Businesses operating in much of Asia face a serious aging population challenge that is distinct to the region. While as a whole, Asia Pacific is the fastest aging region globally, there are varying paces of population aging across member countries –with some economies expected to encounter the problem of an older workforce sooner than others. Businesses need to do better at assimilating older workers, especially in sectors like technology, where demographics are skewed towards a younger set of workers. Without the wisdom of older people, every new generation born into the world would have to start from scratch. Children would have to teach themselves to read, to tie their shoes, and open doors. There would be no rules to sports. Cars would turn to rust on cracked highways. Fortunately, older people—parents, teachers, and mentors—provide ensuing generations with the wisdom they need to live, navigate life’s challenges, and find meaning in the world. Older employees offer companies these same benefits, and much more. Though researchers have found that the biology of age tends to negatively affect episodic memory (remembering context) and processing speed (handling complex tasks), researchers have also found that increases in age are associated with better semantic memory (base knowledge) and language and speech skills (discourse). In fact, in general, researchers have found that while ‘fluid intelligence’ (new problem solving, pattern-finding) tends to be lacking in older workers, ‘crystallized intelligence’ (accessing skills from knowledge and experience) tends to be much higher in older workers. Older workers have also been known to have better capacities for emotional regulation, meaning that in stressful or tense workplace situations they are more likely to act calmly and rationally (and therefore cost-effectively) when making difficult decisions.  The Power of Gratitude Aging employees understand that life is temporary, and that good health and a rewarding job should never be taken for granted. Aging employees enjoy higher job satisfaction rates than younger employees. They tend to able to focus and are not consumed by outside distractions and influences. Younger employees, particularly when the economy is strong, often ponder better opportunities elsewhere—jobs with better salaries, better amenities, and better working conditions. Younger workers are more prone to leave jobs and often believe the best way to land a raise is to change companies rather than negotiate with their current manager. Today, it is common for younger employees to depart a job in less than two or three years and move on to the next one. This trend is extremely costly for employers. Older workers in a firm also provide the crucial potential for firm-building and knowledge consolidation. During a vast wave of retirement in the early 2000s as baby boomers left the workforce, many companies struggled with the knowledge gaps created in their absence. Preserving older workers’ intellectual capital is key for culture and knowledge preservation – a crucial attribute in an environment of constant disruption and evolution. Studies also show that older workers are better at nurturing and guiding younger workers, which helps improve business continuity and mitigate knowledge gap problems. We see clear evidence of this trend, especially in the Energy industry. In a recent recruitment campaign across Asia, featuring pictures of older workers using the latest technology, Saudi Aramco went on a hiring spree targeting retired drilling experts to join their newly acquired offshore refinery off the coast of Malaysia. Aging employees also know who they are and what they want from a job and their employers. They are better at negotiating a salary that makes them happy during the interview process, and more astute at knowing which opportunities best fit their skills and sensibilities. Older workers have grown beyond young-adult family and social obligations and offer employers a level of loyalty that can be difficult for younger workers to achieve as they juggle competing priorities. For employers, this sense of stability and happiness has an incredibly valuable impact on the workplace culture. It leads to reduced employee turnover and increased productivity and worker morale. Older employees are the perfect balance to younger employees who are still finding themselves, and where they belong, in the workforce. It is heartening to see an increase in the number of older workers active in the workforce, thanks to the increase in retirement age in many countries. The resulting multigenerational workforce will benefit employers and eventually the overall economic environment, with less dependence on social security. The Continuation of Values Every successful company is built on particular values. Some companies prioritize VIP customer service, the power of new technology, or being environmentally conscious. Over time, we often find companies can lose sight of their mission and values and must revisit their past to find a new direction for the future. Take, for instance, Apple which, in 1997, was operating at a loss. The board decided it had no choice but to rehire co-founder Steve Jobs to kickstart the company toward financial recovery. (Microsoft and Windows 95 had taken over the market.) Steve Jobs’ passion for, and understanding of technological disruption, industry defiance, and sleek-beautiful products returned Apple