How can employers improve staff engagement? (Human Resources Director (HRD) Asia, Friday, 22 June 2018)
Selecting the right performance period for long-term incentive plan (The Business Times, Thursday, 29 March 2018)
Digital transformation starts from the top (The Business Times, Friday, 12 January 2018)
Transformation in Action (People Matters, Monday, 8 January 2018)
In search of innovative talent? (The Business Times, Thursday, 3 August 2017)
Competitive, yet collaborative: How does collective ambition drive business growth? (HQ Asia, Friday, 23 June 2017)
Will artificial intelligence take over your banking job? (The Asian Banker, Wednesday, 21 June 2017)
What keeps Asia CEOs awake at night (The Business Times, Friday, 17 March 2017)
Tough love is hard to do (The Business Times, Saturday, 18 February 2017)
Collective ambition important for business growth: study (The Business Times, Wednesday, 25 January 2017)
No second chance at a first impression (The Business Times, Saturday, 10 December 2016)
Is your co-worker toxic or just annoying? (The Business Times, Saturday, 17 September 2016)
What next after being passed over for promotion? (The Business Times, Saturday, 20 February 2016)
The REIT way to fair remuneration (SID Directors' Bulletin, December 2015 for Quarter 1, 2016)
by NA BOON CHONG, Managing Director and Partner – Talent, Rewards and Performance, Aon Singapore
This article first appeared in Human Resources Director (HRD) Asia on Friday, 22 June 2018.
While Singapore’s economy expanded by 3.6% – outperforming the forecast—employee engagement levels here remain unchanged from last year according to Aon’s 2018 Trends in Global Employee Engagement report.
At just 59%, not only is the engagement level in Singapore lower than the Asia Pacific and global average (both 65%), it also has the lowest engagement level among key markets across Asia.
So, how can Singapore employers engage with their workforce to drive productivity and performance – not just today, but in the future?
Many organisations are undertaking transformational change programs as they manage their way through digital disruption and the need to meet the ever-changing wants of their customers.
Transformation, however, also needs to include engaging the employees, both from a rational and emotional perspective. Employees worldwide – including those in Singapore – have articulated the overwhelming importance of “the future”.
With growing concern over the evolving nature of jobs and skills required to remain relevant, employees are seeking certainty – something they look up to their senior leaders to provide, and to future-proof themselves with new knowledge and capabilities that can be applied later in their tenure with the company as well as in their careers.
Aon’s study showed that the top three engagement opportunities in Singapore focus on precisely these areas: career and development, senior leadership, and enabling infrastructure.
Career and development refer to a company’s ability to provide a favourable set of circumstances for an employee’s future in the organisation. This includes ensuring that employees at all levels have career resilience, by being equipped with skills that are aligned with the long-term business strategy.
In one example, a company had taken feedback from their employee engagement survey to make improvements on their career development processes – such as implementing transparent job posting and training managers to conduct career counselling.
However, over two years, their employee engagement score continued to decline.
Employees believed their career opportunities in the organisation didn’t look good; the organisation wasn’t quick enough to apply resources to new ideas that will drive future success; people weren’t comfortable taking calculated risks; and senior leadership didn’t excite them about the organisation’s future.
This demonstrates that, while digital transformation is often focused on projects, processes, and infrastructure, it is the people factor holds the key to success.
Senior leadership refers to the ability of leaders to connect employees to the business through a compelling future vision of the organisation. Through constant change, employees want certainty—something they look to their leaders to provide.
This may pose a problem for leaders in a disruptive world, where they may not have a clear view of the future success model, but still need to excite the employees along the discovery journey.
For these leaders, there are four areas that will strengthen employee engagement. Firstly, give employees a clear sense of purpose by explaining what the organisation is looking to accomplish and why.
Secondly, paint employees a picture of what the organisation is trying to create and keep them going towards a clear destination.
Thirdly, provide a plan to gain the confidence of your people – so they don’t just see an end, but also a means of reaching that end. And finally, give your employees a role in the change. Their commitment to making any change work will depend on them feeling a sense of ownership in the change.
Enabling infrastructure refers to the technology, processes and people practices that enable employees to be most productive at work. This includes tools that promote greater agility, better connections and stronger results.
One company addressed their infrastructural challenges by speeding up technology investment to create a paperless office, reduce approval channels, and facilitate better connectivity and collaboration, and support employee mobility in and out of the office.
In doing this, the company not only enhanced its employee engagement – it also aligned employee experience to the customer experience it delivered as a business.
Millennials at risk
According to the Aon study, only 56% of the full-time millennial workforce in Singapore is engaged – a 2-point drop from the year before.
Perception scores for millennials in Singapore plummeted by 7 points in the area of ‘Work Tasks’—which is the organisation’s ability to fairly distribute workload and an employee’s sense of enjoyment and accomplishment from the work they do.
Perception scores also fell by 3 points in the area of ‘Employer Brand’.
However, the positive note is that the top engagement driver for millennials is change readiness – proving that they are the generation most prepared for the future of work.
While there is no one-size-fits-all employee experience that will maximise engagement, forward-thinking organisations can identify the drivers that are most important for their employees and create a fit-for-purpose experience.
Most of all, increasing employee engagement for now and the future is a shared responsibility – senior leadership must encourage their team members to own their engagement levels, by creating an environment where employees are empowered to develop new skills, future-proof their career journeys, and maximise their potential even as industries disrupt.
Three years may be optimal but firm's unique conditions have to be taken into account.
by KUMAR SUBRAMANIAN, Partner – Talent, Rewards and Performance, South East Asia
This article first appeared in The Business Times on Thursday, 29 March 2018.
LONG-TERM Incentive (LTI) Plans have been in existence in Singapore for nearly two decades. Aimed at aligning shareholder and management's interests, they constitute as much as 40 per cent of the senior executive remuneration in many large-cap Singapore companies.
But a quick glance at the remuneration disclosure statements of the Straits Times Index (STI) 30 companies reveal that their LTI plans bear a striking resemblance to one another. More intriguing is that 90 per cent of the STI 30 companies that have a performance-based share programme use a three-year horizon for vesting of their awards.
Almost three in four companies in the Australian Securities Exchange (ASX) 30 vest their performance-based share awards over a three-year period. The corresponding figure for the Standard & Poor's (S&P) 500 companies is an unsurprising 80 per cent.
Most companies use a three-year planning cycle and that conceivably could be the reason behind the widespread adoption of the three-year performance period. A three-year performance window may have also emerged as a "consensus" solution - one that is reasonably long enough to provide shareholders a track record of sustainable returns, but also short enough to take management's interests into consideration.
But the question is, are such three-year performance plans serving their purpose?
RETHINKING THREE-YEAR PERFORMANCE PERIOD
Consider the following scenarios:
A global energy conglomerate that is investing several billions of dollars in renewable assets, where typical pay-back cycles are more than five years.
A mature, top 10 Enterprise Resource Planning (ERP) player that has charted out a four-year roadmap to transform its operating model from client server to the cloud.
An integrated-resources producer and supplier that operates in a commodity price cycle that lasts typically between five to six years.
In each of the above cases, it is quite probable that a three-year performance window would provide an incomplete view of the management's ability to create value for shareholders.
Worse, it could incentivise management to play safe and refrain from the bold bets required to make their strategy work and drive sustainable performance. For example, management can use a disproportionate share of operating cash to pay dividends or buy back shares to boost three-year shareholder returns. Thus, their share awards would vest and the plan would end up with an unintended consequence of rewarding management for sacrificing the strategy.
Proponents of a shorter-term performance period argue that long-term alignment can be achieved by requiring management to hold shares for a reasonable period of time (say two or three years) after they have vested. Alternatively, require them to accumulate stock to a certain ownership level, defined in dollar value or number of shares.
In fact, more than 80 per cent of Fortune 100 companies implement a formal stock ownership policy covering their key management personnel.
But stock ownership policy by itself cannot solve short-termism - since management's priorities will be guided by what they need to achieve in order to vest the share awards, before needing to hold them for the required period.
ASSESSING LONGER-TERM PERFORMANCE TARGETS
If the case for longer-term performance targets is so deceptively simple, why are there few companies implementing it?
The reason may lie in a phenomenon behavioural economists call "hyperbolic discounting"; which they argue is wired in the way our brains work. The October 2016 issue of Harvard Business Review refers to a study that suggests that executives discount distant payouts at 30 per cent per annum, about four-five times compared to what the rationalist economic model would suggest. Thus, the perceived value of a performance award that vests over five or six years is drastically lower than one that vests over two or three.
How do we mitigate the problem of hyperbolic discounting when it comes to LTIs?
Potentially, by structuring a remuneration package that strikes a good balance between annual performance, retention and longer-term performance. This may be contrarian to the widely-held opinion that calls for a greater proportion of pay to be delivered through LTIs; but it does alleviate the problem of executive management heavily discounting the performance pay package, thus rendering it ineffective. Singapore large-cap companies also have fewer constraints to structure a more balanced executive compensation package, given the conspicuous absence of proxy advisors or tax guidelines that are more benign towards long-term incentives. Another contention often held against longer-term performance periods is that locking targets upfront over a five- or six-year period is challenging, with all the fluidity around regulation, competition, economy or the equity markets.
