORARY JOBS

TALENT SHORTAgE IS gETTINg WORSE

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DCR NATIONAL TEMP WAgE INDExEMPLOYERS OffERINg MORE IN WELLNESS PROgRAMS INCENTIvES

H-1B CAP REACHED QUICKLY

Recent findings by fidelity Investments and the National Business group on Health have found that 79 percent of employers now offer wellness programs, which can include health questionanaires, blood tests, biometric screenings, and smoking cessation and weight-loss classes. On average, employers are offering a record $693 per employees as a financial incetive for participating in wellness programs. This is up from an average of $594 in 2014 and $430 five years ago. Companies with more than 20,000 employees are offering an average of $878 per employee, while companies with between 5,000 to 20,000 employee are offering $661 per employee. These incentives take the form of cash, reduced insurance premiums or contributions to a healthcare account.

Meanwhile, fewer employers are imposing penalties such as charging more for insurance if workers do not participate or achieve goals. for example, only 6 percent of employers say they penalize workers for not answering health risk assessments, down from 11 percent in 2014.

However only 47 percent of employees earned their full incentive amount in 2014, translating into millions of dollars of unclaimed incentives.

Every year on April 1st, businesses submit applications on behalf of their foreign workers for temporary employment visas, knows as the H1-B. A maximum of 85,000 work visas, including 20,000 for holders of master’s degrees, are available each year under limits set by Congress. If the number of applications exceeds the 85,000 quota within the first week, visas are granted via a lottery system.

This year, 233,000 people applied for the H1-B, up significantly from the 172,500 applications in 2014, and nearly double the 124,000 applications in 2013.

Advocates of raising the H-1B visa quota argue that this volume of applications is further proof that the government needs to take action. According to estimates from Complete America, a coalition representing major technology companies including Amazon, facebook, and Microsoft, the United States loses about 500,000 jobs a year because of the limits on H1-B visas.

“Year after year, the government falls back on a lottery system to determine which U.S. employers will ‘win’ the ability to hire top world talent. This year, employers had a mere 36 percent chance of being granted an H-1B visa. U.S. economic growth should not be left up to this gamble.” ~Lynn Shotwell, Executive Director of the Council for global Immigration

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It’s been over a year since Colorado became the first state in the country to allow people to legally sell and buy marijuana in January 2014. When the state made marijuana legal for everyone, not just medical patients, it also implemented a 25 percent tax rate on sales. In february 2014, governor John Hickenlooper’s office projected that Colorado would take in $118 million in taxes on recreational marijuana in its first full year after legalization. However, recent projections based on seven months of revenue data say that the state will collect $69 million through the end of the fiscal year in June, missing intial estimates by 42 percent.

Experts believe that the projections were off for several reasons, including economists overestimating the number of people who would stop buying marijuna on the black market and the number of medical patients that would switch to recreational marijuana. Medical marijuana is taxed at a much lower rate of 2.9 percent. According to Andrew freedman, Colorado’s Director of Marijuna Coordination, the biggest drag on revenues is that much of the market remains unregulated. A 2014 report by the state’s Department of Revenue estimated that 130 metric tons of marijuna was consumed in Colorado that year, while only 77 metric tons was sold through medical dispensaries and recreational marijuana retailers. Samantha Chin, the Director of Marketing at Colorado Pot guide, says retail prices have fallen between 16 and 30 percent in the Denver area since November 2014.

The fiscal benefit of changing marijuna policies has been a driving force behind its legalization throughout the country.

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A LOOK AT COLORADO’S MARIJAUNA TAx REvENUE

“Tax revenue is nice to have, but in most states it is not going to be enough to change the budget picture significantly. The stakes in reducing criminal activity and incarceration and protecting public health are way higher than the stakes in generating revenue.” ~Mark Kleiman, Drug Policy Expert at University of California – Los Angeles

“Sale Statistics for Colorado Marijuana

Source: Colorado Department of Revenue

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U.S. ECONOMY: DISAPPOINTINg?

