Much has been written about the collapse of the post-WW2 world order.  Much more will be written about whether a return to fragmentation, de-globalisation and the undermining of trust in global institutions is a deliberate strategy, or is merely collateral damage for the MAGA movement.  But what is incontrovertible is that the certainties which have governed international relations for the last 80 years have gone. Instability has replaced reliable certainties. Europe can no longer take the American security umbrella for granted.  The Rule of Law and faith in its supporting international institutions is no longer indisputable.  International economic cooperation and liberalised markets have been replaced by trade wars and protectionism.  Might, rather than right is the order of the day as we regress to a doctrine which most closely resembles that of the 19^th Century Spheres of Influence. 

With geopolitics suddenly crashing into every board and living room across the globe, dictating, as it does so, the price and availability of everything from food to furs, it is not surprising to see the former US Treasury Official Dane Alivarius urging all companies to create a new role of “Chief Geopolitics Officer (CGO) to navigate the increasingly blurred lines between commerce and statecraft” where the “referees [i.e. governments] have changed the rules”.

The importance of understanding geopolitics

The reason for the sudden importance of understanding geopolitics is the erratic Trump juggernaut. The post-WW2 world order, which prioritised liberalised and rational economies and a rules-based international system over the volatility of politics, has been upended.  Even if some elements of President Trump’s trade war have been walked back by its collision with economic reality, his economic policy remains shocking to the international investment community precisely because it is so at odds with the long-accepted standards of neoliberal economics: politics has leap-frogged economics to suddenly take the driving seat in the US. 

Rational economic and political behaviour has been replaced by an obsessive focus on rivalry and relative position in the global pecking order. In the US, resistance to the prospect of it its economy being surpassed by China’s has led Trump to withdraw American willingness to cooperate on the international stage, legitimising a disregard for the international norms deemed to stand in the way of national primacy.  The US is not alone in this shift of approach. Globally, the breakdown of respect, trust and cooperation has accelerated, aided by an increasingly broad definition of national security (think semi-conductors or rare-earth minerals) that is used to justify a political readiness to sacrifice long-term political stability and economic prosperity in order to gain short-term domestic political advantage.

But President Trump’s America-first political agenda is not an isolated example of nationalist populism.  It is part of a global phenomenon which has seen the political rise of the hard-right – Brexit and the EU’s focus on building its own ‘Strategic Autonomy’ are part of this political shift towards harder physical, trade and immigration barriers.

It is not merely coincidence that the rise of the hard-right has accelerated over the last decade: with the passing of each survivor of the Second World War, the hard-earned lessons of the dangers of nationalism are being forgotten. The understanding that cooperation and collaboration were better than rivalry and competition as tools for ensuring our collective welfare was the principle underlying the 1941 Atlantic Charter, and later the UN, the EU, the WTO the IMF and a host of other international institutions, which were created to avoid a return to the nationalist-inspired hostility that characterised the lead-up to the Second World War.  As we have allowed nationalism to become worryingly normalised in our collective modern political psyche, we have lost sight of the hard-won recognition that the surrender of a little sovereignty is a small price to pay to enable all boats to float, creating the peaceful, stable conditions which have delivered the historic levels of prosperity and poverty reduction from which we have all benefitted over the last 80 years.

This change in attitude can be seen in the way that Governments are increasingly no longer just the ‘rule-makers’, who, once the rules are set, step aside leaving the private sector to deliver prosperity, economic growth and employment through regulated competition. Rather, Governments are becoming increasingly active players in the market, pursuing a transactional approach to international trade, using policy to skew economics and commerce for their political advantage. 

This is not ‘normal’ or comfortable territory for companies accustomed to operating in a world where rules-based economics were the driving force. Corporations find themselves plunged into a world where geopolitics has gained primacy over economics leading to irrational economic policies and behaviour becoming the norm.  In this new world, understanding the complex interplay between national security, trade, and industrial policy is a prerequisite for effective commercial leadership. Companies that recognize the inevitability of unexpected government intervention and therefore make geopolitical considerations a key driver of their supply chain and growth strategies will gain a competitive advantage.

