Talent Shortages, Already Bad, Will Grow Worse in Indonesia

JAKARTA, INDONESIA--(Marketwired - May 28, 2013) - Indonesia's economy will likely break into the top 15 in the world in the next decade, but many companies will be left behind unless they tackle the nation's looming talent shortage, according to a new BCG report. Indonesia already faces a shortage of middle managers, but by 2020, the gap between supply and demand will reach as high as 56 percent.

By 2020, top companies in Indonesia will only be able to fill about half of their entry-level jobs with fully qualified candidates. (The shortage will be less severe if companies are willing to train and develop new hires.) At senior levels, more-modest shortages will emerge, but many of the candidates will lack the global exposure and leadership skills needed to succeed.

These talent shortages stem from the success of the Indonesian economy, the rapid growth of the services sector, and the weakness of the nation's educational system to prepare students for careers. Only 22 percent of the college-age population is enrolled in a school in Indonesia, a lower percentage than in Brazil, Russia, and China. Making matters worse, almost 60 percent of graduates switch jobs within their first three years, and more than a third switch more than once.

"While the talent picture looks bleak in the future, individual companies do not need to be defeated. By starting now to address these shortages, they can jump ahead of their less farsighted competitors," said Dean Tong, a BCG partner and coauthor of the report, which is titled "Growing Pains, Lasting Advantage: Tackling Indonesia's Talent Challenges."

How to Win in Indonesia

The report argues that companies must comprehensively address their talent and leadership challenges rather than rely on short-term fixes such as hiring from competitors. Poaching sends an unhealthy message that employees need to change jobs to advance their careers.

Instead, "Tackling Indonesia's Talent Challenges" advocates an eight-pronged approach built around workforce planning, recruitment, training, career development, performance management, employer branding, people practices, and meritocracy.

Some companies in Indonesia have started to act on elements of this approach. Astra International, the diversified conglomerate, for example, has created Astra Management Development Institute, which manages development programs for new hires and the top-two layers of leaders.

Pertamina, the national oil and gas company, is making use of social media in its recruiting efforts. The company has nearly 50,000 followers on Twitter and Facebook and uses both channels to engage potential recruits.

"Creating leading-edge people practices takes years to achieve and a lifetime to maintain," said Bernd Waltermann, a BCG senior partner and coauthor of the report. "In Indonesia, where talent is so scarce, companies that create that edge will keep it for a long time."

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

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