15
Human Resources in Asia-Pacific: Agenda for Future Research and Policy
Introduction
Since the publication of the first volume (see Budhwar, 2004), there has been continued interest in studying the human resource (HR) practices in the Asia-Pacific region. Not surprisingly, countries in the region have followed different trajectories in their growth paths. This is to be expected as the socio-cultural, economic, political and legal frameworks (among others) guide and often determine national HRM policies and practices (Budhwar and Debrah, 2009). For example, China follows a one-party political framework that makes decision making relatively easier. On the other hand, India has a multi-party democracy that often makes decision-making excruciatingly difficult, thus one often hears that it takes China just six months to build a bridge, while India may take six years to just plan the building of the bridge. This is not to say that one system is better than the other, instead it is critical that a country’s policies and practices be understood in context.
In keeping with this line of thought, the chapters in this book have been designed to explore the countries’ HR practices in relation to their contextual realities. While we would have liked to have covered many more countries in the Asia-Pacific region in this volume, practical realities limited the final number. However, we are very pleased with the final list, as it provides a comprehensive coverage of countries in the region.
As the readers would have noticed, each of the preceding chapters followed a general framework designed to help the readers compare and contrast the HR practices of each country. In addition, the unique contextual factors of each country are presented so that readers may interpret the HR practices in light of those realities. For example, the Islamic work principles in Malaysia result in very unique practices that stand in stark contrast to the multi-ethnic and multi-religious Indian society, where work practices are still guided by laws and regulations established by the British.
In addition, each chapter also provides a discussion of the possible future challenges faced by each of the nations included in this volume. For example, the tremendous growth of the Indian economy (spurred, to a large extent, by the arrival of Business Process Outsourcing (BPO)/call centres) resulted in job opportunities for college students. This meant that a new class of employee was created, which had a significant impact on the socio-economic fabric of the Indian society. At the same time, the influx of the multi-national corporations has led to a sharp increase in the number of options available to the working professional with the result that job-hopping has become commonplace. This thus requires HR departments to devise strategies for employee attraction and retention.
As such this book was designed to present a comprehensive overview of HRM practices in key Asia-Pacific countries, with one caveat. Obviously not all countries of the region are covered in this volume; however, we believe that the list of countries included presents a diverse range of nations, each with their own unique social, cultural and political reality, thus allowing the reader to interpret the prevalent HRM practices in conjunction with the relevant context. Such an approach helps to highlight the context-specific nature of HRM and to explore the unique practices of the countries that directly or indirectly affect HRM strategy and practices in the countries (also see Schuler, Budhwar, and Florkowski, 2002). So, for example, China’s one-child policy has a direct bearing on labour supply. At the same time the one-child policy has led to better standards of living, thus leading to increased demand for consumer goods, in turn leading to increased labour demand. Similarly, the tremendous growth of the Indian economy has resulted in increased opportunities for management professionals, leading to severe job-hopping. Given that the management schools in India are unable to produce anywhere near the number required, organisations in India find themselves competing for the same pool of management professionals. As one may expect, this situation has a direct effect on how organisations set up their compensation strategies as well as their recruitment and selection strategies.
HRM Challenges of the Asia-Pacific Region
Even though the various chapters in this book are dedicated to the unique and specific realities of each of the countries, it is not difficult to see some common threads running across all of them. For example, the continuing globalisation forces all nations to react appropriately and design policies and strategies to take advantage of globalisation while at the same time trying to protect against any negative fallout. For example, Japan’s continued insistence on restricting inward migration, coupled with an ageing workforce, has resulted in the need to come up with creative solutions for the labour shortage, thus new policies offer incentives to retirees to rejoin the workforce.
