Jobs and Careers: Where Did All the Executives Go?

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If there is a bonanza hidden in the Great Recession, it ought to be in corporate headhunting. After all, the global economic collapse, which gutted industries and services across the map and erased 8.4 million jobs, instantly created a reserve pool of idled managers and senior executives. What better way to angle for bargain talent than in a torrent of pink slips? But that is an optical illusion. Struggling back from the last two bruising years, companies of all sizes and across the economy are facing a massive shortage of top-tier management. Turnover in the commanding heights is intense. Wages are spiking as rival employers wage star wars. Corner offices are empty. "Thirty percent of employers across the globe continue to struggle to fill positions available," Jeff Joerres, chief executive of the recruitment agency Manpower, told the World Economic Forum earlier this year.

Some of this is blowback from the global downturn. After shedding help in droves during the recession, many businesses find they are now shrunken and bereft of the qualified professionals needed to kick-start growth again. But employers are also colliding with a reality the economic slump simply masked. Sure, the legion of graying baby boomers set to punch out is part of the problem. So is the meltdown in the classroom, where plunging math and literacy scores and science-by-the-numbers are cheapening diplomas and hobbling tomorrow's professionals. Yet what has turned abundance into a dearth is a sea change in the international economy that is challenging the way businesses organize themselves, create wealth, and shop their brands around the world. The rise of the Web and tech-based professions such as logistics, biotech, health services, and information technology has put a premium on top-tier scientists, engineers, and computer geeks, who are suddenly scarce and costly. And as emerging markets take off, skills that were previously seen as gloss on the CV—adaptability, foreign-language skills, ease in other cultures—are part of the core job description of managers.

Despite the so-called résumé tsunami, employers are finding the pickings increasingly slim for skilled and trained managers. The problem is particularly acute in the rising economies of Asia, Latin America, the Middle East, and even Africa, where breakneck growth is pushing management to the limit. So severe is the skills crunch that a wonky subgenre of doomsday literature, with titles like Companies at a Crossroads and Winning the Global War for Talent, has hit the business stacks. The prose might be heavy going, but the message is clear. If the recession is lifting, the scramble for the world's finest minds is just beginning.

Once that might have seemed laughable. All that major employers scouting for talent had to do was post an ad, and a reliable stream of able, eager young applicants would follow—if not from home, then from abroad. Now the able candidates are not so eager anymore, while the eager are not always up to the job. McKinsey & Co. projects that while the demand for experienced IT professionals between the ages of 35 and 45 will increase by 25 percent over the next three decades, supply will fall by 15 percent. And that's just in the U.S.

The talent crunch is far worse in the emerging markets. Not long ago the smartest professionals in developing countries were desperate for a break in the richest nations. But now, as wealth and power shift hands, it's no longer a buyer's market for the First World. Some 50,000 multinationals open for business in China every year, scouring the market for the top talent and the means to keep it. The same is true in India, where businesses are expanding at 30 percent a year, three times the pace of the economy. With developing-world multinationals like Tata, Lenovo, and Vale on the rise, and the Asia-Pacific region on track to kick in, according to the International Monetary Fund, 45 percent of global GDP by 2015 (versus 20 percent for the U.S. and 17 percent for Western Europe), the skills drain will only get more intense.

Throwing money at managers won't stop the corporate brain drain. But more long-term thinking might. Oil companies learned the hard way: after gutting staff, R&D, and prospecting when world energy demand slumped a decade ago, the entire industry is scrambling for engineers and geologists. An exception was Brazil's Petrobras, which decided to buck the recession and poured money back into training and recruiting. "When you cast the net into the sea you get soft-drink cans and old boots, but you also get lobster," says Mariângela Mundim, head of human resources at Petrobras. "Fortunately, there's a lot of lobster out there."

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To fill their nets, businesses will ultimately have to rethink the way they recruit and steward talent. China has 1.3 million young engineers, but only 160,000 are skilled enough to be hired by multinationals, according to McKinsey. "In India we have the 'stuffed duck' system," says Vijay Govindarajan of the Tuck School of Business at Dartmouth. "We are very good at filling our heads with facts and technical problems, but we lack theoretical skills, negotiation, political savvy, and the ability to work in teams. We still have to go the last mile." To do that, many of the biggest companies are trying to create the talent they lack. For Infosys the search begins on college campuses, where company recruiters made some 20,000 job offers to seniors graduating in 2009. Corporations as diverse as DHL and Petrobras have founded their own universities to shape raw recruits into corporate leaders.

At the same time, the talent crunch is shaking up First World corporate culture. Although multinationals are no strangers to the developing world, in the past they mainly hurled up assembly plants and tapped low-cost labor. "They didn't need local talent," says Govindarajan. The globalized economy changed everything. "Now India, China, and other emerging markets are becoming sources of innovation and exporting technology globally, and research and development are moving overseas." The boardrooms of the world have taken note. The days of managers parachuting into a foreign subsidiary like a deus ex machina with an interpreter are over. "We now need chief officers who are diplomats, know how to move across borders without alienating people," says John Wood, vice chairman of Heidrick & Struggles, an executive search and consulting firm. "Command and control and the dominant king CEO are no longer the norm." Now companies speak of the ideal manager as the perfect combination of East and West. In a world where talent must be found anywhere, that sounds just about right.