Global Talent And The Innovation Imperative

The impact of the COVID-19 pandemic will be to exacerbate the existing talent crunch for business.

The ‘global war for talent’ is something of a hackneyed cliché, but that doesn’t mean the premise is false. International studies show that the next 20 years will bring a talent crunch as a growing number of international organisations compete for a relatively stable number of high talent individuals, particularly in the STEM sector. The problem for business is that numerous studies show that talent, and international talent, in particular, is a key driver of innovation.

The last decade has been characterised by a drive for innovation, with ‘disruptive’ market entrants such as Google, Facebook and Netflix toppling industry leaders and upsetting established markets with trailblazing products and services. To drive innovation, many of these businesses have relied heavily on international talent, as seen in places such as Silicon Valley, a global hub for highly skilled migrants. This strategy is supported by the academic literature, which shows that international talent and diversity are major drivers of innovation and outperform local talent in many categories.

The impact of the COVID-19 pandemic will be to exacerbate the existing talent crunch for business. The travel-suppressed environment, declining economic conditions and government policy realignment to respond to these changes risk making international talent less accessible. The COVID-19 pandemic has already radically altered the Australian immigration environment with a drastic reduction of onshore temporary migrants including international students – many of whom would have otherwise sought to bring their skills to the Australian job market. Longer-term impacts might include fewer pathways for employers to sponsor foreign nationals, as the government seeks to prioritise local employment to address high rates of unemployment.

Attracting skilled migrants to Australia, a small market of 25 million people often perceived as distant from major economies in Asia, Europe and North America, may become more difficult as alternative destinations offer greater opportunity. Australia has long relied on its reputation as an attractive lifestyle destination; however, fewer opportunities to access visas or residency, greater opportunities elsewhere and worsening perceptions of Australia because of policy towards temporary residents place this at risk. To compete, Australian organisations must put innovation, diversity and disruption at the centre of what they do, build an attractive ‘culture first’ business and engage where possible within the limits of local immigration laws.

It is in this increasingly difficult environment that in-house counsel are being called on to support the strategic goals of innovation and competition. To do so, in-house counsel must ensure the business has the necessary tools to attract global talent (GT), build a culture that can effectively manage non-financial risk and bridge the knowledge gap between people and culture, risk and compliance.

Innovation is the catchcry of the 21st century. The rapid development of computing technologies and the combined effects of machine learning, big data and ubiquitous access to internet services have changed business and our lives in profound and permanent ways.

Organisations such as Apple and Google now dominate global markets in ways that Ford and General Motors did in the mid 20th century, using their technological services and near-universal reach. To remain competitive, organisations are focused on replicating these techniques—building innovative products and services while transforming their existing operations using these same tools.

Innovation has been notoriously challenging to bottle; however, studies have shown that migrants play an outsized role in innovation and business outcomes. In the US, 51% of unicorn companies were founded by first-generation migrants and 40% of Fortune 500 companies were founded by first or second-generation immigrants. One hypothesis for this is that higher-skilled migrants are more likely to seek the best opportunities and are more willing to travel to do so.

International talent does not just deliver results by attracting the best and brightest but also through increasing the level of diversity in teams. Diverse teams have been shown to outperform homogenous teams and organisations can seek to maximise the impact of in-house talent by creating their own ‘talent clusters’, groups of highly skilled workers who maximise their outputs through knowledge transfers and deliver greater results under these relationships.

Businesses are also increasingly recognising the imperative to create ‘culture first’ organisations to maximise employee engagement to drive productivity and performance. Combining this employeecentric approach with a focus on acquiring key international talent and organisational diversity has the greatest potential to deliver the best outcomes. In many respects, this combination of talent, culture and diversity to drive innovation is the holy grail that the top tech companies have achieved and others seek to emulate.

However, while the value of diversity, culture first and international talent might be apparent, the means for organisations to effectively secure and maintain access to the right individuals is often less so. Immigration laws are the primary mechanism that connects employers with skilled international talent. The visa system acts as a filter to sort prospective migrants who are seeking international opportunities and provide them with entry points to the Australian economy. For many foreign nationals, the Australian university system is the first potential pathway to the labour market, through a first-class education and exposure to local job opportunities that accompany it. The second pathway is for employers to sponsor temporary workers through the main Australian work visa, the Temporary Skill Shortage Visa 482 (TSS 482).

For employers seeking to access international talent, these two pathways are useful methods for engaging prospective employees; however, the rapidly changing nature of the immigration system can make securing long-term access to these groups difficult, particularly in the current pandemic and accompanying economic crunch.

TSS 482 is the main Australian work visa and is open to highly skilled individuals in occupations the government has deemed in shortage in Australia. However, the visa has a number of problems including outdated occupations lists, messy compliance obligations and uncertainty around access to permanent residency. Despite this, it is the primary visa for retaining international talent, and organisations need to come to terms with the challenges.

As the immigration system is subject to significant change, organisations must maintain an awareness of the status quo, whether by appointing a dedicated internal resource to monitor key changes or external relationships, such as with an immigration lawyer or registered migration agent.

