Hong Kong companies are falling behind their counterparts in Asia’s fast-growing economies in adopting employee strategies to distinguish themselves and demonstrate why they are a great place to work, thereby increasing the risk of reduced employee engagement and poorer business performance, according to a survey conducted by professional services company Towers Watson.
The Towers Watson Global Talent Management and Rewards Survey shows that companies with a strategic approach to what it calls their Employee Value Proposition (EVP) and Total Rewards face fewer challenges attracting and retaining key employees. As well, they are seven times more likely to have employees that are highly engaged and three times as likely to see financial performance significantly above their peers.
In Hong Kong, a smaller percentage of companies have EVPs aligned with what they actually stand for, compared to companies in fast-growing economies. As well, few of those EVPs are distinctive from other competing organisations.
The study surveyed 1,605 companies worldwide on their workforce management and employee rewards practices, including 796 companies from Asia Pacific (AP) – 289 from developed markets and 507 from fast-growing markets.
The AP developed countries are Australia, Hong Kong, Japan, Korea, Singapore and Taiwan; AP fast growing countries are China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam.
A company’s Employee Value Proposition is a critical factor in hiring, retaining and getting the most out of staff – it articulates how an employer is unique, offers a great workplace, and why it attracts and retains great people. This would include a sound Total Rewards strategy covering good management, training, career advancement, good reputation, and good rewards package within the business sector. It includes a strong brand. As the name suggests, rewards comprises fixed, variable and nonmonetary elements, including salary, bonuses, pension, benefits and annual leave.
“The notion of having a formal employee value proposition is still relatively new for many organisations in Asia Pacific, including in Hong Kong and interestingly we find organisations in fast-growing markets are more likely than those in developed markets to have a clear EVP in place,” says Jeffrey Tang, Director of Talent & Rewards at Towers Watson Hong Kong. “The challenging talent markets in these fast-growing economies are a possible reason cause for their early adoption.”
Fast-growing Asia Pacific markets are progressive and investing more effort in defining and delivering on EVP. Close to half (46%) of organisations surveyed have a formally articulated EVP, whereas in Hong Kong, a developed market, only 38% of organisation did.
In Hong Kong, only 33% of the organisations say that their EVP is clearly aligned with what the company stands for in the marketplace, compared to 44% for fast-growing Asia Pacific markets. However, only 7% of the organisations in Hong Kong agree that their EVP is clearly different or stands out from other organisations with whom they compete for talent, compared to 28% in fast-growing markets.
This might be explained by Hong Kong companies not being able to segment their EVPs. Figures do point to this conclusion as only 15% of organisations in Hong Kong have customised EVPs compared to 26% in fast-growing markets.
Segmenting EVP means having different value proposition and total rewards programs for different segments of the employee population to tailor to the unique needs and preferences of employees.
“Uncertain economic prospects, intense cost pressures and global competition for attracting and retaining employees will present all types of challenges for employers in the years ahead. Organisations should take a strategic approach to developing their EVP that will differentiate them from their peers. Savvy employers will want to tackle the hard work of getting this right, because the benefits are demonstrable, significant and sustainable,” says Tang. “This is an important aspect of the Total Rewards Strategy Hong Kong employers must pay attention to if they do not want to lose out.
The study also emphasises that communication is an important but often neglected component of a strong EVP and Total Rewards strategy. Companies need to articulate the EVP clearly so that it is well understood by employees.
The design and strategy of Total Rewards need to be explained to employees so that they can appreciate the full value of what the company is intending to provide, says the report. Only then can the EVP and Total Rewards strategy achieve its objective of attracting and retaining key talent and motivating performance.