Confronted with a very high turnover of young talent, Asian companies in the financial and consulting sectors are trying to address the problem by making their compensation more attractive. Does it work? This article
investigates the roots of the problem. They are not financial; they are cultural. The author’s research points at one clear cultural trend: the rapid decrease in collectivism and power distance among new generations in Asia. Attracting and retaining young millennials and Generation Z employees requires a totally new strategic HR approach that aligns with the unique preferences and values of these generations. This article suggests
10 concrete measures that organisations in Asia should adopt to successfully address the challenge of young talent.
A few months ago, the Big Four audit firms and several banks in Singapore substantially raised their compensation for young recruits. Their objective is clear. Confronted with extremely high turnover among young millennials (born 1981-96) and Generation Z (born mid-1990s to mid-2000s), they are trying to retain them by making their compensation more attractive.
With starting salaries for young associates at around S$3,500 per month, the Big Four audit firms in Singapore have long positioned themselves below the market median for young graduates. Improving their entry-level compensation to attract and retain new generations makes sense. It is also a common trend among organisations operating in the financial and consulting industries in Singapore, Hong Kong, and several other regions in Asia. But the question is, will the additional money alone be enough to attract and retain young talent?
The root of the problem is not financial; it is cultural. According to Hofstede (Hofstede, G., 2010), Asians have common characteristics when it comes to two key cultural dimensions: individualism and power distance. The individualism index (IDV) — as opposed to collectivism — is the degree to which an individual derives their identity from self-reliance, low concern, and distance from the group they belong to. The power distance index (PDI) measures the level of inequality within a society and to what extent less-powerful individuals accept the inequality.
While it is important to avoid making sweeping generalisations about leaders in this region, especially since Asia encompasses a culturally diverse landscape, there are certain values and characteristics that can be observed among male leaders in their fifties and sixties:
- High collectivism.
Leaders in this age group often focus on social harmony, stability, and economic development for the greater good.
- High power distance.
They prioritise centralised control and top-down leadership styles to maintain stability, social order, and development.
- Traditional values and social conservatism.
They often hold socially conservative views on issues such as respect for the elders, personal sacrifice, family structure, gender roles, and moral values. These views can shape their policies and decisions, especially in areas like education and human resource management.
However, do these traditional values still resonate with those born after 1990? To address this important question, I used my research on national and generational culture in the academic environment. Being a professor of leadership, I had the opportunity to measure the cultural traits of 500 Asian Executive MBA and Executive MBA participants over the past 10 years. I focused on Asians, Singaporeans, PRC Chinese, and Indians attending Nanyang Business School’s MBA in Singapore. These individuals are similar from a demographic standpoint; alike in gender balance (30 per cent women), average age (38), work seniority (12+), and socioeconomic background (well-educated, English-speaking upper-middle and upper class). Over the period 2011-21, MBA and EMBA participants were asked to take the CultureCompass psychometric test, designed to measure their national cultural dimensions, including individualism and power distance.
The results of my research lead me to conclude that one clear cultural and demographic trend will dramatically change the financial and consulting industries in the next 10 years: the rapid decrease in collectivism and power distance among new generations. Asian young millennials and Generation Z are much more individualistic and have a lower power distance compared to previous generations (figure 1).
Figure 1: Power distance and individualism among EMBA participants in Asia and the GCC regions
These results are consistent with one influential theory of cultural change, the modernisation theory, which predicts the rise of individualism because of economic growth.
Going back to our original question, I doubt that compensation alone will fix the great resignation. As young millennials and Generation Z hires are much more individualistic and have a lower power distance than their older colleagues, we observe a fundamental change in terms of values and relations within the family. The rise of individualism is also affecting the way people relate to power and to each other. Young people in Asia are showing a much wider range of attitudes towards loyalty and obligation than their elders, partly because of the growing importance of technology and partly because of the rapidly changing economics. In an age defined less and less by traditionalism and family connections, self-expression, independence, and authenticity, together with singledom, job hopping, digital connection, focus on work-life balance, and a nomadic workforce, are a natural evolution.
