Corporate Research Driving effective workplace change in Asia Introduction The time is ripe for organizational change, especially in Asia. Global megatrends—economic uncertainty, environmental crises, new technology, ethics commotions and a war for talent—are forcing organizations to rethink the way they do business. Whether in the context of merger and acquisition (M&A), restructuring, downsizing, offshoring or outsourcing, corporations are focused on driving down costs dramatically while increasing competitive advantage. This translates into a corporate rallying cry across the business for enhanced ‘productivity’, defined as a function of outputs over inputs. To provide this lever for improved work and business performance (Fig. 1), corporate real estate (CRE) professionals are increasingly driving or being asked to drive workplace change. The desired outcomes vary by sector. Financial services companies focus on reducing real estate costs, stripping millions of square feet out of portfolios, and on agility to respond to uncertainty in the economic environment. Pharmaceutical and technology companies place more emphasis on the speed-to-market of ideas and products, with brand presence and corporate culture becoming more important to attract talent. The days when CRE was required to simply provide space are over. Today, CRE’s new remit involves integrating with the business and partnering with functions such as IT, HR and corporate communications to deal with the behavioral dimensions of the workforce that vary significantly across Asia. This paper aims to help you do this more effectively by understanding how different frames of leadership and culture can provide clues to successfully drive such workplace changes. Figure 1: Workplace Provides a Lever for Improved Work and Business Performance Improve Revenue (Output) Business agility Innovation + productivity Attraction + retention Collaboration + learning Reinforce brand Real estate costs Environmental impact Reduce Costs (Input) Source: Jones Lang LaSalle 3 Asia Wants Workplace Change In Asia, mindsets about work style change are evolving due to strong triggers such as the accelerating globalization of Asian multinational corporations (MNCs). For Japanese corporations, geographic expansion means hiring locals in the countries they enter and adapting their work policies to suit a more diversified workforce. For some Chinese corporations, increasing their overseas footprint via M&A activity or organic growth is seen as an opportunity to experiment with new work styles, with the possibility of introducing them to their domestic operations if the benefits in terms of improved efficiency or reduced expenses are deemed attractive enough. New workplace practices are continually being introduced into these organizations, such as new management styles, telecommuting or policies on preferred devices, as they seek to stay ahead of the curve. Concepts such as Results-Only Work Environments (ROWE), where employees are evaluated on performance instead of presence, are receiving interest in Asia as well. The Asia HR Director of a major Japanese technology company says, “If 4 your manager knows what you’re doing all the time, you’re not doing your job, and he’s not doing his.” In India, with shift workers in the service industry already used to being out of their manager’s sight, ROWE should not be too far away. Telecommuting has been successfully implemented by MNCs in Asia, especially IT companies. In post-earthquake Japan, the Government and major firms are championing programs enabling employees to work from home to raise employee productivity, reduce transportation greenhouse gases and support business continuity planning. When allowed to use their own devices, employees do enjoy increased mobility, higher job satisfaction and improvements in efficiency and productivity. India is the undisputed leader of the Bring Your Own Device (BYOD) phenomenon, wherein employees use personally owned smartphones, tablets or laptops rather than standard equipment provided by their employers. According to a Citrix survey, 34% of the workforce in India is already using non-company-issued computing devices and the proportion could reach 38% in 2013, while the UK follows with a 22% adoption today and 34% in 2013. Effecting Change Success Even with the best intentions, 70% of change initiatives fail. Workplace change is no exception. While the number of corporations adopting alternative workplace strategies (AWS) is increasing, change initiatives can be difficult to manage, and many have fallen short when it comes to implementation. Globally, large MNCs exploring new ways of working have seldom been able to roll out their change programs smoothly. This is due to a series of barriers that include lack of senior management support or visible engagement required to counter ego and legacy footholds, resistance of ‘rain makers’ to give up their big offices and the prestige that goes with them, mobility restrictions for certain employees and IT security issues. In addition to these perennial challenges, when workplace change is deployed globally, a number of issues play out differently across Asia that may be less significant in Western countries. The diversity of local cultures present in Asia requires that workplace change programs be culturally adapted, not merely transplanted from West to East. Change programs successfully implemented in the US or in Europe might not be equally positive in Asia if cultural characteristics are overlooked. Culture can be a difficult concept to grasp as assumptions, values and beliefs are often not articulated. Failing to address cultural issues as part of a workplace change initiative has serious implications for companies operating in Asia as they strive to improve talent attraction and retention and improve business productivity. 