Perhaps the solution to this lies in choosing a succinct set of performance criteria (ideally two and no more than three) that constitute an indispensable aspect of management's remit. Management's ability to generate Shareholder Returns in excess of Cost of Equity over a long-term horizon is one such measure. Besides, when shareholder returns are computed over a longer-term horizon, they tend to dampen the impact of short-term market volatilities on performance evaluation. Another essential performance component could be milestones or outcomes that represent successful deployment of the strategy. Examples include revenue/profit from new platforms, products or services, and penetration/expansion of target customer base.
Some prominent global companies have stepped beyond convention and developed a more progressive performance share programme. Exxon Mobil's performance share programme is awarded based on a combination of several performance criteria including trailing shareholder returns, returns on capital, and strategic business results. Half of the awards vest at the end of five years and the other half at end of 10 years or retirement, whichever is later.
In its annual remuneration disclosure, the firm states that the Exxon Mobil share programme is better aligned with sustainable shareholder value, promotes long-term accountability, discourages under-investment to boost short-term shareholder returns, and is consistent with the impact of project decisions that typically span over a period of more than 10 years, compared to a traditional three-year performance vested plan. Apple's performance share programme vests based on three-year shareholder returns relative to S&P 500; however it also awards a restricted share programme that vests over an eight-year period.
Three years may be the optimal performance horizon for a share programme but must not be the default performance period. So, as remuneration committees decide on executive pay, they may find it well worth revisiting their LTI plan, and solving the "time" horizon with the firm's unique context in consideration.
Board members are the thinkers and stewards for strategy, risk and talent.
by NA BOON CHONG, Managing Director and Partner – Talent, Rewards and Performance, Aon Singapore
This article first appeared in The Business Times on Friday, 12 January 2018.
In his National Day Rally 2016, Prime Minister Lee Hsien Loong described digital disruption as "the defining challenge" facing the Singapore economy in the years to come. Indeed, digital disruption has changed the way that people purchase, the way that they consume content, and the way that products and services are delivered. Businesses realise that they can no longer afford to just keep up. To truly succeed, they must stay ahead - not just of their competitors but of trends and technology. In Singapore, as we embark on the long journey towards becoming a Smart Nation, industries from banking to property, transportation to telco, and even health care, are using digital technology to transform the way that they interact with customers.
Yet, taking on any sort of transformation in business incurs risk; not just on profit, but on other critical aspects such as cyber security, brand reputation and talent capabilities to deliver on the promise. So how can organisations in Singapore take on the daunting mission of digital transformation - and succeed?
The answer, like the goal, starts at the apex: the board of directors. As they are the thinkers and stewards for strategy, risk and talent in an organisation, it is critical that business transformation through digital disruption is fully supported at the top level - whether from a strategic, implementation or budgetary standpoint.
Still, Aon's board evaluation consulting experience has shown that it remains a challenge for organisations to appoint board members with strong digital experience as well as have them aligned with management on the execution of and expectations for digital transformation strategy. This is despite 80 per cent of directors indicating that re-evaluating corporate strategy was their top area of focus in 2017, according to research from various sources.
The Committee on the Future Economy (CFE) underlines the importance of "strengthen(ing) enterprise capabilities so that our companies are innovative and competitive" and "develop(ing) strong digital capabilities and support(ing) the pervasive adoption of digital technologies across all sectors of the economy". We agree that these are the critical areas for development. However, the missing ingredient in most boards of directors, it appears, is courage.
Board directors often believe that change is not necessary when the business is doing well, and that it is better not to "rock the boat". On the contrary, this is exactly what brings rising risk to the status quo, bias towards the familiar, and comfortable complacency - all issues that are critically damaging to business. When business is successful, the board should be monitoring changes in the external environment, nudging the management to foresee the threats on the horizon (even if they are still far away), and making timely decisions on digital transformation.
It is during successful times when the board must lead courageous conversations by asking tough questions and re-inventing previous successes. The board must courageously confront challenges by going beyond what they already know about the business and re-evaluating the external environment - such as globalisation, consumer demographics, advancements in technology, rise in convergence, disruptive competition, and normalisation of digitisation - in order to create greater value for customers; and in doing so, generate new revenue streams. And finally, the board must make courageous decisions, which would involve changing business direction, investing in new areas and talent, and walking the talk when it comes to creating an open culture of innovation.
How can boards achieve this?
The board's primary role in digital transformation is to enable the management team in these five key stages of the journey: vision, strategic development, strategic planning, budgeting and execution.
Both the board and the management team will have specific responsibilities in each area, and at each stage, must come together to align their thinking, objectives, and expectations.
Stage 1: Vision
The board defines what is considered long-term value creation for the business. At this point, it is also critical for them to set clear expectations and underline any shortcomings that they foresee will stand in the way of realising this value.
With the guidance of the board, the management team articulates its vision and the related strategic goals.
Together, the board and management team review and debate this articulation, making the necessary amendments until they arrive at an agreement.
Stage 2: Strategic Development
The board signs off on the statement of vision and strategic goals, which kick-starts the process of strategic development.
Using relevant data and insights about the organisation, as well as the external business environment, the management team develops a draft strategy statement that outlines in brief how the vision and strategic goals are to be achieved.
Together, the board and management team hold meetings (some organisations choose to hold retreats) to review and refine the draft strategy statement.
Stage 3: Strategic Planning
The board signs off on the final strategy and plan, and notes any guidelines for preparation of the requisite budget.
The management team notes the crucial assumptions, key functional drivers and essential resource needs; and sets meaningful milestones for execution.
Stage 4: Budgeting
Before approving the budget, the board ensures that its major provisions and thrust are consistent with the strategy and plan previously approved. If required, modifications must be suggested at this point.
The management team prepares the budget and key checkpoints for the board's final approval.
Together, the board and management team review all supporting activities to ensure that they align with the proposed strategy - such as performance management, incentive plan, talent acquisition/development, and risk management.
Stage 5: Execution
The board is responsible for monitoring financial performance and other strategic or lead metrics, both against the organisation's past performance as well as industry peers.
The management team presents regular reports to the board on the validity of the crucial assumptions (and if any need to be updated), performance against the meaningful milestones, as well as any changes to the business environment and competitive landscape.
Together, the board and management team agree to any necessary amendments to the strategy and execution plan, if and as required.
What's next in 2018?
As the drive towards making Singapore a Smart Nation grows in intensity this year, board directors must remember that digital transformation is not just about technology.
It is about breaking away from traditional business models and the status quo, bringing together people, data, and processes in innovative and intelligent ways, and developing a digitally-skilled workforce across all levels.
The organisations that will succeed are those that can excel in these areas, starting from the very top with a courageous partnership between the board and management.
by NA BOON CHONG, Managing Director and Partner – Talent, Rewards and Performance, Aon Singapore
This article first appeared in People Matters on Monday, 8 January 2018.
In an exclusive conversation with People Matters, Na Boon Chong, Managing Director and Partner, Aon Hewitt Singapore talks about his own career trajectory, the Asian talent landscape, and the need for organisations to adapt to disruptive technologies.
“Organisations today have recognised the importance of talent and they don’t wait for the right time to invest on talent anymore”
“Everybody recognises the importance of having the line perspective in HR; the downside of that is that you may not have the HR expertise to manage the strategic and the operational aspects of HR”
Boon manages Aon's human capital consulting business in Singapore and has more than 25 years of experience of consulting in corporate governance, executive compensation, public sector pay, organisation transformation, post-merger integration and talent management in Asia. He initiated the Best Managed Boards Award (a joint study with the Singapore Institute of Directors examining best human capital practices by Boards locally and globally) which is part of Singapore Corporate Awards. Prior to joining Aon Consulting, Boon had a long career with Hewitt, most recently as head of its Singapore consulting operations and APAC practice leader in Corporate Restructuring and Change.
Boon graduated from University of Minnesota and Rutgers University (USA) with a B.Sc. and M.Sc. He is a Certified Compensation Professional with the World at Work, and is a Fellow of the Singapore Institute of Directors. He contributes frequently to boardroom discussions on issues relating to performance, compensation and leadership.
You have had a long career with Hewitt and then Aon. What has been this journey like?
I think I can segment my career into 3 stages. The early part of my career in international HR consulting started in 1989 when projects were mainly transactional in nature like compensation benchmarking, performance management, etc., and we were serving primarily multinational clients. The second stage started somewhere around the late 1990s, which coincided with the Asian Financial Crisis. There was a lot of restructuring of major domestic companies during this time. It was also a period of significant growth for us and we did more end-to-end type of restructuring work. The third stage was when I left Hewitt and joined Aon in 2007, and started HR Consulting for them. We were in a start-up mode as we were building the business from scratch. Then Aon acquired Hewitt in 2011 and I went back into the fold of a large firm. I believe my experience and my work have benefited from the various cycles of the business that I went through.
While you were in that start-up mode, what was the differentiating factor that you found relevant in the context of a bigger firm?
If I were to look back, in a large firm, there is a lot more you can do in HR consulting. You have more offers and tools at your disposal, and you can assess and evaluate their suitability for your client. On the other hand, when you are starting a business, you must be selective in what you want to bring to the market to give your organisation the competitive edge over the big rival companies. At Aon, I chose to bring to the market executive compensation services at a time when corporate governance was getting scrutinized and the demand for consulting was accelerating. During this time our competitors lacked the edge, so I acquired the right talent with the right skillsets and increased our penetration within the market. Our model was about developing a unique offer that is timed to the market and then linking that with the right talent strategy as opposed to trying to be all things to all clients.