Recently, the Bloomberg Economic Surprise Index ranked the U.S. economy as the most dissapointing major economy in the world. The index which measures incoming economic data against economic expectations says that U.S. economic data has consistently been falling short of expert’s predictions in the last six years.

Corroborating this statement is Citigroup’s U.S. Economic Surprise Index, whose scoreboard shows that the U.S. is the most disappointing relative to consensus forecasts. The Citigroup U.S. Economic Surprise Index gauges how U.S. economic data performs relative to expectations on a rolling three-month basis. While American policymakers frequently talk about weakness in the European and Chinese economies, both are exceeding expectations.

While the media often focuses on the positive – the 1.3 million jobs added over the past 4 months and the low unemployment rate – other measures fall short of expectations. This month alone, personal income and spending, manufacturing, automobile sales, factory orders, and retail sales are all weak.

Most Disappointing Countries

Source: Citigroup

U.S. ECONOMY: DISAPPOINTINg?

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First-Quarter Growth Forecasts: first-quarter U.S. growth forecasts continue to be cut by leading banks. Michael feroli of JPMorgan Chase cut his forecast to 2.0 percent from 2.5 percent, while Barclay Capital reduced its estimate to 1.5 percent.

Wage Growth: While monthly job gains continue to gain consumer confidence, wage growth has not seen an improvement.

Job Creation: Economists says that despite job creation, the biggest disappointment has been the types of jobs being created and the overall strength of the labor market.

The U.S. Dollar: According to some economists, in the past six months, the dollar has increased by a near-record amount making U.S. goods about 25 percent more expensive on global markets.

Manufacturing Output: According to federal Reserve data, in March 2015, manufacturing output had a 0.1 percent gain, its first advance in four months.

Industrial Output: In March 2015, U.S. industrial production fell sharply by 0.6 percent. A year ago, industrial output was up 2 percent.

Utilities Output: Utilities output fell 5.9 percent in March 2015, the biggest decrease since January 2006.

U.S. Firm Borrowing: U.S. corporations have been borrowing large amounts to buy back stocks, increasing their leverage without building new production

capacity.

Housing: The Commerce Department recently released a report showing a smaller than expected rebound in housing starts. Economists were expecting

housing starts to jump to a rate of 1.05 million in March 2015, but they actually only rose 2 percent to 926,000. Also, building permits, an indicator of future

housing demand, fell 5.7 percent to an annual rate of 1.039 million.

Jobless Claims: A report from the Labor Department showed an increase in initial jobless claims in the week ending April 11th, 2015. Initial jobless claims

climbed to 294,000, an increase of 12,000 from the previous week. Economists had expected jobless claims to edge down to 280,000.

March’s Job Report: The U.S. economy added 126,000 jobs in March 2015, the lowest monthly job gains since December 2013. Economists were expecting

245,00 new jobs.

“[The latest figures add] to a growing list of dissapointing U.S. economic indicators, suggesting that the economy ended the quarter on a very weak footing. Moreover, there is little indication of an impending rebound.” ~Millan Mulraine, Analyst at TD Securities

“Are we creating enough jobs that people with a range of skills can possibly take on? Do we have the right skills? Are we creating jobs that fit the skills we can create?” ~Jerry Webman, Chief Economist at Oppenheimer funds

“The dollar is a wet blanket on manufacturing. If the dollar remains this strong, we’re going to have headwinds in manufacturing for a while.” ~guy Berger, U.S. Economist at RBS Securities, Inc.

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WAgE gROWTH ACROSS THE U.S.

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While overall job growth is on a upward trend, economists question how variations in this growth among and within industry segments impacts wage growth. Over the majority of the past two years, job growth in the United States has averaged over 200,000 new jobs per month. However, during the same period, hourly wages grew much slower at only about 4 percent in total. And this wage growth rate was exactly the same as the change in prices for the same period, which means that real average hourly wage did not increase.

While many economists broadly interpret this as a sign that wage growth is stationary, the reality is quite different. The diversity of job creation at different wage levels paints a different picture.

