The Evolution of the Workforce

Evolution is typically energised by a single but significant change, the effects of which are radical but slow coming. Language, the ability to walk upright and the introduction of money each happened in pockets spread over land and generations. Yet now we’re being hit by numerous and instant technological changes that affect us worldwide, and employers are struggling to keep up.

“Due to exponential technological disruption, digital can completely transform a business within a year,” warned Nils Michaelis, Managing Director for Digital within the APAC Products Operating Group at Accenture.

Speaking at Criticaleye’s Asia Leadership Retreat, held in association with Accenture and CEIBS (China Europe International Business School), Nils went onto explain how another important factor — the consumer — has been a catalyst for the creation and evolution of many jobs, even among the top roles.

“A couple of years ago, the then CEO of Macy’s gave himself the title of Chief Customer Officer and was one of the first CEOs to do so. This got the whole company to rotate towards being customer-centric,” Nils explained.

From a leadership perspective, the difficulty lies in creating a talent pipeline that is able to deal with these changes. “As leaders, we need to turn our attention to how we bring the workforce together, and how we reskill them,” said Chris Harvey, Managing Director for Financial Services across APAC at Accenture, who led the keynote address.

However, in a Criticaleye survey of attendees at the Asia Leadership Retreat, only around half said their executive team are collaborative and 85 per cent said the behaviour of their executives can create silos.

While it’s a global business issue, it’s particularly important in Asia where talent is in dangerous demand, competition has led to high staff turnover, and many of the family and founder led businesses aren’t doing enough to train and promote talent. So, how can we progress?

From aptitude to attitude

For many business leaders, including Alan Armitage, CEO for Standard Life (Asia), the spotlight has turned from highlighting an employee’s functional aptitude to their attitude.

“I used to focus on the project plan, but realised more effort had to be put into behaviours and people,” said Alan. “We’ve put a strong emphasis on behaviours, both individually and collectively, especially on whether we have the right blend of individuals within the team and if they will work together in a productive manner.”

In her work with businesses both in the UK and Asia, Jamie Wilson, Managing Director at Criticaleye, has found that “high performing teams show collaboration, innovation, trust and the ability to handle the ambiguity of change”. She added: “It’s these traits that will see them through today’s fast-changing business environment.”

Alan recognises that in order to attract the best talent, Standard Life needs to offer its staff the opportunity to develop in a way that suits them. By doing this, the organisation will also reap the benefits of having a diverse range of skills across its workforce.

“The next generation have less affiliation to the company itself but more to those that develop their skills and brand at a personal level,” Alan noted.

“Every single member of our team has an individual development plan. Those plans need to be absolutely distinct from the individual’s day job and their performance-related plan. They are focused on where the individual would like to be in three years’ time. They need to be challenging and also outline the steps an individual needs to take.”

The fluid workforce

Leaders must acknowledge their workforce will be more fluid than ever before; that may mean hiring more people on a part-time or consultative basis, and also acknowledging that an employee’s development might result in them leaving the company.

This is something Criticaleye Board Mentor, David Comeau, realised back when he was President for Asia Pacific at Mondelez International. Rather than being afraid of the fluid workforce, he saw it as a way to improve the company’s reputation as an employer.

“People need to own their own career and development,” said David. “We realised people would leave the company, so we told them we would celebrate when they leave − but also when they return.”

David explained that three-years ago the company launched a programme through social media that openly recognised employees who chose to develop their careers by moving on. “This allowed both us and them to promote their skills and success to those outside of the business. It’s helped their development while also getting the word out on the great things going on at our company,” he said.

Planning ahead

This kind of attitude teaches leaders to embrace, rather than fear, mobility and succession planning. Indeed, it’s an increasingly crucial way to manage tomorrow’s liquid workforce. “Succession can be a great exercise as it forces honest discussions about building the team,” said David.

Neil Galloway, Executive and Group Finance Director at Dairy Farm Group, said that “we’re increasingly trying to learn from exit interviews with people who we didn’t expect would leave the company”.

One of the things he discovered was that employees wanted to see there are opportunities for them to grow within the organisation. “In some cases, we had to create mobility through forced changes in order to make room for talent to move up the business. This has meant putting all roles − including mine − into a succession plan. It was a surprise to some that I was already talking about finding an internal successor within a few months of joining the group, but it sent a strong message,” Neil explained.

Although the requirements on your workforce – be they skills or entire roles – are both changeable and unpredictable, your employees will want reassurance.