Perhaps one of the biggest changes seen in the business world since the publication of the first edition is the clear shift of balance of power from North America and Europe to Asia. As is well known, China is now considered a clear economic global leader with India not so far behind. Interestingly, while these two countries are neighbours, their social, cultural and political environments are very different, resulting in unique advantages and disadvantages for each. For example, while India’s multi-party democracy often results in a lot of debate but few results, China’s one-party system allows it to plan and execute developmental projects at tremendous speed. Similarly India’s history of British rule has resulted in English being taught across the country and is almost always the language of business. On the other hand, China is only now beginning to introduce English at the primary school level.
In this connection, it is important to note that one of the key factors that led to the increased importance of China and India was the shift of manufacturing and BPO jobs to these countries. This requires HR departments of companies in these two countries to re-calibrate their HR strategies to address the new reality. Indeed, this is a common theme across all the countries; that is, the continuing development of the industrial sector in these countries calls for HR departments to continually stay one step ahead and pro-actively address the changing needs of their respective workforces. In the following section we present the key challenges faced by the countries covered in this volume.
Talent Acquisition and Retention
As one may expect, the influx of companies to the Asian region has resulted in a marked shortage of quality talent. While one often hears that countries like China and India have huge populations, this does not automatically translate to having a qualified workforce. Indeed, several authors have noted the problems with recruiting and retaining talent in China (for example, Dickel and Watkins, 2008) and India (Budhwar and Varma, 2011). Both China and India produce millions of university graduates each year, however most of these graduates lack soft skills and are often considered unemployable. As an alternative, many companies (mostly MNCs, although some local companies too) have tried to hire foreign-returned graduates, however, this has met with little success as these graduates often lack local knowledge that is crucial in industries such as real estate, consultancy, legal affairs, finance and banking. Sadly, the shortage of qualified professionals leads to poaching of talent, as well as unreasonable expectations from individuals. In the short run, this often means that individuals change jobs frequently in an effort to gain higher salaries, leading to a loss of intellectual capital for organisations and higher turnover and replacement costs. Indeed, as a result of this shortage, organisations are sometimes forced to offer job candidates job titles, salaries and responsibilities well beyond what they deserve based on their experience and potential (Cooke, 2012).
Other countries in the Asia-Pacific region are also struggling with attracting and retaining talent, albeit for different reasons. In Taiwan, the skills shortage issue manifests itself differently; here the growth of technology has resulted in a polarisation of the labor force, with the result that Taiwanese companies are struggling to find a sufficient number of qualified people to fill their vacancies. Several different initiatives are being implemented to address this gap (San, 2011), including attracting foreign workers to join the workforce. However, a lack of succession planning and strategic talent management tend to exacerbate the talent problem, with the primary reason for the high turnover of mid-level managers being a lack of career-development programs, which is precipitated by the fact that most Taiwanese businesses are family owned and thus fail to implement succession management.
On the other hand, Australia is at the precipice of an interesting situation, whereby it is estimated that the number of new workers entering the workforce will steadily go down in comparison to those leaving the workforce (Critchley, 2004), creating an increasing demand–supply gap. Similarly, Korean organisations are responding to the war for talent by aggressively devising and implementing attraction and retention strategies (Kim and Bae, 2004), such as sign-on bonuses and stock options.
It should be clear from the above discussion that one of the most serious challenges facing HR departments in the Asia-Pacific region is how to attract and retain talent. What is also clear from the examples above is that there is no ‘onesize-fits-all’ strategy that will work for all of the countries. Thus, HR departments in all of these countries will have to pro-actively identify and implement appropriate talent acquisition and retention strategies, so as to be able to support their business strategy. In addition, given the dynamic nature of business and talent in the current environment, HR professionals will need to realise that such strategies are likely to prove to be a moving target at best, and they need to continually revisit, re-evaluate and re-tool their strategies as necessary.