In your opinion, has there been an overall shift in the mindset when it comes to talent?
When people talk about talent and the importance of talent, I would like to refer to what organisations were doing 8 to 10 years ago, when organisations spent more money on talent during an upturn or cut back spending on talent in the downturn. Today, business volatility is the new normal, and they cannot go with the same spending pattern. Organisations today recognize the importance of talent and they don’t wait for the upturn to invest on talent anymore. For them, there is never a good time but more of a strategic spend on talent regardless of the economic situation.
There’s a lot of talk on succession planning. It is the number one challenge for organisations in the ASEAN region — they talk about thinking ahead and how to get ready for the future. What do you have to say about it?
Succession Planning has become one of the major issues in the last 10 years and has sort of distilled into the talent management perspective. If you want to get good CEOs, then you need to look at the entire pipeline — from young talent, middle talent, to senior talent. If you look at the role of a board, there are two sets of responsibilities. One is fiduciary, directly addressing the affairs of the company to make sure that they are in line. The second is to ensure that you have the right management team in place to run the business. The latter is where succession planning falls in.
So, why are we only in recent years become concerned with succession planning?
The first reason is boards in Southeast Asia needed to strengthen corporate governance first including audit, risk management, financial control and compliance. These issues are in place now, and hence boards are turning attention to CEO succession, and related concerns such as talent management and culture transformation as business transformation levers.
Then, of course, the maturing of the current generation of CEOs is another reason.
Some of the most successful companies in ASEAN are state-owned or founder-managed. What is the difference that company-ownership brings on leadership strategy?
I would say that state-owned companies have detached and impassive kind of talent management practices; for example, the CEO of a state-owned enterprise might not be there forever because the state might deploy a CEO from one company to another. On the other hand, founder-led organisations are very different and the fit with the founder is very important, therefore making it an emotional issue as well.
So how can you develop leaders and actually move those leaders when it comes to dealing with change and adapting to new technologies. How is that done?
I think this is where we come back down to an open culture, bringing in new ideas into the organisation.
One question to ask is: Do we set up a unit that deals with innovation or do we build innovation within our own organisation?
I want to mention the example of DBS Bank. It’s well known that they hold periodic hackathons where they invite Fintech companies, who interact with their employees and co-create new ideas. What they are doing is that they are bringing new things into the organisation, rather than setting up a special unit to innovate or incubate. They are aligning employees and outsiders, and using this opportunity to develop promising ideas— they then fund the growth of these start-ups while aligning their own employees to adapt to what is happening outside.
How do you think organisations can manage the coexistence of collective ambition and individual ambition?
I think there is always a challenge in this. When talent join an organisation, they need to leave their ego at the door before they enter. For organisations, the first thing is to define long-term goals and identify people with the right competencies. Apart from right skills, organisations need to consider the softer competencies of their candidates, for example interpersonal skills and team work. Once on-board, then it is a matter of how do we develop the team culture using every way possible to shape desired behaviours. Structure drives behaviours and so it is important to think carefully the roles for the people, and how they must play their roles on a day-to-day basis.
In one of your articles you have mentioned that “Ensuring quality in human capital starts from the top and this is probably the most fundamental risk mitigation tool any company can have.” Tell us more about it.
This was actually said in the context of the changes in business models brought about by disruption and innovation and the need to have the right talent to execute it. Any time you change the business model, you are undertaking a fair amount of risk and you need the right people to help you mitigate this business risk. Organisations need to seriously consider human capital issues and play a bigger role to manage such risks. Managing these risks involves managing the values and behaviours, not just hard skills. For example, success in digital transformation requires not just people with digital skills and new technologies but ability to collaborate and innovate together in the face of uncertainty and ambiguity. We can see the physical changes in the organisation, but we can’t see the cultural changes that are essential to sustain the transformation.
As disruption occurs across industries and economic cycles become more volatile, more firms are seeking a balance of fixed pay, short-term bonuses and long-term split between retention and performance. Tell us how can this balance be attained?
I think that’s an interesting challenge. If your business model is being disrupted and your profit margin is declining, you cannot afford to fund your annual bonus as before, how do you motivate management to stay and fight for the future? This is where we see that there could be a good balance — between the short-term and long-term incentives. If you suffer the short-term pay-out this year because of current performance, you still have long-term incentives to shoot for.
A typical type of performance share plan is that I grant you a hundred shares today and it will be vested in 3 to 4 years’ time, subject to future performance conditions being met. The prevalence of these incentives depends on which market we are in. The volatility of the marketplace and business cycles will also affect the ability to plan the performance targets. Sometimes these performance plans don’t vest at all due to market volatility. Furthermore, a performance share plan of 3 years might not reflect the transformation cycle of the organization. Typically, transformation requires disrupting the business model and requires collaborative effort across the organisation and business units to tackle the unknown. But collaboration is hard to measure by KPIs. The reinforcement of collaboration is more about culture and values, and leaders who drive the culture and live the values.
One hand you want to measure, but on the other hand we are putting more emphasis on intangibles like behaviours and values. How can there be a balance?
Measurability of intangibles is a tough task. Let’s see this through the example of the Board of Directors. They find it harder to do this because they don’t work in the companies, they are non-executives and come to meetings only a few times a year; what they do know is that to transform a business in a sustainable way, you need to have a good reading of the culture. Typically, what they would do is to try to take a dipstick — talk to people, etc. and get a sense using observations and opinions, and hopefully, when they add all the subjective observations together, they get something a little more objective because it is coming from different people. That’s why it is important to monitor culture change. A business transformation without transforming the culture is not sustainable. The good news is the measurement of the intangibles such as personality, values and behaviours are getting to be more scientific every day. That is one part of our growing business.
How do you think disruption is affecting HR as a function?
Today, businesses are talking about the digital platform serving the customers. This actually permeates down to HR having a digital platform to serve employees in order to fill out the value chain. If we could digitize dealing with customers, then we should also digitize the employees who are serving the customers. The overriding objective is to get HR department upgraded with services, technology, capabilities, governance and a measurement system. Digital strategy is not just about supporting a digital customer strategy; it is about changing the business model. In that, you also need to have an employee digital strategy. A lot of what you are doing in terms of having digital HR as an integrated platform would enhance the employee experience and enable data analytics. A common problem in most organisations is that HR data is in different places.
Over 50 percent of CHROs in Southeast Asia do not have an HR background, and almost 40 percent of this group has a 'Mixed' background. In your view, what are the positives and negatives of having CHROs with an HR background and without one?
I think everybody recognizes the importance of having the line perspective in HR. The downside of that is that you may not have the HR expertise to manage the strategic and the operational aspects of HR. But I believe that it actually depends on what stage you are in. If your HR practices are pretty mature, that’s where you can get the line perspective in. But if you are in more of a HR building stage, then you may need more of an HR expert and having a line person as a HR head might not work so well. I think it is more about thinking what kind of a person you need for that period. For example, if it’s a start-up stage, you will need an HR expert to come in because you are starting from scratch. But the HR expert needs to be one who could adapt to that start-up environment as opposed to merely importing best practices of matured companies.
People analytics can help match the right person to the task, as well as groom him to his best potential.
by NA BOON CHONG, Senior Client Partner, Singapore and Southeast Asia, Aon Hewitt
This article first appeared in The Business Times on Thursday, 3 August 2017.
Innovation and disruption are the buzz words that dot the business landscape today. At a consumer level, we can order taxi rides conveniently from our smartphones and get food delivered to us at top speed. But at work, what do these buzz words really mean?
There is no one right—or easy—answer. Socially, younger generations are increasingly setting the agenda as the politically and economically dominant age group. These individuals have grown up in an Internet-enabled world, and they’re interacting and consuming in radically different ways than their parents. They have high expectations for service, choice, and ease of doing business. Innovation is a part of their everyday lives.
Yet, creating an innovative workplace and developing an innovative workforce remain a challenge. In 2011, Apple co-founder Steve Wozniak stated that though many people in Singapore were well-educated, our society lacked in creative elements as people were not taught to think for themselves. In 2015, Deputy Prime Minister and Coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam spoke at the 50th Anniversary of National University of Singapore's (NUS) Business School and had already said, “Going forward, Singapore's future lies in being an innovative economy. Innovation in a serious form requires deep skills… whether in data analytics, robotics (or) digital marketing. And we need deeper skills in Singapore than we have today."
Still, education begins not at the start of work but at the start of learning—which goes back to our education system. Our schools are renowned for producing the highest-achievers in the world, with primary and secondary school students coming top in mathematics, reading, and science in the Programme for International Student Assessment (PISA) study last year. More importantly, our education system is expected to evolve in the coming years—where primary school leavers will have greater choices of secondary schools that offer niche programmes in robotics, environmental issues, art, music, and others. This is so that students can, from a young age, develop their interests and expand on their lateral thinking skills to encourage an innovative mind-set.
As recently as March 2017, Minister of Education Mr Ng Chee Meng reiterated that we needed to “develop in (students) an entrepreneurial dare, so they will go beyond the classroom, apply their learning to real world context, and pursue their passions.” At the same time, our education system must be equipped to help them “develop deep skills and expertise”, “develop their passions into strengths”, and “enable learning at every stage of life.”