Between the period from July 2012 to July 2014, the sectors contributing the largest number of jobs were a mix between those that pay a higher wage on average (business and professional services and construction) and those that pay a lower wage on average (retail and leisure and hospitality). In some sectors, such as information workers and financial workers, wages grew faster than average, while in other sectors, such as utilities, wage growth was below average.

WAgE gROWTH ACROSS INDUSTRIES

Employment and Hourly Wage by Sector

Source: BLS

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National aggregate numbers also mask another important source of variation – location. States have different average hourly wages, ranging from

a low of $19.34 in Mississippi to a high of $29.01 in Massachusetts. Thus, the national average wage depends to some degree on where new jobs

are being created. Additionally, the states vary widely in the distribution of jobs across industries. for instance, 15.2 percent of total Massachusetts

nonfarm employment is in professional and businesses services, which has a higher wage growth than average. In Mississippi, this sector makes up

8.9 percent of employment.

Comparing total private

employment growth to wage

growth by state, it appears

that several states are actually

experiencing a wage decline. But

in reality, while this is true with

regard to these states’ average

wages, the situation is likely a

reflection of faster growth in

some low-wage industries or in

lower-wage occupations within

an industry.

WAgE gROWTH ACROSS STATES

Source: Deloitte University Press

Total Private Employment growth vs. Wage growth, by State

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The professional and business services sector, which contributes substantially towards the employment of temporary workers, has experienced large job growth over the period from July 2012 to July 2014. And jobs in professional and business services tend to pay higher-than-average wages.

The industry has been a major job creator since the beginning of the economic recovery in 2009. Currently, this sector employs 1.2 million more people than it did when the recession started in December 2007.

Since professional and business services is an industry which provides services to other businesses, its health depends largely on the health of the businesses it serves. The industry has benefited from the turnaround in the U.S. economy. Additionally, the long-term trend of outsourcing non-core functions to professional and businesses services has played a large part towards the industry’s growth.

LOOKINg AT PROfESSIONAL AND BUSINESS SERvICES

Professional and Business Services Employment and Hourly Wages

Source: BLS

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WAgE gROWTH ACROSS THE U.S.Looking at the types of occupational areas served by professional and business services, they are quite varied, ranging from administrative and support services that comprises 43 percent of the industry and has an average hourly wage of $18.40 to the higher-paying computer and system design services, which has an average hourly wage of $42.73 per hour.

Professional and Business Services Employment growth Compared to National Average Sector growth, By State

Source: BLS

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INDUSTRY HIgHLIgHT: AUTOMOBILE MANUfACTURINg INDEx

Due to strong domestic demand and a steady increase in exports, United States auto production is nearing an all-time high. According to

WardsAuto.com, American automakers built 11.37 million light vehicles in 2014, among the higher output totals since the record of 12.59 million

produced in 1999. Exports of American-made vehicles was over 2 million for the first time last year.

However, this growth in automobile manufacturing is not creating the jobs that analysts would expect, due to these American-made cars and

trucks being made with parts imported from Mexico, China, and other foreign countries.

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In 2014, the U.S. imported a record $138 billion in car parts last year, equivalent to $12,135 of content in every American vehicle built. Mexico was the largest supplier of car parts to the U.S. last year, accounting for 34 percent of imports, followed by China at 13 percent. Since 2008, imports from China have more than doubled, while imports from Mexico have increased by 86 percent.

While the U.S. is manufacturing the highest volume of automobiles since 1999, and has hit a record with its volume of exports, the growth of parts imports has left the nation with a growing deficit in overall trade in cars and parts of $168.3 billion in 2014. This is compared to $156.2 billion in 2013.

