Introduction: The economic slowdown caused by the pandemic and border closures are changing ASEAN, a region that has long relied on diversity as a power source for growth. The management of foreign companies doing business in the region need to change. In the next two articles, we will discuss the future of global management. As the first  topic, we will introduce an interview with Mr. Mehra, a partner at Merver (Singapore), about the challenges and future of human resource management. (Excerpted from an article and interview by Ms. Shofu for the February 2021 issue of Marketing Horizon, published by Japan Marketing Association.)

Lesser cross border worker mobility urges companies to use external workforce.

——— How do you see this border closures affect the corporate HR diversification in general? Especially looking at the ASEAN countries in terms of both mindset or skillset.

Dhruv: Border closures as a result of the pandemic have basically accelerated a trend that we have been noticing in the last couple of years globally, which is a rise in nationalism and an increase in what I would call protectionist policies. These were, in large part, driven primarily by digitalization, automation, and AI in the workforce. In our recent 2020 Global Talent Trends survey, 34 percent of employees expect that their jobs will disappear in the next three years. And almost 30 percent of companies say that they would not pull back. Which means that a majority of companies are still looking to heavily invest in the transformation agenda, in digitizing operations, business models, which means that a large portion of jobs are at risk.
And when you have a macroeconomic shift like that, it is expected that countries will primarily first look after their own citizens, ring-fencing employment opportunities through protectionist policies.
COVID 19 has accelerated this with border closures making the physical movement of labor much harder, because of the difficulties of providing work visas to non-locals. And that will have an impact on human capital development.

Interview to Mr Dhruv Mehra
Interviewer Rieko Shofu

A partner at Mercer, Mr Dhruv Mehra wears a couple of different hats. He leads a multinational client segment for Singapore and acts as a client manager to some large multinational companies, both global and local. He also leads Mercer’s M&A business across Asia Pacific, with a team of around 45 consultants across five markets: Japan, China, Korea, Hong Kong, and Singapore. He has spent close to two decades in HR consulting and has lived and worked in Asia for seven years now.

We see a few different ways that companies can address this situation. In our survey, we saw that around 40 percent of companies say that they plan to increase more strategic partnerships. Around 39 percent said that they’re going to use more and more contingent workers and continue to use virtual working and digital tools to promote cross collaboration across geographies.

——— By strategic partners you mean not only to utilize their own employee, but also to engage with other talent from the supplier or outsourcing the part of their job.

Dhruv: If you look at skills which companies want more of or are lacking within their workforce, a lot of those are digital. And there’s a growing shortage of those skills in the market. Hence, rather than trying to find or build those capabilities internally, companies are looking for partnerships with smaller technology companies that are in the same industry and trying to fill the gap through these partnership models. If the company, for example, does not have an end-to-end digital channel, say from customer interface to fulfilling their orders and last-mile delivery, then they may consider getting a partner to completely outsource that digital channel tool.
And the second is contingent workers. If companies do not have those skills internally, can they use external workers or consultants to fill those roles? It also allows for flexibility as companies can use them on part-time or project basis to fill those gaps.

While remote work arrangement might drive less diversified nationalities in the office, companies are trying to figure out adaptive working model.

——— We are discussing current situation from two angles. One angle is that the job, the portfolio will change because of AI and the digitalization. Some jobs which will be disappeared in the future, are changing the job portfolio in a company. The second angle is that due to the border closure, the nationality or the talent diversification in the workplace will somehow change in a couple of years. How can companies adopt this new normal?

Dhruv: Pre-pandemic, there was a lot of demand from employees around more flexibility in their work arrangements. And I think a lot of times there was resistance because either managers were not supportive of this flexible working or organizations felt that there would be a drop in productivity. But the pandemic forced companies to adopt this flexible working arrangement and has proven that flexible working works. We found that in fact a lot of companies should have seen an increase in productivity because now employees are not commuting to and from work and working longer hours because boundaries between work and life are increasingly blurred.
The widespread adoption of flexible working has raised some interesting questions because employees are now asking if they actually need to be living in the city that they are working in. Companies were getting such questions, especially for employees who wanted to be close to families. What some companies have done is allow their staff to work from where they want to, on condition that they are employed in the country they choose to live in. As a result, companies can have teams that are spread across geographies but still working together like one cohesive unit. But I think it’s still very early days. There are still lots of practical challenges. We’ve been talking to clients about what the immediate future will hold, and if and how they can embark on full remote working. What many of the leading companies are saying is that it’s possible in the short term but unsustainable model in the long term because there is a certain amount of value that you get from in person interaction which does not come from scheduled Zoom meetings. So, what we’ll probably get to is a hybrid working model where certain types of work can be done remotely.

All the more reason to upskill

——— Another concern is that many foreign companies see the overseas branch or overseas operation is one way to groom the talent. So, let’s say US company based in Japan they send the managers or MDs to look after the overseas branch so that those particular managers can be promoted after returning to home. How company can tackle with such initiative which suddenly affected by border closure?

