As the influx of young, ambitious employees join the workforce across Asia Pacific, it is critical for companies to recognize that their talent management practices and policies will need to evolve.
Millennials entering the workforce is identified as the top labor market shift affecting workforce strategy of Asia-Pacific firms, followed by globalization of labor supply, according to a new report by SAP SE, produced in conjunction with independent research group Oxford Economics.
Fear of obsolescence, along with competitive compensation and benefits, are also key concerns for employees in the region.
Companies in the region lead in workforce training and mentoring but lag in talent management and the adoption of new technology in the face of changing needs, according to the Workforce 2020 survey which polled more than 5,400 executives and employees in 27 countries, including Australia, China, India, Japan and Malaysia.
Amid growing pressure to find and retain skilled staff, employers in the region undervalue the impact of leadership and soft skills needed to lead a global and diverse workforce, see little merit in loyalty and retention, and fail to appreciate the need for career development opportunities together with work-life balance.
According to the survey, workforce strategy has not been placed in a strategic position across organizations in Asia Pacific to drive business outcomes.
The study’s findings challenge conventional wisdom and highlight the most critical issues facing human resources professionals in the region.
Across Asia Pacific, pay and benefits matter most, but career development would increase loyalty, while being laid off is less of a concern than becoming obsolete – even among Millennials. Millennials are in fact no more likely to job-hop than non-Millennials.
“Workforce data and analytics will be critical in enabling HR managers to track, manage and assess recruitment, demographics, staffing, training, skill sets and incentives in a way that helps the business run better,” says Adaire Fox-Martin, President, SAP Asia Pacific Japan.
Compensation and Bonuses Matter
For employees in Asia Pacific, defined opportunities for career development is the most important factor to increase loyalty and engagement (46 percent), followed by more comprehensive benefits (45 percent) and higher compensation (44 percent).
Job satisfaction for Millennials in the region is driven by competitive compensation (67 percent), but bonuses are more important to non-Millennials (52 percent).
Fifty-one percent of employees are most afraid of their position changing or becoming obsolete, compared to 40 percent globally, while only 7 percent cite layoffs as a top concern.
Millennials are Misunderstood
While 64 percent of executives in Asia Pacific say Millennials entering the workforce will have a major impact on their firm’s workforce strategy, only 27 percent say they are giving special attention to Millennials’ particular wants and needs.
Yet, Millennials are more similar to non-millennial coworkers than expected and do not always fit the stereotypes.
Millennials (21 percent) are no more likely than non-Millennials (24 percent) to leave their jobs in the next six months.
In Asia-Pacific, Millennials in Asia Pacific have the same top priorities for job satisfaction as Millennials worldwide, but put significantly more weight on career goals (48 percent versus 35 percent globally), income goals (39 versus 32 percent globally) and advancement (38 versus 29 percent globally).
Leadership and Loyalty are Undervalued
Only 27 percent of executives in the region view long-term loyalty and retention as an important part of their talent strategy, although 82 percent rely mainly on full-time staff (versus 66 percent globally).
Only 11 percent of executives consider leadership as an important trait in employees, in contrast to 21 percent globally. Likewise, creativity and problem-solving skills are ranked at only about 5 percent, half of the weight given to these worldwide.
Only a quarter of companies in Asia assess employees’ “soft” skills (e.g. leadership, collaboration, creativity, empathy, decision-making ability etc.), compared to 39 percent elsewhere. Yet, 36 percent of Asia Pacific executives say their leaders are ready to lead a global workforce, versus 55 percent in North America.
Bridging the Talent Gap
More than half of executives in Asia Pacific cite a high level of education or institutional training as the most important employee attribute, much higher than the 33 percent globally. Addressing this, two-thirds of employees and 70 percent of executives in the region see their firms offering supplemental training to develop new skills, ahead of the 55 percent globally.
But only half of employees say their company provides ample training on the technology they need, and less than one-third say their company makes the latest technology available to them.
Compared to 53 percent globally, only 36 percent of executives in Asia Pacific recognize workforce development as a key differentiator for their firm, even though 43 percent say that problems with talent and skills affect business performance.
Only 38 percent of executives in the region say their company has a culture of continuous learning.
Although the need for skills, such as analytics, cloud and programming/development, will grow sizably over the next three years, less than half of employees expect to be proficient in these areas in that timeframe.
Compensation Models, HR Policies and Technology Must Change
In Asia Pacific, 44 percent of executives say changes in compensation plans will be required along with increased investment in training.
Only 29 percent say changing nature of employment will result in changes to employee technology policies, such as bring your own device (BYOD), compared to 38 percent globally.
While 31 percent of employees around the world say their firms currently allow BYOD, it is only 18 percent in Asia Pacific.
Executives note an impact, but to a lesser degree, on required investments in HR technology (31 percent versus 41 percent globally) and HR policy (20 percent against 31 percent globally).
Only 28 percent of executives say they have ample data about the workforce to understand their skill strengths and weaknesses, while the same percentage uses quantifiable metrics and benchmarking as part of their workforce development strategy. Only 34 percent say they know how to extract meaningful insights from the data available to them.
“Workforce 2020 reveals that employees in Asia Pacific are career-driven, especially Millennials, and what they need is not isolated training, but more leadership and career guidance,” said Fox-Martin.
“Armed with this sort of data and the right tools, companies will be better equipped to invest resources in the right people and programs that will drive retention and help meet business objectives. As Millennials shape the future of work, every company must transform itself as an employer in order to compete for talent.”