Preparing Employers in Emerging Markets for a Digital Future

Preparing Employers in Emerging Markets for a Digital Future

by
KATE BRAVERY AND PUNEET SWANI

Global Practices Leader, Career Business at Mercer; Swani is Growth Markets Leader, Career Business at Mercer.

How are the 2017 global trends – growth by design, a shift in what we value, a workplace for me and the quest for insight -- affecting the workplace and employees?

Amid a rising wave of anti-globalisation rhetoric, emerging markets across Asia, Africa, the Middle East and Latin America provide hope for resurgence in global trade. Chinese President Xi Jinping’s widely acclaimed speech at the World Economic Forum in Davos earlier this year presented a new model of growth to the world, one that is equitable and inclusive. Macroeconomic headwinds notwithstanding, emerging markets offer unprecedented opportunity, not only to global multinationals but to an increasing number of homegrown regional companies who have set their sights on going global.

No surprises then that we find a pattern within the talent trends across such a diverse and complex geographical spread. Mercer’s latest Global Talent Trends Study covers more than 37 countries, a mixture of developed and emerging markets, and 20 different industries. One of the key findings across all countries is how the technology-driven disruption is re-shaping value chains, making people and information more accessible, and re-defining how work gets done. At the same time, the changing demographic profile of employees, ageing workforce in some large markets coupled with a young educated workforce in others, is challenging the traditional model of what it means to “go to work.”

Trends to watch

Our Talent Trends report identified four key themes driving global workforces. A massive 93% of business executives surveyed plan to make an organisation design or structural change in their company within the next two years. Organisations are transforming structures and jobs in a desire for increased efficiency, agility, and customer intimacy. Ensuring that the people agenda is not lost amid the drive for change is critical to sustainable growth.

We are also seeing a shift in what we value, which is calling for a new employee rewards paradigm. Fair and competitive pay, along with opportunities for promotion are top priorities for employees this year. But it’s not just about financial results or activity metrics – 97% of employees want to be recognised and rewarded for the wide range of contributions they make each and every day.

Personalisation of the employee experience is another strong theme. People expect their employer to “make work work” for their individual circumstances. Companies are starting to respond by taking a “whole person” approach and increasing the flexible work options available to their workforce – 63% already have a formal flexibility policy in place.

Despite massive leaps in technology and the capturing of big data, predictive analytics continues to be elusive with most organisations lacking the competence needed more so than the technology.

Emerging markets stick together

We found the results from the study across emerging markets surprising similar despite the geographic dispersion across Asia, Middle East, Africa and Latin America. This reinforces the premise that companies in emerging markets, both homegrown and multinational, are faced with similar challenges when compared with those in Europe, North America and Oceania. Organisations in emerging markets historically grew off the back of matrixed structures in an effort to not overlay profitability and revenue growth compulsions on new geographies. Organisations now recognise the need to further empower their local management teams, and to be able to respond to changes faster, as opposed to slower decision-making from a distant headquarters. Decentralizing authority (the number 1 priority in Brazil) is fairly similar to the top organisational design change planned by companies in AMEA, which is forming self-driven, holacratic work teams. Generally, there is a strong need for a flatter and nimbler organisational design to make companies more responsive and ready for the sweeping digital disruption. 67% of the companies in Singapore are keen to adopt a new approach to how quantify contributions of different jobs or roles to the business. A more scientific approach to evaluating job worth, especially at a time when the scope of jobs is undergoing sea change will be crucial. Companies across growth markets believe these changes are important to drive greater efficiency (over 50%) and increase customer intimacy (over 30%) by potentially outsourcing certain functions and roles to focus on making core businesses more agile. Roles in sales, delivery, innovation and design will grow faster than conventional management jobs as organisations pivot even more around the customer.

In terms of implications for the future of jobs, HR’s view across the emerging markets region is consistent with the rest-of-the-world, in that an increasing number of high-value jobs will focus on design and innovation.

However, there is one key difference. HR leaders in emerging markets believe that an increasing number of jobs will be done virtually (over 40%, compared with being ranked 7th globally). Hong Kong is the only market where HR leaders are much less concerned about talent scarcity while Japan is the only one where ‘ageing workforce’ gets highlighted as a key concern for both business and HR leaders. A rising number of companies will shift support functions, including HR operations to shared services as result.

Getting personal

This year, pay competitiveness, benefits, and job security will be even more important factors for people when deciding whether to stay and where to go. However, employees care more about ‘opportunities to get promoted’ when evaluating current and future employers (over 50%). This illustrates the importance the relatively younger workforce based in emerging markets place on growth opportunities, when compared with base pay. Employers therefore have to focus on the overall ‘Individual Value Proposition’ and compelling career paths as an integral part of those propositions to be able to attract and retain the best talent.

Despite the media attention on employers who have done away with performance ratings, companies in emerging markets prefer retaining performance ratings. However, a large majority (over 80%) admit to having made changes to their performance management systems to improve effectiveness as well as the employee-manager experience. Singapore is an outlier, as 42% of the respondents say that they eliminated ‘forced-rankings’ last year.

Employee experiences are getting personal. This means companies are moving beyond segmented pay and benefits to a more nuanced value proposition – one that responds to individual interests and is brought alive through technology.  One trend that is on the rise across industries, generations, and cultures is flexible working. This year we have seen an explosion of different work models and this has risen up the wish list for many employees. A staggering 68% of employees in Latin America are seeking more flexible work arrangements. Therefore, getting serious around a culture to support flexible working should be a top focus.

Employees in Asia Pacific expect the workplace to be more focused on their health and wellbeing while a majority of those in Latin America believe that the workplace will become increasingly team-based in the near future. Personalisation of benefits will therefore become a big differentiator for employers in emerging markets. New technologies and the democratisation of data can help navigate the disruption, but companies are making slow progress in using analytics to drive evidence-based decision-making.

Time to upskill

With rising wage inflation across emerging markets amid falling global trade and productivity, the labour cost arbitrage of the outsourcing boom years is passé. Different workforce demographics require a complete shift in talent management, and a focus on the employee experience. Upskilling the workforce for the digital future and providing compelling career paths are crucial to a sustainable employee value proposition today. Companies are realising that learning from examples of progressive talent practices in say Latin America and applying those learnings in Asia can create sustainable competitive advantages. The key will be just how quickly they realise this, in this fast-paced environment.

The Human Resource function will need to play a pivotal role as a change agent, preparing the organisations from within for the transformation by fostering a culture of innovation, of learning and of agility. And HR professionals themselves will need to lead by example at a time when continuous learning is much needed across organisations. As Gary Hamel and Bill Green poignantly noted ten years ago, “I have a dream of organisations that are capable of spontaneous renewal, where the drama of change is unaccompanied by the wrenching trauma of a turnaround. I dream of businesses where an electric current of innovation pulses through every activity, where the renegades always trump the reactionaries. I dream of companies that actually deserve the passion and creativity of the folks who work there, and actually elicit the very best that people have to give.” And we certainly hope to see more companies in this region embrace such renewal.

To view Mercer’s Talent Trends 2017 research, click here.

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