5 Success Through Leadership Endorsement Before embarking on a workplace change journey, such plans must first be endorsed at the leadership level. The need for organizational change often only becomes apparent to leaders when they realize that the present reality is failing their company’s future. However, leadership may not go on to commit to a workplace change—failing to communicate a compelling business vision, making unpopular decisions about change, demonstrating inconsistent attitudes and not motivating staff. CRE teams that can present a clear business case and vision, aligning factors affecting work (processes, culture, etc.) and articulating how workplace factors act as enablers, will help enlist leadership support. When building any business case for workplace change, it is important to: • fully understand what drives the business and evaluate the need for change; • present a robust, relevant business case that aligns the solution with the business vision to ensure endorsement and visible leadership; • think beyond merely cost saving drivers and develop goals and metrics that are aligned with broader business objectives; • include all types of benefits, quantifiable as well as more subjective; and • create well-defined metrics that are easy to track to simplify reporting and communicate success over time. 6 However, there are challenges in preparing a compelling business case in an Asian context. In Asian developing countries, productivity is not yet a buzzword and office density is already relatively high. Office space ratios in the US or in Germany, for example, used to be quite generous and have offered significant opportunities for reduction. In contrast, space efficiency has long been addressed in markets like Japan and Hong Kong, with office floors already compactly occupied by small desks that are closely spaced. A more relevant business case would be one around talent attraction and retention in a region where high-caliber talent is scarce. Millennial employees tend to put a lot of emphasis on evaluating technology and workplace when deciding between potential employers. Talent Attraction and Retention Top of the CEO Agenda in Asia “During the agrarian revolution, the most important resource was land. During the industrial revolution, it was capital and machinery. In post-industrial society, it is increasingly knowledge.” Rakesh Khuraqna, Marvin Bower Professor of Leadership Development, Harvard Business School We work in an era of talent scarcity. Companies must address the potential shortage of employees with the right skills in order to remain competitive. The talent risk is particularly acute in Asia where low unemployment rates give candidates a broader range of choices. This is compounded by the rapid growth of domestic and international companies combined with the expansion of Asian companies outside their home markets. According to Manpower’s Talent Shortage Survey 2011, 45% of Asia Pacific employers have difficulty filling job vacancies due to lack of suitable talent, compared to 34% globally. This represents a four-point year-on-year increase and the highest percentage of reported difficulty since the survey began in 2006. The situation is not expected to ease in the near future. The global trend toward an aging workforce is evident in Asia, albeit to a lesser degree than in the West. For example, China is facing long-term talent shortages. Due to the onechild policy and the aging population, the Chinese workforce is forecast to grow less than 5% by 2015, when a third of the population will be over 50 years old. Skill shortages can already be felt at the senior management and executive levels. Employability is a core problem in emerging countries. The uneven quality of the education systems means that only about a fourth of Indian engineers were considered employable by MNCs in 2010, and only 10% of Chinese engineers. However, progress is taking place across multiple countries. In Vietnam, for example, the Government is exploring options to better match education with skills demand. Several countries have a ‘talent-friendly’ brand or program, such as the Chinese Talent Development Plan 2010–2020 that sends students abroad and facilitates their return. Employability vs. Talent Mismatch in China and India CHINA INDIA 10% 25% 15% 15% of engineers of finance/ accounting graduates of engineers of finance/ accounting graduates How many local graduates would