to its former glory. It also introduced the world to a new succession of streamlined products that dominate our culture today. Aging employees provide companies with a continuity of values. The incessant pressure to innovate and compete often sends companies into misguided directions that can cost millions in wasted capital. Aging employees have had time to internalize the values of a company and can identify when outside pressures are tempting the company into products or behaviors that will ultimately undermine resources and brand equity. Consider this: of the companies that comprised the Fortune 500 in 1955, only 12% were still around in 2016. Sure, the march of time and technology changes the business landscape, but certainly, many of those companies became extinct because they lost sight of their North Star. Older workers, like older family members, can bridge the past and future. Diversity is the New Competitive Edge As companies strive to outmaneuver the competition, they’re discovering the inherent power of a diverse workforce. Not even the latest technologies and business strategies can offer the sheer power of ideas generated by a diverse group of people trying to solve a problem. The more brains with different backgrounds and experiences that are sitting around the table, the greater the opportunity for unique, revolutionary ideas. And no workforce is truly diversified without aging employees. Accomplished business leaders have witnessed the magic that happens when employees from different cultures, races, genders, and ages work together to create something entirely unexpected – something that elevates a brand or company to the forefront of their industry. Aging employees are the cornerstone of a diverse workforce. Whenever a business encounters mistakes or troubled times—and they all do eventually—older workers are there to provide mentorship and perspective. A company’s workforce is a community, and that community needs the grounded insights of employees who have lived through bull markets, recessions, and every type of economic swing and industry shakeup. Also, aging employees simply know more about life than younger employees because they have more experience with it. Whenever a younger employee struggles to balance family and work or navigate other problems that impact the quality of their job performance, older employees are there to offer guidance. This provides a level of value to companies that may not appear in their annual budgets but nevertheless can determine if they succeed, or disappear from the Fortune 500 list. 1 Cognitive Predictor and Age-Based Adverse Impact Among Business Executives, Klein et al. 2015 2 Carstensen, Fung, & Charles, 2003; Charles, Piazza, Luong, & Almeida, 2009
Disruption Is the New Norm — What Are You Doing About It? Mercer’s 2019 Global Talent Trends study reveals that 73% of executives are predicting significant disruption in the next few years — up from 26% in 2018 — and nearly all are taking action to prepare for the future of work. This sharp shift in perception of the future business environment demands new workforce strategies if companies are to stay ahead. As the pace of change accelerates and we enter into a new world of work, it’s more crucial than ever that companies rethink their people agenda to unlock human potential and adopt new strategies to become ready for the future. But where do you start? Read on for three tips to help you build a future-fit organization. Tip #1: De-Risk Create an evolving organization that’s human-led and digitally enabled. Nearly every company we surveyed in our 2019 Global Talent Trends study is actively embracing change: 99% of participating companies report taking action to get ready for the future of work. One way companies are preparing for this is by creating an integrated people strategy that pays attention to today’s needs, while tipping the balance in favor of investing in tomorrow. What this means is that companies should concentrate now on building the leadership, culture, competencies and skills needed for future competitive advantage. This includes redesigning jobs and moving people to where future value will be created. It also demands rethinking the HR lifecycle to make it more agile, and embracing digitalization to enable HR to make these critical transformation efforts with greater efficiency, flexibility and speed. Tip #2: Innovate Design agile rewards. Our 2019 Global Talent Trends research shows that the #1 workforce rewards priority is offering more diverse rewards. This finding comes as no surprise as companies are recognizing that the future of rewards lies in innovation. What does this mean and how can companies drive innovation? It starts with understanding and building the various employee personas in an organization, and then designing a rewards program for each — unlike a blanket one-size-fits-all approach, this ensures rewards are meaningful. Equally important is communicating these rewards programs using channels that are relevant to employees. Employers that offer the most compelling rewards will succeed in attracting top talent. In Asia especially, employers are actively seeking a new and fresh take on benefits that will help set their employer brand apart. To truly align the business, investments in rewards should reflect a company’s strategic focus. In many cases, this means taking a step away from market norms and moving towards more differentiated