December 2008 Poll Results: The World Economic Crisis Begins to Impact Asia

The Chapman Consulting Group has completed its December web poll on whether HR practitioners in Asia Pacific Japan expect any downsizing in their HR teams due to recent world economic events. The poll, which opened on 1 December and closed on 30 December, recorded 184 votes from the HR community. According to Oscar Fuchs, Associate Director of The Chapman Consulting Group, the month of December saw recruitment activities across the Asia Pacific Japan region stall - not only on the back of the traditionally slow pre-Christmas period, but also due to worsening economic conditions causing nervous companies to push non-essential HR hiring into 2009.

Of respondents surveyed, 29% reported that they were actively reducing HR headcount. While our survey didn't go into the industries where this was happening, The Chapman Consulting Group is has found the greatest reductions occurring in the banking and the technology sectors. Unfortunately, HR staff on short-term contracts have generally been the first to go, although we have seen a number of permanent headcount reductions as well.

25% of respondents said that they were beginning to make contingency plans for headcount reductions. We expect these reductions to start to be implemented early into the calendar new year, although there is some talk in Singapore, Hong Kong and China that we will only see the worst after the lunar new year in February.

On the positive side, 25% of respondents reported that they were still involved in hiring key HR positions. This tallies with what The Chapman Consulting Group is experiencing — in instances where a critical HR staff member leaves and there is no internal successor, the external hiring process is still continuing. Moreover, companies in this position are using the opportunity to ‘upscale’ the talent in these roles. We will need to wait and see how this trend plays out against the back-drop of talk of further global recruitment freezes.

Most encouraging of all, we saw an optimistic 21% of respondents saying that they would be looking to increase their HR headcount, despite the unpredictable economic climate. Based on The Chapman Consulting Group's read of the market, we think this growth will be concentrated in 'bright-star' sectors that are still showing growth, and also in countries across the region where HR headcount still needs to be ramped up. We’re also seeing a continued drive in extracting efficiency in HR operations, so we may still expect to see growth in HR Operations headcount and Shared Services teams.

This month has seen a significant slow-down in hiring activity for HR positions across the region. Most major corporations have frozen non-essential new HR headcount, and some have taken the drastic step of freezing what would in normal circumstances be viewed as essential headcount. In these companies, HR headcount expansion is now only authorised when approval comes from as high up the food chain as the Global HR Head or, in rare cases, the Global CEO. In other cases, HR headcount is being re-specified to incorporate particular expertise in skills such as change management, workforce redeployment and employee communications.

The Chapman Consulting Group is also noticing search processes on existing roles becoming more complicated. We have seen some top-level HR roles in the region be scaled back to more ‘operational’ levels. We have seen some HR positions become "double-hatted", where often HR Generalists are being asked to take on extra responsibilities for specialist functions such as Recruitment or Organisational Development. Organisations are increasingly trying to use internal candidates wherever they can in order to avoid internal redundancies and external recruitment expenditure. The worsening economic downturn is affecting HR hiring in all markets across the region, particularly Japan, Australia, Hong Kong and now Singapore. China is still showing the greatest activity, but there is concern that HR hiring here could also slow into 2009.

Not liwithstanding the above, The Chapman Consulting Group remains active on quite a number of HR searches with a number of ‘bright star’ companies across the region, primarily in Life Sciences and in Industrial sectors such as Oil & Gas. Some Technology companies are also using the recent market turbulence to hire key new talent into their organisations. Most Banking and Financial Services institutions, however, are initiating broad recruitment freezes.

Leaner, medium-sized organisations are better positioned than larger multinationals in the current market, as they often have greater flexibility to reallocate resources to where they are most needed. While we are still working closely with a number of larger multinationals, these medium-sized companies are accounting for most of our HR hiring activity at the moment. Such companies, the same that in recent years have had difficulties in attracting talent into their organisations, are now tapping into our networks to reach out to top-grade HR practitioners around the region.