MNCs consider ‘employable’ if they had demand for them all? Source: McKinsey & Company (2010), Talent management: Transforming forces for the next decade 7 Success Through Employee Engagement Increasing employee engagement, participation and understanding are likely to lower resistance to change according to the investigation1 of a major reorientation within a telecommunications firm. Findings from that research showed a strong positive relationship between participation and goal achievement and organizational commitment. Another study2 of Australian organizations revealed employee resistance as being the most frequently cited problem with implementing change. Often, frontline staff do not understand the need for change and do not develop a sense of ownership of the program. In considering employee resistance, it is useful to identify the factors that contribute to it. Understanding the appetite and ability for change among your employees is the key to change success, as this will help you determine where to focus your efforts (Fig. 2). Ability arises from enablers such as environment, technology, processes and the hard skills required to make the change. Your employees will ask themselves if they have what it takes to adapt to their new workplace and if they are supported. The answer is ‘yes’ in most cases, as change managers usually tick these boxes. Building ability is relatively easy because it can be program-oriented and linear as it deals with the ‘hard’ side of change—planning, timing, skill and commitment. high Need enablers Low resistance High resistance Mindset change appetite John Shook, MIT Sloan Management Review, January 2010 Figure 2: Appetite vs. Ability for Change Matrix low “Start by changing what people do rather than how they think. It’s easier to act your way to a new way of thinking than to think your way to a new way of acting.” low ability high Source: Jones Lang LaSalle Appetite arises from understanding the future workplace and agreeing on ‘what’s next’. This willingness to change is shaped by past experience of change and by cultural frames. Personal and often hidden variables come into play, such as emotions, expectations and ego. Compared to the hard skills that build ability, appetite is the soft side of change and hence more difficult to influence. 1 Influence of participation in strategic change: Resistance, organisational commitment and change goal achievement, Rune Lines, Journal of Change Management Vol. 4, No. 3, 193–215, September 2004 2 The changing face of organisational change, Waldersee and Griffiths, Centre for Corporate Change, 1996 8 Success Through Cultural Relevance “What I think globalization has harmonized are practices. Practices are what we do and the more superficial things. The symbols we recognize and the rituals we engage in. But the deeper meanings, the values, have been implanted in us before puberty and they can still be fundamentally different.” Professor Geert Hofstede, interviewed in Inter Cultures Magazine, Volume 7, Number 2 Cultural frames are subtle examples of how you might address cultures differently. Studies such as those conducted by Dutch social psychologist and anthropologist Geert Hofstede, showing how culture influences values in the workplace, help articulate the differences between cultures so that you can tailor your approach. The following pages illustrate some of the cultural factors you will need to keep in mind when designing your change program. Cultural factors need to be balanced when a program spans multiple workplaces in different cultural and geographic locations, as is often the case in Asia. Clarity of Vision Can be Challenged where Uncertainty Avoidance is Low Creating a vision requires an understanding of uncertainty avoidance. In this dimension, a high score indicates a society that is uncomfortable with uncertainty and ambiguity while lower scores indicate a more relaxed attitude. Where uncertainty avoidance is low, the need arises to get more tangible and detailed. It is important to ask deeper questions, to go through mock implementation, to show what the new workplace will look like and to explain how the vision is implemented and operated. When uncertainty avoidance is high, the general desire for certainty means that visions are easier to define—it’s culturally the norm. Uncertainty avoidance A high score indicates a society that is uncomfortable with uncertainty and ambiguity while lower scores indicate a more relaxed attitude. SINGAPORE 8 UK 35 JAPAN 92 Source: Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations, 2001 9 A ‘Yes’ Does not Always Mean ‘Yes’ A gap between communication intent and how it is perceived occurs in a number of work situations in Asia. For example, in countries such as India, China or Japan, it is rude to say ‘no’ and as a result it can be difficult to decipher what people are really saying in negotiations. In Asia, where avoidance of conflict is present, tactics such as storytelling are useful to unlock negotiation by enabling staff to distance themselves from their feedback (I have a friend who thinks that…). Engaging employees in a conversational, non-confrontational