Skills 4.0

How CEOs shape thefuture of work in Asia

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Skills 4.0
How CEOs shape the future of work in Asia

Preface“Skills 4.0: How CEOs shape the future of work in Asia” is an Economist Corporate Network (ECN)
report. It is based on a survey of the primary members (Regional/Country CEO/President) of the 500+
ECN clients based in the Asia Pacific region. The report was sponsored on a regional basis by Hays. The
findings and views expressed in this report are those of the ECN alone and do not necessarily reflect theviews of the sponsor.
The report was written and edited by Florian Kohlbacher in Tokyo with assistance from Christoph
Schimkowsky and Rehabya Wijaya and editorial input from Mary Boyd in Shanghai, Robert Koepp in
Hong Kong and Pamela Qiu and Andrew Staples in Singapore. Gaddi Tam in Hong Kong was responsiblefor design.
We would like to thank all the respondents and focus group participants for their time and input.

November 2016

© The Economist Corporate Network. All rights reserved. All information in this report is verified to the best of the authors’
and the publisher’s ability. However, the Economist Corporate Network does not accept responsibility for any loss arising fromreliance on it. Neither this publication, nor any part of it, may be reproduced, stored in a retrieval system, or transmitted inany form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the
Economist Corporate Network.

© Economist Corporate Network 2016

1

Skills 4.0
How CEOs shape the future of work in Asia

Contents

2

3

Key findings
A quick read of the brief and its findings

4

Introduction
Asia’s business leaders share their thoughts on megatrends and the challenges they pose to companies’
skills management strategy

5

Megatrends and their impact
What are the changes driving the need for new kinds of skills in the workforce?

9

Which skills are needed—now and in the future?
What skills are necessary and sought-after by forward-looking businesses?

12

Developing and acquiring the right skills?
What are the challenges businesses face in “skilling up” their workforce, and what are their strategies
in facing them?

16

The role of the CEO in skills development
How do corporate leaders see the relationship between their leadership and future skills management?

19

Appendix© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

Key findings
A quick read of the brief and its findings
We asked: What are the changes driving the need for new kinds of skills in the workforce?
 What skills are necessary and sought-after by forward-looking businesses in Asia?
 What are the challenges businesses face in “skilling up” their workforce, and what are theirstrategies in facing them?
 How do corporate leaders see the relationship between their leadership and future skills
management?

We learn that: Megatrends matter: Technological progress and digitisation of the economy are seen as anopportunity; climate change and industry convergence are most often viewed as a threat.
 The majority of CEOs believe that most of the skills required for their business to respond to global
megatrends are new skills that they neither appreciate nor use today; soft skills are more important
than hard skills for their business currently and increasingly so in the future.
 Communication of the skills management strategy, getting the right structures for skills
development in place and CEO’s time constraints are the key challenges.
 70% of respondents agree that shortage of suitable skills is limiting localisation of management
positions in their companies in Asia.
 63% of CEOs prefer a combination of buying and building talent when it comes to skills in theirworkforce.
 90% of CEOs claim to be personally strongly involved in making sure their company has the rightskills. Only 4% said that this was not the case. More involvement is seen as crucial.
 Only about 10% of the surveyed CEOs stated they leave strategic decisions about skills and the skills
development of the workforce to the human resources department.

© Economist Corporate Network 2016

3

Skills 4.0
How CEOs shape the future of work in Asia

Introduction
Asia’s business leaders share their thoughts on megatrends
and the challenges they pose to companies’ skills management
strategies
Skills are the essential resource in the knowledge economy of the 21st century. With theunprecedented economic developments in Asia and the dramatic changes rattling through manyindustries, companies need to make sure they are ready to embrace the disruptions and fend off
potential skills gaps and talent shortages. The driving forces behind these changes are a seriesof global megatrends including demographic change, climate change, technological progress,
urbanisation, globalisation as well as the digitisation of the economy and the convergence ofindustries.
Managing the business responses to these trends and developing the organisation’s human capital
to equip them with the skills needed in this environment is becoming a key challenge for businesses.
The skills required are likely to comprise of both soft and hard skills, ie both people skills andtechnological as well as business skills.
At the same time, if they were to be successful and sustainable, responses to these megatrends
need to be sensitive to the cultural and organisational realities of the Asian business environment.
Tomorrow’s markets will be more complex; to thrive in this environment businesses will need to be able
to develop the ability to attract, develop and retain the best talents available to them.
This new report from the Economist Corporate Network examines the CEO’s perception of thechallenges and opportunities that arise from megatrends in terms of the organisation’s skills andtalent management, and explores the extent to which CEOs are taking ownership of the future skills
and “skilling up” agenda in Asia. We conducted a survey of our 500+ clients and contacts across Asia
Pacific in September and October 2016. Focus group meetings with a small number of invited CEOs and
HR executives were held in Hong Kong, Shanghai, Singapore and Tokyo to discuss the issues in the local
context. This paper is a summary of the survey and the focus group discussions.

4© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

Megatrends and their impact
What are the changes driving the need for new kinds of skills in
the workforce?
Megachanges await us
Megatrends and the “megachanges” they trigger have become more and more important—and areincreasingly recognised as having a tremendous impact on societies, economies as well as individual
businesses1. These megatrends comprise various social, economic, demographic and technologicalchanges, including globalisation, population ageing, climate change, technological progress, socialchange, urbanisation, digitisation of the economy, industry convergence, etc. Managers all acrossAsia are becoming more sensitive towards these developments and as a result are looking for the
relevant business intelligence to make sense of them. In our survey, more than 70% of the respondents
reported spending more time on identifying megatrends now than they used to before. A staggering
85% of them also spend more time thinking about what kind of skills their businesses will need in orderto deal with these megatrends.

MegatechTechnological progress seems to accelerate at unprecedented speed. Self-driving cars, 3D printing,next generation robots and artificial intelligence are at the cusp of establishing themselves inthe business world and society at large2. This offers business opportunities, but also creates risks
for companies and their workforce. According to some estimates, 5m jobs will be lost by 2020 as
technology renders human work redundant in some areas3, especially when it comes to single-skillset
jobs4. In the words of Brynjolfsson and McAfee, the authors of the New York Times bestseller “The
Second Machine Age”, “as technology races ahead, it’s leaving some people behind”. To retain theirplace in the labour force, individuals have to acquire skills that match the socio-technological changes
in the work environment5. Companies thus have to “re-train and re-skill workers to avoid crisis”.
Technological changes require a workforce that is able to keep up with technological developments.
At the same time, they also challenge the workforce to surpass technological progress time andagain in order to not be replaced by them. For this innovation of work, new and adapted skills are offundamental importance.

Unpredictable?
Megatrends such as industry convergence, technological change and globalisation lead to anincreasing complexity, which in turn poses new challenges for managing businesses. A moreunpredictable and complex social and business world requires more qualified workers who can adjust
to a variety of situations and challenges. The challenges brought on by megatrends have thus longsince reached companies and come to the attention of senior executives. According to our survey, only
© Economist Corporate Network 2016

Franklin, Daniel; Andrews,
John (2012): MEGACHANGE:
The world in 2050.

1

Brynjolfsson, Erik; McAfee,Andrew (2014): The Second
Machine Age. Work, Progress,
and Prosperity in a Time ofBrilliant Technologies.

2

World Economic
Forum(2016): The Future of
Jobs. Employment, Skills, andWorkforce Strategy for the
Fourth Industrial Revolution.

3

World Economic Forum(2016): The jobs of the future—and the two skills you need to
get them.

4

Brynjolfsson, Erik; McAfee,Andrew (2014): The Second
Machine Age. Work, Progress,
and Prosperity in a Time ofBrilliant Technologies.

55Skills 4.0
How CEOs shape the future of work in Asia

10% of CEOs do not have a clear idea what megatrends are and what kind of business implications theypresent. At the same time, less than one third of the surveyed senior executives state that they arecompletely sure about the business impact of megatrends. The majority (54.4%) say that they havesome sort of understanding of what global megatrends are and how they may affect their business.
This implies that, while there is a certain level of awareness and understanding of the business
implications of megatrends, plenty still needs to be done to ensure executives have the relevantbusiness intelligence to interpret megatrends in a meaningful way.

Mega-important megatrends
While CEOs recognise the impact of all eight major megatrends surveyed in this study (see Chart
below), they assign the most importance to the processes of globalisation, technological progressand digitisation of the economy. Over 80% of the surveyed senior executives think that the above
mentioned trends affect or strongly affect their companies. Among these, technological progress
is seen as the most important trend, with almost 60% of CEOs stating that it strongly affects theircompany.
Chart 1: To what extent is your company affected by the following megatrends and their implications?
Please indicate how strongly your company is affected.
(% of respondents)

