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View Profile’s latest recruitment insights and reports on the talent landscape across our key markets - Hong Kong, Singapore, Shanghai and Beijing.

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Diversity & Inclusion – Are attitudes shifting in the Asian workplace?

Richard Letcher, Managing Director of Profile Search & Selection, discusses the importance of Diversity & Inclusion and the shifting attitudes in workplaces across Asia. The last three years showed an unprecedented change in attitudes in the West towards Diversity & Inclusion (D&I) in the workplace. The way men view women in an office environment changed almost overnight when allegations were brought against Harvey Weinstein in late 2017, a story that opened floodgates to accusations against many men, and started the #MeToo campaign. In addition to this, the BBC salaries scandal last year exposed the gender pay gap within many organisations. Men have now been forced to re-examine their attitudes to women at work with an accompanying rise in levels of self-awareness. Attitudes toward LGBT men and women in the workplace have also changed as several countries have legalised same sex marriage. As governments move forward, CEOs in the region have undoubtedly been thinking, ‘Perhaps I need to change my perception of the LGBT community’. But in what way are attitudes regarding D&I in the workplace changing in Asia? Now in its fourth year, our ‘Working in Asia Pacific: Key HR and Leadership Priorities’ survey attempted to answer this question, among others. In the latest version, close to 3,000 people filled in the survey with the majority of respondents based in Hong Kong, Singapore, China or Australia. 84% of respondents were Managers through to Board Directors, and D&I was just one of many Human Resources and Talent-related topics covered. The survey was done in conjunction with Roffey Park, a leading UK headquartered leadership consulting firm, and The Next Step, a specialist Australian HR recruitment firm. Among many questions posed by the survey, we asked respondents if their organisation is accepting of difference (as “related to gender, sexual orientation, ethnicity, religion, disability and age”), a question we also asked in the 2017 and 2018 editions of the survey. The results, as seen below, show a marked change in the perception of employees that their organisations are indeed more accepting of difference. Infographic 1: Percentage of respondents who indicated ‘agree’ that organisations are more accepting of difference Singapore and, for the most part, Hong Kong have seen a large improvement since 2017. Even more positive are the results for Australia, with 90% of respondents agreeing their company is accepting of difference. Australia was not part of the survey in 2017 and 2018, so we only have data for the current year. China appears to have gone backwards. This might be partly explained by the fact that 2017 and 2018 respondent numbers were not materially large, with 2019 being far more so. As such, the results for 2019 might be a more realistic view given the larger respondent size. ​ But what about diversity when it comes to actually recruiting and retaining talent, and also the perception of employees when it comes to diversity in their organisation’s senior leadership team? The following infographics from the last three years of survey data point to the fact that more needs to be done when it comes to D&I in the workplace. Infographic 2: Percentage of respondents who indicated ‘agree’ that organisations are more accepting of difference when it comes to talent acquisition and retention ​Infographic 3: Percentage of respondents who indicated ‘agree’ there is sufficient diversity in the senior leadership team in their organisation Although the numbers have improved over the past two years in terms of attracting and retaining talent from diverse backgrounds, there seems to be a lot of talking the talk without walking the walk. This is evident in Singapore, Hong Kong and Australia, given both the percentages and the percentage increases between 2017 and 2019 are lower than those seen in infographic 1. Digging a bit deeper with this question, it appears that perhaps the initial perception that many organisations are accepting of difference might be hiding a slightly less rosy reality. Diversity in senior leadership teams (infographic 3) shows even lower percentages. Change will take time; however, the changes highlighted in the first two charts provide hope that bringing D&I into the boardroom is an achievable result in the mid-term. With potential generational differences in attitudes towards gender, LGBT, disability and ethnicity, there is hope these changes might accelerate over the next few years as Generation Y become a greater proportion of the workforce. We have been very fortunate to capture this snapshot of people’s views on D&I within the Asian workplace over the last three years, a period in which there has been a lot of change in views globally. The long and short of it is that things are changing for the better in Asia, but there are still some whose attitudes and perceptions need to evolve.