offerings to satisfy both changing employee needs and the demand for new skills. Leading firms are concentrating on the overall pay experience, expanding their focus beyond base pay to include career growth, incentives and recognition. Tip #3: Empower Curate the employee experience. More than half (54%) of the organizations we surveyed conduct engagement surveys at least twice a year, yet only 33% can identify the key drivers of engagement. So what really drives engagement? Employers must identify what their people want most out of work, and understand employees’ challenges and experiences in the workplace. Employers must start investing in the kind of experiences they create for their employees to build a work environment that appeals to the future workforce. For many employees, opportunities for learning and development are critical. Offering employees the opportunity to upskill and/or reskill gives them a greater sense of mastery, the chance to learn something new and the ability to hone their skills. Empowering employees to be more intentional about their careers and giving them a sense of autonomy in their work are vital too. By curating careers, organizations can provide employees with new ways to grow — for example, through mobility programs or internal gig platforms, where employees can apply their expertise and gain new experiences. At the same time, employers can help build and nurture the broad skills and adaptable mindset needed for the future of work. Since employees also crave work that is fueled by purpose and want to be part of something bigger, building a coherent sense of identity and purpose, and fostering employees’ sense of connection within the workplace and to the company are crucial to building a 21st-century employee experience. As our research shows, making the work experience relevant to individual employees helps them grow and thrive. What we see increasingly is that empowerment is a key enabler of these work experiences. Leaders who manage to achieve these objectives will power great performance in their organization. Preparing for the #FutureOfWork As society embraces a digital future, preparation is key to thinking systematically about the opportunities ahead and accelerating progress toward the future of work. Are you ready? More Strategies for Being Future-Fit To learn more, join me — along with other Mercer and industry experts — at our upcoming Asia HR conferences in Singapore and Shanghai. Find Out More. Watch a video: Becoming Future-fit in Digital Age
Amidst the fastest pace of change in human history, thriving organizations are the ones that have realized that people have become more, not less, important as companies look at completely different ways of creating economic value. When manufacturing processes were automated, design skills became more critical. Yes jobs disappeared, but new jobs emerged. The technologies of the Fourth Industrial Revolution will continue to need new skills, while digitization will enable microeconomies to be built locally—driven by people’s imagination, not the economies of globalization. Understanding the impact of these changes and preparing people to ride the crest of opportunity is paramount. And this preparation begins with fostering a culture where people can thrive in the workplace. As Louis Gerstner, the legendary CEO of IBM who turned around the tech behemoth back in the 90’s famously said, “Culture isn’t one aspect of the game, it is the game.” The Historical ‘Deal’ Abraham Maslow famously introduced the theory of motivation in early 1940s. His big idea was that we all have a hierarchy of needs: once our basic physiological and safety needs are fulfilled, we seek belongingness, then self-esteem and prestige, and finally self-actualization. This model did well to explain the evolution of the ‘deal’ or the ‘contract’ between people and employers before the advent of the fourth industrial revolution. In the 20th century, the loyalty contract defined the relationship between employer and employee. Organizations met basic needs through an employment contract, such as pay, benefits, and job security, in exchange for a lifetime of commitment from employees. Over the past 20 years, the engagement contract has been the dominant model. Organizations have been searching for ways to ensure their workforce is fully invested by meeting both their basic needs of pay and benefits, but also to differentiate themselves through career management and employee wellness programs. When transformation is a business goal, the employee value proposition should not be static. This challenges our existing talent processes and how we deliver on a personalized value proposition that resonates with employees. Figure 1. Source: Mercer Thrive Research The New ‘Deal’ Our new perspective of thinking about the new “deal” to enable people to thrive, positions rewards into three primary categories of the employee value proposition continuum: Contractual: This is the traditional compensation and benefit deal. Experiential: This is the way an employee experiences the organization both inside and outside work, from careers to well-being programs, for example. Emotional: This is the connection created through a sense of purpose – driven by the employee’s connection to the vision or mission of the organization as well as its social responsibility initiatives. This includes not only the meaningful impact created through the organization’s