These same sentiments are supported by the Committee on Future Economy (CFE) in a report released earlier this year, which outlines seven strategies to encourage people and companies in Singapore to stay nimble and adapt amid rapid technological change, slow global growth, and the steady rise of anti-globalisation.
But the question remains: With 99 percent of businesses in Singapore made up of Small and Medium Enterprises (SMEs), who are employing 65 percent of the available talent, how can this talent ambition for our country come to fruition?
The turnkey lies in the hands of HR leaders and CHROs. As the champions for both employees and the company, as well as the gatekeepers of the organisational culture, this deepening of skills must begin with HR leaders and CHROs themselves.
The Ministry of Manpower’s recently-released HR Industry Manpower plan echoes this sentiment, focusing on three key strategies of strengthening the HR profession; enhancing HR support for employees; and nurturing a vibrant HR services sector and HR eco-system.
In the report, Mrs Josephine Teo, Minister, Prime Minister’s Office, Second Minister for Manpower, and Second Minister for Foreign Affairs was quoted as saying, “There is great urgency for Singapore to uplift our HR industry. We have entered into a phase of economic development where industry disruption is pervasive and businesses are constantly challenged to transform themselves. It is therefore critical that our people adapt, acquire new skills and move into new roles.”
So, what emerging skills must HR leaders have in order to achieve this goal for their people? Aon’s Developing the Next Generation of CHROs in Southeast Asia study this year discovered six critical ones:
Be the architect and assessor of organisational culture.
CHROs are in a unique position where they can align HR processes and programmes to incentivise change and dis-incentivise the status quo—thus ‘architecting’ the shift.
Proactively map organisational capabilities to the future strategy.
CHROs must anticipate new sets of capabilities the organisation is likely to require—by translating the business strategy into strategic future capabilities, assessing the gap between existing capabilities and the ones needed, and developing a two-to-three year plan to bridge the gaps.
Play the role of an internal and external talent scout.
CHROs need to build the critical ability to spot pools of talent the organisation can access, and enable cultural alignment in the organisation by ensuring new recruits align with the behaviours the firm wants to develop.
Leverage technology to enable HR transformation.
The CHRO must work with his/her HR team to keep roles within the HR team relevant. By leveraging analytics and technology, HR generalists and business partners can morph into HR consultants.
Drive data- and analytics-based decision making.
With the emergence of technology, SaaS-based HRMS platforms, and internal social networking software, HR leaders are more equipped than ever with employee data to help make the best decisions.
Apply critical thinking to HR trends and data.
While emerging trends or skills may be important for aspiring CHROs, they are also important for others striving to be effective HR leaders within their organisations. CHROs need to apply critical thinking skills by looking through the lens of the business strategy and understand when—and when not—to leverage ‘leading practices’.
The fact remains that the most innovative companies are those that have a culture of innovation—an objective that is best achieved if enabled by HR leaders and CHROs themselves. Aon’s The State of HR Transformation 2017’ study shows that, to succeed, companies must achieve three things: Positive talent outcomes, engaging employee experience, and the ability to optimise data and analytics. The survey also found that seven out of 10 participating organisations plan to implement more robust people analytics strategies in the next 12 to 24 months, primarily to solve issues around performance, productivity, and retention.
A significant part of creating an innovative culture in any organisation involves digital transformation around HR processes and systems. Not only is it important to make it easy for employees to utilise these processes and systems, it’s just as important to get buy-in from line managers—who are the ones to best promote behaviours that the organisation wants from their employees. Furthermore, user-friendly interfaces encourage more of the workforce to utilise these digital platforms, and ultimately, deliver the end-goal of getting more data for people analytics. And as HR leaders and CHROs grow increasingly comfortable with engaging business leaders using data and talent science, people analytics will lead the way to developing an innovative workforce—by identifying the right talent for the right hires, discovering existing talent with the best potential, and grooming future leaders with the foresight to outline ambitious strategies and have the creative minds to achieve them.
So, where can you find innovative talent in Singapore? The first place to look is within your own organisation, starting within the HR department.
by NA BOON CHONG, Senior Client Partner, Singapore and Southeast Asia, Aon Hewitt
This article first appeared in HQ Asia on Friday, 23 June 2017.
ASEAN businesses have been facing headwind in recent years with the volatile global economies, depressed commodity prices and the geopolitical risks. On the other hand, the potential of the ASEAN Economic Community (AEC) as a significant regional bloc is hanging out there. One expected benefit of the AEC, other than the opening of the markets, is the talent mobility. Accessing talent and using that to fuel business growth presents itself as the only opportunity in a stagnant environment.
Aon Hewitt recently conducted a People Fuel Growth study, surveying high-growth Fortune 1000 firms.100 percent of the firms profiled in the study agreed that ‘collective ambition’ was key to their growth trajectory. But what is collective ambition?
Collective ambition is when the leadership team is united under a singular vision, purpose, and aspiration. Collective ambition is fuelled by leaders who are both competitive and collaborative. This is not about competing for competition’s sake or collaborating for collaboration’s sake. Instead, it is the result of having a strong desire to be successful, and awareness that success is only possible when leaders work together.
Interestingly, both the term ‘collective ambition’ and the latter sentiment of necessary teamwork were echoed by Singapore’s Education Minister, Mr. Ong Ye Kung. When describing the working culture of the Cabinet in a recent interview to the Straits Times, he said: “Disagreements are not treated as an ego contest. New ministers entering this kind of working culture know that while discussions are very robust, we are all on the same team. If there’s any ambition, it is a collective ambition for Singapore.”
Why collective ambition is so critical to growth
Collective ambition ensures common goals are achieved. When leadership teams across different business units truly believe in the vision, purpose and aspiration of an organisation, they will share a common set of priorities. These shared priorities guide the decisions leaders make, keep them focused on the goals for growth, and help them to effectively leverage their team’s talents to accomplish results. Occasionally, these same priorities may even direct leaders to make the difficult decision of sacrificing the interest of their individual business unit for the good of the entire organisation. An example of this is developing a new business that may end up cannibalising an existing successful business today.
The basis for collective ambition:
1. Select and develop leaders of substance.
High-quality leaders are the basis for collective ambition to work. We need a competent group of leaders and we bind them together with collective ambition. According to Aon Hewitt study Top Company for Leaders, high-growth companies are disciplined in grooming future leaders and much more selective in their talent identification process. They designate 10% less employees as high potentials each year while removing 15% more employees from the high-potential designation from employees who are already identified each year compared to average-growth companies.
2. Right strategy.
According to the People Fuel Growth study, customer centricity is one of the three parameters of high-growth companies (the other two being collective ambition and intentional alignment). That is having insight and foresight about the distinctive needs of customers, and how an organisation is uniquely capable of delivering to those needs. The right strategy and direction for the organisation is necessary for collective ambition to work. Having the right leadership skills and attributes would not guarantee success if the strategy is wrong. Similarly, the right strategy without the right leadership skills to execute would fall flat too. Aon Hewitt’s Aaron Olson’s research has discussed this in detail in the book Leading with Strategic Thinking that points the way to the deployment of both sets of skills effectively. Setting strategy in today’s disruptive world is a big challenge.
3. Managing collective ambition versus individual ambition.
The companies we profile are the largest commercial businesses. Collective ambition is a prominent factor for these large entities globally. However, the leaders of such successful organisations are typically highly competitive and achievement oriented. They strive to win. Despite that, because of the complexity they have to deal with, business, political, geographical, they understand that there is a team of people behind their success and their organisation’s success. The CEOs we work with today understand that collaborating with their teams is very important; collaborating with their competitors, other industry-players, and within the organisation is also important. Certain political developments in the world seem to contradict the aforementioned observation, but it remains to be seen if such counter-trend would lead to success in today’s complex world. An ASEAN top banking CEO was emphatic when he said that humility is an essential leadership attribute, and to him, humility doesn’t mean being docile. It means recognising that one doesn’t have all the answers and one can learn from others. Leaders who ask more questions than they talk.
What leaders need to do to bring collective ambition to life?
Collective ambition is entirely dependent on leaders working together. Collective ambition isn’t something that can be achieved by a draconian decree or simplistic declaration of a vision statement. For collective ambition to work, leaders must work in unison to create, review, and reinforce it.
1. Tie goals to concrete measures.
Achieving collective ambition requires goals to concrete measures and incentives.
Although these measures can vary, most of the high-growth organisations profiled in the study favour those of profitability and returns, and a purposeful redesign of annual and long-term incentive plans to tie leaders to collective goals. This involves measuring long term value creation that goes beyond the annual performance and binding leaders with a common set of long term performance metrics for three or five years (or longer as increasingly so) that they know they have to achieve on a group basis.
Incentives and rewards on achievement and penalised for non-achievement of group goals helps align business leaders from diverse units with their own profit and loss accountabilities.