“You need honest, transparent discussions with external candidates, so they understand the situation they are signing up for,” said Neil. “And you need to give colleagues candid feedback on their capabilities and potential, both the opportunities and limitations.”

These views were shared during Criticaleye’s Asia Leadership Retreat 2016, held in association with Accenture and CEIBS.

By Mary-Anne Baldwin, Editor, Corporate

Do you have any experiences of the changing workforce you would like to share? If so, please email maryanne@criticaleye.com

Read more from our interviewees as Nils Michaelis discusses the customer experience and Alan Armitage reveals how to motivate the executive team.

And, don’t miss next week’s Community Update on how to tackle international expansion.

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Putting Your A Team into Asia

“While Asia has grown in importance for almost every Western company, many of them are lagging in the sense of having good enough management power in the region,” says Hellmut Schütte, Dean Emeritus of China European Business School.

“In general terms, if you take a larger company and you have, let’s say, 50 top leaders across the organisation, only five to 10 per cent of them would be in Asia.”

Criticaleye Thought Leader Hellmut says there are multiple reasons why Western multinationals should rethink their strategies for Asia. In his recent article, Organising for Asia, he highlights one major problem as the reluctance to let power move away from HQ.

“A strategy exists for development in Asia but there can be a sense that headquarters are constantly interfering and not ready to take risks [to] capitalise on high growth,” he adds.

Perceived risks in Asia – such as disruption, a changing regulatory environment and the volatility of commodity prices – often keeps many controls firmly within the US or European HQ. Mark Ling, Head of International Large Corporates for Santander Corporate & Commercial, comments: “That doesn’t necessarily help in an environment that is moving very fast; to take advantage of the opportunities you need more local decision making.

“There’s a bit of a paradox for boards, they see the growth but they also see the risk. It’s often hard to reach that balance.”

John Shelley, Chief Risk Officer at RBS Asia Pacific, who has been in Asia since 2006, says the company did not devolve enough power to Asia during its growth phase. “There was tension between the London HQ and the Asia hub. From Asia, it felt like more autonomy was devolved to the US [than to Asia],” he says.

Moving power 

In order to seize opportunities and navigate challenges, decision making in any market needs to be effective and timely. Michael Crompton, General Manager for Asia at Criticaleye, says: “You need to build a realistic strategy for each market and understand that you won’t win overnight. You must take steps to seize opportunities and those operating in Asia need to know they are a relevant part of the business, rather than just a footprint.”

Some companies are relocating their best leaders to key markets. Hellmut offers French company, Essilor, as an example. It’s President and CEO now heads the global prescription lens provider from Singapore.

This is similarly the case at Manulife. John Brisco, Senior Vice President, Chief Information Office and Chief Operations Officer for Manulife Asia, says: “We are moving global roles to Asia to ensure we have a suitable spread of talent across our geographical footprint.

“For example, our Global Head of Leadership Development has moved to Asia because, with the growing influence of Asia to our global business, it was vital we had this role based in the region.”

For big players with the appropriate resources, a new HQ could be the next step. For example, GlaxoSmithKline has had a significant presence in Asia since the 1970s and will open a new global HQ in Singapore next year. Abbas Hussain, President for Global Pharmaceuticals says this is a major development for power in the region.

“Our new headquarters for Asia will serve as one of three global control towers for GSK, alongside the UK and US,” he explains. “Decisions normally made at a global level will be taken in Asia, with Asian patients and consumers in mind. We are aiming to create both autonomy and accountability, improving the speed and quality of decision making.”

While leaders in Asia need to have spent time in the company’s other major markets − usually the West − it’s also critical that those from the West have global experience.

“The key for more management power is that the executives of the business should be considered as global managers, not just regional. That requires a programme of talent and leadership development that ensures you have a lot of mobility and horizontal career opportunities so that people are multi-skilled,” Mark comments.

“If certain powers lie with head office, they need to have that empathy with the local leadership. If you haven’t seen different markets and trends then the nuances could come as a surprise. You might follow a template that may not work in that environment. You need the best leaders at every part of the business.

John Brisco says: “I think Manulife has done a good job in articulating that we are a globally focused organisation and that we need management capability that can wake up in Toronto one day and go to Hong Kong the next and be just as effective and capable. If you can get that right then you’ve got the real makings of a truly global powerhouse.”

For Western multinationals to meet the needs of regional consumers, both local and global experience will be vital. While the development of local talent is perhaps a separate point from those made above, it’s hugely important for long-term growth and succession planning.