Not affected at all

Slightly affected

Moderately affected

Affected

Strongly affected

Globalisation
2.7

5.4

8.8

48.7

34.5

Demographic change/ageing populations
6.1

12.1

19.5

36.9

25.5

Climate change
14.8

24.2

29.5

15.4

16.1

Technological progress
1.3

10.7

31.5

56.5

Social change
4

7.4

24.2

51

13.4

Urbanisation
4

10.7

18.8

35.6

30.9

Digitisation of the economy
0.7 4

14.1

35.6

45.6

Industry convergence
1.3

6.7

19.5

50.3

22.2

Other factors
20

23.4

18.3

38.3

Threat or opportunity?
It is obvious that megatrends bear business implications. But the big question is whether theypose a threat or bring opportunity. According to our survey, CEOs tend to see most of these trends
as opportunities rather than as threats. For example, technological progress and digitisation of
the economy are seen as an opportunity by close to 80% of the respondents. Among the surveyed
megatrends, climate change (23%) and industry convergence (26%) are the trends that are the mostoften viewed as a threat by CEOs.
6© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

Chart 2: To what extent do you perceive the following megatrends to present a threat or an opportunity?
Please indicate how strongly your company is affected.
(% of respondents)

Big threat

Small threat

Neither nor

Small opportunity

Big opportunity

Globalisation
3.4 2

18.1

27.5

49

Demographic change/ageing populations
4.7

14.9

29.7

19.6

31.1

Climate change
8

15.4

46.3

12.8

17.5

Technological progress
7.4

6.7

6.7

24.8

54.4

Social change
2.7

8.9

32.2

34.9

21.2

Urbanisation
3.4

27.5

30.9

38.3

Digitisation of the economy
5.4

6

8.7

36.9

43

Industry convergence
7.4

18.2

23

31.8

19.6

4.8

21

Other factors
24.2

14.5

35.5

Other factors
Apart from the eight megatrends surveyed by us, CEOs also brought up further trends or issues they
perceive to be relevant. These include protectionism, social change triggered by rising living andeducation standards, political instability and rise of nationalism in several countries. Interestingly,
with about 39% these trends were considerably more likely to be seen as a threat by CEOs. A possible
explanation for this is that the trends we included in our survey are larger in terms of their implications
and thus more widely recognised. Accordingly, companies are more likely to have already some
response systems in place that allow them to view these well-established megatrends as opportunities;
conversely there is less awareness about smaller/emerging trends mentioned by respondents
themselves. Businesses are apparently less prepared to face them, and thus more likely to see them asa threat.

Are you ready for the megachanges?
No matter whether the above mentioned megatrends are perceived as threats or opportunities, only asmall number of CEOs are confident that their company is completely prepared to deal with these trends.
While urbanisation, globalisation and technological progress are among the megatrends that CEOs
are most prepared for, they feel significantly less prepared for trends such as industry convergenceand climate change. This is obviously directly connected to the fact that these two trends are morestrongly perceived to be threats than the other three megatrends for which they feel more prepared(urbanisation, globalisation and technological progress).

© Economist Corporate Network 2016

7

Skills 4.0
How CEOs shape the future of work in Asia

Chart 3: To what extent are you ready to face the changes, challenges, and opportunities that arise from these
global megatrends?
(% of respondents)

Completely unprepared

Somewhat unprepared

Neither nor

Somewhat readyCompletely ready

Globalisation
8.7

6

64.4

20.8

Demographic change/ageing populations
6

27.5

7.4

59.1

Climate change
12.8

2

49.7

29.5

6

Technological progress
0.7

16.2

9.5

10.8

62.8

Social change
8.7

45

42.3

4

Urbanisation
0.7 4

49.3

26.7

19.2

Digitisation of the economy
2

17.5

17.5

53.7

9.4

Industry convergence
2

19.5

30.2

44.3

4

Other factors
4.8

9.5

42.9

36.5

6.4

Summary points
 CEOs spend an increasing amount of time on identifying megatrends as well as on thinking about
what kind of skills their businesses will need to deal with these megatrends.
 More than 80% of CEOs believe the megatrends affect or strongly affect their companies.
Technological progress is seen as the most important trend, with almost 60% of CEOs stating that itstrongly affects their company.
 Technological progress and digitisation of the economy are seen as an opportunity by close to 80%of the respondents. Climate change (23%) and industry convergence (26%) are the trends that are
the most often viewed as a threat by CEOs.
 Only a small number of CEOs are confident that their company is completely prepared to deal withthese trends.

8© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

Which skills are needed—now and in the
future?
What skills are necessary and sought-after by forward-looking
businesses?
Skills 4.0
A staggering 90% of the senior executives are confident they know what skills are required to respondto global megatrends. This seems promising but does not guarantee that companies actually havethese skills already in their workforce. Indeed, about 58% of CEOs believe that most of the skills
required for their business to respond to global megatrends are new skills that they neither appreciate
nor use today. But there is some regional variance to this. While 61% of the respondents in China agree
that the skills needed in the future are new skills, only 48% in Singapore agree; in Japan it is only one
third of the CEOs who believe so, with 47% disagreeing (the rest are unsure). This could be interpreted
in two ways. On the one hand, these supposedly new skills might already be familiar to respondents
in Japan—regardless of these megatrends. On the other hand, the exposure to megatrends might begreater and more intense in Japan—to the extent that firms are already responding by acknowledging
these new skills.

Soft skills risingOverall, most CEOs agree that it is mostly soft skills that are needed to rise to the challenges broughton by megatrends. Of the surveyed CEOs 71.9% feel that soft skills are more important than hard skills
for their business currently. With perspective to the future, this number increases to 85.9%. In a similarvein, complex problem solving, co-ordinating with others and people management are seen as the three
top skills for businesses in the present and are expected to remain similarly important in the future.
Taken together this indicates a clear shift away from hard skills towards soft skills. Business leaders thus
can expect soft skills to become increasingly important in the future.

Hard vs soft skills
This emphasis on soft skills is also reflected in CEOs’ evaluation of individual skills. Abilities such as
co-ordinating with others and active listening are considered as (very) important by an overwhelming
number of respondents. Hard skills such as computer programming or machinery operations are
considered significantly less important. Examples of critical soft skills that were highlighted during our
focus groups across the region included the ability to identify new opportunities, resilience as well as
the determination to close a deal or conclude a project. This also includes the capacity to learn, adapt,change, think critically, and challenge oneself as well as the ability to turn insight into solutions.

© Economist Corporate Network 2016

9

Skills 4.0
How CEOs shape the future of work in Asia

Chart 4: How important are the following skills for your business currently?
(% of respondents)

Not important at all

Somewhat important

1. Complex problem solving
1.6

11.8

1.6 3.9
1.6 2.3

35.2

60.9

10.2

45.7

43.3

5. Negotiation
3.9

20.3

37.5

6. Quality control
9.5

38.3

41.7

7. Service orientation
10.2

45.7

26

62.2

8. Judgement and decision making
5.5

49.2

45.3

9. Active listening
8.6

2.3

45.7
57

4. Critical thinking

1.6

Very important

37.5

3. People management

3.2

Important

40.9

2. Coordinating with others

0.8

Moderately important

46.9

10. Creativity
0.8 3.1

20.3

42.2

29.7

46.1

11. Emotional intelligence
2.4

16.7

46.8

12. Congnitive flexibility
0.8

34.1

16.5

60.6

22.1

13. Design thinking
4.7

5.5

31.5

14. Foreign language skills
5.5

13.3

10.2

0.8

10.9

16. Mathematical and numeracy skills

34.4

21.3

10.2

14.2

39.1

15.1

30.5

26.6

26.8

20.6

20. Machinery operations

14.1

36.7

25.2

19. Social media fluency

26.8

35.2
26.6

18. Computer programming

16.4

40.2

17. Statistical analysis and data mining

1.6

24.4

30.5

15. Basic computer skills
1.6

33.9

22.8
42.1

22.7

11
20.6

25

13.3

8.6

21. Familiarity with specific software
7

20.3

22. Familiarity with technical language
7.8

17.2

33.6

23. Financial and budgetary skills
0.8 5.5

29.7

25

46.9

28.9

14.1

28.1

13.3
21.9

People skills and technological skills
Technological progress obviously does not mean that everybody has to become a technician, nordoes it necessarily mean that hard skills become more important. However, the greater integration oftechnology in work processes does require some level of technological literacy of employees. Indeed,basic computer skills are seen as important by almost 70% of CEOs. Accordingly, people skills, soft
skills and technological skills are seen as the three skill sets most needed to rise to the challengesof the future. Furthermore, they are also understood to be the three skill sets that are most likely toincrease in importance compared to today. This finding was also echoed in the focus groups that weheld across the region. Certain hard skills such as data analytics were seen as important, but soft skills
10© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

were seen as even more critical. In particular, participants were of the opinion that hard skills can be
more easily acquired and often these skills can be conveyed through in-house training if the employee
does not already bring them with him/her. But the soft skills are much for difficult to build whichmakes it all the more important to identify, attract and retain the right talent. For example, it is much
more difficult to find people who can implement new innovative technologies for the business than tofind data analysts.
Chart 5: The skills required to respond to the challenges in the future are likely to be:(% of respondents)
Strongly disagree