products and services, but also the option to provide employees working time and resources to engage in charitable initiatives that provide personal fulfillment. We believe that getting the contractual pieces right is the foundation for an effective rewards program and critical for remaining competitive, but differentiating on these elements can be quite costly. Where differentiation can be more engaging and cost-effective is in the career opportunities and focus on well-being of employees. There is a shift away from work-life to a new concept of well-being, a holistic notion that addresses the physical, emotional and financial health of the people. Facebook is a good example. Facebook’s chief human resources officer defines the deal at Facebook in terms of three buckets of motivators: career, community and cause. When these three are fulfilled, people bring their whole selves to work and create significant economic value and impact. Many companies are creating true uniqueness in their value proposition in the area of purpose. Our engagement research shows that this element can help to create “stickiness” with an employer and has more retentive impact than the traditional rewards elements. Research has also shown that purpose-driven organizations have greater financial success. Here lies the next challenge. “To know what one really wants,” Mr. Maslow argued, “is a considerable psychological achievement.” Businesses and HR functions have thus far relied on anecdotal evidence, market trends and generalizations around employee segments to try and understand what people seek. The Employee Value Proposition Translating the employee value proposition (EVP) or the deal into a compelling experience for each and every employee, however, requires both art and science. The “science” starts with workforce analytics to map internal labor movements and identify “personas”—rather than segments—that represent micropopulations of employees with a unique combination of needs. The “art” of the EVP is, and will remain, the human contact—how managers and coworkers shape the work environment with meaningful personal interactions. And that is how thriving organizations curate distinct experiences for their people, turning the notion of “going to work” into “living one’s purpose.” 1https://hbr.org/2018/02/people-want-3-things-from-work-but-most-companies-are-built-around-only-one.html
Every organization has a vibe, a feeling that is clearly discernible but difficult to pin down, and you can feel this ‘vibe’ the moment you step into a workplace. Some organizations feel hectic and stressful. Others seem cold and sterile, or worse still - dull. But a few—a rare few—are different. Walk inside these organizations and one thing is clear: people are genuinely excited to be there. A perceptible buzz – an undercurrent of energy and vitality – permeates the place. A clear sense of pride, passion and purpose is evident in every interaction with an employee, customer facing or not. And this passion is evident in every product or service, and manifests itself in every customer touch point. These organizations far from being disrupted have become even more resilient amidst digitization, having found newer ways to harness the collective energies of their employees leveraging technology. In a research study recently released by Mercer, we explore just what does it take for organizations to thrive from a people standpoint, as a way to uncover some key attributes of organizations which have been able to create this rare vibe of passion and purpose. The first thing that becomes clear about such organizations is that they have fundamentally transformed the idea of ‘going to work’ for their employees and turned it into a compelling experience, one that is meaningful to each employee individually. After surveying over 800 HR and business leaders, we drew insights around organizational cultures and people practices around the world to understand the underlying themes. ‘Growth’ and ‘Learning’ stood out, as did a sense of ‘equity’ as key drivers for creating a thriving workplace. And we believe that this thriving workplace is the foundation for building businesses which are not only resilient to disruption, but are businesses that can actually thrive today by embracing innovation. We also heard regional differences around what it takes to thrive. Companies in North America placed emphasis on a leader’s style and the importance of their “relatability”, “accessibility”, “their ability to connect with the workforce“. The perceived fairness of talent assessments was also important, i.e. “equal access to experiences”, “clear assessment for development opportunities”, “transparent promotion choices”. In emerging markets such as Asia and Latin America, respondents were most vocal on the criticality of career and development transparency, “clarity around promotion criteria”, “career frames that define the experiences and skills you can gain”. Organizational design was part of the message from Latin America – ‘build flatter structures”, “have less levels”, “move to agile work structures”. European and Asia based companies both shared how they have reaped the return from workforce analytics “data that tracks the progress of diverse groups” “data to know what people want, actually use, might need –linked to life events”. European companies also mentioned the importance of involving employees in the decision making and change actions that