Training and Development
On a related subject, organisations are faced with a difficult choice, that is, to train or not to train their employees. On the one hand, they often end up hiring employees who are not job-ready, and thus require training, yet on the other hand, this very training leads to turning the employees into employable commodities, easily poached by competitors. Various other issues result in making this a complicated issue. For example, the Vietnamese workforce has an excess supply of non-skilled and semi-skilled labour while there is a continuing shortage of skilled labour, making it imperative that training is provided, either in-house or externally. It should be pointed out, however, that while in-house training has to be weighed against cost–benefit concerns, external training needs to be evaluated against corporate needs and for quality. Singapore is an interesting case, which has seen a huge growth in the number of training consultants over the last two decades or so, yet it is not clear if they are able to support organisations appropriately. While many of these training outfits (and in-house training) programmes emphasise operational efficiencies and cost-reduction strategies, what the economy seems to really need is a different kind of skill (for example, innovation), given that the new economy is increasingly knowledge-based. On the other hand, Thailand is facing a different, although related, problem. As technology and automation lead to re-structuring of organisations and jobs, numerous individuals (especially older workers who have lower or no technology skills) are likely to be laid off or forced into retirement. Again, this means that re-training may be needed to keep the workers gainfully employed.
Work–Life Balance
The growth of the economies in the Asia–Pacific region has given rise to an important concern – work–life balance. As individuals attempt to cash in on the increased opportunities, there is always the danger of going overboard and ignoring family in the pursuit of economic success. In fact, the impact of this is already being felt in various circles. In India, increasing numbers of applicants are seeking companies that offer work–life balance while Korean firms are pro-actively addressing the issue by adopting family-friendly policies, such as designating every Wednesday as a family day, and switching all lights off at 6 p.m., so employees are not tempted to work late, and instead go home to be with their families.
The issue of work–life balance is also becoming an important agenda item for the Australian HR professionals. A steady shift towards longer working hours for both full-time and part-time workers has led to a longer working week with the average full-time employee now working 42 hours per week, up from 38 hours in 1982, with many working 50 hours or more each week (Van Wanrooy et al., 2006).
Changing Workforce Demographics
One difficult issue that HR departments in the region are struggling with is the changing nature of the workforce demographics. For example, in Taiwan, the average age of the population has been increasing (from 34 years old in 2001 to 43 years old in 2011). This change has a direct affect on the supply of young workers while at the same time the ageing workforce requires HR departments to devise relevant HR policies that address such key issues as lifelong learning, opportunities for atypical employment and medical-care systems. Singapore and Hong Kong also face similar situations, that is, their workforce is ageing fast.
In addition, the rate of participation of females in the workforce has been steadily rising, with the result that the employment rate for females in Singapore has grown from 65.4 per cent in 2001 to 75.7 per cent in 2011. However, Singapore is also characterised by a unique phenomenon—a large pool of highly qualified females (typically in their early 30s) who voluntarily withdraw from the work-force temporarily to raise families. Ironically, while the government has enacted policies to motivate older workers to stay in the workforce (thus reducing the need for immigrants), not much has been done to address the issue of females rejoining the workforce after the time taken to raise families.
Interestingly, in both India and China the young workforce is often credited as one of the key reasons for their tremendous economic success. However, this advantage has an obvious downside where many in this young work-force think little of issues like loyalty and long-term commitment. In other words, turnover rates are skyrocketing, leading to higher replacement costs for organisations.
Culture
Any discussion of HR issues must necessarily address the role of culture in all its complexities. As Gamble (2001) noted, cultural traits such as attitudes to power distance are difficult to predict and often evoke different responses depending on the context. Given the complex societies that make up the Asia-Pacific, it is not sensible to try to develop a single model that would help researchers and practitioners better understand the role that culture plays. However, several trends are clearly emerging and need to be addressed pro-actively, so the countries may capitalise on the opportunities presented by the shift in economic focus from the West to the East, so to say. First, most of the Asia-Pacific region has been known to display collectivistic tendencies. Here, the introduction of Western models of performance and rewards can often be in direct contrast to the cultural leanings of the individuals. For example, Chinese socialistic values promote paternalism and egalitarianism, thus requiring employers to take care of the employees in a just manner. In Korea, the introduction of performance-based management and evaluation systems has seemingly led to the erosion of traditional cooperative behaviours, as individual employees are focusing more on individual behaviours and rewards. In India, employees seem to be moving away from the traditional expectation of paternalistic management, and are expressing increased individuality and desire for autonomy. On the other hand, this shift is seen to a limited degree in Malaysia, where only the new middle class seems to be displaying increased individualism while the so-called upper class continue to subscribe to traditional collectivist values, perhaps because this helps secure their position in the society.
