In a shifting economy and corporate world, agility has become a key predictor of success—yet studies show only a fraction of the global workforce is considered highly agile. In this regular column, Michael Distefano, Korn Ferry’s chief marketing officer and chief operating officer, Asia Pacific, explores the concept of agility: who has it, who doesn’t, and what companies can do to mold it.
Let’s say you are a legacy multinational corporation looking to ramp up growth in the Asia-Pacific region. Your biggest market, China, is in need of new senior leadership, ideally someone with global experience who can drive cultural change while executing a strategic vision. If you think you are going to find the right candidate using the same talent and rewards strategies you have in the United States or Europe, you are sadly mistaken.
Of all the places in the world, the war for homegrown talent in Asia-Pacific continues to be a major stumbling block for one multinational after another. Start with the fact that China alone is simply not producing nearly enough local graduates with the right skill sets, coupled with huge local disrupters like Alibaba and Tencent that are growing so fast they can afford to snare talent at will—and you end up with some eye-popping salaries.
Indeed, base salary increases here of up to 50% are not unusual, not to mention additional benefits and perks that seem like a steroidal version of Silicon Valley. For the best leaders, we’re talking luxury cars, ski trips, apartments, and cash bonuses of a year’s salary. Just for starters.
Of course, not every company can afford all this. But traditional organizations can still compete for talent using what I like to call “paycheck agility.” That includes adopting some key organizational changes that will increase their appeal, like speeding up decision-making and empowering fast-growing businesses. It also means being a lot more agile with current performance and reward programs. Here are some ideas, developed from research with my colleague Dhritiman Chakrabarti, a senior client partner in Singapore, for dealing with a shallow talent pool in a tough region:
1. Align employee skills with business needs.
Too often, employees get rewarded for work that doesn’t fit the company’s key strategic imperatives. Make sure that the best reward programs aren’t directed toward skills that build old (not new) businesses.
2. Adjust your reward models.
In a country like China, where the ratio of jobs on offer far exceeds those who are available for work, it isn’t enough to know what your competitors are offering. Consider the industry’s own potential revenue growth and other such metrics so that rewards keep up with required growth.
3. Less mature firms will pay more.
It is obvious that the bigger brand names can more easily attract talent. Know where your organization is in its lifecycle—infancy, growth, maturity, decline—and use that to dictate total rewards, especially in terms of the mix between fixed pay, bonuses, and long-term incentives.
4. Make your pay positioning more aggressive.
This may seem obvious, but in the APAC region, the spread of compensation for the same pay range, particularly among entry- and middle-level employees, is much wider than the Western world, with spreads of 200% or more between levels not unusual.
5. Link rewards with growth.
One of the challenges that global multinationals face is aligning bonus pools with the financial performance of individual markets. Sharing a larger pool of bonus money with super performers in high-growth markets would go a long way toward making pay more competitive.
6. Align long-term incentives with purpose.
Not unlike their peers in the rest of the world, Asian employees, particularly younger talent, place more value on career development, purpose and meaning of work, collaboration, work-life balance, and other such intangibles than they do on financial rewards alone. Establishing the role of such incentives within the overall employee value proposition is crucial to any talent strategy in the region.
7. Find your firm’s stars early and customize their rewards.
Quickly assess and identify your organization’s talent and determine their future potential as rising stars, top performers, and role players. Differentiate their rewards by more closely tying salary, bonuses, benefits, perks, and development accordingly.
Clearly, even these steps are not a sure-fire solution to an issue that will only get tougher every year. But it’s a good start for any global multinational that needs an affordable way to deal with a very expensive problem.