“We’ve never produced so many cars in the U.S., but we’ve never made so few of the parts.” ~Sean McAlinden, Chief Economist at the Center for Automotive Research

AMERICAN CARS, fOREIgN PARTS

Percentage of U.S. Content for Car Models, 2010 vs. 2015

Source: The Wall Street Journal

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The shift of parts production to foreign countries has shrunk an industry that has long been considered one of the largest sources of manufacturing jobs in the country. In 2014, employment at manufacturers of car parts averaged about 537,000, a decline of 36 percent from 2000. Meanwhile, while the output has grown, employment at manufacturers of completed vehicles declined 32 percent from 2000 to 2014. Industry experts attribute this decline in part to productivity imporvements that include automation.

To compete in a growing global market, the larger U.S. automobile parts makers have invested in foreign countries. for example, American Axle, based in Detroit, has plants in Mexico, Brazil, Poland, the U.K., India, China, and Thailand. Only about 30 percent of the company’s employees are in the United States.

Wages in the sector have also been trending downwards. In 2014, the average hourly wage for production and other nonsupervisory workers at car-parts markers was $19.91, a decrease of 23 percent from a decade earlier. According to the Bureau of Labor Statistics (BLS), automobile manufacturers saw a wage decline of 22 percent to $27.83 in the same period.

“The U.S. tech industry continues to make significant contributions to our economy. The tech industry accounts for 7.1 percent of the overall U.S. gDP and 11.4 percent of the total private sector payroll. With annual average wages that are more than double that of the private sector [overall], we should be doing all we can to encourage the growth and vitality of our nation’s tech industry.” ~Todd Thibodeaux, President and CEO of CompTIA

“HOW THIS IMPACTS EMPLOYMENT

Automobile Manufacturing Employment and Hourly Wages

Source: BLS

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In 2007, U.S. automakers were concerned with how to close a $30-per-hour labor cost gap with their Asian rivals. Today, however, fiat Chrysler Automobiles (fCA US) has labor costs for its U.S. workers that are on par with Toyota and Honda, and general Motors (gM) and ford are at about $10 less per hour. According to the Center for Automotive Research, fCA US pays its workers about $48 per hour (with all benefits and bonuses included), while gM pays $58 per hour, and ford pays $57 per hour. These per-hour labor costs averages include pay for temporary workers who are formally employed by staffing agencies, but work full-time alongside workers employed directly by automakers.

The Center for Automotive Research (CAR) says that Japanese-owned plants utilize temporary workers as a larger percentage of their workforces than U.S. automakers. CAR estimates that Nissan uses temps for as much as 43 percent for its U.S. workforce, while Toyota uses them for 10 to 20 percent of their workforce. Meanwhile, at ford, temporary workers make up about 2 percent of the workforce, and as much as 4 percent during high-production months.

According to Rick Hesterberg, a spokesman for Toyota, the company uses temporary workers to handle fluctuations in demand and to screen hires. Since 2011, Toyota has permanently hired 1,900 of its temp workers in its georgetown, Kentucky plant.

TEMP WORKERS AT AUTO MANUfACTURINg PLANTS

Source: Center for Automotive Research

Average Hourly Total Labor Costs Per U.S. Worker by Auto Manufacturer

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WHAT DO MILLENNIALS WANT?

Projected Demographics in the U.S.

Source: U.S. Census Bureau

What is it that millennials want? As more millennials are occupying leadership positions across the world, organizations are trying to discover what they can do to ensure their success.

According to the U.S. Census Bureau, millennials will comprise the majority of the workforce by 2025. When it comes to employee engagement, this means that there is a large variance in the current workforce and each worker needs to be treated differently. Each category of worker has their own priority, from work-life balance to health care benefits. And employees today don’t just care about salary; they are looking for additional benefits from employers.

Adding to the urgency to determine what millennials want at work is that most of the existing research on the generation is skewed towards a Western population. Conclusions based on this limited sample could lead to missed opportunities about attracting, retaining, and developing millenial leaders in a global business environment.

WHY DOES IT MATTER?

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WHAT DO MILLENNIALS WANT?

Why Do you Want to Be a Leader?

