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Our economic future depends on our talent pool

By Keith Peden and Zoltan Csimma
(published in the September 22, 2006 edition of the Boston Business Journal*)

Increased anxiety is a side effect of the fast-changing global economy. Jobs that have been steady for decades can become obsolete - or be shipped offshore. But one principle is even truer than in the past: Jobs follow talent. Places with the deepest pools of talent will enjoy economic growth in the new economy.

No place is better positioned to win the competition for talent than Massachusetts, but it will require strategic investment and collaboration to fend off increased competition and ensure our economic future.

Innovation has long been Massachusetts' competitive edge. An unparalleled cluster of top universities made us the world's think tank and served as a global magnet for talent. Much of that talent stayed to grow the state economy after graduation.

But innovation is no longer the sole province of Massachusetts; it now drives the world economy. Domestic and international competitors are investing in their own universities. The continuing pre-eminence of our universities, and the economic benefit they bring, is no longer assured.

Given the increased competition, it's not surprising that the Commonwealth's economic growth has lagged in recent years. We must confront two overarching challenges: the high cost of living and our slow population growth. And while we can and must reduce cost of living, eastern Massachusetts will never be a low-cost area. The real opportunity is optimizing the talent pool.

Massachusetts the only state to lose population two years in a row, and the loss is disproportionately among the young, college-educated workers we most need to keep. As a result, companies are suffering from particularly high turnover among 22-30 year olds. We need to give talent a reason to stay.

Invest in talent
Turning the tide will require a comprehensive plan to invest in talent. Corporate location decisions are increasingly focused on the availability of workers, which means we must not only produce talent, but create an environment that helps attract and retain it.

Investing in talent means targeted increases in K-12 education. Last year, Massachusetts became the first state to lead the nation in all categories on national tests, but we continue to lag the international competition, particularly in math and science. Corporations are investing in education through programs like MassBioEd, which aims to prime the pump for science talent by putting labs in every high school.

We must also invest in public higher education, the graduates of which overwhelmingly stay and build careers here. Many foreign students have traditionally done the same, but the rise of previously under-developed economies like China and India combined with rapid technological advances increasingly make returning home a viable option. In a technology-based global economy, talent can live anywhere. Engineers work together on a project while sitting in different continents.

Part of that investment in higher education should focus on improving alignment between curricula and industry needs. The Commonwealth's job vacancy rate - open positions companies can't find people with the right skills to fill - has risen to 2.6 percent.

Massachusetts Talent Bank
Unlike Massachusetts, many other states subsidize higher education training programs. Small and medium-sized firms in particular often can't afford their own programs. Colleges are reluctant to start new programs without some assurance of a demand for its graduates. One solution would be to set up a non-profit with a board consisting of HR and higher education leaders to identify training needs. The Commonwealth could then provide public and private colleges with access to incentive-based training funds to scale up a "Massachusetts Talent Bank" that would encourage the development of specialized talent pools.

Improve the business climate
Attracting and retaining talent will require us to get several other issues right. The Commonwealth has made progress on improving the business climate, but there is more to the business climate - and business costs - than taxes. Unemployment insurance and other mandates make Massachusetts an expensive place to do business, and if it costs too much to create jobs here, they will move elsewhere.

Massachusetts faces unprecedented challenges to our economic security. Old barriers that kept people here no longer exist. We now have to fight for our economic future, but we have strengths that are the envy of the competition. By leveraging those strengths, the Commonwealth can become a magnet for the world class talent that is the key to success in a knowledge-based global economy.

Keith Peden is senior vice president for human resources at Raytheon and chair of the Human Resources Advisory Committee for Global Massachusetts 2015, an economic development initiative convened by Mass Insight. Zoltan Csimma is senior vice president and chief human resources officer at Genzyme, and a member of the Human Resources Advisory Committee.

*final published version may contain minor edits

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