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Talent Management Column

Jobs Headline the Davos Meetings

The need for more job creation, increased training and education, and concern over rising income inequality dominated the discussions at the World Economic Forum's annual meeting. And people from the emerging economies -- especially China, India, Brazil and the smaller countries of Southeast Asia -- were doing much of the lecturing.

Monday, January 30, 2012
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The annual feast of business and policy discussion at Davos, more formally known as the World Economic Forum's annual meeting, generated the usual headlines on trade policies and public finance topics.

Underneath the headline sessions, though, were hundreds of smaller gatherings where the focus was on jobs and how we are going to get more of them. Specifically, the concern centered on the possibility that we might lose a generation of young people who cannot get work experience and are then passed over when new school leavers come into the market.

This is what is known in Hollywood as the "failure to launch" problem.

Another focus was on rising income inequality, which was recently ranked by a Forum study as one of the most-important risks facing society globally.

None of this per se seems surprising, but what is surprising, especially for people like me who spend their time focused on these business and policy discussions in the United States, is how those conversations evolved at Davos.

CEOs were in virtually every discussion, including U.S. CEOs, yet the topic of making money hardly ever came up. And the goal of maximizing shareholder returns never came up. Not once in the five days I was here.

There was some conversation about what governments could do to help business, but the overwhelming majority of discussion was about what businesses should be doing to help their communities and their employees. And the CEOs were competing to demonstrate what their businesses were doing -- not just to improve the environment but also to help workers and communities.

To be fair, most of those discussions were about programs in the developing world.

There used to be a view popular in these international gatherings known as the Washington consensus, suggesting that the path to economic growth was open markets, employers focused on making profits and government largely getting out of the way. There was always some pushback on it from European representatives, but they tended to lose the debates in the face of U.S. growth.

That model was nowhere to be seen at Davos.

What's new now is that it is no longer the Europeans making a different argument. Many of their economies are in such bad shape that they have little credibility, although Germany and Scandinavia are still chugging along nicely.

It is now the emerging economies -- especially China, India, Brazil and the smaller countries of Southeast Asia -- that have the stage. They are lecturing Europe and the United States about fiscal reform and, at least implicitly, about the need for U.S. employers to do more for their societies.

What was a bit of a shock for me at these meetings, even in smaller private sessions with only business leaders, is that the U.S. model wasn't even mentioned. It was apparently irrelevant.

As for workplace issues, the consensus in every session I was in was that employers had to do more to generate jobs. There was no real agreement as to what that meant, but no business leaders pushed back and said, "Hey, our role is to make money. Jobs come from that."

The more practical topics concerned skills and the need to improve education and training. Here, there was not only a consensus that business had a big role to play, but also how it should play it. That was to work locally, adopt local schools, provide up-to-date teaching materials, even provide teachers if necessary.

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The most interesting story I heard was about an Indian company that had adopted some local, smaller colleges in the United States -- providing this kind of support to ensure better graduates in the United States!

The consensus was also that employers should also be providing internships to help educate students about the workplace and should be informing both them and their schools about career opportunities.

An amusing moment in one session came when a delegate from a Southeast Asian country asked why it was that the United States had not yet put forth a job-creation program. The assumption behind the question was that this was obviously the thing we should be doing and that the reason it is not happening must be because of an issue of execution, rather than the real reason, which is opposition to doing so in principle.

Certainly the kind of U.S. companies that dominate the Davos dialogue are international businesses that care a great deal about opinion in other countries. And these same companies might take a different approach back in the United States. Yet the apparent sea change in international opinion is something of a shock to see -- and it has relevance at a minimum for any U.S. operation thinking of expanding its operations internationally.

And yes, I think the Davos meetings are as important as they are reported to be precisely because they get business leaders out of their day-to-day world and to a place where they both see and confront the changes underway in their markets and in a world bigger than their businesses.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School. His latest book, with Bill Novelli, is Managing the Older Worker: How to Prepare for the New Organizational Order.

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