are being driven “involving employees in discussions about why we need to change”, “getting people involved with new initiatives early”, “and involving them in innovation”. Additionally, employees also seek to work for an organization whose purpose not only resonates with their own but also one that creates a broader social impact. Various doomsday forecasts around job losses on account of automation notwithstanding, we need to understand the impact of technology on jobs from an employee’s vantage-point. Employees in Asia seek more opportunities to grow their careers and develop isn’t surprising, given the soaring aspirations at the back of technological strides underway in the region. Thriving organizations place a premium on people and invest in their development, especially to make them ‘digital ready’. One of Asia’s leading banks – DBS for example recently announced that it would invest $20 million over the next five years to raise the digital competence of 10,000 of its employees in Singapore. With the advent of new technologies such as artificial intelligence, fostering a culture of continuous learning and meritocracy is paramount for organizations to thrive. They realize that to generate best-in-class performance, they need to attract and retain the best talent pool. Thriving organizations go to great lengths to ensure that their talent management practices not only appeal to a wide range of employees, but resonate with what they want for themselves and their families. They create thriving workforces that are diverse and adaptive, inclusive and growth focused, and are committed to the physical, financial and emotional wellbeing of their employees. To download a copy of Mercer’s Thrive research, click here.
After five years of weak growth, the global economy has thankfully entered a period of sustained, albeit mild, recovery. Job and capital markets around the world are seeing a positive outlook with the increase in global trade volumes, protectionist fears notwithstanding. The Asia Pacific region has been at the forefront of this recovery with the lowest unemployment and highest GDP growth rates in the world. This growth has been largely driven by improvements in the commodities and manufacturing sectors, along with the positive sentiment around China’s “One Belt, One Road” initiative, which promises to spur capital investments and infrastructure development across the region. A cause of worry has been the steady rise of inflation across the region. Although central banks have been proactive in trying to contain inflation, the cost of doing business in the region could be adversely affected. In the context of this macroeconomic backdrop, the labor market is demonstrating several trends that will affect employers in 2017 and beyond. Labor Market Insights Although the aging workforce is not as pronounced a problem in Asia as it is in developed economies, it is certainly an area of growing concern for businesses. The working populations of Japan, Hong Kong, South Korea, Singapore and Thailand all have a median age of well over 40 years. On the other hand, the younger workforces in India, Indonesia and the Philippines present both opportunities and challenges. The World Economic Forum’s 2016 Human Capital Index rates countries globally on two themes: learning and employment. The employment indicators include but are not limited to labor force participation rates, unemployment, underemployment rates and skills. In addition, the Index includes learning — not only the quantity but also the quality of the available learning infrastructure. Women’s participation in the labor market remains very low in countries like India and Indonesia, and although participation rates may look healthier in other countries, such as the Philippines, deeper systemic issues still need to be addressed. Mercer’s When Women Thrive, Businesses Thrive data show that women currently hold only 25 percent of professional roles in Asia, which is the lowest level in the world and significantly below the global average of 35 percent. Another trend having an impact on labor markets is the growing talent shortage, particularly among roles requiring engineering and sales skills. In Asia Pacific, 46 percent of companies surveyed by Manpower Group this year cited difficulty in filling positions, as opposed to 40 percent of companies globally. In addition to technical skills, behavioral competencies are becoming increasingly important as a reflection of how employees deal with change.[²] The World Economic Forum’s 2016 The Future of Jobs report cites core work-related skills such as complex problem-solving, active learning and cognitive flexibility as increasingly important to all sectors amid the digital disruption of the Fourth Industrial Revolution — a term famously coined by the founder of World Economic Forum, Karl Schwab.