Soft skills

2.31.61.6

Somewhat disagree

Somewhat agree

Strongly agree

28.1

Hard skills

66.4

21.9

0.8 4.7

People skills

53.9

18.8

30.5

0.81.61.6

65.6

Technological skills

0.81.6

Neutral

7.8

43

46.9

Business skills

37

0.8 0.8

12.6

4

10.7

48.8

18.8

35.6

30.9

Chart
to today, the following skills will in the35.6
future be:
0.7 4 6: Compared14.1

45.6(% of respondents)
1.3

Much less19.5 important

6.7

Soft skills

Slightly less important

1820

0.8

Hard skills
1.6

23.4

0.8

18.8
14.1

Business skills
0.8 2.3

0.7

4

14.1

6.7

44.5

38.3

44.5
36.7
35.6

24.2
30.9

35.6
19.5

7.9

35.9

18.8

Summary points

1.3

31.5

35.9
10.7

Much more important
22.2
38.3
50

44.1

Technological skills

4

Slightly more50.3
important

18.3

15

People skills
0.8 2.3

31.3

The same

45.6
50.3

22.2

 The majority of CEOs believe that most of the skills required for their business to respond to global
20
23.4
18.3
38.3
megatrends are new skills that they neither appreciate nor use today.
 71.9% of the surveyed CEOs feel that soft skills are more important than hard skills for theirbusiness currently.
 Certain hard skills such as data analytics were seen as important, but soft skills were seen as evenmore critical.
 While hard skills can be more easily acquired and often conveyed through in-house training soft
skills are much for difficult to build.

© Economist Corporate Network 2016

11

Skills 4.0
How CEOs shape the future of work in Asia

Developing and acquiring the right skills
What are the challenges businesses face in “skilling up” theirworkforce, and what are their strategies for facing them?
Build or buy?
How can companies acquire the talent and skills needed to maneuver the business world? 63% ofCEOs prefer a combination of buying and building talent when it comes to skills in their workforce.
Just buying talent is not considered a suitable strategy by most CEOs, with only 6% of respondents
presenting it as their favoured approach to secure skills for their workforce. 31% of the surveyed CEOs
predominantly build talent in-house. Training and retraining the workforce is thus seen as importantby an overwhelming majority of the participants. Predominantly, this happens through internal andon the job-training. Buying/renting skills from outside the company, such as through outsourcing or
recruitment firms are relatively less often used. There seems to be a clear imperative for companies todevelop the skills in their own workforce in-house6. But given that CEOs actually prefer a combinationof build and buy, there should also be a need for outside options offered by outsourcing or recruitment
firms. The fact that the companies surveyed do not seem to use these options as much indicates scopefor improvement. Service providers operating in this space may want to consider “skilling up” theirofferings.
Chart 7: In terms of skills development, we make use of:(% of respondents)

Internal training
0.8 3.9

Never
11

7.1

35.4

3.2

42.5

11

19.5

Training
the talent
4.8
9.5

12

18.1

37.8
57.1

23.8
30.2

8.7

18.1
43.3

29.9

Others (please specify below)

See also: World Economic
Forum (2016): The Futureof Jobs. Employment, Skills,
and Workforce Strategy for the
Fourth Industrial Revolution.

12.6
50.4

23.6

Outsourcing

6

Regularly

40.2

9.5

Recruitment firms

2

Often

44.1

42.5

9.5

On-the-job training

3.2

Sometimes

40.2

External training

Software tools

Rarely

38.6

9.5

9.5

9.5
44.3

42.9

5.5

36.5

4
6.4

Overall, one-quarter of the surveyed CEOs are unsure whether their company has the right structuresin place to “skill-up” existing employees. While about one-half of the respondents somewhat agree that
their business already possesses the required institutional mechanisms to equip their workforces withthe skills needed for future challenges, only 5% of CEOs have absolute confidence in the skill training
structure of their companies. One-quarter of them believe that they do not have the right structures in© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

place. In Hong Kong, this figure was as high as 64%. This result is alarming
and should serve as a wake-up call to executives to ensure they make theirbusinesses ready for the skills and talent challenges of the future.

Chart 8: We have the right structures in place to skill
up our existing employees.
(% of respondents)
Strongly agree

5.5Managing future skills

Somewhat agree

50.4

Neutral

18.9

CEOs are split over their company’s ability to manage future skills. While over
60% think that they are keeping up with their peers or are even ahead of thecurve, nearly 40% of the surveyed CEOs feel that their company is strugglingor still at an early stage when it comes to skills management. Similarly,
while more than 60% of CEOs are confident about their company’s managing
of future skills, slightly less than 40% are not. When it comes to their own
ability of clearly communicating the company’s skill management strategy, CEOs are more confident,with 60% of participants stating that they experience little or no problems. However, 20% of CEOs stilllack confidence in their ability to articulate their company’s skills management strategy.

