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[IWS] USCOC/Towers Watson: HR MANAGERS & the ASEAN Economic Community (AEC)? [7 November 2014]
IWS Documented News Service
Institute for Workplace Studies-----------------Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor--------------------Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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U.S. Chamber of Commerce (USCOC)
ASEAN BUSINESS OUTLOOK SURVEY 2015 [27 August 2014]
[full-text, 60 pages]
Press Release 7 November 2014
Why should HR Managers worry about the ASEAN Economic Community (AEC)?
The Association of Southeast Asian Nations (ASEAN) is rapidly approaching a new milestone: the implementation of the ASEAN Economic Community (AEC) in 2015. This community is expected to transform South East Asia into a single market for production, distribution, investment and skilled labor movement, thereby paving the way for economic development of the entire region.
In rising to the various challenges and opportunities of this integration, readiness of the business leaders and HR managers is crucial. Businesses are key stakeholders in the process and it is imperative for them to understand the direction of the changing workforce and employment patterns in the region.
In the ASEAN Business Outlook Survey 2015 report recently released by the American Chamber of Commerce and participated in by more than 500 executives representing small, medium and large U.S. companies in all ASEAN countries, we can see interesting insights on business leaders’ assessment and outlook on opportunities in the region. According to the survey, ASEAN markets have become more important for 58% of respondents over the past two years in terms of their companies’ worldwide revenue. Similarly, the majority of respondents say that ASEAN markets will become more important for their companies’ worldwide revenue over the next two years. A majority of those surveyed likewise plan to expand their operations in the region, with Indonesia, Vietnam and Myanmar emerging as the priority markets for future business expansion.
To capitalize on this positive outlook, however, businesses must understand the issues faced and opportunities created because of the foreseen human capital movement. We expect these emerging labor trends taking place as an effect of the economic integration.
Mobility will increase and thus workforce diversity. In response to increased labor movement across ASEAN, organizations must take a more sophisticated approach to sourcing and managing their talent. Greater volatility and talent shortages in key fields will require organizations to rethink many traditional employment relationships. Organizations must apply workforce segmentation to understand talent categories, differences and gaps. Talent segmentation enables companies to better appreciate generational differences, specific work-life challenges and differing cultural attributes that can affect employee attraction and retention. In addition, according to Towers Watson’s Global Talent 2021 study, a vast majority of companies are undertaking transformation initiatives to rethink their global strategies, business models and organizational approaches as a result of rapid shifts in the marketplace. Business transformation and the new geography of talent likewise call for a fresh way of doing things in ASEAN. Companies cannot rely on a one-size-fits-all strategy across such widely varying markets.
This transformation will require new employee skill sets, including having a global mindset, agile thinking and stronger interpersonal skills to deal with new ways of working and increased diversity and complexity in the workplace. This also puts forward the stronger need to have highly effective managers and supervisors who have the biggest impact to employee engagement and workplace productivity.
Importance of international rewards and benefits competitiveness will rise. At a time when benefit costs continue to increase, the dilemma that employers face is clear: How can they optimize their benefit strategy by offering attractive benefits that will mark them as an employer of choice, whilst also managing costs in a more competitive ASEAN employee market? The 2013 Towers Watson Asia Pacific Benefit Trends Survey found that many employers are accomplishing this balancing act by thinking innovatively about the way they design, communicate and administer benefits. Adding flexibility to their benefit packages allows companies to cater to the diversity of their workforce by offering employees a wider selection of choice in their benefits, enhancing value perception in a cost-effective and streamlined way. Understanding pay trends and regulations across countries will rise as companies look to source talent beyond domestic markets. Lastly, the concept of optimizing Total Rewards in the context of managing cost effectively will play a more critical role in an organization’s talent attraction and retention strategy under AEC 2015.
ONE South East Asia EVP and rewards strategy will grow in importance. According to a recent Towers Watson study of HR trends, a significant number of organizations are missing out on a golden opportunity to attract, engage and retain top talent, and even improve financial performance. Less than half of the companies surveyed have a long-term plan on how to get the most from their employee value proposition (EVP) — the employment deal that defines what an employer expects from its employees and what it provides in return.
The changing workforce demographics in ASEAN will force employers to review their EVPs and tailor their messages to drive attraction and commitment in different key talent segments. Thus, it is critical for organizations to have a compelling rewards program which is aligned with the different key talent segments and overall business objectives.
Indeed, the South East Asia region is positioned for growth and endless opportunities that will be brought about by AEC in 2015. However, with this growth comes challenges as employers face rising costs and the ongoing war for key talent. Organizations who want to win will need to rethink their techniques for managing talent and ensure they are aligned with the strategic objectives of their organization.
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