Which leads me back to the centrality of the Chief Geopolitics Officer.  As governments shift gear to become more interventionist, companies will need to play a new game with rules governed by politics.  That response will need to be both strategic and be political in nature. With the global shift towards protectionist economic nationalism likely to accelerate, the CGO will become a (probably the) key advisor to successful CEOs.  We might not like this new world.  We may look back with nostalgia on the comfortable era of the Washington Consensus.  But this new world is the new commercial reality: companies must adjust to it, or risk failure.

The Right Ingredients for Recruiting Success

There’s no doubt that the well-established race for talent will continue to intensify. Shifting demographics are significantly impacting the composition of the talent pool, to the harsh extent that some companies are even leaving positions unfilled because they cannot locate the “perfect fit” candidates. Yet, in this global economy where the most critical competitive differentiators are derived from a higher performing workforce, this approach simply isn’t viable. Plus, when the mandate from the board clearly states that ‘our people are our greatest asset,’ HR professionals need to support the organization with a firm strategy that addresses hiring challenges. Simply put, to sustain and drive a market leader position, hiring the ‘A’ team is a necessity, not an option.

Admittedly, the game has changed. Gone are the days when posting to a job board resulted in a flurry of qualified candidates. Even social networking sites – such as LinkedIn and Facebook – aren’t fresh ideas when it comes to sourcing candidates. Even when you’ve sourced properly, how do you determine whether a candidate is a good fit? Fortunately, there are new ways of addressing hiring challenges, if you start with three main ingredients: employment branding, creative sourcing and pre-hire assessments.

First, when was the last time that you checked your employment brand? While we’re all familiar with readily recognizable consumer brands – such as McDonalds, Tim Horton’s and Loblaws – when a job candidate peers from the outside looking into your organization, what do they see? Is your company the brand – such as Hewlett-Packard or IBM – or is your company a house of brands – such as Crest, Tide and Bounty? Is your company socially responsible, a purveyor of environmental and community best practices? Or, has your brand been tarnished by workforce reductions and high profile litigation? Is your company an employer of choice or one that candidates chose to avoid?

A positive employment brand must be as carefully crafted as the company’s marketing brand. Researchers at McKinsey encourage employers to apply the same “rigor and precision” to their employment branding efforts as they do to brand the overall company. However, establishing an employment brand isn’t as simplistic as linking the company’s brand to HR’s efforts. Knowing what motivates your ideal candidate is an important component of creating the brand that will attract, retain and motivate them.

It’s also worth noting that generational differences drive candidate expectations so whereas a baby boomer might be more receptive to a “stability” brand, the millennial candidate is more concerned with training opportunities and company innovation.

Another important aspect of brand management is to consider what other companies compete against you for talent. Whether you’re sourcing candidates against each other geographically, or within a specific field of expertise, a “win- loss” analysis will help determine why other companies are attracting the candidates you’re seeking to hire. This analysis should also include examination of how your brand messages are being delivered to candidates, from radio, TV and newspaper advertising, to the reception that a candidate experienced the first time they step into your lobby, and to how the hiring manager supported the brand messages during the interview process.

Employment branding is a strategic initiative that requires constant tending. Creative sourcing of candidates requires the same level of attention, as without a healthy candidate pipeline, HR cannot possibly serve the needs of its internal customers and support overall organizational goals. The time to source candidates is now, proactively; not reactively when the position goes open.

Logically (and conveniently) when one thinks of sourcing candidates, job boards are the first place to start. The proliferation of job boards has made it the predominant sourcing tool; however, with all good things, it has run its course. That’s not to say that job boards are dead but, as every HR professional will attest to, they cast the net too wide and far and the resulting deluge overwhelms already busy HR departments. This “spray and pray” approach also backfires by sullying your employment brand when earnest candidates expect to hear back from the company on their submission.

Many times, the most effective means of sourcing candidates is right in front of you. Your existing workforce and relationships are rich sources of referrals. During my recent conversation with the vice president, Human Resources for a Canadian company with 25,000 employees, he mentioned that they’re offering $6,000 per new referral. He added that this approach was previously relegated to salaried positions only and, on top of that, only for those jobs in Alberta, where it’s more difficult to recruit. Now, this approach is being used to recruit for the entire organization. While this might sound pricey, consider how expensive it is to have an unfilled seat! Add the unfulfilled potential to the expense of job board postings, recruiter time and meetings with irate hiring managers. Implementing a referral program that incents your employees for candidate referrals will also result in more engaged employees, which directly impacts retention and productivity.