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Human Resources – Are we in the middle of a confidence crisis?

Human Resources in Asia Pacific has come a long way from being a purely administrative function, commonly referred to as “Personnel”, to a business partnering one with closer relationships to an organisation’s leaders. As the world becomes an increasingly unpredictable place, CEOs have increasingly relied on their HR leaders to assist with growth, restructuring and directional changes, which have become more common and complex in recent years. Although in some organisations HR has not moved from simply doing the payroll and creating policy, most have moved firmly down the strategic route. But how are HR functions really perceived at the moment? What are their strengths and weaknesses according to the business, and according to HR professionals? What specific skillsets do HR professionals see as being crucial now and in the future in order to develop and maintain its significance? All these questions, and more, were posed in a recent survey we conducted in conjunction with the Roffey Park Institute, a UK-headquartered leadership development consultancy, and The Next Step, a specialist HR recruitment company in Australia, for our fourth edition of a survey entitled Working in Asia Pacific: Key HR and Leadership Priorities for 2019. Close to 3,000 people, half of them HR professionals and half from outside the profession, filled in the survey questionnaire and the results came out earlier this month. Of the total number of respondents 84% were manager level through to board director, and 94% were based in Hong Kong, Singapore, China or Australia. We asked everyone who responded, whether they worked in HR or elsewhere in the business, to rate the capability of their HR function with respect to 13 areas of HR, ranging from its ‘Use of Analytics’ to its ‘Ability to facilitate learning’. For all capabilities here are the results of how HR was rated: Confidence in HR capability - average % ratings for all capabilities ​ Not exactly a cause for popping open the champagne bottles. So what is HR doing, or not doing, that is stopping internal clients from jumping up and down with joy? Firstly let’s look at what HR is doing right. Below is a table showing the top capabilities as rated by both HR professionals and non-HR professionals. For the latter group many thought HR have done a great job at developing an inclusive and diverse workforce, but also in developing digital HR tools and facilitating learning. HR professionals’ thoughts mirror a couple of these but they also feel they are doing a great job at ‘Talent acquisition’ and ‘Approach to performance management’. Top three areas in which the HR function’s capability is considered to be excellent And where is HR going wrong? According to both HR professionals and the business, the top three are exactly the same - the ‘Use of Artificial Intelligence’ (AI), the ‘Use of Analytics’, and finally ‘Succession Planning’. Top three areas in which the HR function’s capability is considered to be weak No one can blame HR for the speed at which it has picked up AI given it is at an early stage of its adoption. Although a few companies have adopted machine learning HR helpdesk chat bots and the like, many of these companies are extremely large with economies of scale, and the initiatives have been global ones. Other companies that are sifting through the dizzying array of products available and being peddled to them, are, potentially rightly so, waiting to see which rise to the top, and are probably 2-5 years away from implementation. But the other two areas of weakness highlighted do need to be addressed. The need for data analytics has been around for many years and the ‘could do better’ result in our survey is probably deserved. ‘Succession Planning’ is a little more complex as business leaders should also take responsibility for this, but as an initiative many would argue it is HR’s responsibility to instigate. As an aside, the two areas of HR where there was the biggest difference in opinion between HR and non-HR professionals on the rating, were the ‘Approach to performance management’ and ‘Talent acquisition’. HR thought they did well in these areas but the business did not. Better communication might be one solution when it comes to organisational change - in reality it can be incredibly difficult to execute well, and business leaders may not be recognising this. Acquiring talent, particularly in specific areas of the job market, can also be problematic with the business not realising this, and the difference in opinion might simply be because HR has not been managing expectations. So, what do HR professionals feel are the skills needed right now and in the future in order to develop and add value? In the current business environment, across the region, change skills are the name of the game, and specifically broad-based change management skills as well as organisational development and design skills. Other areas of importance, skill set wise, include employee engagement, talent management and leadership development. Top four most important technical skills for a HR professional to possess in the current business environment And what are the HR skills required in the future according to HR professionals? From the below table it seems like the ‘Culture change ability’ is key but also the ‘Ability to influence decision-makers’. ​ ​Top three compentencies HR functions most need to change or develop over the next 5-10 years All in all, although HR has come a long way over the past two decades, it seems that more work needs to be done in specific areas of HR - namely in change management, technology adoption and data analysis. None of this will happen overnight, but real steps need to be taken to fill the gaps. None of these areas are renowned to be cornerstones of an HR professional’s tool kit, so either upskilling needs to take place, or another solution would be to move staff internally with the right skillset and from outside of HR, or to hire externally. KEY CONTACTS For more information or individually tailored advice, please do not hesitate to contact our regional Human Resources team: Hong Kong Office - Richard Letcher and Amanda Clarke Singapore Office - James Rushworth Shanghai Office - Shelya Zhou Beijing Office - Ming Ming Click here to download the full report.