Somewhat disagree

22.8

Strongly disagree

2.4

Skills management communication
Communicating the company skills management strategy to the workforce is another issue, with only
half of the CEOs believing that it is clearly conveyed to employees. In Japan this figure was even lower.
A mere 40% thought these strategies are clearly communicated to employees. This also came up during
our focus group in Japan. Interestingly, the problem does not seem to be that CEOs are not involved
enough in HR strategy, but it is rather that the strategy is either is not communicated well throughout
the company, or that there is a discord in what the CEOs want to convey and what is being conveyed tothe employees.

Proactive leaders needed
The ability of CEOs to articulate a clear skills management strategy and thecommunication of this strategy to all employees is crucial for successful
skills and talent management. It is imperative for executives to become
more proactive in this communication process in order to drive theircompany’s skills management. As became evident in our focus groupin Hong Kong, teaching managers new ways of thinking is now part ofstrategic skills management. Top managers such as business unit leaders are
telling middle managers to consider themselves to be “the CEO of your own
department”. Overall, there is increased emphasis on lateral thinking andencouragement to see things more in terms of context than content.

Chart 9: When it comes to managing future skills, weare (select one response only):(% of respondents)
Ahead of the curve

12.6
Keeping up with up peers 51.2
At an early stage
33.1
Struggling

3.2

Lack of local talent
Another issue that became evident throughout our study is the lack of suitable local talent. 70% of
respondents agree that shortage of suitable skills is limiting localisation of management positions© Economist Corporate Network 201613

Skills 4.0
How CEOs shape the future of work in Asia

in their companies in Asia, which often leaves
Chart 10: Shortage of suitable skills is limiting our
localisation of management positions in Asia.
companies little choice but to look for future(% of respondents)
talent globally. This can however lead to various
Strongly agree
22.1
inefficiencies due to increased cost and lack ofSomewhat agree
48
local and cultural knowledge of talent coming
Neutral7.1
Somewhat disagree
18.9
from outside. The only exception here wasStrongly disagree
3.9
Hong Kong, where the majority did not thinkthat a shortage of skills in Asia is affecting
their localisation of management positions.
Nevertheless, almost 75% of the respondents
in Hong Kong are increasingly looking globallyfor future skills. In Japan, 80% are increasingly
looking globally, with a staggering 87% thinking that there is a shortage of skills that is limiting
localisation of management positions.

Culture matters
CEOs feel that the reasons for the shortage are often rooted in the local societies. For example, in our
focus group interviews in Japan, participants highlighted that the Japanese education system does
not adequately equip students with the skills needed in today’s world and implied that a Japaneseculture of perfection is at odds with the work requirements in modern multinational companies. Having
the courage to fail and to learn from failure was seen as a crucial skill in itself.
Summary points
 63% of CEOs prefer a combination of buying and building talent when it comes to skills in theirworkforce.
 One-quarter of the surveyed CEOs are unsure whether their company has the right structures inplace to “skill-up” existing employees.
 Only 5% of CEOs have absolute confidence in the skill training structure of their companies.
 While over 60% think that they are keeping up with their peers or are even ahead of the curve,
nearly 40% of the surveyed CEOs feel that their company is struggling or still at an early stage whenit comes to skills management.
 While more than 60% of CEOs are confident about their company’s managing of future skills, slightly
less than 40% are not.
 20% of CEOs still lack confidence in their ability to articulate their company’s skills management
strategy.
 70% of respondents agree that shortage of suitable skills is limiting localisation of management
positions in their companies in Asia.

14© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

The views from China and JapanFor many China-based and Japan-based CEOs, theongoing redefinition of job descriptions today has madeflexibility and willingness to adapt to new roles the mostessential skills they look for in potential hires. In China,
the country’s rapid economic growth has itself generated
challenges for workforce planning. High turnover andthe need for constant hiring and training of replacement
staff has resulted in skills shortages. This volatility
has been compounded by technological changes andregulatory requirements that have redefined roles within
the workplace. Some enterprise growth has been organic,
but frequently has come about through mergers andacquisition, often on a large scale and at a very fast pace.
Against this background, it is not surprising that many
participants in the Shanghai focus group discussioncommented on pressures due to post-merger efforts tointegrate work forces, noting various examples of postmerger strategies—some successful, others less so. One
model cited featured a high degree of autonomy for theacquired company, leaving it to retain its own corporate
culture more or less intact. At the other extreme were
examples of premeditated strategies to identify key
employees at the target company prior to the acquisition,and the crafting of a proactive policy to retain them postacquisition, within a three-year timeframe. In the example
cited, the company routinely pursues a deliberate valuationof personnel “assets” as integral to the value of theacquisition, and allows a generous timeframe to inculcate
the new corporate culture.
Meanwhile, the challenges for corporate leaders in Japan
stem not so much from rapid economic growth, but frompersisting deflation and economic stagnation. Participantsin the Tokyo focus group discussion remarked how people
in Japan have become increasingly inward-looking andaverse to risk and failure, and how this has actually shrunk
the talent pool. Part of this, they observed, is culturaland reinforced by society. One participant observed how© Economist Corporate Network 2016

Japanese workers tend to prefer to be perfect at what they
do and dislike straying outside their areas of expertise or
responsibility. This tendency is exacerbated by societal
institutions and corporate practices that severely punish
failures and downplay personal successes.
In addition to these, corporate leaders in China and Japanare also tasked with setting and maintaining the tone fora positive work environment. Participants had several
examples where companies make deliberate efforts toestablish an empowered culture within the workplace,through team work, accessibility and interactivity of training
and consultation with staff. All of these practices were felt
to be beneficial in strengthening the soft skills of employees
and in identifying high potential candidates. There was lively
discussion about the importance of corporate cultures, andthe difficulty of encouraging good communication practices
and independent thinking, particularly for employees moreaccustomed to hierarchical organizational structures.
Finding candidates with appropriate hard skills wasusually not an issue in both China and Japan. However, theeducational system in both countries was faulted for failingto develop critical thinking and proactiveness in risk-taking,particularly amongst new graduates. One participant inShanghai shared that the most effective hiring philosophy
was based on “hire for attitude, train for skill”, and cited“learning agility” as the most valuable (yet most elusive)
quality in new hires. Participants in the Tokyo focus group
discussion seem to agree. One participant noted that theideal profile is someone who not only has learning agility,
but also the curiosity and desire to learn and venture outside
their comfort zone. Various companies represented in bothfocus groups practiced a variant of triage for employees—
those identified as lacking in commitment were weededout quickly, while those showing the required talent andattitudinal grit were given special grooming to develop theirsoft skills and leadership potential.

15

Skills 4.0
How CEOs shape the future of work in Asia

The role of the CEO in skills development
How do corporate leaders see the relationship between theirleadership and future skills management?
CEO involvement
CEO involvement is imperative to bring talent management issues onto the strategic agenda. In our
survey, 90% of CEOs claimed to be personally strongly involved in making sure their company has theright skills. Only 4% said that this was not the case. This is also reflected in the fact that only about
10% of the CEOs surveyed stated they leave strategic decisions about skills and the skills developmentof the workforce to the human resources department. The vast majority seem to be at least somehow
involved in these strategic decisions. While this is positive, there certainly remains leeway for
improvement and an even stronger CEO commitment and involvement.

Megatrends and future skills
As mentioned earlier in this report, 70% of
our respondents say they spend more time on
identifying megatrends than before. This seems
to underline that CEOs recognise the increasing
relevance of megatrends for their business. In asimilar vein, more than 80% of the respondents
spend more time on thinking what skills theirbusiness will need in the future now than they did
before. Only 2.4% said that this was not the case,while around 12% were undecided. Again, thesefindings seem promising, but in order to stayahead of the curve in this era of megachanges,
a more proactive role of the senior leadershipin driving the skills and talent agenda of theircompanies is critical. According to the discussion
at our focus group in Tokyo, the role of the CEO
includes to gain the trust of the employees by
being authentic, honest and frank and throughleading by example. In a nutshell, the CEO needs
to create a culture that motivates and drives
success.