2. Build a culture that reinforces common values and desired behaviours.
A widely accepted definition of culture in management is culture is essentially “the things you do when no one is watching over you.” That is doing the right things for the business. Cultures and values are the soft part of business management. A CEO of a major diversified company in Singapore says, “I look for three types of collaboration in my business leaders. One is easy, referring another business colleague to a client, here only good will is generated. The second one is that both colleagues work together to get new business from a client, and both win. The third one is the hardest and most crucial, one sacrifices for the larger good. For example, giving resources to help another business that is struggling. The third one can’t be mandated or measured as a KPI, but emanate from the culture and values painstakingly built over time.”
Leaders need to build an organisational culture that reinforces the values that the organisation needs to achieve their collective goals in a sustained manner.
3. Execution focus
Our consulting experience tells us that very often good intention fails because the essential components of strategy development, strategy cascading, business and budgeting planning, capital and resource allocation, and performance management are activities that take on their own lives and remain unconnected.
A well-structured execution approach is needed, which answers the following key questions in four areas:
Are authorities of individual managers and decision bodies well-defined and understood?
What are the principles and guidelines in making capital or resource allocation decisions? More of the same or based on strategic objectives?
Are managers fulfilling their execution role effectively, especially if it stretches beyond their own department?
Do the executives get all critical information necessary for decision-making on a timely basis?
Do executives feel that the progress status is based on objective criteria?
Is the executive meeting agenda too full or too empty of execution issues?
Is the frequency of progress review well-balanced between preparation, discussion and follow-up time?
Which parts of progress reporting could be automated to increase accuracy and efficiency?
Do we have the right number of personal interactions in addition to mass communication on strategy?
What level of understanding/buy-in/ownership have managers and employees reached?
Which communication channels proved most successful?
Have employee feedback and concerns been incorporated and used to fine-tune strategy execution?
Have strategies and initiatives been assigned a clear owner who drives execution? What about the “white spaces” in-between organisational boundaries?
Have individual targets been distributed at the right level, reflecting also cross-boundary relationships?
Has management exercised consequence management by rewarding out-performers and disciplining under-performers?
Has HR fully aligned performance management to strategy cascading and execution?
With collective ambition, an execution focus, and the right strategy, leaders can leverage their team's talents to achieve the organisation’s growth goals. In fact, by implementing these suggested practices, organisations are also laying the foundation for leaders to instil that same attitude of competition and collaboration in the rest of the organisation—and to groom the next generation of leaders.
by PATHIK GUPTA, Associate Partner and Regional Head of Wealth Management for Asia Pacific at McLagan, an Aon company
This article first appeared in The Asian Banker on Wednesday, 21 June 2017.
Banks have been very good in automating tasks and then actually improving certain tasks through historical analysis
In artificial intelligence where there is predictive and cognitive capability, certain jobs will start to disappear - jobs where you would not need human intervention
Jobs that will continue to thrive in banking are those that need skills despite AI, with human qualities of creativity, strategy, adaptability, interpersonal skills and leadership
Digitisation has changed banking forever. Cashless transactions, mobile and online communications, paperless submissions, and automated teller machines (ATMs) have changed the face of banking. Disruption is a norm, and organisations both large incumbents and financial technology (fintech) start-ups are creating new markets and controlling consumer experience like never before. According to the Organisation for Economic Co-operation and Development’s (OECD) projections, 25% of the workforce is in jobs where a high percentage of tasks could be automated. With artificial intelligence (AI) and robotics, much of the talks in banking centres around – Will AI take over my banking job? Will my skills still be relevant in the future?
Components of digitisation in banks
There are three types of digitisation occurring in banks — automation of mundane tasks, historical analysis to improve those tasks, and the third most disruptive is predictive and cognitive analysis.
Banks have been very good in the first two components that is automating tasks, and then actually improving certain tasks through historical analysis. Have they replaced jobs per se? Based on Aon McLagan’s study of 105 banks in Asia over the last five years, we have seen an increase of 35% in the number of information technology (IT) jobs and at the same time reduction of 14% in the number of operation jobs indicating bank’s continuous focus on process automation and optimisation. However, we haven’t witnessed jobs going away, but what we have witnessed is the nature of the jobs has changed.
So for example, 15 years ago, the teller who was in a retail bank could do bookkeeping and cash transactions, but now these are all automated, and so the teller now needs to key in certain information or scan a certain code, or assist and educate customers with their online or mobile transactions.
The third component is that in AI, where there is predictive and cognitive capability, and here is where certain jobs will start to disappear - jobs where you would not need human intervention. These jobs will be done by machines, for the machines will know that if certain scenario arises this is how to react. This will be the “if to how” scenarios, which machines will handle themselves. This is where jobs of credit analysts and relationship managers will disappear. For example: The job of the credit analyst or credit underwriter is to support the home loan applications and perform a know your customer (KYC), confirm if the applicant has any defaults, through credit check, credit history, credit validations and approve or reject the application. But with AI, banks can now perform a credit check and analyse, based on historical data and future trends, what is the percentage chance of the potential customer defaulting - and all this in nano-seconds. Robo-advisers, cashless transactions and online and mobile banking have already replaced backend operational roles, relationship and wealth managers, remisiers and reduced the need for branch service staff.
It is not all bad news. In a highly competitive market, banks are turning away from mass marketing towards individualised and relevant marketing targeted to each customer’s profile and banking habits. As banks use predictive analysis to compete and thrive, there is a dearth of data analysts and data scientists who have both the technical know-how and the industry knowledge. You can’t create a predictive model, unless you have the talent to create that predictive model. Another such role is the highly specialised regulatory and compliance functions. The heightened regulatory environment has created a need for more people and accountability on banks to rely not just on systems but also individuals from within the industry who can look at it in a holistic manner. Regulations are more complex to interpret and have different interpretations in different jurisdictions. The role of autobots or automated system therefore becomes difficult. The second reason is repercussion of regulatory breach is so high, both in reputation and costs, to the bank that even though if someone does automate something, the risk of failure may prevent the bank from completely automating these tasks.
AI's bigger role within banks
Jobs that will continue to thrive in banking are those that need skills, despite AI, with human qualities of creativity, strategy, adaptability, interpersonal skills and leadership. Therefore, functions that need human interactions like sales, human resource (HR), and marketing will still be relevant but can expect job reconfiguration. AI could help these functions to be more effective by giving them quicker access to relevant information than ever before. Leadership and strategic roles will continue to see a demand in banking. Leaders need understanding of the digital world, and understanding where the industry and market is shifting and where the demographics and competition are moving, so that they can take timely measures to direct their workforce and the business model of the bank in that direction. As banks continue to reduce costs and increase revenues, AI will play a bigger role in the functioning of the banks, the skills and roles in this environment that will survive and thrive are the ones that can’t be digitised.
With employee expectations evolving and disruption in technology, CEOs are striving to drive business success by harnessing the potential of their people.
by JEREMY ANDRULIS, CEO of Aon Hewitt's South-east Asia business
This article first appeared in The Business Times on Friday, 17 March 2017.
At a time when leaders are challenged to drive better business performance through their people, CEOs continue to be plagued by a critical skills shortage and heightened cost pressures. Externally, volatility continues to be the "new normal" for most organisations - in fact, a recent study shows that 70 per cent of Fortune 1000 companies have disappeared in the last 70 years. Employee expectations are also evolving, while disruption and advancements in technology are changing the configuration of work faster than ever.
How can today's CEOs in Asia drive business success by harnessing the potential of their people?
In the Aon Best Employers 2016 survey, we spoke to CEOs of almost 600 organisations across Asia about their strategic goals and the business challenges that impact their organisations' ability to succeed. We discovered what the CEOs of these Best Employers are doing differently from their competitors to achieve 20 per cent higher engagement than the market average, and drive 10 per cent greater revenue and 26 per cent higher profit than market average.
Three key themes emerged:
Create a competitive advantage through people
CEOs in Asia named three challenges that impact their organisations' ability to succeed - market factors (52 per cent), people issues (47 per cent), and product/service innovation (35 per cent).
Market factors such as global competitive trends from non-traditional sources and evolving customer expectations mean organisations have to rapidly innovate their products and services in order to meet ever-changing needs and demands - and they can only achieve this with an agile workforce.
These challenges of speed, innovation, and agility are also the critical differentiators for creating a sustainable competitive advantage. At the centre of each differentiator are people who think and operate differently. Aon Best Employer CEOs now see making the right investments and decisions about people as the enabler of their competitive edge. They work hard to build organisations that thrive on product and service innovation, while creating work environments that are more likely to attract and retain the best talent. Their organisations also fill 28 per cent more openings internally than the market average, which helps them achieve better business performance through their people. However, with CEOs citing critical skills shortage (63 per cent) and poor availability of talent in the external market (60 per cent) as their top people risks, the road to building agile organisations is an arduous one - even for Best Employers.
Deliver a differentiated work experience
As salaries continue to rise year on year, critical skills shortage and low availability of external talent put power in the hands of employees and job seekers. At the same time, an inadequate leadership pipeline means organisations are forced to spend more to attract senior leaders to their team. However, money is no longer the easy answer to retaining great talent. Furthermore, increasing salaries and rewards is not sustainable. It creates a huge risk to the bottom line and an adverse impact on profitability in the medium- to long-term.
This is why Aon Best Employers across Asia are increasingly focusing on building a strong employer brand and leveraging digital platforms to create a differentiated work experience.
In 2016, CEOs said that the most important employer value proposition was teamwork and empowerment (59 per cent) - up from the third spot just last year - where employees prefer to be enabled, rather than instructed, in performing their roles.