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Profile Human Resources Market Update, June 2019

The following summaries provide an update on the key trends that we have observed within the Human Resources job market across Hong Kong, Singapore, Shanghai and Beijing. These updates identify emerging themes across the industry and detail the major factors impacting hiring and talent movement. HONG KONG​ 2018 was a very active year for hiring in Hong Kong. Candidates were more confident about moving jobs than the preceding year and clients were keen to add headcount where they could. Throughout 2018 Financial Services gained momentum across the market and we saw hires in Insurance, Asset Management, Alternative Funds, and Banking. By the second half of 2018, mass market retail, luxury brands and professional services had also picked up their talent acquisition activities, with a number of these firms seeking to upgrade roles as HR teams restructured and created new hubs in the region. In particular, specialist areas such as Talent Management saw a huge increase in demand for talent as clients created new roles and expanded existing teams. By contrast, the hiring market in 2019 has so far been more subdued, particularly over the last couple of months. In part this has been due to the volatility in financial markets in the first half of the year and the trade war between China and the US. As a result, clients have struggled to get headcount approved internally. Nonetheless, niche roles within Talent Management and Rewards, for example, are still in demand, and rather more promisingly, we have seen an increased number of recruitment positions come into the market in Q2. Over the last year and into this year we are also seeing more Chinese domestic Financial Services firms expanding offshore into Hong Kong, and with this, the need to recruit HR professionals. Salaries in 2019 have increased largely in line with inflation yet bonuses paid in early 2019 were a little mixed. Despite a strong financial year, there were a number of people who had expected a higher payout. Nonetheless, the rest of 2019 looks tentatively upbeat, particularly at the junior to mid end of the market with new vacancies opening up and a refreshed desire to upskill current teams in a number of areas across HR. With a continued shortage of strategic, mid to senior level HR talent, especially within Talent Management, it will be the clients who can offer strong learning and growth experiences, flexible working, holistic/unique benefits and an inclusive company culture who will be able to better attract the top talent in 2019. SINGAPORE Off the back of a very strong 2018, hiring activity and sentiment this year has varied, depending on the industry, with the overall picture being a bright one. Partly fueled by the government’s initiatives to encourage technological innovations and the start-up ecosystem, the IT and Communications sector has performed very well in recent months and we have seen demand for HR talent in this space. The Finance and Insurance sectors also grew, and this has been bolstered by the ramp up of ‘new economy’ activities such as digital payments. Sectors experiencing continued challenges include oil and gas, shipping, construction and retail, with significant change programs and retrenchment work on the cards within these industries. In demand are strong HR Business Partners as well as specialists in Talent Acquisition, Compensation & Benefits and Talent Management. Talent Acquisition professionals with excellent stakeholder management skills have been particularly sought after, and companies have found these individuals increasingly hard to find. Generally, the market for high potential HR candidates has been particularly tight given the length of this bull run in hiring, and often these professionals have multiple offers on the table at one time. Winning organisations in this battle are ones that focus on the speed and professionalism of their hiring process, selling their organisational culture, as well as having a competitive compensation package on offer. Flexibility and agile working is on the rise, with many organisations using this to differentiate themselves in the talent market. Companies who have not considered these policies are losing their competitiveness in the war for talent. Digitisation, transformation and HR analytics are key conversation topics that are trending, and clients are looking for HR candidates who have relevant exposure as current capability in many organisations is weak in these areas. Health and Wellbeing remains high on the agenda for many organisations, with a focus on how organisations can increase engagement and talent retention through such channels. This is also filtering through to benefit packages, ensuring