2008-11-21
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HR consulting firm advises employers to be mindful of local context and be wary of 'one size fits all'solutions
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Hong Kong – There are very clear differences in what companies in the US and in Asia Pacific markets are doing in response to the economic downturn, according to Richard Kantor, regional practice leader for Hewitt's Talent and Organizational consulting services in Asia Pacific. Survey results also indicate that there are regional market differences in the actions companies are taking, how they are taking action, and the approaches being taken to two critical talent issues.
Kantor said: "There are no 'one size fits all' solutions or approaches. What's effective in an organization's US operations is likely not strategic if duplicated in markets such as India or China. It's critical that organizations plan and execute their decisions to reflect local market realities and practices.
Difference 1: What they are doing differs
"It comes as no surprise that companies in the US are much more likely than companies across Asia to be considering layoffs," Kantor added. In the survey results, 55 percent of US respondents indicated that they are planning or have implemented layoffs. In the Asia Pacific market survey, only 24 percent of respondents indicated this as a possible direction.
Other notable examples of differences between US and Asia Pacific organizations and what they are doing include:
US companies are also more likely to be freezing salaries (15 percent vs. 8 percent in Asia Pacific), and lengthening the time between salary increases (25 percent vs. 13 percent)
Given the dynamic talent environment in Asia, preference is given to a simple approach of just reducing the increase budget (42 in US vs. 57 percent in Asia Pacific)
Asia Pacific companies generally start from a higher budgeted increase in many cases, so there is more room to move; and the other measures may be seen by many employers in Asia Pacific markets as more difficult to implement here.
Difference 2: Why companies are taking action differs
Companies in Asia Pacific more frequently cite concerns about the economy as a reason for making changes (67 percent in the US vs. 75 percent in Asia Pacific). Companies in Asia Pacific are also three times more likely to be taking actions based on actions by their competitors (6 percent in US vs. 21 percent in Asia Pacific).
Difference 3: How companies are taking action also differs slightly
Survey results show that the most common approaches in response to possible impacts of the economic downturn are being taken at a company-wide level in both the US and Asia.
However, Asian companies are twice as likely as their US counterparts to tailor approaches to business units (6 percent in the US vs. 13 percent in Asia Pacific). Of particular note, companies in China are three times more likely to tailor approaches to business units.
Kantor adds: "This is likely one way that Asia Pacific companies are seeking to grow while also cutting budgets, striking a crucial balance between the near-term and the medium-term."
Difference 4: Two important different approaches to two key talent issues
Survey results indicate clear differences in special planning around high performers, as well as paying for performance, by companies represented in each region.
While 67 percent of respondents in the US study indicated they have identified and are treating high performers differently from the rest of employees, over 90 percent of companies have taken this position.
Kantor said: "Clearly, when we look at other data in the survey, retaining high performers is a key focus in Asia. This shows up in plans for how pay will be administered and also in how other engagement drivers will be managed.
"How companies are approaching learning and development program planning provides a case in point: 58% of companies in Asia Pacific say they plan to actually increase spending in this area.
"Hewitt data suggests that this is consistently a good lever to pull to retain and engage top performers. We just have to see whether companies follow through on this intent."
On 'paying for performance', nearly two out of three companies (64 percent) in Asia Pacific expect bonus payouts to be impacted, while just under half (49 percent) of the US have this expectation.
In addition, a larger percentage of US companies are bracing for a significant decrease (e.g, greater than 10 percent) in variable pay (66 percent of US companies vs. 36 percent of Asia Pacific respondents).
About Hewitt's Economic Survey in the US and Asia Pacific
A special survey was designed and conducted online with more than 400 companies in the US and over 700 companies in Asia Pacific. The survey questions identified how the economic crisis was affecting company planning and HR programs in both markets, and responses were in October 2008.
Asia-Pacific Economic Survey results were obtained from 12 markets including Australia, China, Hong Kong, India, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan, and Thailand.
About Hewitt Associates
For more than 65 years, Hewitt Associates (NYSE: HEW) has provided clients with best-in-class human resources consulting and outsourcing services. Hewitt consults with more than 3,000 large and mid-size companies around the globe to develop and implement HR business strategies covering retirement, financial and health management; compensation and total rewards; and performance, talent, and change management. As a market leader in benefits administration, Hewitt delivers health care and retirement programs to millions of participants and retirees, on behalf of more than 300 organizations worldwide. In addition, more than 30 clients rely on Hewitt to provide a broader range of human resources business process outsourcing services to nearly a million client employees. Located in 33 countries, Hewitt employs approximately 23,000 associates. For more information, please visit www.hewitt.com.