way and formulating questions positively (What could be improved? How could we make this a better place?) will encourage them to open up more freely. When to Mix It Up, and When Not To A high degree of power distance indicates acceptance of a hierarchical order. A lower score indicates a society where people strive to equalize the distribution of power. Where power distance is high, such as what occurs in many Asian countries, employees will be reluctant to speak their minds in the presence of the leadership. In this case, the best option is to engage the conversation within hierarchical levels—for example, by running horizontal workshops within single hierarchical band levels. The reverse is true—where power distance is low, vertical workshops work better as they will be perceived by employees as engaging them in high-quality conversations. In multinational companies where there is a mix of cultures, a hard and fast rule will not necessarily work and the approach will be less straightforward. You will need to understand the organization as well as the culture (Which is dominant? What will work best?) to help guide the best outcomes. 10 Conflict communication styles WEST: Dominating, compromising or integrating. JAPAN: Obliging. CHINA: Avoiding. Power distance A high degree of power distance indicates acceptance of a hierarchical order. A lower score indicates a society where people strive to equalize the distribution of power. GERMANY 35 JAPAN 54 CHINA 80 Source: Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations, 2001 Size Does Matter Similarly, the individualism vs. collectivism dimension involves another type of engagement. A high rating for individualism indicates a loosely knit social framework while its opposite, collectivism, demonstrates a preference for a tightly knit social framework. Where individualism is high, such as in the US, engaging employees in large groups yields better results because high individualism leads to people feeling comfortable about their individual opinions and their right to be heard. Where individualism is low, people don’t speak up in large groups for fear of having a different opinion to the majority. It is advised to break down in smaller groups of three people where they are not outnumbered and can test new ideas in a safer environment, before feeding back into larger groups. Individualism A high rating for ‘individualism’ indicates a loosely-knit social framework while its opposite, ‘collectivism’, demonstrates preference for a tightly-knit social framework. SINGAPORE INDIA US 20 48 91 Source: Geert Hofstede, Culture’s Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations, 2001 Understanding Exchange Value In Asia, many people are motivated by external factors such as visible praise, money and symbols of status. Understanding and communicating to employees the benefits they are obtaining from a workplace change will help them perceive changes as gains instead of hurdles.Understanding the ‘exchange value’ in a change program can assist with the speed of change and the focus on communication. Listening is critical to success here. It will enable understanding cultural symbols, identifying the motivations for change, uncovering real concerns and competing commitments and ultimately securing adhesion to the project. For example, if hierarchy is an important factor for people and the new workplace is designed for ‘free-address working’, A desk by the window means... it is important to understand what other expressions of hierarchy might replace space as a status symbol. This could include increased autonomy, empowerment and decisionmaking, access to better technology, access to amenities and increased remuneration. It is important to understand the benefits that make employees tick in each country, such as the proximity of a car park in Vietnam, abundance of food choices and a covered walkway to the public transport network in Singapore. Employees have to be heard with as much granularity as possible, as resistance to change varies individually and can also come not just from the employee themselves but also from their families. US: Status. JAPAN: Failure. Madogiwa: a desk ‘by the window’ means no significant work to do. Source: Culture at Work, The Life of a Salaryman 11 Considerations for Enduring Change One common question about change is whether it should be incremental or transformative. You will have to make choices such as launching a pilot project or just implementing a new workplace en masse. The context dictates the situation. The ‘big bang’ effect of transformational change can be considered when time is a constraint, where there is broad support for the change program, or if change is required for survival. Innovation WEST: Breakthrough innovation, revolution. Frugal innovation; Bricolage innovation; ‘get it done’ spirit. EAST: Incremental improvement, imitation. Lean manufacturing (Japan); 创新达人 or ‘innovation expertise’ (China); Jugaad (India); ‘can-do’ spirit (Singapore). One Size Does Not Fit All While valuable lessons can be learned from others, your strategy must be tailored for your business, your