APAC firms anticipate highest impact from Millennial influx in workforce
Fear of obsolescence, along with competitive compensation and benefits, are the key concerns for employees in Asia Pacific, according to a new report by SAP, produced in conjunction with independent research group Oxford Economics. 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. Millennials entering the workforce is identified as the top labour market shift affecting workforce strategy, followed by globalisation of labour supply.
Workforce 2020 surveyed more than 5,400 executives and employees in 27 countries, including Australia, China, India, Japan and Malaysia. The study shows that Asia Pacific companies fail to fully recognise the talent management changes that will be required. 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. “Millennials are not as different to their predecessors as companies may think,” pointed out Stefan Ries, Chief Human Resources Officer and Member of the Global Managing Board of SAP SE. Across APAC, 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.
“As the influx of young, ambitious employees join the workforce across Asia Pacific, it is critical for companies to recognise that their talent management practices and policies will need to evolve. 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,” said Adaire Fox-Martin, President, SAP Asia Pacific Japan.
Top workforce issues facing companies in APAC:
#1 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 per cent), followed by more comprehensive benefits (45 percent) and higher compensation (44 per cent).
• Job satisfaction for Millennials in the region is driven by competitive compensation (67 percent), but bonuses are more important to non-Millennials (52 per cent).
• 51 percent of employees are most afraid of their position changing or becoming obsolete, compared to 40 per cent globally, while only 7 per cent cite layoffs as a top concern.
#2 Millennials are misunderstood
• While 64 per cent of executives in APAC say Millennials entering the workforce will have a major impact on their firm’s workforce strategy, only 27 per cent 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 per cent) are no more likely than non-Millennials (24 per cent) to leave their jobs in the next six months.
• 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 per cent globally) and advancement (38 versus 29 per cent globally).
#3 Leadership and loyalty are undervalued
• Only 27 per cent 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 per cent of executives consider leadership as an important trait in employees, in contrast to 21 per cent globally. Likewise, creativity and problem-solving skills are ranked at only about 5 per cent, 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 per cent elsewhere. Yet, 36 per cent of APAC executives say their leaders are ready to lead a global workforce, versus 55 per cent in North America.
#4 Bridging the talent gap
• More than half of executives in APAC cite a high level of education or institutional training as the most important employee attribute, much higher than the 33 per cent globally. Addressing this, two-thirds of employees and 70 per cent of executives in the region see their firms offering supplemental training to develop new skills, ahead of the 55 per cent 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 per cent globally, only 36 per cent of executives in APAC recognise workforce development as a key differentiator for their firm, even though 43 per cent say that problems with talent and skills affect business performance.
• Only 38 per cent 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.
#5 Compensation models, HR policies and technology must change
• In APAC, 44 per cent of executives say changes in compensation plans will be required along with increased investment in training.
• Only 29 per cent say changing nature of employment will result in changes to employee technology policies, such as bring your own device (BYOD), compared to 38 per cent globally. While 31 percent of employees around the world say their firms currently allow BYOD, it is only 18 per cent in Asia Pacific.
• Executives note an impact, but to a lesser degree, on required investments in HR technology (31 per cent versus 41 per cent globally) and HR policy (20 per cent against 31 per cent globally).
• Only 28 per cent 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 per cent 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. 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,” added Ms Fox-Martin.
