University rankings and the battle for talent

As economies continue to build competitive advantage around knowledge in all its forms, the focus sharpens on how to nurture, attract and retain talent. Talent is increasingly important and highlights the skills needs in rapidly changing economies that place a premium on problem solving, creativity, flexibility, communication and cross-disciplinary skills.

The battle for talent becomes even more pressing given that a number of countries are facing problems associated with the ageing of their workforces.

To obtain a handle on talent, its development and management, INSEAD put out a yearly Global Talent Competitiveness Index, which ranks 118 countries around the world. The 2017 version makes for interesting reading.

The Index measures countries according to inputs and outputs. Inputs comprise four elements:
  • • Enable – For instance, the regulatory environment, political stability, the general business environment, labour market flexibility and labour-employer co-operation;
  • • Grow – Features such as enrolments in higher education and vocational education, tertiary expenditure, university rankings, employee development in enterprises and access to growth opportunities through social and professional networks and personal freedoms or rights;
  • • Attract – External and internal openness, including foreign direct investment, brain gain, international students, gender equality and tolerance of minorities and immigrants; and
  • • Retain – Taxation and pension, brain retention, lifestyle and social amenities.
On the output side are two components:
  • • Vocational and technical skills – For instance, ease of finding skilled employees, labour productivity, relevance of education to the economy, availability of scientists, engineers and technicians and skills gaps; and
  • • Global knowledge skills – Encompassing the workforce with tertiary education qualifications, professionals and researchers, the quality of scientific institutions, innovation output, entrepreneurship and high-value exports.
Switzerland is ranked number one on the Talent Index followed by Singapore, the United Kingdom and the United States, Sweden, Australia, Luxembourg, Denmark, Finland and Norway.

What is striking is that in 2017, four of the top 10 countries on the talent index are Nordic countries. It is therefore immediately apparent that the size of an economy is not a guarantee of successful talent management. Apart from the US and UK, the other economies in the top 10 are relatively small in GDP – gross domestic product – terms.

It may be argued that smaller economies provide the focused support and close-knit personal and professional networks, among other things, which are necessary for nurturing and harnessing talent. They also make critical investments in education and talent because they believe that advantage cannot be derived simply from the economies of scale associated with large domestic markets.

Second, the countries in the top 10 by and large tend to have cohesive economic and social systems, including Singapore (even though its system of government is different to that of the Nordic countries), with an emphasis on lifelong skills development and learning, co-operative labour relations and strong performance on gender equality as measured by pay differentials.

For example, both Switzerland and Singapore which occupy the top two positions in the overall ranking, are best in the world on having the least gender pay gap, are in the top three on co-operative labour relations and the top two on brain gain, also suggesting an openness to talent from abroad and all that this brings with it.

Rankings vs talent

What is the role of the university rankings in shaping talent and thus performance in the Global Talent Index? The index takes the average score of the top three universities in a country on QS metrics to derive its rankings score.

The top two on the Talent Index, Switzerland and Singapore, are ranked fourth and third respectively in the university rankings. By contrast, the US and UK are ranked fourth and third on talent but first and second respectively on university rankings.

Other countries in the top 10 have considerable variance between their talent rating and their university ranking, for example, Norway is ranked 10th overall on talent but 22nd in the world on university rankings. Only Australia is on a par in sixth place on both talent rankings and university rankings.

There are a number of implications that we can deduce from these findings. First, university rankings do not tell the whole story and are probably in the “necessary but not sufficient” camp as a driver of talent. It is true that university rankings are important in that the top 10 performers on talent also fare well in university rankings, but in many cases there is a gap between talent rankings and university rankings.

Second, university rankings cannot be considered in isolation but in terms of providing the enabling capabilities that underpin many other aspects of the Talent Index. For example, universities which rank highly produce leading-edge graduates who adapt to employer and economy-wide needs and can display attributes such as teamwork, flexibility and problem solving that will not necessarily be picked up under the strict criteria of rankings.

Tolerance of minorities

The Talent Index shows the importance of the broader set of capabilities that underpin the notion of talent. For example, lifestyle and amenities, tolerance of immigrants and minorities, entrepreneurship, economic vitality and ease of doing business are all factors that play a significant role in creating a location that attracts talent. Having policy settings that address the gamut of talent-related issues is important in developing, attracting and retaining talent.

The other factor is that talent fits within different national contexts. A 'one size fits all' approach does not work. Talent is a function of a nation’s economic structures, needs, historic factors and institutional parameters. Rankings such as these provide broad guideposts, not definitive prescriptions.

One criticism of the Talent Index is that it may include too many variables, making it hard to disassemble what really matters and what are the key relationships amongst the variables. What is missing (and at the risk of suggesting more variables) is any sense of the reverse brain gain – how outward student mobility might be seen as a future investment in terms of accessing skills, connections and capabilities abroad.

Finally, we note the somewhat disappointing performance of the BRIC nations – Brazil, Russia, India and China – on the Talent Index, even though they have significant clout on the global economic stage. This may raise concerns in terms of the long-term sustainability of their economic performance.

Even though the four BRIC countries are in the top quarter of the 118 countries for university rankings, their performance on talent lags considerably behind. For example, India is only ranked 92nd out of 118 countries on talent, China 54th, Brazil 81st and Russia 56th.

A critical factor is the need to improve the overall business and regulatory environments, personal and professional networks and ease of finding skilled labour in a number of these countries.

Tellingly, the BRIC nations fare poorly on tolerance of minorities and immigrants. Capturing and harnessing the talents, perspectives and insights of people from all walks of life is a major challenge for BRIC nations. Seeking to further internationalise their higher education systems would be a good starting point.

Dr Anand Kulkarni is a consultant and principal adviser at Victoria University in Australia. Kulkarni’s book on India and the Knowledge Economy, published by Springer, is expected at the end of 2017.