culture and your people. This level of detail is critical to ensure that your strategy is aligned to your business, adds real and measurable value, can be successfully implemented and is sustainable over time. 12 Success Through an End-to-End Approach Why is it More Difficult in Asia? Most countries in Asia have reached or are moving fast toward a service-oriented knowledge economy in which productivity is measured and primarily driven through the workforce. CRE contributes to this productivity imperative through developing workplace strategies that help optimize cost, enhance brand image, reinforce the stickiness of talent to the firm and provide environments that enable the workforce to collaborate, innovate and work more efficiently. • Country diversity – Variances between Asian countries can be as ample as between Western and Eastern countries. • Verbal communication – A gap between communication intent and how it is perceived occurs in a number of work situations in Asia. For example, in countries such as India, China or Japan, it is rude to say ‘no’ and as a result it can be difficult to decipher what people are really saying in negotiations. • Body language – Non-verbal communication such as eye contact, smiles, postures, touching or a loud voice are highly contextual and can mean different things in different cultures. • Hierarchy – Studies by Dutch social psychologist and anthropologist Geert Hofstede show that values in the workplace are influenced by culture. His ‘power distance index’ measures to what extent less powerful members of organizations accept the uneven distribution of power, 100 meaning a high acceptance and 0 meaning no acceptance. Many Asian countries rank high, with 80 for China and 77 for India, while most Western countries rank lower, with 35 for the UK and Germany, 36 for Australia and 40 for the US. • Personal space – ‘Proxemics’, a term introduced by anthropologist Edward T. Hall in 1963, is the study of measurable distances between people as they interact. In Latin cultures, for example, relative distances are smaller than in Nordic and most Asian cultures where it is uncomfortable standing too close to each other. • The desk – Often in Asia, the location where an employee sits in relation to management is meaningful. In Japan, where desks of a work unit are often put together to form a large table, employees tend to face each other while the supervisor sits at the head and the youngest sits at the foot. This contrasts with many Western offices where employees sit with their backs to each other to seek privacy and concentration. Sitting alone by a window in Japan is a sign of exile from the active working group, in contrast with the Western connotation of status for a desk with a view. No matter how good these workplace strategies are, it is crucial that they are implemented and managed effectively to create enduring workplace change. CRE teams should make sure that the value they add to the enterprise is measurable. They should build in flexibility to adapt to cultural variances and deploy a robust change management program to accelerate adoption and establish a smooth transition. Preparation is critical. End-to-end execution is king. 13 Considerations for Enduring Workplace Change Choose the best timing Plan a relevant change management program 55 Mergers and acquisitions 55 Understand the stakeholders at all levels 55 Cultural change 55 Engage relevant stakeholders to create a shared need 55 Restructures 55 Shape the vision based on the needs and objectives of the business 55 New buildings or workplaces 55 New work processes 55 New technologies Think like business leaders 55 Understand the business 55 Mobilize commitment and initiate action among employees 55 Segment the workforce to customize the solution if needed 55 Introduce right behaviors, systems and symbols 55 Present a robust, relevant business case 55 Make change last through ongoing communication, choosing the right forms of engagement and communication channels 55 Align the solution with the business vision 55 Gain stakeholders’ buy-in to effect speed of change 55 Gain endorsement and effective visible leadership 55 Reinforce sustainable behaviors 55 Understand the need for change Understand local dimensions 55 Culture 55 Economy 55 Technology and infrastructure 55 Demographics 55 Talent 14 Co Ass ne rp oc T or iat ho an ate e ne Di rav .th R e + or 6 As se rect al av 5 ia a or al@ 64 Pa rch , ap 94 3 cific , .jll 63 .co 0 m An W Ass Ni or oc n kp i a g lac te W nin e D o g.w + A Se irec ng 6 s on 5 9 ia rvic tor, g@ 79 Pa es ap 7 2 cific , .jll 53 .co 9 m St ra teg ic He ad of S Se tra rvi teg ce i c S s W u su +65 , As ork Li .lim 8 ia pla m @ 399 Pac ce ap 3 ific .jll 23 .co 6 m For more information, please contact: www.joneslanglasalle.com/asiapacific/EN-GB/Pages/Workplace-Solutions.aspx 15 About Jones Lang LaSalle Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.2 billion of assets under management. Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 22,000 employees operating in 78 offices in 14 countries across the region. 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