Source: HBR

INSEAD’s Emerging Markets Institute, Universum, and the HEAD foundation recently conducted a survey on millennials, surveying 16,637 people between the ages of 18 and 30 in 43 countries. On average, 40 percent of respondents claimed that becoming a manager or leader was “very important” to them. The reasons, ranging from money to building career foundations, varies across countries. High future earnings stood out as the most dominant global theme, but the range was still wide. Half of respondents from Central and Eastern Europe chose high future earnings as a reason to pursue leadership, while only 17 percent of African respondents did.

LEADERSHIP

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WHAT DO MILLENNIALS WANT?WORK-LIfE BALANCE

Numerous articles have been written about how millennials want a strong work-life balance, but it is rare to find research on the kind of balance this means. for previous generations, work-life balance often meant a work-family balance. for millennials, it seems to mean more of a work-me balance. Millennials want time for themselves and space for their own self-expression. In the survey by Insead et al, the dominant definition of work-life balance was “enough time for my private life” followed by “flexible work hours”. This might be explained by the fact that a large population of millenials are currently single, do not have children, and are not providing care for aging parents.

What Does Work-Life Balance Mean?

Source: HBR

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WHAT DO MILLENNIALS WANT?MILLENNIALS AND THE fUTURE Of WORK

Human resource experts are recognizing that millennials might understand the future of work better than other generations, and that companies can learn a lot about where the workplace is heading by watching how millennials approach and define their careers.

The internet has opened more doors to the millennial generation than any other. Their whole lives, millennials have been told that they can and should pursue as many interests as they want, so they are a generation with diverse interests. This is why the idea of a portfolio of work comes naturally to them. Millennials have been doing web design for thir mom’s coworkers after school, and teaching themselves video editing through online courses and picking up gigs to supplement their part-time job.

This natural flexibility positions millenials to take advantage of where the future of work is heading. According to a national survey conducted by freelancers Union and Elance-oDesk, 38 percent of millenials are freelancing, and 82 percent are optimistic about the future of freelancing.

Millennials understand networks and hubs, which make for successful freelancers. They understand the power of affiliations, more so than earlier generations. And they are putting this understanding to use in areas besides their career. In the U.S., the Occupy movement took up the cause of social justice and economic equality and built a networked infrastructure to advance their ideas. In Spain, Podemos, founded by millennials, is one of the fastest-growing political parties in the country.

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WHAT DO MILLENNIALS WANT?THINgS TO KNOW ABOUT MILLENNIALS

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MALAYSIA: OIL PRICES POSE THREAT TO ECONOMY

Many labor experts consider Malaysia to be one of Southeast Asia’s success stories. With a population of around 30 million, it is the region’s third-largest economy and has

a relatively strong literacy rate. It is a moderate and democratic Muslim state, where the Islamic majority lives mostly in harmony with the country’s Chinese and Indian

communities.

However, recently the delicate political and ethnic balance of the country is starting to unravel. Since 1957, Malaysia has been ruled by the United Malays National

Organization (UMNO). In recent years, however, the opposition political party has won more of the popular vote. Experts worry that if political tension grows it could have a

damaging impact on Malaysia’s economy.

In 2014, Malaysia had a real gDP growth of 6 percent, the second-highest performance in South East Asia. But the country is a significant net exporter of energy, which

makes it vulnerable to fluctuations in oil prices. Also, foreign bond ownership is high at more than 40 percent, and political and economic unstability could make foreign

bondholders wary.

Malaysia Labor Market at a glance

Source: Trading Economics

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The World Bank recently stated that lower oil prices would slow growth through delays in capital expenditures in the oil and gas sector. In 2015, Malaysia’s economic growth is expected to slow down to 4.7 percent, before normalizing at 5 percent in 2016.

Comparativley, the World Bank expects other countries in Southeast Asia to grow, with Indonesia projected to grow 5.2 percent this year, Thailand to grow 3.5 percent, and the Philippines to grow 6.5 percent.

According to the World Bank reports, a fifth of the government’s revenues depend on oil, so a decline in oil prices is a key risk to near-term growth, fiscal and external accounts.

