Principal, Executive Search
Future of Work
How Asia's Gen Z is influencing organizational strategy
The rise of Asia’s Gen Z is influencing the evolution of consumer behavior as well as talent acquisition strategies in Asian companies.
How Asia's Gen Z is influencing organizational strategy
Consumer behavior in Asia has evolved substantially over the past decade. With a median age of below 30, the profile of Asian consumers is becoming distinctly younger and more affluent. The highly educated, culturally diverse and digitally native Asian Gen Z is changing the rules of engagement for established and challenger brands alike. Below, we examine how this consumer demographic influences talent and retention strategies for organizations seeking to capture their elusive attention.
The current consumer picture in Asia is culturally highly complex and dynamic. The median age of below 30 in ASEAN alone offers a stark contrast to the US and EU’s median of 40-44 years. Tertiary education rates among Gen Z in ASEAN are on par with the OECD (Organization for Economic Co-operation and Development) average of 50%. Factoring the steady rise in average income per household and low single digit unemployment rates across the region, the Asian Gen Z consumer is an economic force to be reckoned with.
Although distinct in many aspects, certain topics are as close to Asia’s Gen Z generation as they are to their Western counterparts, such as a preference for employers who share their concern for environmental and social causes. Brands like Singapore’s Grab, who create an authentic, purpose-driven connection with Asian Gen Z’s cultural and personal identity, are winning both intellectual as well as consumer spending capital.
Major US and European consumer brands have built strong brand recognition and loyalty in Asia over the past several decades, often highlighting premium ingredients and materials produced outside Asia as a mark of distinction. However, this trend is being challenged, as Asian consumers gain in affluence and seek out homegrown brands that link to their cultural identity.
Consumer trends originating in Asia have gained recognition beyond their region over the past decade. The K-beauty industry, which generates around USD13bn globally every year, emerged from a desire by Asian consumers for innovative skincare and cosmetic products for their skin types created with natural and organic ingredients. In the fashion industry, sports brand Li-Ning, named after its Olympian founder, has equally expanded, organically and by acquisition, beyond its native China to become an international success story on the stage of New York Fashion Week.
The rise of the Asian Gen Z consumer has talent implications for companies seeking to capture their attention. L’Oréal is one brand that has responded to this trend in two significant ways.
First, the cosmetics brand has carefully invested over the past few years in deepening its bench of Asian leadership talent. Second, as the brand reorganized in 2021, it intentionally deviated from a geography-centric approach to one that allowed for more nuanced responses to L’Oréal’s consumer outside of its European home base. Vismay Sharma, L’Oréal’s President for the South Asia Pacific, Middle East and North Africa (SAPMENA) region shared that the key principle underpinning this approach was to “be more driven by consumer insights, consumer behavior, and the expectation of consumers.”
A localized leadership team undoubtedly provides a more audible voice for Asian consumers, for instance, in terms of product innovation. However, it does not guarantee impact at market level. High quality consumer data and organizational agility are critical for success.
Accelerated by the COVID pandemic, L’Oréal’s digital transformation has permitted the cosmetics powerhouse to improve its quality of data. This allows for faster decision making based on smart, data-based risk analysis. Atul Gaur, SAPMENA Head of HR for L’Oréal’s Consumer Products Division, Digital and E-Commerce, shared how leaders are “enabled with data and empowered with ‘freedom within a framework’”. This, according to Gaur, has provided the organizational agility for leaders to create measurable impact at market level.
While brick and mortar retail is making a comeback in 2022, the pandemic also rapidly matured the “phygital” or omnichannel experience. Thanks to COVID, luxury ecommerce is no longer an oxymoron and the Online to Offline (O2O) user experience is more seamless than ever across Asia.
China, arguably the most digitally sophisticated economy in Asia, boasts a unique ecosystem of social media platforms like WeChat and marketplaces like Tmall and JD.com. These platforms offered a playful digital sandbox for brands like Burberry during COVID. The luxury brand also collaborated with Tencent in 2020 to create a highly gamified shopping experience at its flagship store in Shenzhen, which included interactive window displays, music and unlocking of avatars. The metaverse is the next frontier, fueling the already raging war for technology talent over the coming years.
The surge in demand for tech and digital talent during the past two years tested the investments that companies made to differentiate themselves to not only the Asian Gen Z consumer, but also the workforce through employee experience and proactive talent acquisition strategies. In our Digital Talent Study for Asia, we found that 61% of companies surveyed measured the success of their talent management initiatives by looking at turnover. By contrast, only 29% measured success in terms of return on investments, such as coaching, motivating and developing their digital work force to create measurable commercial outcomes.
While differentiating the employee experience may not necessarily keep Gen Z from moving to another employer, it may be a deciding factor for boomeranging back after gaining valuable experience at another company or industry.
Alan Agnew, Global Talent Transformation Lead and former Global Head of Tech Hiring for Philips, shared that “Our pre-COVID investments in designing a flexible resourcing model and effectively linking talent management with talent acquisition allowed us to respond quickly during the pandemic to build an anytime, anywhere optimal workforce.”
Asian Gen Z employees have many commonalities with their Western counterparts. According to Korn Ferry’s research on Gen Z in the workforce, this generation is perceived as “ready to take on the world”. Indeed, Gen Z are overwhelmingly described as “more optimistic” and “more motivated” than millennials.
The other side of the equation is that Gen Z is also a “high touch” generation who are hungry for frequent and personalized feedback. They also see purpose and social impact as a key factor in their choice of products and employer. These trends are often amplified in Asia. A recent McCann study showed that 98% of Indonesian Gen Z surveyed felt strongly that they have a responsibility to make a positive contribution to their community . There is a huge opportunity for companies to harness the energy of a generation that believes in its ability to directly and positively influence the world of work.
As the attention shifts to Gen Z as an economic force in the market place as well as the work place, game changing organizations are evolving their talent strategies to adapt to this audience. Moving beyond “Buy, Build, Borrow”, progressive organizations are extending their strategies to add: “Bot” (automating transactional tasks) and “Bind” (using creative rewards structures to incentivize an ownership mindset and secure retention until ROI is achieved). As the price for retaining high performing talent steadily moves upwards across Asia, a radical shift needs to occur in how we measure the ROI of talent strategies.
To capture the hearts and wallet share of Asia’s Gen Z, consumer industry CEOs, CFOs and CHROs will need to go beyond redesigning the office space. Reimagining rewards and linking organizational purpose to Asian Gen Z’s cultural identity can tip the scale on market share and inspire the entrepreneurial mindset needed to achieve exceptional key outcomes and objectives in Asia.
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