HR in Asia vs. HR in the rest of the world: A talent outlook

With increasing globalization, Human Resource Management is looking to strike a fine balance between global and local. As multinational companies foray into new markets, it is becoming critical to uphold globalized talent practices to maintain consistency. At the same time, organizations must adopt localized-flexibility to attract, retain, and manage local talent. Therefore, while the basic tenets of Human Resource Management hold true across regions, localized implementation is the key to winning the War for Talent. One can see this distinct approach in talent management in Asia-Pacific, vis-à-vis the rest of the world. As the workforce is becoming more complex, organizations must understand and appreciate these differences. Only then, can they customize people-interventions in line with the local employee expectations, while maintaining home-country standards.

The organizational milieu

The Asia Pacific region sports a highly diverse workforce in terms of culture, ethnicity, race and other workforce characteristics. This presents a unique challenge--integrating employees under one organizational umbrella while harnessing and celebrating their local differences. Differently wired legal and labor systems also contribute to a distinct HRM environment in Asia.

• Values and culture: Individualism versus Collectivism has a significant impact on the HR process and policy. The western world is more in tune with individual-based rewards and recognition, due to the primarily individualistic outlook of its people. Asia has traditionally been a collectivist society, leading to the evolution of industrial recognition and unionization in the East. The West has traditionally upheld values such as meritocracy and transparency, while Asian economies have valued loyalty, trust and compatibility.*  Also, there is an affinity towards the long-term focus in Eastern economies, as opposed to a short-term, immediate-gains focus at a global level. Even within the West, values differ, with strong labor laws protecting workers’ interests in the EU, while the US being a primarily free-market labor market.

• Communication: Different communication styles affect the ways of working drastically. While in western work-culture, open, transparent and direct communication is the norm, Asian cultures are known to follow a more indirect communication approach. Power-distance also tends to be higher in Eastern economies, with managers coming with a chip on the shoulder i.e. a concept called “Kiasu – I am the boss so I am right”. Industrial communication is largely governed by labor regulations, especially with strong unionization of the labor market in Asian economies such as India and China.

• Mobility, both across and upwards: Organizational mobility is affected by several factors. Some Asian economies such as Singapore and Hong Kong have a significant expatriate population and have cultivated diverse environment required to sustain the population. For example, Singapore ranks number 5 in InterNation’s list of the world’s most popular destination for expatriates. However, from the Asian economies, only Taiwan ranks amongst the top 5, based on factors such as the ease of settling in, quality of life, cost of living, personal life, etc. This index has long-standing repercussions on talent models, since talent may need to be home-grown even for hot skills, in most Asian countries, vis-à-vis the West.  

• Skill levels: Most Asian economies operate on a generalized talent model. Critical skills are in high demand and short supply, hence job seekers change jobs every few years, with salaries increasing at 9.5 to 10 percent on an annual average (AON Hewitt, Mercer, 2019). The ongoing automation and digitalization flurry is also impacting Asian economies. Already, 61 percent of the talent in Malaysia is proposed to be impacted by automation, as per a Hay’s finding. Singapore stands second in impact, with 45 percent of the working population being affected.

A “Glocal” approach to talent management

Considering these differences, it is important for MNCs to take a well-thought-out decision in terms of adopting localized talent practices, versus maintaining the home-country talent strategy. The following elements would be critical:

• Talent Acquisition: Creating an employer value proposition that appeals to the local sentiments is critical to building a thriving workforce. For example, American companies are often viewed as fast-paced, short-term focused, yet change-ready. European companies are seen as more employee-centric, yet less productive. Asian companies are perceived as more loyalty-led. Recruitment efforts must create the right blend of brand propositions, to attract the right competence and culture fit.

• Total Rewards: The compensation strategy should be devised to cater to the employee type- locally hired versus expat, internally grown versus externally hired, cash-heavy versus incentive-heavy, etc. Implications of the local tax structures, government financial policies, labor market, and labor policy, etc. must be factored in. Going local is critical, since fast-growing Asian economies sport a high salary increase and high churn, while many developed economies offer a better environment for job stability and longevity. However, with millennials coming in, there is a distinct shift from pure compensation to more benefits. Looking at this diversity, a personalized basket of rewards, for employees to select from seems to be the best approach.  

• Leadership Development and Succession Planning: While building an internal talent pool to take up leadership roles continues to be an ongoing challenge, another concern may be the apparent “glass ceiling” for APAC leaders to move into global roles. Offering career progression and mobility opportunities are critical to developing leaders internally. Planning ahead of time to build leadership skills, based on potential is a must-do, wherever it yields business results. For example, Western-headquartered companies often place a high value on English-speaking Asian countries. Naturally, Singapore and Hong Kong are today considered as global-standard industry hubs, compared to Japan which is known more so for its native and stringent approach to doing business.

• Employee engagement and retention: Satisfying employee expectations is a real challenge. According to Deloitte, organizations shall increasingly turn to people analytics to cater to employees’ needs. The challenge is that these needs vary drastically- in the Deloitte survey***, 91% of respondents cited “career progression” as a key challenge; 86%  mentioned “better rewards”, and 80% found “work-life balance” to be an issue. HR must customize engagement interventions to align with the cultural and social outlook of locals.

• Learning and development: Naturally, organizations must up their skill sets, at every level and on an ongoing basis to stay relevant and engage and inspire their people. While global systems and learning tools can be brought to local regions, the local skill-gap must be addressed through innovative talent programs, some of which may involve public-private partnerships, engagement with educational institutions, new-age learning platforms, digital learning, etc. Skill upgradation is a key government initiative as well, with which companies must collaborate to address the current and future skill gaps.  

In a way, the HR function itself should restructure and realign itself to meet the new-age needs of a complex and diverse workforce. An example of that is Hong Kong, where the HR market has seen a distinct shift from a generalist-HR approach, to become more specialized and functional HR professionals. HR and business leaders can adopt the right blend of “glocal” only by analyzing the real needs of the business and people and walking the tightrope between the two.