Deloitte Study: While Most Business Leaders Believe the Right Workplace Model is Key to Success, only 24% are Very Ready to Make Needed Changes

KUALA LUMPUR, 26 January 2023 - The pressure to be competitive and innovate is creating many opportunities for organisations in Malaysia to re-imagine their business models and nurture a high-performing workforce. With the workforce constantly facing challenges – global, economic, and societal, many organisations recognise that evolution and adaptation are no longer concepts but realities that need to be top of mind for chief executives and their leadership team. From the rise of remote working to the increasing importance of employees’ well-being, these challenges are set to have a significant impact on the way businesses operate.

Deloitte's “2023 Global Human Capital Trends” report, "New Fundamentals for a Boundaryless World," examines how leaders are managing these challenges and how their organisations may succeed in a constantly evolving environment. The focus will be on how leaders find ways to better integrate the new realities in their organisations and for people practitioners to refocus efforts on driving performance and productivity. Respondents to the study, which include more than 1,500 C-suite executives and board members, recognise the boundaries that have traditionally governed the rules of work — the way jobs are organised, where work happens, and who qualifies for specific roles — are falling away. However, while 87% of respondents say finding the right workplace model is important to their organisation's
success, only 24% feel that their organisations are ready to address this trend. In the near term, 59% of respondents report focusing on the next steps for reimagining their workforce models. Their dedication indicates that they see great potential for reward in a new approach towards work, workers, and the
workplace.

"Workforce, organisational, and people priorities remain at the top of board and C-suite agendas. This year's ‘Global Human Capital Trends’ insights reinforced the ongoing prioritisation that we have seen for over a decade. The opportunities for leaders and their teams across all industries are boundaryless and open new frontiers in their relationships with workers, customers, stakeholders, and fellow leaders," said Art Mazor, Principal and Global Human Capital Practice Leader at Deloitte Consulting LLP.

Reimagining work: The end of jobs

Even though work today is primarily defined by jobs and descriptions of specific tasks, many see this as an outdated notion. Deloitte's skills-based organisation survey recorded that only 19% of executives and 23% of workers say work is best structured that way. This reflects what many are already seeing in their workplaces, with 63% of executives reporting that workers are focused on team and project work outside of their current job descriptions. Should organisations decide to urgently address this issue, additional benefits of transitioning away from jobs include unleashing worker potential to drive
tremendous value, making their teams more likely to innovate and improve processes to maximise efficiency. It is high time for organisations in Malaysia to start building relevant capability in attraction and retention, eventually transforming themselves into destination workplaces to meet the constantly
changing needs of talents.

“As the work landscape rapidly evolves, upskilling and reskilling have become critical for both individual growth and organisational success. Leaders must understand the importance of providing workers with continuous learning opportunities to stay relevant and competitive in their respective fields. Doing so can then allow us to unlock the full potential of our workforce and drive innovation, productivity, and sustainable growth for our businesses and Malaysia," said Shahrizal Suffian, Human Capital Leader for Deloitte Consulting Malaysia.

Relevant policies and strategies need to be in place to continue providing the right incentives and to champion strategic programs that would focus investment towards building the right skills for Malaysia. For example, the government introduced the Malaysia Digital Economy Blueprint or MyDigital with aspirations of transforming the country into a high-income nation, focused on digitalisation and serving as a regional pioneer in digital economy. This, will help push Malaysia’s digitalisation efforts to greater heights by nurturing more talents with specific skill sets.

Reimagining the workforce: Worker agency is key

In today's online and interconnected world, public awareness and action have risen sharply on a wide range of social, political, environmental, and economic issues, with individuals feeling an increased sense of empowerment and responsibility to stand up for what they believe in. For example, two in five Gen Z and millennial respondents to a Deloitte survey have rejected a job or assignment because it did not align with their values. Ranked first in Southeast Asia for social media penetration, workers in Malaysia are posing stronger influence thanks to technological advancements. This trend is putting significant pressure on most organisations to align their values, strategies, policies, and actions with the personal values of their workers (individually and collectively), and with the values of the larger society. Although this poses a challenge due to differing expectations of workers and society, the benefits outweigh those challenges.