This is followed closely by product and service excellence (52 per cent), where employees across generations express a desire to be proud of what they're creating and how they're contributing to the organisation and changing the world - not just from a professional perspective but a personal one.
Learning and career (51 per cent) rounds up the top three employer brand themes, where employees are seeking organisations that offer them opportunities to learn new skills and grow their careers.
Yet, while 65 percent of organisations say that they have a clearly articulated employer brand, only 11 per cent of their CEOs and HR leaders are aligned on that definition. While this suggests more work is required to align leaders on why their organisation provides a differentiated work experience, the good news is that CEOs are applying the same approach to their employer brand as they do to their products and services. They focus on clearly and consistently creating a differentiated employee experience in order to attract the best talent and enable them to perform.
Correspondingly, CEOs are looking to invest in more digital platforms that align with the experiences that employees have outside of work so as to provide real time, end-to-end, and anywhere access to information and services. Digital platforms also enable organisations to collect data more frequently, and in a more targeted way, in order to gather better insights and make better decisions about their people and for their people.
Build an agile organisation through analytics
Data empowers organisations to make informed decisions on how to best achieve their business and people goals. In addition, always listening to employees through constant conversations and frequent pulse surveys - not just organisation-wide evaluations once a year - provides up-to-date and relevant data for leaders to make the right decisions on where to direct people investments.
CEOs expect the HR function to use analytics and critical thinking to create compelling business reasons to make effective and predictive decisions on people and organisation investments. This applies to organisation design and workforce planning, as well as development of an effective leadership pipeline, where CEOs want HR to have the ability to make informed decisions on answers to questions such as:
Who are the organisation's future leaders?
How can the organisation improve the performance of current leaders?
How can the organisation evolve to face up to dynamic market forces and meet customer expectations?
At the same time, this is where CEOs believe HR leaders have room for the most improvement. Thirty-eight per cent of CEOs believe a top improvement area is succession planning and leadership development - not just for leadership at the top levels, but at all managerial levels. Still, more and more Best Employer organisations are taking multiple approaches to talent and leadership assessment in order to better predict future success. CEOs are also demanding return on investment on leadership programmes.
The bottom line is: as HR leaders get a seat at the table as key design-makers in business, CEOs expect them to have the agility to address people issues at the pace of evolving business demands. Top HR leaders in the world believe that leadership driven by collective ambition - where leaders are united under a singular vision, purpose, and aspiration - is key to any organisation's growth trajectory.
By uniting leadership around a common goal, supported by intentional alignment from a "people" standpoint and customer centricity that ensures relevance, it helps CEOs to best leverage their talent and drive growth from the top down.
Plus, enjoy the added bonus of a better night's sleep.
Bitter medicine is hard to swallow, but sometimes, that's what an employee needs to get better.
by VIVIEN SHIAO
This article first appeared in The Business Times on Saturday, 18 February 2017.
These days, it's become extremely unsexy - almost taboo - for management to talk about wielding sticks, as opposed to dangling carrots. So we focus on the rosy: what perks employers can provide, how bosses can motivate and reward staff, and the list goes on.
No one can deny the need for positive reinforcement. But this cannot replace constructive criticism and yes, even discipline, when the situation calls for it.
Many managers have no qualms patting employees on the back for a job well done, but falter when the time comes to deliver negative feedback. Some fear being liked less, some fear tears. But failing to address it is a failure of management. It sends a message that underperformance is okay, not just to the person in question, but also to the rest of the team who are working hard to pick up the slack.
It's a fine line to tread, and veering off to extreme ends of the spectrum is all too easy. We have seen bosses who get so worked up that it ends up getting personal, and there are those who hedge it with so many compliments that its impact is lost. Or worse, some resort to a passive-aggressive e-mail.
The times, they are a-changin'
In the past, no one would bat an eyelid if a boss shouted or banged his fist on the table - it was pretty much the modus operandi in the small and medium sized enterprises back then. It was a top-down style of management where bosses had no qualms giving staff a piece of their mind.
Vidisha Mehta, talent strategy practice leader - Asia, Mercer, observes: "The traditional style of management tended to be quite paternalistic, with managers treating their employees like children - this was reflected in how they provided feedback."
Times may have changed, but by no means does this indicate that such behaviour is a relic of the past.
Noora Alsagoff, head-HR, Asia Pacific, Middle East and Africa, Aon Hewitt, points out: "Unfortunately, angry bosses are ubiquitous in today's organisations. There are hundreds of stories where employees were told off by their bosses, often publicly."
In today's economy where collaboration, ideas and innovation are valued, the way feedback is given needs to evolve. Employees increasingly want to be treated like equal partners in their development.
Shouting does quite the opposite, creating an environment of fear and distrust, where staff stop being inclined to share their views and opinions openly. Says Ms Alsagoff: "When managers begin by showing anger, the conversation becomes less about reason and more about denial and defensiveness . . . Organisations with a strong, supportive culture never condone this behaviour."
But before managers start their lament on the strawberry generation, Ms Mehta adds that this does not imply a "softening" of attitudes among staff of today. "It means that employees want to be treated with the respect that you would accord an equal. The emphasis is on being firm, yet respectful to the individual, rather than being condescending."
Rules of engagement
Aside from a public dress-down, one of the big no-nos when it comes to giving negative feedback is sending it via e-mail. That may seem like the easy way out, but there are so many problems with this. One sent to the whole team regarding the mistakes of a particular person is simply naming and shaming. On the other hand, not specifying who leaves everyone flummoxed and a witch hunt is likely to ensue.
Even if sent with the best intentions, e-mail can still be easily misconstrued and circulated. Just one word: Don't.
As far as possible, it should be done in a one-on-one setting to get down to the root problem. The old adage "praise in public, criticise in private" stands. The aim is not to rant or to blame, but to understand how things can be improved upon in the future.
In an ideal world, feedback by managers comes regularly and there's ongoing communication between the two. But we all know that in reality, this often doesn't happen until either it's time for performance appraisal, or when an employee has screwed up big time - in both instances, it's too little too late.
"Feedback is most effective when it is shared as soon after the incident as possible, while it is still fresh in the minds of both the employee and the manager," advises Ms Mehta, noting that an emotional reaction typically happens when the employee is surprised by the feedback.
Other common reactions managers can expect are denial, anger or those who go quiet due to shock. In such a situation, it is the leader's role to listen well, stay calm and stabilise others, according to Aon Hewitt's "The Engaging Leader" study.
But the key to avoid defensive reactions in the first place is for supervisors to prepare examples to support their stance. This is not about stockpiling an arsenal to attack the person, but rather to share evidence so that staff know the context.
More importantly, asking for specific examples is the most common reaction by staff, so supervisors must be able to provide that, says Ms Alsagoff. Otherwise, criticism can easily be passed off as judgment, and this lack of clarity can lead to frustration or misunderstanding of the manager's intention.
It's not enough to give employees feedback on areas they fared poorly in. Managers need to give suggestions on how they can do better in similar situations in the future. This provides a clear course of action and ensures that the employee is not left to interpret this for themselves. Needless to say, whatever plan mutually agreed upon during the discussion must be followed up with regular progress reports.
On a final note, in a job market as poor as today's, the worst thing a manager can do is to make a veiled threat about job security as a means to cause change, no matter how riled up.
Ms Mehta adds: "It's difficult to change behaviour - you only have to look at the hundreds of broken New Year resolutions to know that. Managers need to convey to employees that they are willing to support them in the journey of behaviour change, and that they are committed to the employee's success."
Ultimately, negative feedback is a bitter pill to swallow, but if administered right, brings about recovery and growth. A good dose of tough love may be just what your employee needs to get back on the right track.
by NISHA RAMCHANDANI
This article first appeared in The Business Times on Wednesday, 25 January 2017.
Collective ambition is key to driving business growth, according to a study, which found that high-performing companies were able to unite leadership to drive collective performance through unique annual and long-term incentive plans.
The People Fuel Growth study by talent firm Aon Hewitt surveyed chief human research officers from 25 companies to establish what successful companies do to outpace their rivals.
All the firms interviewed were headquartered in the United States but most had global operations; the firms represented 1.1 million employees.
Na Boon Chong, senior client partner at Aon Hewitt Singapore, said: "By uniting leadership around a common goal, supported by intentional alignment from a 'people' standpoint and customer centricity that ensures relevance, it helps organisations to best leverage their talent and drive growth from the top down, be it at a firm or at a national level."
Collective ambition is defined as uniting leaders under a singular vision, purpose, and aspiration.
Leaders at high-performing companies are typically equipped to empower their teams to contribute to the company's growth, while compensation packages incorporated a mix of long-term and short-term rewards, Aon Hewitt highlighted in the report.
Higher-performing companies typically use one or two metrics – such as profit – in the annual incentive plan to enable growth.
Approximately 40 per cent of high-performing companies of those studied used only one metric.
In contrast, average-performing companies might add other performance metrics in addition to profit, creating more focus areas which could end up contradicting one another.
High-performing companies also set a higher ceiling of performance than average performers, and in line with that, provided for a higher maximum award payout. This could be pegged to a percentage of the target. Similarly, high-performing organisations provided a much lower payout for achieving minimum performance.