“As a net hydrocarbon exporter, lower oil prices will dampen the outlook for investments and growth. The outlook for 2016 and beyond is clouded by uncertainty in the direction of commodity prices and the pace of structural reforms to move investments decisively to skills-intensive sectors.” ~World Bank

Malaysia’s Imports and Exports


MALAYSIA’S ECONOMY ExPECTED TO SLOW“


In Malaysia, traditional sources of employment in extractive industries (mining, quarrying, dredging, and oil and gas extraction) and light manufacturing are slowing down. Many labor experts believe that employment will depend on how quickly Malaysia can adopt the workplace methods of a global economy.

A recent study by the Organization for Economic Cooperation and Development (OECD) ranked Malaysian students at number 39 among its 44 countries in problem-solving, comprehension, language, computation, and analysis. A recent government study says this has long-term implications for employment, as Malaysia’s percentage of skilled workers in the workforce is 25 percent, less than half that of neighboring Singapore. The use of English, the language of the global economy, has actually declined in Malaysia over the last 40 years.

“People here are willing and able to work, and the country has good connections to the region and decent infrastructure. They could make this place the back-office to the economy of the Internet. But they need more and better basic education for this to become a reality.” ~Kal Joffres, Local Consultant at Tandemic

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Malaysia’s Education by Attainment

Source: Ministry of Education, Malaysia

EDUCATION AT THE CRUx Of THE EMPLOYMENT CHALLENgE

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Educational Attainment of Population Aged 25 and Older

Source: UNESCO Institute for Statistics


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In recent years, electronic companies have pulled thousands of jobs out of Malaysia, in order to pay lower wages for comparable skills in China and other nearby countries.

According to the World Bank, Malaysia faces the challenge of implementing productivity-enhancing reforms to support long-term growth. This includes modernizing social policies towards income-targeted programs focused on equality of opportunities, reforming the education system without public spending, reducing dependence on energy revenues, and enhancing competition in the economy.

In Malaysia, according to the fair Labour Association, workers come from more than 12 countries in Asia with the majority coming from Indonesia. At the National Council of Professors (MPN) Conference in December 2014, it was stated that there were about 2.9 million legal foreign workers in Malaysia. National labor statistics show that 40 percent of migrant workers have no formal education.

The Malaysia Employers federation (MEf) says that foreign labor, especially blue-collar workers, contribute significantly to the national economy. Datuk Shamsuddin Bardan, Executive Director of MEf, says that while these foreign workers contribute positively to the country, there is a negative perception towards them among Malaysians, with migrant workers being blamed for increasing crime rates and other issues.

According to the International Labour Organization (ILO), foreign workers make up around 50 percent of the construction workforce in the country, and nearly 60 percent of the workforce in the manufacturing sector.

Average Monthly Wages, Manufacturing


MALAYSIA’S MIgRANT WORKERS

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What is innovation? To many managers and executives, the idea of defining innovation can be daunting. Innovation may not be simple but it is straightforward. And in today’s fast-paced market, it is just as standard and as essential as any other core business function.

To frame it in another way, was there a time when HR was not a core function of a company? Many might say no since HR has been a critical business function for quite some time. However, the concept of HR is fairly new – in the early 1900s, we started to recognize its value and in the 1920s, we started to formalize worker rights and HR processes. In today’s business world full of multi-billion dollar companies with thousands of employees, it would be impos-sible to imagine a company where HR is not a core business function.

In many companies, innovation today is a business process in the same transition period that HR was in during the early 1900s. No matter what you read, everyone is talking about innovation. Executives and managers know that innovation is a priority, and many companies are trying to find ways to innovate within their industries. The problem is that some companies are unsure of how to get started.

INNOvATION AS USUAL

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Often when we think about innovation, we automatically consider it to be an amorphic concept which has no structure, is complex, and immeasurable. But in reality, innovation can be quite the opposite. It is possible to structure the innovation process, and make it as measurable as any other function in business.