[³] Tightened Belts, Long Road Companies across Asia Pacific are currently thinking about how best to reward employees to attract, motivate and retain the talent they need to support their businesses. The link between pay with performance is regarded as one of the top three drivers of employee engagement in Asia, according to the recent Mercer | Sirota research. Employees in Asia care most about a culture of meritocracy and opportunities to grow in their careers. Any conversation around rewards must therefore take into account the specific needs of the talent pool in this part of the world and the motivators that drive these individuals. For this reason, an increasing number of HR departments are beefing up their analytics capability to facilitate evidence-based decision-making, especially when developing a compelling rewards strategy. Look Who Is Hiring Hiring in India, Vietnam and the Philippines is happening at a greater pace compared with other countries in the region — for example, hiring intentions are lower in Singapore, Malaysia and Hong Kong. The overall hiring outlook is bright, however, with five out of 10 companies looking to maintain headcount, including replacements for staff turnover.[⁵] Hiring sentiment is often therefore a reflection of trends in staff turnover in certain countries and industries. The flipside of higher GDP growth and increases in base pay also implies that the staff turnover is higher for those countries. Attrition is higher for industries that have continued to outpace the slowdown we observed in the preceding year. Consumer and retail industries are faced with the highest levels of attrition, whereas the manufacturing industry has some of the lowest levels of attrition in the region.[⁶] As companies prepare themselves for digital disruption, they recognize the need to hire experienced talent — especially in areas that are critical for future success. We find that roles in engineering, finance, sales and marketing functions are particularly difficult to fill in most countries in Asia. Unsurprisingly, the sales function has the hardest time retaining talent.[⁷] Companies have a strong case to develop a sales incentive program that actually works in attracting and retaining key sales talent. Protecting The ‘Pay Base’ The huge spread in base-pay increases across Asia Pacific is a clear reflection of the dichotomy of emerging versus matured economies, but also of dominant industries in the respective countries exerting heavy influence on the overall picture. With Asia increasingly becoming a hub for both research and manufacturing in the life sciences industry, we see the highest salary-increase levels in this sector, followed by higher-than-average salary increases in the high-tech and consumer industries.[⁸] An interesting dynamic that is often overlooked involves pay-increase cycles during the fiscal year. Some companies follow the calendar year, whereas others announce salary increases during April or May. From a talent-retention standpoint, companies need to be aware of the cycles followed by their competitors to be able to ascertain how their pay competitiveness is being perceived by talent both within and outside the organization. According to the recent Mercer Talent Trends research, 47 percent of employees ranked fair and competitive compensation as the number one factor that would improve their work situation — yet only 28 percent of HR professionals plan to focus on ensuring rewards competitiveness in 2017.[⁹] In addition, transparency around pay decisions was called out as an important factor by employees in Asia Pacific. We find that this divide between HR intent and employee expectations can have negative implications on retention, especially in high-growth countries such as India, in high-growth industries such as life sciences and in high-growth skill areas such as sales. Pay equity with regard to reducing the gender gap has also received significant attention recently, as workforce analytics provide greater insight into how gender can affect salary decisions. With salary information increasingly being made available online on job boards and social media, employees are becoming more demanding with regards to transparency and disclosures around senior management pay. Rewards professionals need to reduce ambiguity and discretion in pay-related decisions and leverage empirical data analytics to map the business priorities and how those align with the overall rewards philosophy. With Asia leading the world’s growth, there is no dearth of highly skilled professionals from the western hemisphere seeking opportunities here. As a result, we have seen a significant dip in the traditional expatriate salary packages, with more than 75 percent of the compensation plans designed for foreigners in Asia based on the “local plus” model, which provides certain allowances with the comparable base local pay as the foundation. Conclusion Companies that have tended to take a reactionary or cookie-cutter approach to compensation design find themselves struggling to attract and retain talent. Creating differentiation amid increasing cost pressures isn’t easy, but it is more critical than ever before. Creating a rewards proposition that works for all your employee segments requires an analytical approach that takes all these trends into account and ties them to the desired competitive positioning for the business in this hot talent marketplace. Successful companies tend to have a much more dynamic approach, staying flexible and making changes along the way as new trends emerge. 1 Mercer. When Women Thrive, Businesses Thrive, available at https://www.mercer.com/our-thinking/when-women-thrive.html. 2 ManpowerGroup. Employment Outlook Survey, 2017.³ World Economic Forum. The Future of Jobs, 2016. 4 Mercer | Sirota research, 2017. 5 ManpowerGroup, 2017. 6 Mercer, Asia Pacific Pulse Survey, Q3 2017. 7 Mercer | Sirota research, 2017. 8 Mercer | Sirota research, 2017. 9 Mercer. Talent Trends, 2017. 10 Mercer. Global Mobility Snapshot, 2017.