Many organisations struggle to create a “general” synopsis of the APAC market because there is no one-size-fits-all strategy or conclusion. However, there are some common threads we have observed across the region during the last 6 months. Evidently this varies across different industries, organisations and specific countries, but here are the 5 broad themes we feel are becoming more prevalent around the region.
1. The lens is still on APAC, but more cost scrutiny
With uncertainty facing Europe and Latam in particular, APAC still remains a key growth region for a number of organisations. However, this growth is more tempered and subject to more ‘weights and measures’. Organisational structures are being optimised to ensure that this growth is as efficient as possible, with HR transformations cutting through all parts of the region. This reflects a continued business demand for efficient and effective people processes. As one global HR director of a European MNC put it: “As APAC matures, like in Europe, we are trying to do more with less and there is an increased lens on cost control.”. This is particularly the result of the ‘slowdown’ and caution in the Chinese economy. We have seen increased consolidation around Greater China regions with key growth focussing more on markets like South Asia and Asean. We are also seeing more regional roles come into locations traditionally seen as low cost like India, Malaysia, Philippines and Thailand. The trend of moving global roles to Asia has continued, but hasn’t accelerated as much as previously predicted. It’s only the more progressive companies that are embracing this opportunity to diversify their global leadership teams. On the HR side, Singapore has seen more global specialist roles than HR director roles. China continues to see more global HR BU roles particularly in the manufacturing and industrial side. What this does mean is that there is still significant choice for exceptional talents from the APAC region who are mobile, as organisations seek to rotate future leaders into HQ roles to give them that invaluable global perspective.
2. Competition is still intense but salary increases have plateaued
There are still a wide range of opportunities for international Asian talent, and the best talent will often have multiple opportunities. However, companies are less flexible on compensation packages at present so we aren’t always seeing top talent move for huge increases. There has been an increased focus on employer branding and EVP as organisations try to drive engagement as a differentiator. HR professionals are now looking for a connection and cultural fit and this has become increasingly important. In addition, career development opportunities and thinking a few steps ahead can help attract the top people. A talent acquisition leader recently articulated this: “If someone has an aspiration to be in the US in 3-5 years and we can walk them along a career path through the interview process, that can be powerful because it shows we are already thinking about them and their personal situation. It helps gain their trust.” We are seeing some candidates and organisations practice more medium-term thinking rather than just the next role and pay-packet. An exception to this is in China where local companies are still aggressively hiring from MNCs and can offer significant uplifts on salaries. Traditionally in APAC, remuneration has been more focussed on cash compensation, but we are also now seeing more LTIP components utilised to develop long-term loyalty and retention.
3. The rise of the SME and Flexibility
As one HR director in a large technology firm put it, “We are seeing a cultural shift in Asia in terms of how people view their careers and where they work. They are taking more control and want to be empowered in an area they are passionate about.” Start-ups and medium-sized growth organisations are appealing more to HR professionals at all levels. A large MNC with history and heritage may be seen as a great training ground, but high profile challenges in some large companies have put a question mark over whether large equals stable, particularly in certain industries like financial services. On the flip side, the best-in-class large organisations that offer fast development, rotations, and frankly, pay above market, are still able to retain their top talent. But there is generally less caution about joining smaller, fledgling organisations with the exception of Japan and Korea. Often this type of transition might mean a reduction on fixed compensation but a huge uplift on potential earnings through equity. It’s a risk, and not all people are willing to gamble on the success of a SME, but more people are viewing this type of set-up favourably. Particularly from an HR perspective there is less legacy and bureaucracy and people are excited about creating impact and adding value quickly. However, it’s important to note that in these smaller companies in APAC with embryonic set-ups, the surroundings can appear more exciting and flexible, but we are seeing higher attrition in these environments as they tend to command a 24/7 commitment.
4. The rise of the high potential and the deep specialist
We have observed a huge thirst across the board for high potential talents in all areas across the region. A number of companies are looking for that future star capable of fast tracking to senior leadership positions rather than someone who has “been there done that”. This has certainly been a shift over the last 24 months. These tend to be local talent who are agile enough to grow and develop quickly and are generally deemed to be a more cost-effective hire than someone who is a readymade solution. Ideally, they are mentored by a more senior person in the organisation, but the strategy is to groom them for a future role that is one or two steps ahead rather than the current role they are being hired for. Progressive companies are being quite creative to shape roles in order to bring these types of people into their organisations. The balance is to provide stretch and mentoring in equal measure so they can fulfil their potential quickly. It can be a tough sell to attract people who could achieve a more senior role in another organisation, particularly in competitive markets like Japan, China, Malaysia and Indonesia where title is important. Compensation levels can also be quite high for these high calibre talent as they are retained well in their current organisations. We’ve also observed a huge push for talent, OD and change specialists across the region, but particularly in Japan and China. “Talent” incorporates both talent attraction, and development. Both areas have been in high demand, but there is a real shortage of deep specialists. Organisations that can think laterally, particularly when hiring talent management and OD specialists, will often be better placed. The deep specialist in this space with 15-20+ years experience in markets like China is a rarity because the function itself is not that established. So often it’s best to think more about learning agility and cultural fit over someone that ticks all of the boxes on the technical side. With the increase in structural change and HR transformations, there has been a steady demand for strong HR operations professionals, and we anticipate this will continue. Likewise, as structures are further broken down, the true business partner is also in high demand.
5. Digital
We are seeing a big demand for digitally-minded HR professionals as organisations strive to embed digital into their cultures. For some industries like insurance, the shift to digital is becoming a key business strategy, for others it’s more about embracing technology and data to improve performance. From an HR perspective, we are seeing “Workday” being rolled out increasingly to enhance predictive analytics capability. However, most organisations are still at the start of this journey, grappling with basic reporting, and time will tell how much this platform augments insightful HR analytics. Social media strategies are being increasingly employed to engage both internal employees and externally. We have seen more investment in this space, particularly to try to boost employer branding and EVP. However, many organisations are still struggling with the top-down versus bottom-up approach to social media, and the fragmentation across different countries is also a minefield. Digital tools have also helped to support the removal of the performance ratings process. Progressive companies are using apps where employees can provide ongoing feedback so the dialogue is continuous and collated effectively. We are also seeing more digital on-demand learning being rolled out and this is particularly well-received in the region. APAC remains a complex region and faces ongoing talent challenges. The most agile, flexible, efficient and digitally-minded companies will be best placed to take advantage of growth opportunities going forward. The pace of change is still significant and HR professionals who are business savvy, change-orientated and understand the importance of data and digital will be well placed for the future.
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