News analysis: Meeting reward challenges in Asia

Business opportunities abound in Asia, but there are specific challenges that reward and benefits managers from the UK must face, says Debi O’Donovan

The Confederation of British Industry has called on employers to look to Asia to harness greater business opportunities. With Office for National Statistics figures for August showing UK unemployment levels at 8% and the Bank of England reforecasting gross domestic product growth at near zero, business is not booming in Britain.

However, UK reward and benefits managers working in the Asian region need to be prepared for a mindset shift and a new set of challenges, as became clear at the first Employee Benefits Live Asia event, which took place in Singapore in August.

The first challenge is the impact of having a young workforce (Generation Y, born early 1980s to early 2000s) in a high-employment region. The second is the strong use of reward to drive performance.

Simply bringing UK experience into the Asian market will not work. As Low Peck Kem, divisional director of national human resources at Singapore’s Ministry of Manpower pointed out: “The UK and US have stronger human capital strategies [than Asia], but are European and US strategies fit for purpose for the diversity of Asian workforces?”

Paul Lam, head of partner resources Asia Pacific at Starbucks, added: “If we just absorb the global design, it doesn’t work. We need to look at what drives business in local countries. Using global design does not sound convincing to local recruits.”

For example, Starbucks adjusted the vesting period for its restricted stock units (called Beanstock) to three years in Asia, compared with four years in its western operations. “In Asia, it needs to be quicker because of job churn,” said Lam.

“Cash is king in Asia. Stock is not seen as cash because it is not accessible enough. When doing market analysis on pay, we do not include Beanstock, even though the US is pressing us to do so.”

However, reward managers in Asia can look beyond cash and tap into the desires of Generation Y. Madan Nagaldinne, head of human resources Asia Pacific at Facebook, said: “It is very important forGeneration Y that we invest in IT. If we don’t, it will alienate them. The investment that companies are making in tools such as the Macs, PCs or smartphones that Generation Y has grown up with is massive.

“For Generation Y, the motivators are also the opportunity for learning and the quality of colleagues.”

But it is crucial to get the balance right between the demand for cash and the company culture. Ashok Kapoor, director of human resources, emerging markets group, at global tool company Stanley Black and Decker, said: “You use cash for attracting and retaining staff; you use non-cash to engage and motivate.”

Which ties back into the point of using reward to drive performance in this region. Mahalakshmi Ramaswami, global head of total rewards and organisation effectiveness at Indian business conglomerate Bharti Enterprises, said: “Talking about rewards without talking about performance is like listening to music without earphones.”

For example, Daimler puts a premium on high-performing staff. Eckart Jensen, vice-president of HR sales and financial services, South East Asia at the motor manufacturer, said: “We are planning a 5.5% pay increase for Singapore staff in 2013, plus a salary catch-up in some bands. But we make high performers visible: they got 10-15% pay increases (in the past three years).”

Natural resources company PT Vale Indonesia Tbk uses reward to bring staff behaviours into line with business goals. Bernadus Irmanto, vice-president and director of human resources and corporate services, said: “Specific behaviours that demonstrate new values will be recognised. In order to grow, all employees must adopt the same values.”

Asia is an exciting place to be, but where there is growth, there is also tough competition.

Read also: First impressions of employee benefits in the Asian region: a UK perspective

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Also, find out what’s on offer in Employee Benefits Live’s international benefits stream