On the subject of local talent in Asia, Jingru Liu, Director for China Advisory Services at BDO, says: “If you have the right people on the ground then HQ should be listening. You need to treat each market in Asia differently and employ leaders who know the specific markets well – there are huge differences across the region.

“Businesses need to give local people the same respect – they know their market well. The Western world is sometimes under the illusion it’s always right; they need to respect and understand cultures more.”

Ultimately, whether a company is looking to expand into one particular market in Asia or strengthen its pan-Asian presence, careful consideration should be taken as to what the leadership and decision-making framework will be.

By Dawn Murden, Editor, Advisory 

What are your thoughts on Western multinationals’ strategies for Asia? If you have an opinion that you’d like to share, please email Dawn at: dawn@criticaleye.com

Read our write-up from the Criticaleye Asia Leadership Retreat, at which Hellmut Schütte and John Brisco were both speakers

Or find out more about our upcoming Global Conference Call: Understanding China’s Consumer Landscape

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Winning Strategies for Asia

Comm update_12 November1 The scale and pace at which markets across Asia are growing can leave you breathless. For both indigenous and foreign corporates, the pressure is on to move fast, whether it’s responding to urbanisation, creating new technology or simply meeting customer demand. It all presents a rigorous test for executive teams as they are expected to devise winning strategies in a complex, competitive landscape where talent is in short supply.

These were some of the key themes to emerge from the Criticaleye Asia Leadership Retreat, held in partnership with China Europe International Business School (CEIBS). Over the course of 24-hours, attendees gathered in Hong Kong to share ideas on innovation, sustainability, talent and what the rise of China’s private enterprises means for multi-national corporations (MNCs).

Hellmut Schütte, Vice-President and Dean of CEIBS, observed: “Perhaps the golden age in China is over for foreign MNCs. Everyone is here now, labour costs keep rising, and China’s own MNCs are making enormous progress.”

Aside from the emergence of international powerhouses like e-commerce conglomerate Alibaba and telecom equipment and smartphone maker Huawei, competition was described as particularly acute in China’s third and fourth tier cities, where an increasing number of home-grown private enterprises are capitalising on their local market knowledge. “China still presents significant opportunities for MNCs but it’s now a lot harder to realise,” said Stephen Mercer, Partner in Charge of Multinational Clients at KPMG.

“You have to understand what segment of the market you are dealing with as they can be so different. If you were operating in Europe, you wouldn’t replicate your market entry strategy for each country or market and China [is] the same. Unless you are clear about what you are trying to achieve in China, it will be very difficult to succeed.”

For those companies that do get it right, China’s $9.2 trillion economy provides plenty of openings and areas for growth. Hellmut said: “If China ‘only’ continues to grow its GDP by 7 per cent over the next ten years, it will still almost double the size of its economy. If you combine [Brazil, Russia, India and South Africa] … and the next ten emerging markets, all together they add up to the size of China’s economy today. This is very much in the mind of China’s Government when it deals with the outside world.”

The ability to bring new products to market rapidly was generally agreed to be a significant differentiator for successful businesses. George Yip, Professor of Management and Co-Director of the Centre on China Innovation at CEIBS, said: “Chinese companies have a deep understanding of the customer – [they take] a pragmatic, profitable and customer oriented approach to innovation… Western companies can be too slow because there are too many processes in place.”

Sujit Chatterjee, President & CEO of TATA Consultancy Services China, said that “innovation, as it was understood in the Western world, was for a long period about creating new markets, but, as we see in Asia, especially China, innovation is about capturing markets”.

Companies have to be capable of adjusting to the characteristics of a rapidly changing and geographically diverse country. “Each year, Western companies set-up more R&D centres in China than in any other country in the world, including the US,” George added. “Western companies have an appreciation for Chinese methods of innovation; they are eager to learn how to innovate faster.”

A long-term view

If businesses are to continue to take advantage of the consumer appetite for goods and services, attendees agreed that it needs to be done in a sustainable fashion. Peter Wong, President of Dow Chemical Greater China, said: “Sustainability is very much part of our strategy in terms of driving business growth. For example, in China we are looking at a few of the issues the Government is focusing on, such as food security and safety.

“If we bring our capabilities together, we believe that we’ll be able to find a solution that is going to help the Government tackle some of these challenges, like food spoilages.”

Setting the right strategy and implementing it is key. Peter Lacy, Managing Director of Strategy Practice & Sustainability Services for Asia Pac at Accenture, said: “Companies need to be aware of opportunities to improve their approach to sustainability… It needs to be integrated into organisational design so that support functions are created to incentivise people, so they want to make improvements. That’s as true here in Asia and China as it is elsewhere in the world.”

