The managerial capacity problem, first coined by Penrose (1959), implies that a firm’s ability to grow effectively is directly related to its ability to add managerial capacity to administer and accommodate its growth. This argument entails a debate that is currently being discussed in our context. The debate involves why we are paying about USD 5 billion by recruiting less than half a million foreign professionals mostly engaged in apparel, textile, buying house, telecommunications, information technology, poultry and poultry feed sectors. And, this debate warrants a thorough revisit to the capacity of our local managerial ecosystem. In a bid to cushion this backlog, experts are trying to demystify the avenues of local managerial capacity building.
In the current complex global economy, countries need to equip themselves with demand-driven technical, managerial and professional skills for better utilisation and leverage of human capital. Therefore, managerial and professional skills development has emerged as a key competitive factor for developing countries for fostering innovation, creating business wealth, increasing productivity, integrating with interconnected global value chain and tapping the future prosperity. In line with the global phenomenon, the demand for soft skills related to managerial and professional jobs has been growing in Bangladesh.
Bangladesh is the eighth most populous country in the world. The huge population of the country has opened up an avenue of demographic dividend endowed with more than 20 million youth between the ages of 15 and 29 participating in the labour force (LFS, 2016-17). Of the total 30 million youths between the ages of 15 and 29 in Bangladesh, roughly 3 million go on to pursue higher education. As per the UGC’s (University Grants Commission) estimation, the total tertiary enrolment over the next decade (2016-2026) may reach 4.6 million. Therefore, due to scarce growth at tertiary enrolment, we are falling short of producing home-grown managers and professionals as needed. Additionally, disparity is evident in urban and rural areas when it comes to average monthly earnings of managers.
According to the International Labour Organization (ILO), Bangladesh’s labour force is growing at a rate of 2.2 percent, which means there are roughly 1.8-2 million new entrants in the labour force each year. Only 1.4 million of them are being trained by government-operated skills development agencies, leaving an unmet need for skilled human resources by both local industries and international markets.
The recent Labour Force Survey showed that as per occupation distribution, only 1.6 percent of the total workface are managers and 4.8 percent are professionals. The meagre percentages of managers and professionals indicate that there is a huge gap between our education and the managerial soft skill set that the industry needs in Bangladesh. This skill gap in the managerial position, especially in RMG, textile, power, construction and consultancy sectors, has created a window for the influx of foreign professionals to grab our market with their quality skill set. According to BGMEA, half of the foreign nationals working in the country’s RMG sector are Indians while Sri Lanka and China represent 25 percent and 13 percent respectively.
Stating that Bangladesh’s service sector contribution to GDP is not as well as its regional peers, a research anthology prepared by Institute of Diploma Engineers, Bangladesh (IDEB) found that Bangladesh’s workforce productivity in the service sector, in terms of GDP, was 23 percent less than Thailand, followed by 24 percent of Sri Lanka, 29 percent of China, 45 percent of India and 65 percent of Vietnam. Inarguably, service sector growth is predominantly led by the efficiency of managers and professionals and this is where Bangladesh is falling behind.
Bangladesh Employer’s Federation (BEF) and UNDP Bangladesh commissioned a study titled “Capacity Needs Assessment for Enhancing Management and Professional Capacity of the Private Sector in Bangladesh”. The study found 10 weakest areas of competency our local managers undergo. They are: communication competency, strategic thinking, market forecasting ability, promotional activity, product development, innovation and creativity, critical thinking, sales planning and operations management. Surprisingly, “communication competency” ranked as the top weakest competency area, followed by “strategic thinking” and “market forecast”. The study also found that local professionals are not getting sector-specific training to boost their skills and employers are not creating the scope for them to go abroad to attend advanced training courses, whereas our local managers are popularly considered quick learners.
It’s rarely seen that a firm can evade the effect of managerial incompetence simply by hiring new managers to shore up its managerial resources. What we need to do is create new managers who will easily become familiar with the culture of the place, acquire firm-specific skills and knowledge, and work with other employees long enough to develop trusting relationships. Globally, best practices in the corporate sector are evident where companies examined diversified models to develop human capital. Those can be replicated in Bangladesh. Additionally, it is critical to put emphasis on restructuring our education system.
Unfortunately, our education system is mostly saddled with curricula that clearly lack professional orientation. Therefore, course curricula at all levels need to be updated and should have an orientation towards the changing dynamics of real-world professionals and entrepreneurs. In this connection, the partnership between academia and industry needs to be strengthen to address the skill gap. Furthermore, ratification of SDGs (Goal 8: Decent Work and Economic Growth) demands specific policies involving skills-matching for jobs, sector-specific training institutes, building an entrepreneurial centre of excellence, imparting top management development programmes, foundation programmes for youth entering the workforce, tax waivers for organisations investing in HRD, creativity and innovation-led academic reform and lastly, the participation of public-private partners.
Sabbir Rahman Khan is Assistant Secretary (R&D), DCCI. The views expressed in this article are in personal capacity.