Which brings us to the third ingredient in our recipe for success: how do you know a candidate is really the right fit? After making the investments in your employment brand and sourcing programs, make sure that you have the right pre-hire assessments in place to qualify candidates. For example, are you recruiting for frontline positions that require outstanding customer service skills? Or, is the job requirement to spend hours, if not days, alone and heads down on extremely detailed projects? Taking this scientific approach diminishes variances in hiring and interviewing practices, and also supports other key programs, such as succession planning and building a pipeline of high potentials.

A good example of using pre-hire assessments comes from a custom designed assessment for the recruitment of McDonald’s U.K. and Northern Ireland hourly- paid staff. Each year that organization receives over 400,000 applications for its crew, customer care, and maintenance positions and the new assessment is an integral part of its ‘Hire the Smile’ recruitment process for the organization’s 1,225 U.K.- and Northern Ireland-based restaurants. The assessment measures candidates against the key competencies necessary for a successful career at McDonald’s namely: customer engagement, personal interaction, teamwork, and speed and accuracy.

“Best fit” candidates become engaged employees and research supports that the more engaged your employees are, the longer they stay with and the more valuable they are to the corporation. Research indicates that engaged employees are more likely to recommend their employer as a place to work and have pride in the organization. Pre-hire assessments enable employers to determine if they’re advancing the right candidates in the hiring pipeline and investing in those candidates that have high probability of staying with the company.

Regardless of economic fluctuations, the recruiting game has changed. Even public sector employers are feeling the pinch. A major Canadian city that only 10 years ago had turnover rates of 2.5% is struggling with turnover exceeding 10%. Well-planned and executed recruiting programs are the only means of “seeing around corners” to make certain that your company’s efforts aren’t casualties. Assembling and mixing the right ingredients will help ensure recruiting success!

About the author: Chris Chambers is a Principal at LC Management Consultants with over 25 years of business experience. He has helped organizations improve everything from the management of their human capital to operations and development of Sales & Marketing teams and strategies. In the spirit of mixing the right ingredients, he is also the president of Les Marmitons’ Toronto Chapter, an international men’s chefs club. View Chris’ short bio

International Management: A sticky wicket? Some facts about the global economic climate

Not a reference to the England cricket team’s difficulties on the subcontinent but a term economists use when inflation is resistant to change. Should we then be overly alarmed to see inflation stuck at 2.7% for three months straight in the UK? Perhaps not, but against this backdrop it is little surprise that retail sales were weak over Christmas and the high street is struggling. Conditions for US households are more benign and there is increasing evidence that the housing market has finally turned a corner in the world’s largest economy. The pretender to this crown, China, is also showing signs of improvement. Dampening the New Year cheer in the global economy is the news that the previously resilient Germany seems to have succumbed to the downturn in the Eurozone. How are the US going to repay their debt of $16 trillion and increasing daily?

UK retail sales fell over Christmas

December can be a make-or-break month for retailers, so the “official” data last week were keenly anticipated. In the end, they were disappointing but not catastrophic. The value of sales fell 0.1%m/m, pulling the y/y growth rate down to just 0.7%. If we strip out price increases and focus on volumes (i.e. the quantity of stuff we bought, rather than the amount we spent), the y/y growth rate was just 0.3%. With the exception of 2010, when the “Big Freeze” hit, that represents the weakest December since 1998. When you put it like that, the disappointing news that we will be losing some well-known retailers from the high street does not look so surprising. Also, what about the big drop in net profit for these retailers that will impact on the UK Government revenues!

UK inflation unchanged but the squeeze on households continues. Consumer prices rose 2.7%y/y in December, the same rate as in November and October. The pressure on inflation is being caused by utility prices (gas prices rose 5.2%y/y) and food prices (up 3.9%y/y) and with more price rises on the way throughout 2013/14 and beyond. There was some respite on the petrol forecourt, however, where pump prices fell very slightly. Inflation therefore remains higher than income growth, with average weekly earnings rising just 1.8% over the year to October. Against that backdrop, 2013 will be another difficult year for retailers.

