In SEA, leadership a higher priority than organisational redesign: Deloitte

By Digital News Asia June 7, 2016

While business leaders recognise certain trends, are focusing on other issues instead
Traditional corporate hierarchy needs to be turned on its head, in a disciplined way

In SEA, leadership a higher priority than organisational redesign: Deloitte

LEADERSHIP continues to be the top human capital trend in South-East Asia, with 97% of business and HR (human resources) leaders in the region prioritising it above other talent issues in a recent survey by Deloitte.

This runs contrary to global results, where the urgency of organisational redesign has over taken leadership, with 92% of respondents identifying the critical need to redesign their organisation to meet global business demands, the consultancy firm said in a statement, citing its annual Human Capital Trends report, titled The New Organisation: Different by Design.

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Deloitte said its Global Human Capital Trends 2016 survey is one of the largest ever global studies of workforce, leadership and HR challenges.

The South-East Asia results are a subset of the global report and examines the responses of 213 HR and business leaders across countries in the region, including Indonesia, Malaysia, Singapore and Thailand.

“With advancing digital technologies, changing workforce demographics and speed of innovation, it is becoming increasingly important for companies to evolve leadership models, redesign organisational structures and drive an employee-centric culture in order to remain relevant and competitive in the marketplace,” said Deloitte South-East Asia human capital consulting leader Nicky Wakefield.

The issue of leadership

Surprisingly, in spite of its importance, there is a wide 60% capability gap where leadership matters are concerned, Deloitte said.

A capability gap is defined as the difference between the importance of a trend and the perceived readiness of the organisation to deal with it.

This gap has widened since 2015, increasing 19 points from last year’s 41%, it added.

This is indicative of the current volatile business environment, where even though business leaders recognise trends as important, they have chosen to focus more on matters pertaining to improving shareholder value rather than human capital and talent issues.

“Leadership is a perennial challenge for organisations operating in South-East Asia,” said Wakefield.

“This challenge can be overcome in large by the evolution of leadership models and solutions – however, running faster on the traditional leadership development track will not solve this perennial challenge.

“Companies must make and sustain investments in identifying and nurturing leaders earlier in their careers. Turning the traditional corporate hierarchy on its head, in a disciplined way, will help develop networks of teams and spawn more leaders faster.

“Senior leaders and traditional organisation structures will need to continue to evolve to take full advantage of a re-energised leadership pipeline,” she added.

SEA challenges

Businesses recognise that leadership development is a key priority, and are aware that there is a need to accelerate leaders up the pipeline to ensure that they are equipped with future-focused skills, said Deloitte.

“While C-suites and boards in South-East Asia recognise that leadership development is a key priority for their business, many do not have the capability to address the issues that come with it,” said Indranil Roy, head of Deloitte Leadership, South-East Asia.

“The unique diverse markets within the region – with some more mature than others – poses specific challenges.

“There is a need to break away from traditional structures and mindsets toward leadership development, and embrace transformation,” she added.

Some of the challenges for leadership development in Southeast Asia include digital transformation, globalisation and regionalisation, succession planning, misalignment of leadership capabilities and executive leader readiness.

Organisational redesign urgency

The urgency of organisational redesign, while not as keenly felt in South-East Asia as it is globally, is nonetheless beginning to take root as a top human capital issue, evident by it being in the top five despite being a new trend.

According to Deloitte, 91% of business and HR leaders in South-East Asia believe that this is a key issue, but more than half (53%) feel that they are still not ready to address it.

“Companies globally are overhauling their organisational structure and shifting away from hierarchical and functional business models towards a cross-functional networks of teams,” said Wakefield.

“This shift is encouraging greater collaboration, agility, customer focus, and employee engagement.

“Business and HR leaders in South-East Asia may need to play catch-up and transition their existing structure towards one that empowers teamwork, develops leaders faster, and delivers superior outcomes.

“This is likely to means significant changes to core HR processes and solutions such as recruitment and onboarding, performance management and remuneration.

“These need to evolve to ensure people are selected and rewarded in line with the new operating model. Such demands on HR will definitely require a step change and increase in capabilities for many HR organisations in the region,” she added.

The top trends in South-East Asia, in order of importance, are Leadership, Engagement, Organisational Design, Learning and Culture.

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