that companies’ insurance coverage and internal policies cover the relevant support required. Salary increments and bonuses in early 2019 were modest in many sectors, so the focus for the candidate remains quite heavily on base salary uplift during the hiring process. SHANGHAI In recent years, and with the US/China trade war as a catalyst, China’s economy has been slowing down. However, relative growth in the real estate, hospitality, consumer and professional services sectors, reflects the government’s strategy to shift away from investment in infrastructure to investment in services and consumption. This shift has been reflected in the job market generally, as well as specifically for HR talent. In general, the demand for full function HR generalists in the HR talent market is greater than for HR specialists. HR full function professionals with strong business-partnering skills and capability of driving organisational change and development are highly sought after. This demand for strategic HR business partners has been driven by the extensive business transformation and re-organisation activities happening in many organisations in China. Dealing with ambiguity and navigating complex organisational structures are key skills required of candidates. There is also an increasing demand for senior Talent Acquisition professionals, with the skill-set focus shifting from just fulfilling volume vacancies and promoting an employer brand, to driving team collaboration, implementing digitalisation strategies and talent succession expertise. A trend which is gathering momentum is the move to using technology more effectively in HR. MNCs predominately are driving this through the use of talent digitalisation tools used for talent pool management and market insights analysis, as well as the use of AI in talent acquisition and learning. Senior HR leaders with high levels of resilience are highly sought after across different sectors; individuals who can thrive under the pressure of an increasingly complex and changing environment. Dealing with organisational politics and implementing HR strategies with limited budget and resources are two of the main challenges that senior HR leaders have been facing. HR professionals received salary increments of around 5-7% (excluding increases as a result of promotions), which is slightly lower than in previous years, with variations seen between different industries and levels. BEIJING 2018 was a year of two distinct halves for the Beijing HR job market. Although there were good levels of activity in the first half, the second half saw investment for many organisations dry up somewhat, with a corresponding negative impact on hiring activity. Up to that point there had been almost blind over-hiring, in some cases, of HR professionals. Although the first half of 2019 has gradually become more active with regards to hiring, organisations are being far more cautious with their recruitment, and redundancies have affected quite a few companies. Business leaders are now focused on cost saving, from travel to hiring and training costs. HR professionals are more cautious about moving jobs this year, as they are nervous about being ‘last in, first out’. Many will choose to stay put and stabilize their CVs this year. This is particularly the case for more high potential candidates, which will cause frustration for many organisations, from big multinationals to domestic unicorns, who are looking for top talent. With a number of multinationals putting the brakes on growth in China, many HR professionals have been more interested in opportunities in domestic, listed or state owned companies. This is particularly the case for candidates whose hukou is not in Beijing, as joining these organisations would mean this residency permit problem is solved. The market has been more active at the junior to mid-levels of the market with senior level roles being fewer and further between, and when they are being hired a cautious, considered approach is taken. For senior HR heads who have been working for startup companies or internet firms, many are choosing to return to a larger, more stable company that has already listed in order to bring some stability to their career. Demand for talent acquisition candidates, although very healthy in the first half of 2018, is now at lower levels, and we have seen more roles in rewards, organisational development, as well as talent and performance management in recent months. KEY CONTACTS For more information or individually tailored advice, please do not hesitate to contact our regional Human Resources team: Hong Kong Office - Richard Letcher and Amanda Clarke Singapore Office - James Rushworth Shanghai Office - Shelya Zhou Beijing Office - Ming Ming Click here to download the full report.
