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American Competitiveness Demands Immigration Reform

Geplaatst op feb 25, 2014 in News

Most Americans — and both political parties — have come around to the view that attracting skilled immigrants is good for the U.S. economy. The Republican immigration reform principles released this month noted the thousands of foreign students studying at U.S. universities and called for retaining “these exceptional individuals to help grow our economy.” President Obama in his State of the Union address said, “when people come here to fulfill their dreams — to study, invent, contribute to our culture — they make our country a more attractive place for businesses to locate and create jobs for everybody.” The news that immigration reform may not be progressing this year is bad news for immigrants but even worse news for American companies.

There is wide recognition that we must fix our immigration system, but the many ways in which more open immigration would help build the economy are still not fully appreciated. Many immigrants are inventors or entrepreneurs, and the best ones excel at math and science at a time when companies are crying out for those skills. But the real secret sauce is the variety of experiences, language, and culture that recent immigrants bring to U.S. companies. In a global economy, it is increasingly clear that the country with the most educated, diverse pool of qualified talent will win. A more sensible immigration policy is critical for making that happen.

A strong and growing body of research shows that diversity on teams — especially at the leadership and decision-making levels — drives greater marketplace innovation and profitability. Not only does the conflict and intersection of different backgrounds, ideas, and perspectives create better business outcomes and solutions to almost any problem, they also ensure better understanding of customers and end users. The perspectives and intuitive customer insights that come from having diverse employees — particularly employees who share cultural connections with customers — is real competitive intelligence. Companies with employees that represent the end user are more likely to develop innovative products and services that meet the needs of customers in markets around the world. Having global, cultural, gender, and generational diversity is a serious business asset that confers significant competitive advantage in the global marketplace.

And it’s essential to the U.S. economy that American companies compete successfully in foreign markets. Exports have been among the strongest components of U.S. growth in recent years; they surged 11.4% in the fourth quarter of 2013. Many of America’s most profitable and important companies are heavily dependent on overseas revenue. Fifty-four percent of GE’s revenues come from overseas, as do 51% of Ford’s, 41% of Boeing’s, and 26% of Wal-Mart’s. Overall, about 46% of the revenues of S&P 500 companies (PDF) come from outside the United States.

Yet, as much success as American companies have had overseas, they also face huge challenges. U.S. companies have had some spectacular failures abroad — in Latin America, India, and especially China, where the enormous consumer market offers tantalizing upside. Apple’s smartphone share has been surging in China, but it still trails Asian companies like Samsung and Lenovo. Home Depot failed trying to bring American DIY sensibilities to China where there was neither the need nor the interest. eBay also missed the mark in both India and China by misunderstanding the nature of local relationship-driven transactional culture. Wal-Mart and others have struggled to succeed in Latin America.

Much of the insight and global perspective American companies need to be competitive can be found on U.S. college campuses. Last year, 70% of the graduate electrical engineering students in the United States were foreign-born, as were 63% of computer scientists and 60% of industrial engineers. This puts ready pool of highly-educated, English-speaking professionals from all over the world at our fingertips. Once hired, diverse foreign students bring both academic credentials and personal insights to the workplace. But without improved immigration regulations, some of these students would be headed home after graduation.

Consider the following example. At one major American healthcare company, a mid-level, Argentine-born manager was tapped by her peers in headquarters to turn around lagging sales in Latin America. It was immediately obvious to her that the company’s strategy left out local influencers in the academic world that would be critical to the sales process in the region. While her Latin America–based colleagues had been trying to push for a more local strategy for years, it took someone working within the U.S. headquarters to make a difference. After months of coordination and collaboration with the New Jersey–based leadership team, she was able to successfully persuade the company to allow a totally different, locally relevant sales strategy for Latin America. It wasn’t long before sales turned around and eventually soared.

This company was lucky to have such an employee. Then again, she had been lucky enough to get her green card years earlier after meeting her American husband at a prestigious American university. Had that not happened, she most certainly would have returned to Argentina and become a competitor, rather than a collaborator.

Most of America’s biggest companies across sector and industry, including GE, Exon, JP Morgan, Apple, General Mills, Goldman Sachs, Google, and EY, have large-scale focused diversity initiatives aimed to attract a globally diverse talent pool. But they are hampered in this effort by the current immigration system, which has high hurdles for even the most skilled foreign workers. As a result, many of the best foreign students and professionals with the skills and insights to make a real difference inside U.S. companies are forced to return to their countries with their newly minted American degrees. Tight quotas on green cards and limited numbers of temporary work permits mean that, as the House Republicans put it, “we end up exporting this labor and ingenuity to other countries.”

The immigration proposals on the table in Congress would do much to end this talent waste. They would lift the restrictive quotas on Indians and Chinese, increase the number of H-1B visas, allow spouses of H-1B holders to work (no small matter), and offer new visas for entrepreneurs. In short, they would allow American companies to field a diverse array of talent that no other country can match. In the economy of the twenty-first century, that’s an advantage we can’t afford to miss.

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