Another avenue is long-term incentive plans, such as stock options. "This vehicle creates a win-win for shareholders and participants by requiring increases in share price for the award to have value and providing leveraged award opportunities if that occurs," Aon Hewitt noted.
Of the high-performing companies surveyed that had performance-based long-term incentive programmes, only 10 per cent included relative or absolute total shareholder return as a performance metric, while 33 per cent of average-performing companies used relative or absolute total shareholder return as a performance metric. This could be due to high-performance companies preferring "more controllable" metrics, such as profitability.
The report also highlighted the need for leaders to review the company's mission and growth plan at least once a year. Goals are typically linked to concrete measures so that staff understand how they can add value to – and share in – the company's success.
by VIVIEN SHIAO SHUFEN
This article first appeared in The Business Times on Saturday, 10 December 2016.
Several years ago when I was fresh out of university and looking for a job, I managed to land an interview for an editorial position that I was extremely keen on.
A combination of nerves, social awkwardness, and insufficient preparation resulted in one of the most painful interactions I ever had in my life. The interviewer - who would have been my editor - was also struggling mightily to find common ground with me, in a conversation that was steadily going downhill. And then she asked what kind of books I liked to read. Without thinking, I responded: "Chick lit."
To this day I don't know what possessed me to say that. It's a well-regarded trade publication too and I just kissed my reputation goodbye. And it wasn't even true that I liked that genre! Yes, the last book I had read at that point was one but the answer just came out of my mouth before I could stop myself.
I think the editor winced and the interview was hastily concluded. I'm a little embarrassed to admit this, but being the earnest, overly serious 22-year-old that I was back then, I went home and bawled my eyes out. That was probably my first experience with the consequences of making a poor first impression.
My foot-in-mouth syndrome might have been amusing during my school days, but in the working world, you know what they say: there is no second chance to make a first impression.
I spoke to Martin Gargiulo, professor of organisational behaviour at Insead, who said that first impressions can be very lasting, even if we think of ourselves as being objective. In fact, it is much easier and faster for us to make up our mind than to change it.
"This is the basis of speed dating. We tend to form an opinion about someone pretty fast. It may not be strong, but it is fast."
He says that people form an impression of someone new based on cues such as how they talk, dress or behave. Once that happens, we become more attentive to cues that confirm our views, while filtering out those which don't corroborate. This, he says, is known as "confirmatory bias" in social psychology.
Mollie Kohn, chief commercial officer, Asia Pacific, Middle East and Africa, of Aon Hewitt, concurs, describing first impressions as having a "halo or horn effect". This refers to a cognitive bias that allows a good trait (halo) or bad trait (horn) to overshadow the rest.
"Our brain receives so much information and data all the time, so it tries to be as efficient as possible. So we tend to make snap judgements. Once you make a bad impression, it's really hard to change it."
For people such as me who suffer from foot-in-mouth syndrome, it's a double whammy. But slinking away and hoping for the best when you made a poor impression in the office is not an alternative.
Eugene Chang, senior principal of Korn Ferry Hay Group, said that first impressions affect your personal brand. He points out that in this day and age, workers no longer operate in silos, and it will impact your promotion chances if people don't want to work with you because of a negative impression.
"Certain work cultures can be quite toxic, and if you walk in as a new person and make a bad impression, rumours can start and people may label you before you even get a chance to prove yourself," he added.
But if it's any relief, all three experts I spoke to believe that perceptions can change. A key theme is the need to overcompensate.
According to Prof Gargiulo, it is a process where the offending person needs to produce much more positive cues over time to counteract the negative impression formed. It entails self-awareness to know how one comes across to others, and then deliberately behaving contrary to what the expectations are.
If repeated long enough, others should start to be more open to seeing the positive cues and changing their views.
Mr Chang on the other hand suggests taking a more direct approach to changing a poor first impression- by apologising to the other party first if your intentions didn't go across correctly. Call it out and don't let it fester, he advises. After that, one needs to follow up by making the extra effort to overcompensate for a much better experience with the other person.
Sometimes, the best approach to changing someone's mind is not going through the person directly. Mr Chang said: "It's possible that there's no recourse even though you have done everything. You can then work on proving yourself to people whose judgment the person values, sort of like a testimonial."
This hopefully will make the other party rethink the situation enough to a point where they can start seeing cues that they may have neglected before.
In other words, it takes a herculean effort to repair the damage done by a poor first impression. But let me end this piece on a more positive note.
My botched job interview had an unexpected twist at the end. You see, I didn't just throw my hands in the air and moved on to the next job. That very day, I decided I had nothing left to lose so I penned a letter thanking the editor for her time and also apologising for some of the thoughtless things I said. I did not make excuses for my poor interview, but tried to articulate my views in answer to some of the questions she asked.
Miraculously, I got called back for a second interview! I prepared for that like there's no more tomorrow. It went well and I got the gig in the end.
Years later, I found out from my interviewer that it was my email to her that made her decide to give me a second try. By that time, we had already built a great working relationship and she was in stitches recalling the whole incident. She confirmed that the whole interview was really so disastrous and she had made up her mind not to call me back. But lucky for me, my post-interview note was sincere enough to cause her to relent a little and the rest, well, is history.
While there was a happy ending in my case, I have learnt over the years that do-overs don't always come by. To correct a first impression, one requires at least a second chance to be able to do so. But not all situations allow us to have the luxury of time to change people's minds.
Negative first impressions can be reversed, but why put yourself through all that extra work? It is easier to build on a good foundation, rather than try to fix something that is broken. Be self-aware, prepare, be in the moment and pay attention; this way, you are far less likely to have the problem in the first place.
Knowing the difference can save your career and sanity. Find out what kinds of behaviour warrant action.
by VIVIEN SHIAO SHUFEN
This article first appeared in The Business Times on Saturday, 17 September 2016.
It might be the gossipmonger who sows discord. Or it might be the drama queen who complains about every little thing. Or worse, it might be the passive-aggressive colleague who constantly steals credit. But while it is unrealistic for everyone to like one another, there's a difference between someone you can't get along with and a toxic colleague.
The former has to do with individual preference, while the latter poisons the office with their negativity and malcontent, affecting the performance and engagement levels of those around them.
A 2015 study by Harvard Business School (HBS) on toxic workers suggests that such people compel other employees to leave an organisation faster and more frequently. This not only generates high turnover and training costs, but also brings down the productivity of the entire team.
So while it may be very magnanimous of you to just grit your teeth and bear with it, doing so comes at a high cost to both your career and sanity. It is imperative that you nip the problem in the bud before you become toxic too.
If a co-worker grates on your nerves, but no one else in your team has this problem and you can't really pinpoint why, perhaps it's wise to check whether the problem lies with you. It might be your inner bias talking.
Be honest and ask yourself these questions, says Wendy Chua-Sullivan, leadership coach at Wand Inspiration. "What could you be feeling insecure or jealous about? What are your judgements about this person? What does this person remind you of that triggers your irritation?"
Recognising where your feelings are coming from helps puts things into perspective.
As teams get more diverse, it is inevitable that we encounter colleagues we don't like, and it can simply boil down to a personality mismatch or individual preference. Most people don't realise that it is perfectly fine for co-workers to not like one another. In fact, liking your colleagues is more of a bonus rather than a requisite.
If all parties are professional when it comes to projects and work gets done, it doesn't really matter that this person puts up a front when the boss is around or that your co-worker can't stop over-sharing about his or her life.
The golden caveat here is that it must not impact your ability to perform, or affect how your boss or teammates view you. "Colleagues who are annoying usually are unaware and their intention is not to hurt. They still contribute to the team and results. An annoying co-worker is like an itch - irritating but eventually harmless," says Ms Chua-Sullivan. Vikas Verma, principal of Aon Hewitt, Talent, Rewards & Performance Practice, says that sometimes it may just be the colleague's communication style. "In this case patiently working with the colleague to make him or her aware of this and perhaps help the person with a development plan would be a great start."
But when your co-worker is causing you hurt and misery, he or she has moved into toxic territory. Says Ms Chua-Sullivan: "One who is toxic intends to bring others down. Like a virus in the body, the toxic colleague's intention is to destroy good cells."
Some examples of toxic behaviour include creating conflict, sabotaging others to make themselves look good and spreading negativity. While it may be obvious to everyone else, toxic workers are often hard to spot by managers because these employees still hit their key performance indicators (KPIs) and may hide such traits from superiors. Or worse, they may be buddies with the boss.
However, the worst thing you can do is to keep quiet, which appears to be the norm in Singapore's rather non-confrontational culture. Eve Ash, psychologist and CEO of Seven Dimensions, suggests that co-workers try to talk to the toxic colleague personally. "Give specific feedback, explain the issue and why it is a problem for you, ask them for their opinion, and work out a new way forward together."
But if the toxic co-worker is not receptive, approach your boss with a positive mindset. You should give your boss a fair assessment of the situation with specific solutions you would recommend, instead of focusing on personal grievances.
However, if your boss is not willing to take action and no change is seen, it may be advisable to speak to someone else more senior for advice as a last resort, but make sure your boss is in the know.
Says Mr Verma: "If you do speak to someone else, it's advisable to be objective and talk about your issues rather than the boss or the co-worker. Keep it to the fact that certain behaviour of your colleague is hindering you from giving your best to the organisation and team objectives."