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How Psychological Safety Can Breed Success in Asia

James Rushworth, Managing Director of Profile Search & Selection, explains how businesses can create more effective teams and boost performance by building open cultures and fostering a sense of belonging. In Asia’s fast-paced, highly-demanding working culture, results count. However, getting the right mix of talent and creating the environment most likely to ensure success is easier said than done. The challenge is compounded by changing demographics that mean workforces are increasingly likely to span from recent graduates to 60-year-olds. As a result, the value of ‘psychological safety’ can no longer be under-estimated. It is based on a shared belief of the team environment as a ‘safe’ one within which an employee can show initiative – or take a risk – without fear of negative consequences for their status, such as ‘losing face’. In short, acceptance and respect for an individual breed positive emotions like trust, confidence, inspiration and higher self-esteem, from which spring more open-minded, resilient and motivated people and teams. Such a cultural fit also benefits employee retention and mental well-being. Across Hong Kong, Singapore and mainland China, evidence is mounting to show why business leaders must embrace the opportunity to connect socially and foster trust amongst their staff. Take our report on Working in Asia Pacific: Key HR and Leadership Priorities for 2019. Based on our research, the views of almost 3,000 HR and other professionals in the region show issues relating to psychological safety now feature among key people-related challenges. For example: In Singapore and Hong Kong – Maintaining “employee engagement and morale” are key leadership issues at management level today In each of Singapore, Hong Kong and China – “Managing a multi-generational workforce” is expected to be among a top-three challenge by 2024 Across the region a “lack of opportunities to make a difference” across generations and gender is the second highest reason for employees considering a move in the near future Three ways to make your team feel safe Given that employees across different generations have varied expectations and views of the workplace, we believe managers need to prioritise efforts to increase employee engagement and motivation in several ways. 1. Create constructive politics A lack of transparency combined with power struggles, bias and favouritism – shown by the report as factors manifesting themselves across the region – dent organisational performance due to higher stress levels and reduced faith in top management. Resulting employee cynicism also creates risk aversion and mistrust of each other’s motives. Change is difficult in such a culture, plus people will more likely leave a company with bad politics. Yet our research shows a sense of belonging is an important motivator across generations, although less so in China compared with Singapore and Hong Kong. Business leaders need to set the tone. Ways to shape a constructive working environment include: stamping out negative influences; building an open culture; encouraging interchange and team working; allowing scope for individuality; and involving people in creating a shared purpose at all levels. 2. Provide an open forum Organisations can play their part via a commitment to training, support and raising awareness among staff; employees may then also feel better equipped to help others. While work-related mental health and well-being issues are rising in Hong Kong, Singapore and China, the report shows a general reluctance for employees to divulge their feelings, either with line managers or colleagues. Our research shows Singaporean culture as least open about, and accepting of, mental health issues. Although firms are making some progress, still only around one-quarter of people in each market feel their working environment engenders an open and supportive culture. Interestingly, China seems furthest along the road to a community-based integrated solution through access to medical professionals and on-site counselling, along with amended working practices. 3. Develop soft skills among senior managers Developing softer skills is essential, especially given the emerging multi-generational workforce and influx of millennials over the coming years; management must respond to different needs and wants among employees. Our report reveals that managers in Hong Kong, Singapore and China are most likely to be rated as ‘excellent’ at Autonomy (empowering employees to make decisions), and most likely to be rated as ‘weak’ at Relatedness (connecting with employees on a personal and emotional level). Chinese managers are perceived to reduce ambiguity and make employees feel less threatened by uncertainty by clearly communicating expectations, plans and changes. The research also suggests that many managers across Asia – and especially junior ones – are relatively weak at fostering innovation through building an open culture. Connecting with staff on personal and emotional levels is another area in need of attention. Conclusion Creating a sense of psychological safety can lead to higher levels of engagement in your team, and in turn, better performance. It provides the motivation not only to confront daily challenges in the workplace, but also to seek out learning and development opportunities, a win for both employees and the business.