Australia is experiencing the evolution of culture in a somewhat different fashion – while the majority of migrants prior to the 1950s came from the United Kingdom, subsequent waves of immigrants have come from culturally diverse countries such as Italy and Greece, followed by those from the Middle East, Africa and Asia. The introduction of these new waves of immigrants has brought myriad cultural values and beliefs distinctly different from the Anglo-Saxon mores of the initial immigrants. Australia’s neighbour, New Zealand, has also seen an influx of migrants from Asia and the Pacific islands, thus making it imperative for HR departments to move away from traditional Anglo-Saxon models of management and devise policies and practices that address the cultural leanings of the new members of the workforce. For example, performance management systems must incorporate the collectivistic norms of Asian immigrants.
Conclusion
Overall, it is clear that the Asia-Pacific countries have seen tremendous change over the last decade or so, and this speed of change is not likely to abate any time soon. Clearly, HR departments need to pro-actively address these changes and treat their policy manuals as living, breathing, documents that are able to incorporate strategies that can address the numerous challenges faced by these nations. From addressing issues such as managing contingent workers to partnering with governments to enact appropriate employment-related legislation, HR departments have a tremendous opportunity to become strategic partners of industry.
At the same time, the academic community needs to ramp up its research efforts to focus on this region and investigate its complex issues. As we noted in the introduction, there is some research focusing on cultural values, which emphasised the importance of adapting and/or developing indigenous management practices in Asia-Pacific organisations. However, given the limited number of research publications on the subject, it is critical that scholars focus their attention on this region. As we noted earlier, the extant literature lacks a systematic framework, which reduces its generalisability and applicability. We are happy to be able to present this volume, which offers a framework for future research.
References
Budhwar, P. (2004) Managing Human Resources in Asia Pacific. London: Routledge.
Budhwar, P. and Debrah, Y. (2009) ‘Future research on human resource management systems in Asia’. Asia Pacific Journal of Management, 26: 197–218.
Budhwar, P. and Varma, A. (2011) ‘Emerging HR management trends in India and the way forward’, Organizational Dynamics 40(4): 317–325.
Cooke, F. L. (2012) Human Resource Management in China: New trends and practices. London: Routledge.
Critchley, R. (2004) Doing Nothing is Not an Option: Facing the imminent labor crisis. Ohio: South Western.
Dickel, T. and Watkins, C. (2008) ‘To remain competitive in China’s tight labour market, companies must prioritize talent management and track compensation trends’, China Business Review July–August: 20–23.
Gamble, J. (2001) ‘Introducing Western-style HRM practices to China: Shop-floor perceptions in a British multinational,’ Journal of World Business 41(4): 328–343.
Kim, D. and Bae, J. (2004) Employment Relations and HRM in South Korea. London: Ashgate.
San, G. (2011) ‘Retrospect and prospect of Taiwan’s human resources planning’, Yan Kao Shuang Yue Kan 35(2): 71–93 (in Chinese).
Schuler, R. S., Budhwar, P. and Florkowski, G. W. (2002) ‘International human resource management: Review and critique’, International Journal of Management Reviews 4(1): 41–70.
Van Wanrooy, B., Bretherton, T., Considine, J. and Buchanan, J. (2006) ‘Longer and irregular hours: Employers, decentralised bargaining and working time standards in Australia since the late 1970s’, Conference on 8 Hour Day and Beyond, RMIT, Melbourne.