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When it Comes to HR Transformation in Asia, it Seems that Every Company is Doing it in Some Shape or HR Transformation in Asia: Upsetting the Apple Cart?

​When it comes to HR transformation in Asia, it seems that every company is doing it in some shape or form. Why is HR changing in Asia? How is this transforming HR? How has the HR service delivery model evolved? And what are the keys to not ‘upsetting the apple cart’ in your company when undergoing an HR transformation?

The Changing Face of HR in Asia

HR in Asia is often said to lag behind HR practices adopted in the more mature world markets of Europe, North America and Australia. While this may have been true in the past, many companies are now rapidly innovating their HR platforms in Asia to drive improved efficiencies and service delivery.

For companies in Asia, complications in HR strategy have stemmed from the fact that the region consists of a collection of countries that have significant cultural differences, expectations of HR and sophistication of required HR strategies. The differences between Amsterdam and Athens or between Manhattan and Mississippi are nothing compared to those between Kobe and Kathmandu.

Traditionally, HR Leaders sitting ‘in country’ had a high degree of autonomy with minimal influence from regional or global stakeholders. In many cases, disparate HR strategies emerged in the different countries according to the business objectives by each Country Business Leader. The ability to pursue cohesive regional HR strategies was also limited by differences in the maturity of HR talent in different markets.

Transformation of HR in Asia

The move away from this traditional platform in HR Service delivery in Asia, ingrained in so many companies, has happened particularly in the last five years and accelerated in the last two. We’re moving into a new era of ‘control’. Regional and Global stakeholders want more of a say and greater accountability in the HR strategy being pursued in individual countries across the region.

There is a need for greater alignment in the HR strategies being pursued in each individual country, to avoid duplication of effort and to encourage a cross-sharing of centralised resources. Having standardised metrics by which to measure HR’s impact on the businesses of Asia can also help to further elevate their standing. And improvements in the quality of HR talent, both locally born in Asia and also non-Asian talent choosing to make Asia their long term home, is improving the ability of the HR profession to make a tangible difference to business results.

The Most Common HR Service Delivery Models in Asia

The evolution of HR service models from a traditional platform to a newer-age structure has occurred as follows:

No Regional Headquarter Function

This HR model had no regional headquarter function, with HR of each individual country across Asia operating independently. The global headquarters had limited control on what the individual countries were doing in the region. On the plus side, there is great flexibility and autonomy to adopt local HR practices. However there is limited sharing of HR information, limited mobility of talent from one market to another, and an array of different
HR practices and processes.

Small Regional Headquarter HR Function

This HR structure saw the evolution of the above model to one where there is a small regional headquarter function. Typically this regional headquarter was small and had little control over the countries, but existed to coordinate and summarise information for the global headquarters. The regional HR function included HR specialists in areas like
resourcing, Compensation & Benefits, Learning & Development and HRIS. Compared to the earlier traditional model, this set-up improved the sharing of information between the countries of the region.

Large Regional HR Headquarter Function

A further evolution resulted in a much more sophisticated regional headquarters function. In-country HR Heads and specialists have been aligned very closely with the regional HR Head or regional HR specialists. Sometimes the in-country specialists have had a solid line reporting to regional stakeholders, rather than to in-country HR management. This model, with a larger regional headquarters function, results in both the regional and global HR function having a high degree of control over individual countries. It is characterised by greater sharing of information and increased mobility of Asian HR talent.

Regional Headquarter Function with Shared Services Platform

Over recent years there has been a big focus by companies to reduce unnecessary duplication between certain aspects of HR performed in each of the different countries and at regional headquarters. This has seen the emergence of a regional shared services platform. Transactional HR responsibilities such as payroll, HRIS, and contract generation have been placed into a centralised function that all of the countries tap into. Such a function has usually been created in lower cost countries including India and the Philippines, but also in countries such as Singapore where there is a larger talent pool with regional experience. Some companies have chosen to distribute risk by setting up multiple shared services centres across the region for different functions. Under this structure, the regional HR team and in country HR teams have often become leaner. HR Business Partner roles in turn have usually become more business focused, which can be good news for the further professionalisation of the function, but can sometimes lack the end-to-end variety that some HR talent enjoy.

Keys to Not Upsetting the Apple Cart in Undergoing an HR Transformation

Moving from an HR structure that your team knows and feels comfortable with, to a ‘new-age’ structure which may pay future dividends but involve a degree of short-term pain, is a risk for every company. In order to minimise the risk, it’s important to pay attention to the following :

  • Ensure that Business Leaders support the idea of an HR transformation and keep them informed on its progress.
  • Don’t reinvent the wheel. Avoid change for the sake of change.
  • Analyse different HR shared services arrangements out there and assess their advantages and pitfalls.
  • Get the buy-in of your HR team on the merits of the HR transformation, and openly address any concerns.
  • Develop a robust plan on exactly how the HR transformation will work and the timeframes to achieve each step, and openly communicate this plan with your team.
  • Take into account differences of certain countries, and try not to adopt the same approach for all processes in all – inevitably some unique circumstances made need to be taken into account.
  • Understand the implications of the existing versus new HR talent/skill requirements needed for the HR service delivery model.
  • Try not to divert too much attention from the existing HR service delivery model in setting up the new model, otherwise service to the business can suffer.
  • Have a cut-over plan from the existing HR model to the new model, and allow plenty of room for error.

Conclusion

Construction of the most effective HR service delivery model for a company in Asia is perhaps one of the greatest headaches that regional HR Leaders face. There’s never a one-type-fits-all scenario.

The most effective model must take into account the extent to which individual differences in HR operating styles between different countries should be tolerated. While standardising the HR platform may make sense from a cost and manpower resources perspective, many companies have found that too much standardisation later causes problems in certain countries or sub-regions due to issues such as local language, la
bour regulations, or working practices.

The answer, in the end, tends to be that companies try to standardise and then centralise as many transactional and repetitive elements of HR as possible, but they remain flexible about making special adjustments for what certain countries might need. The effectiveness of the HR model is then reviewed regularly… Despite the best intentions, most companies who adopt an HR shared services platform don’t get it right first time around!

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