Nurturing talent is the key to prosperity

By JOANNE KEESTRA*

New Zealand must embark on an economic transformation to achieve the sort of growth rates in GDP per head that will propel us back to the income levels enjoyed by countries such as Australia, Britain, Canada and the United States.

Talented people will play a critical role in this economic transformation because talented people offer the lever to greater economic growth.

Talented people generate value-creating ideas and knowledge. Talent, when combined with capital, drives innovation and technological change. Innovation and technological change lead to improved productivity and higher incomes. Increased wealth attracts more talent and a virtuous circle for generating wealth is created.

The wealthier a nation, the greater its flexibility to achieve national social objectives for its people, including better health, income support and education.

Talented people will also play a critical role in maintaining a vibrant New Zealand community. They are the driving force behind the cultural institutions that maintain New Zealand's distinctiveness and make it a great society.

As a society, New Zealand must believe that talented people hold the key to economic prosperity. We must want talented people to succeed, we must provide the environment that makes success possible and we must allow the talented to enjoy the fruits of their success.

We must inspire our young people to succeed in some area of human endeavour and provide them with the pathways to success through education and skill development. We must encourage New Zealanders with great ideas in commercial, scientific, academic or cultural arenas to turn their ideas into reality in New Zealand instead of overseas.

We must engage with expatriate New Zealanders, show pride in their achievements and continually remind them that the door is wide open for their return. We must welcome new New Zealanders and help them succeed in this country.

The Government has an important role in establishing an environment that retains and attracts talent. New Zealand is too small and isolated to rely on a level playing field working for us when the market for talent is so competitive. The Government must signal through policy and leadership that New Zealand is an active competitor for talent.

This requires a significant change in policymaking. In the past 20 years New Zealand has led the world in developing an efficient economy, relatively free from distortions. However, being the most efficient economy does not necessarily mean winning talent in a competitive world, particularly when talented people and talent organisations are highly mobile.

Talented New Zealanders must be encouraged to come and go during their careers, rather than simply going and being lost to the nation. We need to be confident that the fundamental strength of this country will not only draw talented New Zealanders back to their homeland at various stages of their careers, but also attract talented foreigners.

Economic and fiscal policy must encourage expatriate New Zealanders to build wealth at home so it is easier for them to come and go.

What are some of the other implications for policymaking? If New Zealand is to become one of the most successful recruiters of talented individuals, we must offer a winning balance of career opportunity, financial rewards and lifestyle. Brand New Zealand needs to communicate a unique work, live and play message - not just be one of the great tourist destinations.

Making brand New Zealand authentic means that wealth creation should be a legitimate aspiration for all New Zealanders. As a developed county with lower salaries than many counterparts, we must use the tax regime as a competitive weapon in helping individuals to build wealth.

At present the fiscal environment does not have wealth creation as an explicit objective; instead efficiency of the tax system has been the aim.

We must be prepared to actively compete for talented people and talented organisations. As New Zealand's talent base is small and fragile, immigration will play a critical role in ensuring the viability of the talent pool. The aim of the skilled migrant programme should be to ensure that New Zealand attracts immigrant talent that helps to create wealth for the nation.

An important first step has been the introduction of the employer-driven Talent Visa. More needs to be done to maximise the quality of immigrants and facilitate their smooth integration into society.

Likewise, we have to compete for talented organisations. It is tremendously important for New Zealand to provide new talent-rich jobs through homegrown success and implementation of a well-resourced foreign direct investment strategy. However, we must also stop the export of talent-rich jobs to Australia by ensuring that we have tax and capital market regimes that make New Zealand a viable base from which to conduct a largely international business. After all, Nokia is still headquartered in Espoo, Finland, and Wal-Mart is still in Bentonville, Arkansas.

Over time we must strengthen our human capital and physical infrastructure through strong networking. In a rapidly globalising talent market, talented New Zealanders and innovative New Zealand organisations will be drawn by even stronger forces to move abroad.

Strong networking will help New Zealand to connect with its expatriate community in a way that allows the ideas and innovation of an international talent pool to drive our economic prosperity.

Expatriate New Zealanders must view themselves as members of the New Zealand talent team wherever they live. We must encourage expatriates to participate in New Zealand life through advisory roles in New Zealand, helping develop business overseas and investing in New Zealand enterprise. As the influence of expatriates on New Zealand life grows, we need to consider how we legitimise the voice of expatriate New Zealanders.

We must also find ways of minimising the tyranny of distance to conduct business from a New Zealand base. It needs to be easy to network with overseas talent to exchange ideas, make use of scarce R&D resources, obtain capital and ensure that good ideas hit the mark by developing better knowledge of overseas markets.

Electronic communication must be supported by ongoing physical contact, but many New Zealand organisations are too small and too remote to be able to afford this. The Government can help through establishing a shared infrastructure that facilitates small and medium sized talent-rich businesses to network and trade globally.

The Government can also seed mechanisms that facilitate matching New Zealand innovation with the world's customers and capital markets.

We must establish New Zealand as a node on international talent networks in order to increase its profile among talent globally and provide young New Zealanders with first-class career opportunities. This requires New Zealand organisations linking with top talent brands in their field in a manner that leads to exciting, innovative work being done in New Zealand.

Clearly, the Government cannot impose such alliances, but it can help New Zealand organisations to find the right opportunities and provide incentives to overcome barriers to investment in New Zealand.

There is no single catalytic solution to building a talented nation. Instead there is a need for lots of specific actions by the public and private sectors over many years. Building a talented nation requires a change of mindset in the way we set economic and fiscal policy. We must also change the way we think about ourselves - we must take pride in our talented people and celebrate their success.

We cannot afford to become complacent in the battle to retain and attract talent just because immigration numbers are up and New Zealanders are returning home. While Government and industry already have initiatives under way in some areas, in other areas much greater focus and speed is required.

* Joanne Keestra is a director of L. E. K. Consulting, and partner in the Auckland office.

* The report is available online at here.

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