Dhruv: This is again another question that we have posed to clients – upskilling and reskilling in this sort of new age that we live in. I think it’s important to first recognize why these types of programs were helpful in helping talent develop. What this kind of mobility has given employees is, I think, two things. One is when you have people who can work in another market, I think they get a much better appreciation for just working in a different culture than what they’re used to. Also generally, when people are moved to talent hubs like Singapore, they’re getting exposure to people that are at the top of their fields from all over the world. And the learnings that you get from that physical interaction and from being in that physical market, I think, greatly accelerates talent development. Now we cannot get people to travel and get that sort of international experience or exposure.
Hence we did ask companies what are they doing to try and address upskilling in this new world that we live in. I don’t think companies have the full answer yet. Because there are limitations to what you can do virtually and in a manufacturing setting. That said, number one was what they call democratizing learning. There is right now a huge uptick in the online learning sites and platforms that people have access to such as LinkedIn Learning, EdX or General Assembly which provides virtual as well as in person learning. The challenge, however is that most people say that while they have access to a lot, they don’t have time. So, companies are now trying to schedule time. For example, DBS is actually scheduling time for employees and they’re requiring employees to spend a certain amount of time to upskill.
The second thing that we heard leaders do is incentivize reskilling. 87 percent of employees say that they are ready for reskilling. And companies are now putting actual incentives within the KPIs for people to achieve learning goals. For instance, we’ve already started to see an emergence of pay for skills. About 20 percent of companies are saying that they are going to start paying for skills. They will look at jobs and the skills that are required for that job and attach pay levels for certain skills that people have. However these skills have to be demonstrated whether via tests or qualifications. So, that is going to incentivize people to start gaining new skills.

——— Despite the reality of the lack of the physical mobility, the company can engage those locals by upskilling or incentivize the transformation initiative. If that’s the case, the physical diversification within the company will be more on the "lesser diversified nationality" in the future?

Dhruv: Correct. And that is probably within the geography. I think companies will try and make up for that where they can through the virtual working teams and that’s how you get interaction between the nationalities. But within a country, as we expect at least for the next three years more protectionism, there’s going to be much more of a focus on developing skills within the country. And you’ve already seen Singapore do this through the SkillsFuture program and through the skills credits that every Singaporean gets. Likewise, many countries are trying to upskill the local talent to meet the future work force needs.
We saw Trump’s “America first” and then a whole wave of this happening across Europe and in South America if you think about Brazil. You also see this in India with the Modi government’s “Make in India” campaign. And I don’t see it reducing because automation and transformation is only accelerating – which means more and more jobs will be at risk. This in turn puts more pressure on governments to keep pushing these protectionist policies.

——— If you look at this situation, two types of the company platform can be discussed. One is the communication platform which can be standardized across the region or across the countries. Second is operation platform which can be isolated or become unique by country if the talent mobility is continuously reducing. How the company can ensure those each operations are united as one corporation/group. Establishing trust between overseas subsidiary and headquarter is always easier said than done.

Dhruv: That is definitely an increased risk. Companies are now reinvesting in leadership development. What a lot of organizations have found out is that over the years, there’s been reduced investment on leadership development partly due to spending cuts. But the need to invest in leaders and leadership development has actually increased because you need resilient leaders and leaders who can lead through massive amounts of change. That is not a skill that anyone is naturally born with. You need to develop that skill.
And I think what they found out again through the pandemic is that there’s so much fatigue, especially at the leadership level. And a lot of companies found that leaders have not been well prepared to lead their organizations through the pandemic.
Leaders who are leading strategically with empathy are sought after today. A core theme of on our Global Talent Trends survey was balancing empathy with economics. Therefore, we see a growing trend in terms of leadership development or coaching as a result of remote working. I hear that from all our clients, at least the ones that have done a better job throughout the pandemic. But we’ll definitely see companies spending a lot more time on people management and learning the softer skills.
A good start would be to make managers aware that this is a real risk. How we are going to measure performance where one person might be remote for most of the time and the other person might be physical?
At Mercer, we are trying more and more to be more data-driven. For instance, we have something called an individual growth statement. Every employee, going into 2021, will have access, via a dashboard to metrics such as the sales they are generating, client retention, client billable hours, etc. This provides more objective criteria to measure how one person performs versus the other.

——— The nationality diversification will be declined in several years. But take this opportunity the company can invest the talent development so that one can play a role that formerly occupied by the foreigners.

Dhruv: Just one more thing I’ll mention is that there is definitely an increased focus on diversity and inclusion within countries. Diversity encompasses many elements – gender, minorities and thought. So, while you may not have national diversity, a lot of companies are focused on gender diversity across ranks. At the junior ranks, we find gender diversity quite evenly balanced. But as you go up the top, only 15 percent of all leaders are women. So, there’s a big focus on improving the gender diversity ratios at the top. Second is around minorities. Even within a nation you could have minority groups from a religious perspective or ethnic perspective. How do we get more representation there? The third is around different affiliation groups like LGBT, which again from an inclusive standpoint, companies need to ensure that we are representing more voices and being inclusive in our policies. While you may not always get the required diversity by nationality, other types of diversity will contribute to diversity of thought.

——— Thank you Mr. Dhruv for inspiring discussion. With lesser cross border mobility, a company need to redefine talent management and corporate diversity.

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