Young and Generation Z-ers in Asia want a meaningful life and clear purpose in their work. They value work-life balance, easy access to their managers, flexibility, learning opportunities, and interesting tasks. Generation Z, in particular, is known for its digital-native mindset, desire for purpose-driven work, and emphasis on work-life balance, as well as diversity and inclusion. Money is important but is not enough. Life is now. Working 60 hours a week with two weeks of vacation every year no longer makes sense for young talent in Asia.
It is time for the Big Four and companies in the financial sector in Asia to look again at their HR model with fresh eyes and a higher level of cultural intelligence. If they want to attract and retain the best young graduates, they need to focus on what really matters to them. Ensuring that the compensation package is competitive and offering additional benefits such as retirement plans and stock options are good moves but will not solve the problem.
Attracting and retaining young millennials and Generation Z employees involves understanding their unique characteristics, needs, and cultural values, and then creating an environment that aligns with these factors. In other words, it requires a strategic HR approach that aligns with the unique preferences and values of these generations.
Specifically, what can organisations do? Here are several strategies that the Big Four and financial companies in Asia can adopt to attract and retain Gen Z talent:
- Servant Leadership Style. Millennials and Generation Z tend to prefer a servant leadership style. Promote the importance of humility, coaching, two-ways communication, and transparency among your senior leaders. This may be difficult to do with senior leaders in Asia, but it is critically important.
- Purpose. Millennials and Gen Z are interested in companies with a clear sense of purpose and strong values. This is also true in the Financial and Consulting sectors. Whenever possible, communicate your company’s environmental and social responsibility efforts.
- Involvement. Make them feel heard. Consider initiatives such as shadow boards to offer them an opportunity to contribute to decision making.
- Proactive Internal Communication. Maintain open and transparent communication channels. Regularly update employees on company goals, performance, key projects, and any changes that may affect them.
- Personal Development and Learning. Provide a variety of learning and career development opportunities. Offer mentorship and reverse mentorship programs and training opportunities.
- Diversity and Inclusion. Create a diverse and inclusive work culture. Promote diversity in all its dimension (nationality, gender, generations) not just in hiring but also in leadership positions.
- Flexibility and Work-Life Balance. Whenever possible, offer flexible work options, including remote work or flexible hours. Consider using unpaid leave. Both generations highly value work-life balance and appreciate the ability to tailor their work schedules to their needs.
- Technology and Innovation. Embrace technology and innovation. These generations appreciate modern tools and processes that enhance productivity and efficiency.
- Regular Feedback and Recognition. Make them feel heard and respected. Provide regular feedback and recognition. Frequent feedback and acknowledgment of their efforts can boost motivation and engagement.
- Team Spirit. Promote team spirit. Organize regular team-building activities and events to build teamwork and strong relationships among colleagues.
Some of the items on my list conflict with the traditional values held by many senior leaders in Asia, who might find it challenging to promote policies they have mixed feelings about. But they have no choice. If they continue to hold to “the old way of doing things here”, they will face increasing turnover, workforce demotivation, and skyrocketing hiring costs. By implementing these strategies, the Big Four and financial companies in Asia can not only attract but also retain young millennials and Generation Z-ers, harnessing their unique skills, perspectives, and energy to drive innovation and success in the industry.
About the Author
Prof. Guido Gianasso, PhD, a Swiss-Italian national with over 35 years of experience, is currently a global leadership expert and professor at HEC Paris in Qatar. He previously served as a professor at Nanyang Business School, NTU, Singapore. With a PhD in Management from the University of Geneva, his academic focus revolves around global leadership and cultural intelligence (CQ). He is also a visiting professor at the Universities of Geneva and Hong Kong, Honorary Consul of Romania in Geneva, and serves on the Board of Trustees of the American University of Phnom Penh. Prof. Gianasso has an extensive corporate background, including roles as CHRO and Executive Committee member at IATA, Managing Director of IATA Training and Development Institute (ITDI), and various international advisory positions. Proficient in five languages, he contributes a wealth of knowledge and expertise to academia and industry.