The challenge is to create alignment across the whole organisation. “At Dow in China, I’ve been trying to build a cross-collaboration model,” said Peter Wong. “It’s been about looking at what the issues are and seeing how people can jump beyond their own boundaries. Hopefully they’re thinking about how we can better collaborate, utilising the R&D lab to [address] the issues we have – if you don’t even understand your true capability, you can’t really develop an innovative mindset.”

Cecilia Ho, President of International Paper Asia, commented: “There actually has to be a change in mindset around sustainability; you’ve got to accept that if you do not operate sustainably you cannot operate at all. [If you understand that], then you’ll do it because it’s beneficial to the company as well as to the environment…

“You can do all the communication and internal marketing – and we certainly do – but the most important thing is that employees are convinced that you practice what you preach. So it needs to be driven by the senior leadership team.”

According to Peter Lacy, thinking sustainably can be a real driver for innovation:  “At the moment a lot of the focus in Singapore, India, China and Japan is on urbanisation and smart technologies and how they can be used to better manage energy and transport systems. There is a ‘digital revolution’ taking place, and we are really only just beginning to see the power of connected physical and digital infrastructure in areas like cloud computing, mobile tech [and the] Internet of Things (IoT).

“This is clearly a strong business imperative, but it’s also a sustainability benefit… Companies in China especially are using things like smart-metering and smart-grids to drive energy efficiency per unit of GDP.”

Matthew Smith, Global Head of Market Development for the Internet of Things at Cisco Systems, estimates that over the next ten years the connectivity of devices will create profits and cost savings of approximately $19 trillion. “People are not afraid to fail in China and that type of attitude is going to be really beneficial in this kind of economy,” he said.

The impact of the IoT will be felt in multiple sectors, from retail and healthcare to life insurance and, of course, energy. Matthew continues: “Texting went from zero to $300 billion in about six years. Thanks to WhatsApp and We Chat, it’s gone back to zero again – the point is a lot of new markets will emerge due to the Internet of Things.”

People first

If technology is unlocking new business models, and globalisation creates a more competitive environment, what kind of skills-mix is required to come out on top? Even for those companies that have a theoretical answer to this question, the reality of identifying and keeping the right people continues to be tough.

In the marketing industry, for instance, digital is having a seismic impact on the way customers behave and this requires a different set of skills. Chris Riquier, CEO for Asia Pacific at Taylor Nelson Sofres, said: “As marketers, we’re not investing sensibly and we’re not recognising the ROI today. We’re also ignoring new platforms, which means we don’t have the skills and expertise in the business.”

The quality of graduates, particularly in China, was also discussed. Hellmut questioned whether the country’s education system, with its emphasis on hierarchy and rote-learning, was preparing the younger generation for the dynamism and innovative thinking required for the modern workplace. “Ten years ago there were one million graduates, whereas today you have 7.5 million graduates and the number of universities and colleges has doubled during the same period,” he said.

“There has been tremendous growth but there is the problem of young people coming into the job market and being unable to find employment. At the same time, you have companies crying out for people. As companies must innovate in order to compete, it is not easy to find the talent you need when they come from this rules-based background.”

In order to overcome the shortfalls in talent, companies were encouraged to start looking regionally to bring in people of the right calibre. Michael Guo, Partner of Human Capital & Change Management Advisory for Greater China at EY, said: “Businesses are increasingly connected. Ten years ago the prime movers in Asia were China, India and Indonesia…

“Now … there are so many different countries where different solutions are required, and for that you need a diverse range of talent, especially for your senior leadership team.”

Global leadership

When discussing ‘Asia’, it’s important to remember the distinct national and cultural differences. Each country and region will present its own idiosyncrasies in terms of doing business, from how relationships are built, bureaucracy navigated and the regulatory environment understood. Nevertheless, the Retreat demonstrated there are questions being asked of senior leadership teams in Asia that will resonate internationally.

Andrew Minton, Executive Director at Criticaleye, said: “Whether leaders are confronting issues around sustainability, talent or digital transformation, they must be able to… see the bigger picture in order to shape their own strategy.

“That’s why, regardless of geography or culture and irrespective of industry or function, there is an overwhelming need for leaders to step out of the day-to-day if they’re to combat complexity successfully.”

Executives need to be prepared to reflect, collaborate and benchmark with others. Trying to establish strategic clairity in isolation is no longer an option.

I hope to see you soon

Matthew

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