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Companies globally are missing out on human capital

Countries – and therefore the companies within them – are missing huge opportunities when it comes to making the most of their populations’ economic potential, with only 65% on average of the world’s talent being optimised during all stages of the working life time, according to the World Economic Forum’s (WEF) Human Capital Report 2016. Leading institutional investor groups in the UK have suggested that human capital should be better reported on by companies to help analysis of their value.

The Human Capital Index ranks 130 countries on how well they are developing and deploying their human capital, focusing on education, skills and employment. The report found that rich and poor countries are both failing to make the most of their people’s skills and talents. Across the index, there are  19 nations that have tapped 80% of their human capital potential or more. In addition to these 19 countries, 40 countries score between 70% and 80%. A further 38 countries score between 60% and 70%, while 28 countries score between 50% and 60%. Five countries in the Index remain below 50% in 2016.

Finland is the top-ranked country followed by Norway and Switzerland with all three countries effectively utilising about 85% of their full human capital potential the WEF said. Japan is ranked fourth with greater potential to be tapped by closing the gender gap according to the WEF.

In order to optimise talent the WEF said that employers and employees need to start thinking about skill bundles, not job titles. While employees and employers often rely on academic degrees and previous job titles to determine fitness for a new role, a key finding in the report revealed that job titles can mean different things in different industries and geographies. The higher the skills overlap between two industries, the easier it is to transfer between them. For example, the research found that there is little skills overlap between LinkedIn members with the job title “data analyst” in the market research and oil & energy industries. By contrast, data analysts in the financial services and consumer retail industries exhibit very similar skills.

The WEF also believes that re-skilling could be easier than previously thought. The report suggested that taking a focus on skills rather than jobs may broaden the talent pool for employers – and create new opportunities for workers. For example, the research found that only about 84,000 of LinkedIn’s 430 million members have the job titles data scientist or data analyst, a highly in-demand profession for which many employers report shortages. However analysis of the skills revealed an additional 9.7 million members that possess one or more of the primary or sub-skills for data scientist and data analyst, among which 600,000 have at least five of these skills. The WEF said while this clearly did not make them data scientists, the research has found a wider range of options for developing new talent through a relatively modest amount of supplemental training.

What do you think?