The difficulty is not that innovation is too complex, but rather that companies do not precisely define what innovation means to their organization. Companies need to consider what makes innovation a success.

One of the first steps a company should take towards solving the problem of innovation is to define what innovation means to the organization. This involves considering how important innovation is to the company and its business model, and what strategic purpose innovation would serve. Managers should consider where the company currently stands in terms of innovation, and identify the greatest areas of opportunity for innovation within the organization. Also important is to consider if innovation is a priority, and if so, does the organization or its key functions need to be re-structured to make room for innovation. And finally, it is important to discuss the implications of not innovating.

Many managers think of innovation as simply new products or services. But really, innovation applies to all business activities, not just end products. Innovation can be in logistics, merchandising, business strategy, marketing, selling, or even within human resources and recruiting. The idea behind integrating innovation within the core business model is to think creatively and holistically about the entire business concept and to rethink the way the company does things.

INNOvATION AS USUALWHY IS IT DIffICULT?

gETTINg STARTED ON INNOvATION

Types of Innovation

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In companies that embrace innovation as business as usual, innovation has its own budget, goals, teams, and projects. In many leading companies known for their innovation, managers encourage “what could be?” thinking rather that “what should be?” thinking. It’s a continuous ongoing process that goes beyond one specific project. for example, google allows employees to work on innovative project for 5-6 hours per week, and 3M encourages workers to use office time to develop innovative ideas.

Bringing innovation into the core business involves creating an environment that encourages collaboration, creative thinking and accepts failure as a part of that process.

While innovation programs can be costly, when they help to meet corporate strategic goals, they are often worth the investment. So it’s important to align innovation objectives with the company’s strateic agenda. Assessing the connection between the innovation program and the company’s goals provides an opportunity to measure innovation. Some common innovation metrics include looking at the impact of innovation. for example, after the implementation of a service innovation, is the company seeing better customer service ratings? Or after a transformation of a business process, is there more efficiency or productivity? for an innovation program to really become business as usual, it needs to generate value.

INNOvATION AS USUAL

MEASURINg INNOvATION

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INNOvATION AS USUALOther metrics look at at the process of innovation itself. for example, how many innovative ideas were actually acted upon and implemented? Or how quick is the turnaround beween idea suggestion and implementation. Innovation programs are naturally creative, and require flexibility and some risk-taking, but the rules of planning and goal setting still apply.

Measuring the Innovation Process

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RECRUITINg DISRUPTED

for years, leading companies’ process for finding talent has followed a typical routine involving investing in several college and university programs,

sponsoring events and conferences, and expecting applicants to apply by the hundreds. However, with the war for talent intensifying and as millennials

become a larger percentage of job seekers, the model is changing. The future of recruiting is about accessing and engaging talent in new ways.

Deloitte recently introduced the concept of the “open talent economy” which is “a collaborative, transparent, technology-enabled, rapid-cycle way of doing

business.” Similar to the way the film industry operates, Deloitte believes that the way recruiting is headed involves employers and candidates finding each

other on a playing field that is more level and open.

The workforce today is evolving; now comprised of a mixture of employees, contractors, freelancers, and people with no formal ties to the organization.

According to the Harvard Business Review, 1.3 billion people will work virtually in the next few years.

““Welcome to the open talent economy – a collaborative, transparent, technology-enabled, rapid-cycle way of doing business. What the open source model did for software, the open talent economy is doing for work.” ~Deloitte

Open Talent Economy Continuum

Source: Deloitte

In this economy, access to talent is more important than ownership of talent. People will move freely from role to role and across organizational and geographic boundaries. Driven by personal mobility, connected markets, social media, and mobile technology, the open talent economy is forcing businesses to reframe the way they think about talent and talent acquisition.

Rather than just a business expense, talent of all kinds will become an asset and a strategic investment that will drive performance and productivity in business operations.

Several global trends are driving the shift towards an open talent market.

globalization: The emergence of a global talent market is changing the way recruiters and managers acquire, develop, and manage talent and work. The open transmission of ideas, practices, and people, lets different parts of the world to influence each other in new ways.