16

Chart 11: I leave strategic decisions about skills andthe skills development ofour workforce entirely to HR.
(% of respondents)
Somewhat agree

10.4

Neutral6.3

Somewhat disagree

32.5

Strongly disagree

50.8

Chart 12: I seem to spend more time on thinking whatskills our business will need in the future now than I
did before.
(% of respondents)
Strongly agree

21.4

Somewhat agree

64.3

Neutral11.9

Somewhat disagree

2.4© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

Time constraints
So what is holding CEOs back from becoming more involved with the strategic planning and decision
making related to skills and their development? According to our survey, almost 50% feel time
constraints keep them from becoming as involved in skills and skills development decisions as theywould like to be. Time constraints are obviously a classic conundrum for executives. But given therising importance of megatrends and megachanges and skill development, it is about time that CEOs
break these time constraints and get more strongly involved in these strategically important decisions.
Chart 13: Time constraints keep me from becoming as involved in skills and skills development decisions as I
would like to be.
(% of respondents)
Strongly agree

9.5

Somewhat agree

38.1

Neutral18.3

Somewhat disagree

20.6

Strongly disagree

13.5

Summary points
 90% of CEOs claimed to be personally strongly involved in making sure their company has the rightskills. Only 4% said that this was not the case.
 Only about 10% of the CEOs surveyed stated they leave strategic decisions about skills and the skills
development of the workforce to the human resources department.
 Almost 50% of CEOs feel time constraints keep them from becoming as involved in skills and skills
development decisions as they would like to be.

© Economist Corporate Network 201617

Skills 4.0
How CEOs shape the future of work in Asia

Focus on “skilling up” in Asia
A common theme that was brought up bybusiness leaders in the focus group discussions
was the clash between local values andthe values that are deemed to be desirable
by forward-looking businesses. We havealready established that risk-taking, failureembracing, and perseverance are some of theessential qualities businesses are increasingly
looking for in a potential hire. However, insome Asian countries—Japan and China forexample, CEOs observed that societal norms
and values do not appreciate those who takerisks, and even more so those who take risks
and fail. In addition, CEOs at our Singapore
focus group expressed their concern about
managing the “strawberry generation”,
a colloquial term used to describe some
generation-Y workers who bruise easily when
put under slight pressure. This group of workers
lacks the perseverance and commitment tosolve problems and tackle challenges in their
day-to-day work.

18

The challenge then, is for businesses in Asia
to either try to shape the local culture to theideal, or to make the local culture work for theircorporate culture. The answer lies somewherein the middle. On the one hand, businesses
should encourage risk taking and embrace
failure. One executive in the Tokyo focus group
discussion explained how he and his HR teamrecorded dancing videos and showed them toother employees, illustrating that it is fine not
to be perfect—that it is perfectly okay to be
bad at something. On the other hand, CEOs,
especially those from abroad, have to gain thetrust of their local employees in ways the latterare most accustomed to. In Asia, this often
involves socialising at drinking gatherings
after work. Expatriate CEOs should immersethemselves more in the local cultures andnorms.

© Economist Corporate Network 2016

Skills 4.0
How CEOs shape the future of work in Asia

Appendix
Participant data
Where is your firm’s global HQ?
(% of respondents)
Asia

27.9

Australasia0Europe44.3

North America

25.4

South America

2.5

Middle East/Africa

0

How would you describe the industry of your company? Please choose the most appropriate one that describes
your primary business (i.e., the largest part of the business).
(% of respondents)
1.Consumer products manufacturing

14.8

2. Industrial products manufacturing

28.7

3. Consumer service

12.3

4. Industrial service

18

Other (please specify)

26.2

China

18.9

Where is the location of the entity that you manage?
(% of respondents)© Economist Corporate Network 2016

Hong Kong

9

Indonesia

11.5

Japan

12.3

Malaysia

14.8

Singapore

18.9

South Korea

3.3

Other (please specify)

11.5

19

Skills 4.0
How CEOs shape the future of work in Asia

What were your firm’s global revenues for its latest financial year?
(% of respondents)

US$10bn or more

40.2

US$5bn to US$10bn

6.6

US$1bn to US$5bn

23

US$500m to US$1bn

6.6

US$100m to US$500m

13.1

US$50m to US$100m

2.5

US$10m to US$50m

3.3

Less than US$10m

4.9

What were the revenues for the entity that you manage (regional/country) for latest financial year?
(% of respondents)
US$10bn or more

1.6

US$5bn to US$10bn

1.6

US$1bn to US$5bn

12.3

US$500m to US$1bn

15.6

US$100m to US$500m

30.3

US$50m to US$100m

11.5

US$10m to US$50m

17.2

Less than US$10m

9.8

Geographic scope of your responsibilities.
(% of respondents)

Country CEO/President

40.2

Regional CEO/President

44.3

Global CEO/President

15.6

Total years in an executive (C-suite) position(% of respondents)

Five years or moreThree years to five years
One to three years
Up to one year

20

77
11.5
9
2.5

© Economist Corporate Network 2016

While every effort has been taken to verify theaccuracy of this information, The Economist
Corporate Network cannot accept any responsibility
or liability for reliance by any person on this report orany of the information, opinions or conclusions set
out in this report.

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