Southeast Asia Human Capital Trends 2015 Report
Looming leadership and workforce capability crisis in the region
Singapore, 4 August 2015 – Global business and HR leaders, including those in Southeast Asia, must adapt to a new world of work that requires tailoring human capital solutions to the culturally diverse markets and evolving business environments.
Lack of sufficient leadership talent is a top issue currently facing 86 percent of HR and business leaders according to Deloitte’s “Southeast Asia Human Capital Trends 2015: Leading in the New World of Work” report released today. All respondents reported that leadership was at least somewhat important to their business. However, the majority of organisations are still struggling to develop a pipeline of leadership talent. This current struggle jeopardises future growth.
The 2015 Southeast Asia report looks specifically at 57 responses surveyed from the region while the global report reviewed survey responses received from more than 3,300 HR and business leaders in 106 countries, making it one of the largest global studies of talent, leadership and HR challenges.
The leadership gap, which was identified as the second most important issue in 2014, became even more critical for Southeast Asia HR and business leaders this year. Only 5 percent of SEA respondents rated themselves as “very ready” to address the leadership challenge through programmes such as leadership assessment and development, succession planning, and talent mobility.
“It’s imperative that organisations treat leadership development as a long term investment, rather than a discretionary development spend item when times are favourable,” said Nicky Wakefield, Executive Director and Leader of the Southeast Asia Human Capital practice for Deloitte Consulting.
“By implementing impactful leadership programmes, organisations will be able to create a strong differentiated leadership pipeline and enjoy improvements in their business performance. We believe that leadership is the only sustainable competitive advantage organisations will enjoy in the future,” added Ms Wakefield.
Workforce capability lacking
Respondents recognised that a general lack of skilled talent is likely to impede business growth and cited workforce capability as the second most important issue. This area also had the largest capability gap. Overall, respondents are noticing difficulties in understanding the competencies required by their businesses today, and even less clarity on what competencies will be needed in the future. On the same note, the capability gap for learning and development has more than doubled in 2015 compared to 2014’s SEA ratings as respondents begin to realise that current approaches were not working.
“The rapid economic growth in Southeast Asia is driving an accelerating demand for highly qualified talent but we see a lack of such talent threatening continued growth,” said Jason Seng, Singapore Leader in the Southeast Asia Human Capital practice for Deloitte Consulting.
“Despite intense spending on training programmes, organisations are quickly falling behind on developing the right skills across all levels. It is critical that organisations re-evaluate their learning programmes and develop a better understanding of current and future capability requirements for job roles in order to optimise effectiveness in developing specific skills,” added Mr Seng.
Culture and engagement woes continue
The third most important issue for HR and business leaders is culture. This year, the capability gap for culture grew by 23 percent since 2014. These findings highlight organisations’ struggle to effectively drive the desired culture within their organisations and a lack of preparedness for addressing this issue.
“Strong leadership at all levels is needed to drive healthy corporate culture. Frequent measurement and nimble programs are necessary to keep ahead and actively manage culture and employee engagement, shared Mr Seng.
HR effectiveness improves yet more improvement is needed
Ratings for HR and talent programmes improved this year with 37 percent of respondents rating HR as “good” compared to 33 percent last year. Likewise, fewer HR programmes were reported as “underperforming” (11 percent in 2015 versus 13 percent in 2014). While overall HR programmes have improved slightly this year, none were reported as excellent this year (versus 2 percent last year) and more were reported as just “getting by” (23 percent in 2015 versus 20 percent in 2014).
Despite reported increases in HR spending in 2014 and continuing in 2015, widening capability gaps indicate that the spending is not translating into more effective HR programmes.
“Based on Deloitte’s experience with clients in the region, we believe the majority of this spending has been in the area of HR technology to drive operational efficiency. Today, business leaders are asking HR professionals to take on more strategic roles. Future spending must be focused on upskilling HR to meet the challenge and to fund strategic HR and talent programmes which will help to address business needs,” said Mark Maclean, Leader of Deloitte Consulting’s HR transformation services for Southeast Asia. “Organisations must make HR a talent magnet and invest in developing strong business and leadership skills as well as HR domain expertise,” recommended Mr Maclean.
Ms Wakefield further commented, “It is time that HR functions invest in developing itself and its people to support critical talent and leadership issues in the future. HR leaders fought hard for many years to get a seat at the leadership table and largely, they have been successful. Since then, there is a growing trend in the heritage of the most recent Chief HR officer (CHRO) hires. Historically, heads of HR rose through the HR ranks, much like heads of Finance and IT. However, CHRO are now increasingly not selected from the HR ranks. There is a growing belief that HR leaders do not have sufficient strong business acumen and strategy skills and as such, the most senior HR leaders are being passed over for business executives as the next CHRO.”
To read the full Southeast Asia report, click here.