Leadership continues to be the top Human Capital trend in Southeast Asia with 97% of businesses and HR leaders in the region prioritizing it above other talent issues. This runs contrary to global results, where the urgency of organizational redesign has over taken leadership, with 92% of respondents identifying the critical need to redesign their organization to meet global business demands.
This is according to this year’s Southeast Asia results of Deloitte’s annual Human Capital Trends report, titled “The new organization: Different by design” Deloitte’s Global Human Capital Trends 2016 survey is one of the largest ever global studies of workforce, leadership and HR challenges.
The Southeast Asia results are a subset of the global report and examine the responses of 213 HR and business leaders across countries in the region, including Indonesia, Malaysia, Singapore and Thailand.
“With advancing digital technologies, changing workforce demographics and speed of innovation, it is becoming increasingly important for companies to evolve leadership models, redesign organizational structures and drive an employee-centric culture in order to remain relevant and competitive in the marketplace,” says Nicky Wakefield, Human Capital Consulting Leader for Deloitte Southeast Asia.
Tackling the Issue of Leadership
Surprisingly, in spite of its importance, there is a wide 60% capability gap where leadership matters are concerned. A capability gap is defined as the difference between the importance of a trend and the perceived readiness of the organization to deal with it. This gap has widened since 2015, increasing by 19% from last year’s 41%.
This result is indicative of the current volatile business environment, where even though business leaders recognize the trends as important, they have chosen to focus more on matters pertaining to improving shareholder value rather than human capital and talent issues.
“Leadership is a perennial challenge for organizations operating in Southeast Asia. This challenge can be overcome in large by the evolution of leadership models and solutions; however running faster on the traditional leadership development track will not solve this perennial challenge. Companies must make and sustain investments in identifying and nurturing leaders earlier in their careers.”
“Turning the traditional corporate hierarchy on its head, in a disciplined way, will help develop networks of teams and spawn more leaders faster. Senior leaders and traditional organization structures will need to continue to evolve to take full advantage of a re-energized leadership pipeline,” says Wakefield.
Businesses recognize that leadership development is a key priority, and are aware that there is a need to accelerate leaders up the pipeline to ensure that they are equipped with future-focused skills. To assist companies with their leadership development needs, Deloitte launched its Deloitte Leadership service line globally & in SEA in September 2015.
“While C-suites and boards in Southeast Asia recognize that leadership development is a key priority for their business, many do not have the capability to address the issues that come with it. The unique diverse markets within the region – with some more mature than others – poses specific challenges. There is a need to break away from traditional structures and mindsets toward leadership development, and embrace transformation,” says Indranil Roy, Head of Deloitte Leadership, Southeast Asia.
Some of the challenges for leadership development in Southeast Asia include digital transformation, globalization and regionalization, succession planning, misalignment of leadership capabilities and executive leader readiness.
Urgency of Organizational Redesign
The urgency of organizational redesign, while not as keenly felt in Southeast Asia as it is globally, is nonetheless beginning to take root as a top Human Capital issue, evident by it being in the top five despite being a new trend. 91% of business and HR leaders in Southeast Asia believe that this is a key issue, but more than half (53%) feel that they are still not ready to address it.
“Companies globally are overhauling their organizational structure and shifting away from hierarchical and functional business models towards a cross-functional “networks of teams. This shift is encouraging greater collaboration, agility, customer focus and employee engagement,” says Ms Wakefield.
“Business and HR leaders in Southeast Asia may need to play catch-up and transition their existing structure towards one that empowers teamwork, develops leaders faster and delivers superior outcomes.”
“This is likely to means significant changes to core HR processes and solutions such as recruitment and onboarding, performance management and remuneration. These need to evolve to ensure people are selected and rewarded in line with the new operating model. Such demands on HR will definitely require a step change and increase in capabilities for many HR organizations in the region.”
The top trends in Southeast Asia, in order of importance, are Leadership, Engagement, Organizational Design, Learning and Culture.
Zooming in on Thailand
Thailand shares its top five trends with Southeast Asia. However, there is a slight difference in the order of importance – Learning is the fifth most important trend for Thailand, whereas learning comes in fourth in the region.
Year on year, Leadership continues to be a pervasive concern and has grown in importance for respondents globally and in Southeast Asia. For Thailand, 100% of the respondents have indicated that Leadership is their key priority. This is more than the global result (89%) and that of Southeast Asia (97%). However, in spite of the importance, only 38% of the respondents feel ready or very ready to tackle this issue.
“Thailand regards Leadership as a matter of utmost importance. This suggests that there is a very strong demand in Thailand for people who can lead at all levels of the company. Organizations in this environment are coming to realize that they must identify potential leaders much earlier in their career and accelerate their movement up the leadership ranks through proper succession planning,” says Kessara Sakmaneevongsa, Lead Human Capital Partner, Deloitte Thailand.
In terms of organizational design, this new perspective is not lost to business leaders in Thailand, with 93% of the respondents recognizing its importance. This is compared to 91% in Southeast Asia and 92% globally. Only 43% of the Thailand respondents, however, feel that they are ready or very ready for this challenge.
“The emergence of this trend in Thailand highlights that the days of the top-down hierarchical organization is slowly coming to an end with a network of teams replacing it to deliver more effective and efficient results,” adds Kessara Sakmaneevongsa.