Technology: The increase in computing speed, storage, and power is making global, real-time collaboration possible in almost every area. In HR, technology is shifting from “systems of record” to “systems of engagement”.

Mobility: Today’s workforces are more able to work where they want, making career moves more seamless and more frequent.

Social: With people connecting, sharing information, and building communities online, there is a shift from the traditional organization to dynamic talent networks. Organizations now use social media to not only build and promote their talent brand, but to connect with people who relate to the organization in different ways.

Education: Rapidly growing pools of talented manufacturing, services, and knowledge workers continue to reshape global talent networks. Massive Open Online Courses (MOOCs) through leading universities are making high-quality courses available to thousands of students around the world.

Analytics: Rather than looking at historical data to make decisions, employers are now using data analytics for predictive purposes. Those who can effectively mine large pools of worker and business data for hidden insights and apply them are able to perform more successfully in the new talent economy.

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WHAT’S CAUSINg THE SHIfT?

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Several companies are already embracing the future of recruiting. glassdoor, a website that provides an inside look at organizations, is disrupting how candidates find information about employers. Since employers do not control the view, potential hires can see real-life salary details and personal views about the company from employees.

Meanwhile, companies such as gitHub and StackOverflow, which started off as places to share coding, have evolved into leading job platforms where users can be invited to apply for jobs by companies like Apple and google.

Codingame, a website where programmers play and solve puzzles to improve their skills, has become a place for job searches and recruiting. While playing games to practice their skills, programmers are able to demonstrate their abilities to potential employers, while employers are able to get an inside look at candidate potential that goes beyond what a resume or portfolio might reveal.

DCR Workforce has built a productive and collaborative ecosystem, Smart Track xCHANgE, which redefines the traditional relationship between staffing agencies, managed service providers, candidates, and client companies. Smart Track xCHANgE takes a client-centric approach to matching skilled talent with top staffing professionals, leading to faster and more cost-efficient sourcing.

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COMPANIES LEADINg THE WAY

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METHODOLOgY

The DCR National Temp Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. The wage rates for temporary workers or contingent workforce are based on payments made by staffing firms to these workers based upon hours worked. Data collected from sources such as Bureau of Labor Standards (BLS) and other government sites as well as an internal pool of staffing companies and consultants, is aggregated and classified based on regions and skill categories, to arrive at an aggregate index.

The baseline for the index is set at 100 for January 2007. Index value for a particular month indicates relative wages with the said baseline and is representative in terms of direction and scale of change. five years of data has been included to observe seasonal patterns and distinguish seasonality from long-term wage movements. The data and the model has been further refined over last six months.

DCR TrendLine combines the exhaustive data from BLS with practical and more recent developments and data from on-field consultants and clients, to provide timely near-term indications of trends and consistent long-term actionable and objective information.

DCR TrendLine uses multiple economic variables to ensure the robustness of its forecasts and cross-validation of trends.

Key data sources and parameters of interest included and influencing the index are:Unemployment datagross Domestic ProductPrime rate of interestNew and seasonal Job openingsNon farm employmentJob OpeningsAll ExportAll ImportAverage Hourly Earnings of All Employees Total PrivateAggregate consultant data on job market parameters

souRCe Data

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DCR Workforce is an award winning, best-in-class service provider for contingent workforce and services procurement management. Our proprietary SaaS platform (SMART TRACK) assists in providing customizable vMS and MSP Solutions to manage, procure and analyze your talent with complete transparency, real-time control, high performance and decision-enabling business intelligence.

DCR Workforce serves global clientele including several fortune 1000 companies. Customers realize greater efficiencies; spend control, improved workforce quality and 100% compliance with our services.

for more information about DCR Workforce and its forecasting Toolkit (Rate, Demand, Supply and Intelligence) including Best Practice Portal, visit dcrworkforce.com

for more information call +1-888-DCR-4vMS or visit www.trendline.dcrworkforce.com

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