“As more organisations start to recognise and value the significant influence that workers in Malaysia bring to the table, it is crucial to remain committed to creating a workplace culture that empowers and nurtures employee well-being. This helps to support their personal growth and development while
enabling them to contribute to organisational growth and development of the country. Leaders are putting their businesses at risk if they do not understand what their workers are avoiding, and what they are inclined towards,” said Clarissa Turner, Workforce Transformation Malaysia Leader, Deloitte Consulting Southeast Asia.

To be successful in this new world of work, organisations must abandon the idea of complete control and co-create with workers to shape new rules and boundaries that will define how they operate. This includes rethinking the boundaries that dictate access to and use of worker data, which 83% of
executives believe is important for their organisation’s success.

Reimagining the workplace: Designing work for a boundaryless world

Workplace flexibility is here to stay. It is no longer regarded as a “perk” to attract workers. Instead, it is gradually becoming an expectation for both organisations and workers. While only 15% of respondents agree that the way work is designed is a key attribute for creating the future of the workplace, other factors point to how crucial it can be. Additionally, respondents indicate that increased employee engagement and well-being are among the most significant benefits they've seen from a future workplace approach.

"In today’s world, organisational adaptability is not just an advantage, it's a necessity. To thrive in the face of uncertainty and complexity, organisations must continuously re-evaluate their priorities and organise around the work that matters most. The most successful organisations are those that embrace
flexibility and efficiency, allowing them to quickly pivot and adapt to changing circumstances. It is time for organisations in Malaysia to shift from traditional hierarchical structures to enable networks of teams to deliver faster and with more productive outcomes." - Yun-Han Lee, Organisation Transformation Malaysia Leader, Deloitte Consulting Southeast Asia.

Flexible work arrangement (FWA) is a concept that has been under pressure for some time in Malaysia as most organisations, especially the small to medium enterprises (SMEs), are still struggling to transition to remote working. While having the government’s support is important and advantageous, organisations must first reflect internally to wholly embrace the mindset change needed to make FWA possible and beneficial for both parties. This workplace evolution calls on leaders to evolve with their workforce, as evidenced by 94% of respondents who believe that leadership capabilities and effectiveness are important to their organisation's success, the highest importance score across all trends. Nearly half of the respondents say their organisation's leaders are overwhelmed by disruptions and are struggling to identify what they should prioritise.

“There is a real need to get HR and business leaders on the same page to prepare for what’s to come in the future of work. People practitioners need to focus on the ‘human touch’ - understanding the needs and aspirations of workers, creating a culture of trust and collaboration, and promoting diversity, equity, and inclusion. As the world of work continues to evolve, business leaders must always be ready to remain agile and adaptable, constantly evaluating and improving its practices to ensure that the organisation is equipped with the right formula to succeed.” - Rishi Jha, HR Transformation Malaysia Leader, Deloitte Consulting Southeast Asia.

Organisations in Malaysia need to be able to reconfigure fast as businesses face tough choices to stay competitive and thrive. Instead of going down the traditional route of downsizing, layoffs, or voluntary separation schemes, businesses would gain in the long term by building and investing in ecosystems and partnerships that allow their businesses to weather the storm. Malaysia needs to be bolder and more aggressive in taking proactive steps to adapt to the evolving work landscape and infrastructure, rather than just catching up with the trends. With more than 16 million workers in Malaysia, we have a large pool of untapped talent and leadership potential that can propel our businesses toward greater heights with the right interventions.

Methodology

The insights gathered for this report leveraged Deloitte's scenario planning methodology and are fueled by research findings from a combination of social media polling, live survey polling, AI-enabled focus groups, and interviews with business and HR executives across industries and — for the first-time in the 11-year history of Deloitte's “Global Human Capital Trends” report — hundreds of workers from all over the world.

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