Toxic work culture
If you focus on how to resolve the issues at hand, there is no reason why you will be looked upon as a troublemaker, unless your entire organisation has a toxic work culture that condones such behaviour. In that case, it is quite clear that seeking greener pastures might be the best option. But until that becomes the only alternative, be the bigger person and rise above it. Find a good mentor to develop your skills and study those who have dealt with difficult people and learn from their interactions.
Says Ms Ash: "Always act professionally, strive to be a champion competitor, and allow the competitive, undermining, passive-aggressive teammate or boss's buddy to make their own mistakes. Don't get sucked into a useless office war."
by VIVIEN SHIAO SHUFEN
This article first appeared in The Business Times on Saturday, 20 February 2016.
The person who doesn't feel anything after being passed over for a promotion either doesn't care, or is in denial. It's only human to be upset and emotional. But for those gunning for a promotion that went to someone else, the worst thing they can do is to act instinctively.
Storming to your boss demanding why so-and-so got promoted and you didn't does not reflect well on you, and it puts your manager on the defensive.
On the other hand, sobbing into your pint of ice cream and keeping quiet will not help your career progression either.
First things first: stop. And breathe.
"If you're passed over for a promotion, it's normal to experience a gamut of emotions but let yourself calm down before you take any action," advises Mollie Kohn, senior partner at Aon Hewitt. "Don't make assumptions of the reasons you didn't get the job."
It stings, but try not to behave abnormally in the office. That just makes things awkward and it looks unprofessional.
Next, congratulate your colleague, no matter how you feel inside. He or she is still a teammate (or new boss), and you will have to continue working with that person.
Once all the niceties are out of the way, the introspection can begin. Finding space and time for reflection is extremely valuable, says Glenn Carter, global head of talent development at Millward Brown.
He says that from the process, employees can learn more about themselves and the company: What qualities or attributes did the successful person have that I didn't? What new experiences would increase my value? Was there already a succession plan in place?
Talking to the boss
After which, speaking to your manager is a must.
Don't wait for your manager to initiate a conversation - be proactive and arrange a meeting after a day or two. Getting feedback on where your expectations were not aligned and what you can do better for the future is crucial if you want to move ahead.
"I would encourage people to have an honest conversation with their manager. Discuss each other's insights . . . the individual may be a high-potential person that was not ready to step into a more complex or senior role," says Mr Carter.
He adds that such a conversation builds trust, creates empowerment and maintains motivation.
Ms Kohn from Aon Hewitt adds that one important point to note throughout your conversation is not to speak negatively about others - especially the person who got the job instead of you. "If you consider that promoted colleague's performance to be inferior to yours, tread lightly and be gracious," she says.
She adds that it is very rare - almost impossible - for a co-worker to know about all aspects of another's job.
So, one's perception of another as a low performer may not be representation of the employee as a whole.
No perks of being a wallflower
Sitting quietly and letting it slide can be one of the worst decisions one can make - promotions hardly ever fall from the sky.
No matter how good a worker you are, being proactive about your career progression can make a world of difference in the competitive workplace. This means initiating regular conversations with your manager about your career, and not just once a year.
"Beyond intelligence and aptitude, gritty people, by virtue of their interest, focus and drive typically achieve higher levels of success," says Mr Carter. "The people who get on in this world are the people who get up and look for the circumstances they need . . . Seeking a promotion demonstrates a person's ambition, loyalty and commitment to the organisation."
Workers should actively seek opportunities and put themselves up for them instead of waiting for management to notice. According to Ms Kohn, some other exceptional traits that these successful candidates have are that they are easy to work with, as well as take and give feedback constructively.
In Aon Hewitt's The Engaging Leader study, other traits include: proactively owning solutions where others cannot or do not; energising people with contagious positivity; being good listeners, and being able to stay calm and unify others.
Time to leave?
It may cross one's mind to leave the company, especially after getting passed over for a promotion multiple times.
However, failing to get a promotion doesn't mean there're no opportunities in the organisation at all. Career opportunities could take many forms, such as lateral movement within the same function, and special projects or cross-department assignments. Before you make your decision, it is best to ask your manager what opportunities can open up to you.
"Quitting is the only answer if your manager suggests that an opportunity will take longer than you are willing to wait, or there's no opportunity at all," says Ms Kohn.
Ultimately, it's about whether an employee still finds meaning in his or her work, adds Mr Carter. According to him, as human beings, we all seek roles and opportunities that we believe are meaningful, in which we are able to learn and grow.
With so much time spent at the workplace, our happiness is impacted by our employment choices.
"This dimension would determine when it is time to leave," he says.
Singapore REITs are now facing a changing economic and regulatory landscape. With MAS enhancements to the REIT management guidelines, REITs will need to make adjustments on remuneration and other policies.
By JACOB TAN
Consultant, Executive Compensation and Performance, Aon Hewitt
This article first appeared in the Singapore Institute of Directors (SID) Directors' Bulletin, December 2015 for Quarter 1, 2016.
The Singapore REIT industry has witnessed significant growth since the first S-REIT was launched on the SGX in 2002. REITs have, until recently, outperformed equities and other investment assets in overall yield for investors.
On the economic front, the REIT industry is now facing challenges. Expectations of higher interest rates have weighed on REIT prices in the past months, with S-REIT indices seeing significant downward trends this year.
On the regulatory front, the proposed enhancements by Monetary Authority of Singapore (MAS) will require adjustments in the corporate governance of REIT, particularly in the area of remuneration.
Following industry feedback on its October 2014 consultation paper on the governance of REITS, MAS issued a response in July 2015 on the measures it intends to implement in 2016. (ED: see “The REIT way forward to good corporate governance", SID Bulletin Q3, 2015).
A significant part of the enhancements was targeted at remuneration for REIT managers, which strive to accord REIT unitholders increased protection and accountability, and better align the interests of REIT Managers with that of their unitholders.
The changes to the remuneration policy guidelines are summarised in the diagram below:
How easily will REITS comply with these new requirements?
To answer the question, Aon Hewitt studied the FY2014 annual reports of 10 major Singapore-listed REITs to evaluate their current compliance levels to the new corporate governance guidelines.
The study found that a majority of these REITs were not fully complying with the new standards for disclosures of remuneration policies and key executive compensation.
A key shortfall was in the disclosure of remuneration policies for key executives. Only 20 per cent of the firms detailed the policies used to determine executive remuneration and any pay-for-performance mechanisms.
The large majority of the firms studied also did not have the appropriate disclosures of key executive remuneration amounts.
However, one REIT, Keppel REIT stood out for its compliance (see example at the end of this article).
For the majority of REIT managers, the findings indicate that they would need to undertake a comprehensive review of their remuneration policies against the enhancements and ensure that their FY2015 annual reports start providing the additional remuneration policy information specified.
Aligning Remuneration with Unitholder Interests
The one message that came through clearly in the MAS paper and enhancements is the critical role the board of the REIT manager plays in acting in the best interests of unitholders. This includes ensuring that the REIT’s remuneration policies be structured to ensure this alignment.
There are two key areas where REIT managers can look into to achieve this.
Firstly, the choice of KPIs used to evaluate executives is critical in achieving an effective pay-for-performance policy. KPIs should be based on REIT performance, such as Total Unitholder Return, Distribution Per Unit, or Net Asset Value.
Measures of the REIT manager’s performance (such as revenue of the REIT manager) should be expressly excluded. Such KPIs would place the REIT manager’s interest in direct conflict with that of its unitholders, and may drive undesirable behaviour. For example, a focus on the REIT manager’s income could incentivise the REIT manager’s executives to extract more fee income from the REIT at the expense of the unitholders.
Secondly, a REIT Manager can explore introducing a long-term incentive (LTI) scheme tied to long-term unitholders’ return and settle such LTI payments in the units of the REIT. This will put a portion of the
REIT manager’s executive remuneration at risk and align its interests to that of unitholders.
These enhancements to the regulatory framework for REITs seek to achieve better alignment between REIT managers and their unitholders. Therefore, REIT managers should not look upon the enhanced guidelines as an additional regulatory or administrative burden. Instead, it is an opportunity to re-examine remuneration
policies and pay-for-performance alignment to achieve a win-win situation for all parties.
K-REIT: A best practice example
Within the group of companies studied by Aon, K-REIT was the only one that fully complied with the MAS enhancements on remuneration disclosures in its FY2014 annual reporting. Some of its best practices in the area of remuneration are:
- Total remuneration package for key executives is broken down into three components: base pay, annual performance incentive, and long-term incentive.
- Compensation structure is directly linked to corporate and individual performance, and the creation of unitholder value.
- A balanced scorecard comprising both financial and non-financial KPIs chosen to align executive and unitholder interests is used to evaluate performance.
- A significant portion of executive remuneration is placed at risk, subject to the achievement of predetermined KPIs.
Remuneration of Individual Directors
- The remuneration for directors is listed on a named basis, broken down by fixed and variable (performance-based) components, as well as any benefits-in-kind received.
Remuneration of CEO and Top 5 Executives
- The CEO and top five executives’ remuneration on a named basis are disclosed in bands of S$250,000, broken down by fixed and performance-based components, as well as any benefits-in-kind received.
- There is disclosure of contingent awards of REIT units as part of the remuneration package.