Inflation less of a headwind across the Atlantic

Conversely, US CPI inflation edged down to 1.7%y/y in December, whilst the core measure that excludes ood and energy was stable at 1.9%. Inflation averaged 2.1% last year, comfortably below 3.2% in 2011 and the 10yr average of 2.5%. Risks that poor harvest yields and tensions in the Middle East would push commodity prices higher failed to materialise (they will rise in 2013/14). This will have been a relief for households who seem to have been more exuberant over Christmas. Retail sales were up 4.7%y/y in volume terms in December – a stark contrast with the UK. The net profit, is there any?

A busy end to 2012 for America’s bricklayers. New housing starts were up 12%m/m in December to an annualised 954,000 – the highest level since June 2008. For the year as a whole the increase was even more striking: a total of 871,000 houses were started, 28% more than in 2011. Along with a declining supply of repossessed homes, modest support from rising employment and steadily rising prices, it looks as if the US housing market finally turned a corner last year. More unemployment on its way!

Germany dragged into the mire

There was evidence that economic weakness in the Eurozone periphery is spreading to the core, as German GDP contracted (0.5%q/q) at the end of 2012. For the year as a whole Germany grew by just 0.7%, down from 3% in 2011, partly due to a slowdown in export growth. Things may get worse before they get better. Germany’s central bank cut its GDP growth projections to just 0.4% in 2013. Certainly this is an economy that is highly sensitive to the health of its trading partners. Ominously, almost 40% of German exports head to neighbouring countries in the Eurozone

Eurozone inflation steady

Inflation was unchanged at 2.2%y/y in December. The ECB sees inflation dropping below its 2% target during the course of 2013, given weak economic activity and high unemployment. This will take some pressure off consumers’ disposable income but will be far from sufficient to achieve a recovery in the Eurozone. Indeed it is likely that conversations will again remain firmly centered on the Eurozone crisis at the Davos meeting in Switzerland this week. The Eurozone is still in deep trouble!

China re-accelerates, but the true test still to come

China’s economy grew 7.9%y/y in Q4, bringing an end to the growth slowdown that had lasted almost two years. China has achieved this by spending more on infrastructure – the government’s favourite tool for stimulating growth. The true test of China’s new leadership will be rebalancing the economy towards consumer spending. So far, it has merely talked-the-talk on reform. In this context there is some good news. Disposable income growth is running at almost 13%y/y for city dwellers, well above average.

The USA has still major issues across many sectors. Plus, borrowing are $16 trillion and growing daily! When will it end?

What do you think about this?

Why do politicians/bankers/lenders ignore history? And yet history repeats itself several times because these people do not read! People need to read `The Rise and Fall of the Roman Empire` and then perhaps they will learn how to avoid repeating history.

The Credit Crunch of AD 33 Repeats itself time and time again!

What with the Bank of England pushing £375+ billion and the USA Federal Reserve $1+ trillion into their countries respective banking systems, readers may be interested to learn of the following from `Banking & Business in the Roman World`:

In AD 33 the lack of cash continued to become increasingly serious (where have we read this before many times?). To remedy the situation, through the intermediary of `ad hoc` financial offices directed by Senators, the Emperor himself offered interest-free loans amounting to an overall sum of 100,000,000* sesterces from his personal fortune for the duration of three years. The borrowers were required to offer security in the form of real estate or buildings. In this way they were not forced to divest themselves of their patrimony in order to pay off their debts. Fides, that is to say confidence, returned, and the situation was retrieved for a short time.

We live in a global trading environment of which there are so many players chasing very few opportunities that it is driving down prices globally and still people do not wish to buy!

Plus, the banks globally are still stashing cash at the highest levels ever recorded, why? We all know why, don`t we! Will we see a run on the banks soon?

The Euro currency will continue to suffer in the hands of Greece, Portugal, Spain, Italy and Ireland followed by France who are `all` in `deep` financial difficulty as first stated in January 2008. Who will leave the euro currency first? Then who will follow? What future has the Euro?

What are your plans for your future to be successful?

About the author: Colin is a former successful Managing Director and former Group Chairman of the Academy for Chief Executive, Non-Executive Director and Mentor – RFU Leadership Academy, helping companies raise their `bottom-line` and `increase cashflow`. Author of several publications, research reports, guides, business and educational models on CD-ROM/Software/PDF and over 400 articles published on business and educational subjects worldwide. Plus, International Speaker/Visiting University Professor.