Finally, for organisations, accessing international talent through the immigration system brings inherent risks. The sponsorship system has compliance obligations for employers that require oversight, planning and organisation. In-house counsel are well placed to manage and overcome these challenges but a broader culture of risk management must be cultivated across the organisation.

The existing challenges of the TSS 482 visa are rendered more difficult in the COVID-19 environment as the government seeks to balance business demand for international talent with high levels of unemployment among Australians. This is a difficult line for the Federal

Government to navigate and worsening economic circumstances risk pushing the government into a defensive position at a time when the economy would benefit most from greater participation of international migrants.

Should the government adopt such an approach, the first step is likely to be a review of the skilled occupation lists to reduce the number of eligible occupations, which would in turn limit or prevent access to sponsorship. Exactly which occupations and industries would be affected would be subject to government determination and organisations would be well advised to engage with industry bodies, state and territory government, and other stakeholders to advocate against the removal of critical occupations for their business.

Two positive changes the government has recently introduced are the new ‘GT’ streams for high talent individuals, one sponsored and the other independent. The GT individual (GTI) stream focuses on creating access for high talent individuals with an international profile in key technology sectors and the employer-sponsored stream is designed to enable employers to access high-value skills that will generate a strong economic return and support the training of Australians, but which fall outside the standard employer-sponsored visa programs. The number of places for the GTI visa has increased to 15,000 for the 2020–21 financial year, a move that will ensure a number of high talent individuals receive a pathway to permanency in Australia—although these non-sponsored visas will not necessarily align with existing employer needs.

For in-house counsel, the key challenges are understanding how to support the business’s talent-focused goals through the immigration system, with its limited visa options, while ensuring operational integrity and appropriate risk management. To do so, in-house counsel must have a high-level understanding of the possibilities, limitations and risks of the systems. Ownership of the broader immigration function may remain with HR or People & Culture, but in-house counsel have a role in ensuring compliance and protecting access to the system.

To achieve this, in-house counsel should ensure the business has a reliable source of information on the system and an understanding of how the current system (1) aligns with business goals. Pinch points, or areas where the system cannot or does not currently deliver essential skills, present an operational risk. Here, in-house counsel can ensure the executive team is appropriately advised on limitations and provide their support to advocates and stakeholders who can promote the business’s long-term talent goals through changes to the current system or identifying alternate routes to secure talent.

In-house counsel can support the effective management of compliance obligations and the appropriate dealings with sponsored employees. While this has clear overlap with the treatment of any employee, the needs of sponsored employees may differ due to their temporary status. In this respect, it is important to remember that the reputational consequences for mismanagement in this space are often more significant than the legal impacts. In-house counsel has an important role to play in ensuring that appropriate internal systems are in place to meet these obligations and provide an effective liaison among the executive, human resources and risk teams.

In-house counsel also plays an important role in ensuring that the critical information regarding the immigration system and compliance does not fall into silos. Larger organisations enjoy the benefit of more resources; however, there is the challenge of ensuring teams can collaborate effectively. Successfully addressing immigration compliance requires building an appropriate culture of non-financial risk management—a broader business need that was highlighted in the recent Hayne Review, where failure to do the legally necessary resulted in major failures of accountability.

Ensuring that different elements of immigration management are appropriately divided among HR, the risk management function and the legal team can prevent knowledge gaps within the organisation. Ensuring information sharing between these functions is an

important means of providing cross functional visibility to meet the legal requirements of the program and prevent any breaches. The consequences of breaches of immigration laws can include financial penalties, sanctions and, more significantly for organisations that rely on GT, being prevented from sponsoring employees on the TSS 482 visa.

For businesses seeking to increase competitiveness via innovation, accessing GT through the migration system will be increasingly critical over the coming years. The role of in-house counsel as key facilitator and guardian of the business’s goals through legal compliance, risk management and engagement across functional teams is essential for guaranteeing access to the international talent pool.

In-house counsel plays a critical role in overseeing and calibrating the risk and compliance approach of organisations to support the business’s innovation and competitiveness strategy. Understanding and engaging with immigration legal issues have the potential to ensure the executive is appropriately briefed on how the current environment enables or challenges access to GT and the organisation remains in a positive position to deal with the shifting policy environment.

Through greater engagement, building cross-team knowledge and participation, in-house counsel can support innovation through talent acquisition and diversity. For some, the role of in-house may shift over time as guaranteeing access to talent becomes more business critical and overlaps with existing in-house responsibilities in risk management, workforce management, and compliance. However, we can be certain that the in-house function will benefit from greater access to international talent, and the diversity it brings, to build more innovative and entrepreneurial teams.

Footnotes

  1. AgTech, Space and Advanced Manufacturing, FinTech, Energy and Mining Technology, MedTech, Cyber Security, Quantum Information, Advanced Digital, Data Science and ICT.

This article was originally published in the Australian Corporate Lawyer Magazine – 2020 Summer Edition.

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