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How to Deal with Business Uncertainty in China

Paul Loo, Managing Director of Profile China, shares his thoughts on managing teams in China's ever-changing business landscape this year.​ ​ There is an air of uncertainty for businesses in China this year, more so than in the past. Trade wars, reduced consumer spending, falling profits and a contraction of the manufacturing sector all contributed to the uncertainty in China when we welcomed 2019 just a few months ago. But is it all doom and gloom? Not really, as it depends on your business and your industry. And regardless of whether your business is affected by this unpredictability, what we have noticed repeatedly in China is that to create greater certainty, two leadership steps keep repeating themselves: (1) Build a more nimble and resilient team, and (2) Become a more empathetic leader. 1. Build a More Nimble and Resilient Team Especially in 2019, building a dynamic team is on every leader’s agenda when faced with an uncertain market. This means the need to respond and recover quickly is more important this year than in the past. But perhaps it’s time to take a slightly different approach. Leaders have a tendency to tell their team to “be more flexible,” or “think outside the box,” or encourage them with “come on — hang in there, we can do it.” Sadly, these overused words mean nothing these days and can even demotivate the team! More importantly, for your team members to thrive in this increasingly volatile business environment, a behaviour change is needed. These words are useless in changing behaviour, especially during times of stress. How then, can you create such a change so your team learns to embrace uncertainty to become more effective and to accelerate growth? A one-size-fits-all approach that you read online or in books may not work, which means you must know each key team member at a far deeper level, and discover what stops them from building resilience and what it would take for them to change their mindset. In other words, discover what motivates or demotivates each team member as they strive to become more nimble and resilient. Building a dynamic and agile team requires behaviour change, and as the leader, the onus is on you to understand why people will/won’t or can/can’t change. And how do you do this? By becoming a more empathetic leader! 2. Become a more empathetic leader What is an empathetic leader? Why is this type of leader different? Empathy is the ability to understand and share other people’s feelings, and a more empathetic leader wants to understand the feelings of their team members, and what stops them from being more nimble and resilient. This concept is not new in China; however, it has remained mostly a concept and not a daily practice. It is easy to blame the education system, the old habit of leaders leading by command or the belief that leaders must have all the answers. But with the ever pressing need to embrace change and uncertainty, isn’t this the right time for leaders to respond with more empathy? This begs the question, “How do I grow into an empathetic leader?” All it takes is to simply ASK before you act. Just as importantly, an empathetic leader listens deeply, listens to understand, and asks and listens again. Take the opportunity to understand why your team members resist building resiliency, understand their fears, and understand what motivates them when faced with a challenging task. Ask and Listen. Before you dismiss all of this as New Age mumbo-jumbo, the power of empathy is rooted in science. When we ask to understand and empathise, our team members feel appreciated, which in turn releases a small shot of oxytocin in their brain. Oxytocin is the “feel good” chemical, and when we feel good, we are more likely to have a little more courage and energy to do what we unconsciously resist or deliberately avoid. Of course, the effects of the oxytocin release can dissipate quickly, but just a small boost is good enough to get us over that initial resistance. Conclusion Yes, 2019 could still turn out as an uncertain year in China, but we can reduce the uncertainty by creating nimble and resilient teams who are willing to adapt to the changing environment. And to do this, choose to become a more empathetic leader. Do let me know how it goes, and I would be delighted to hear from you! ​ ​For more information, please contact Paul Loo, Managing Director, Profile Search & Selection.
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Profile Legal & Compliance Market Update 2019

LEGAL & COMPLIANCE MARKET UPDATE 2019 VUCA – Volatility, Uncertainty, Complexity and Ambiguity is the acronym all businesses are grappling with now. The exponential growth of innovative technology has disrupted the way businesses operate. In addition, the rapid pace of reform in China, paired with ever-changing regulatory and compliance rules, calls for a continued need for robust team structures. Not only do organisations need to understand what is required to keep pace with local and global regulatory change, they need to be able to implement that within existing infrastructure, and monitor it on a consistent basis. As the international reach of US, European and UK regulators widens, the pressures of site inspections, investigations, and fines have all impacted organisational costs, and consequently, the view on culpability. Human capital is a key tool for organisations seeking to shore-up their businesses against a regulated and uncertain future impacted by trade wars, market volatility and disruption from smaller, more nimble innovators. How firms prioritise their staffing going forward will be crucial to their preparedness for such an environment. This report details the forces driving hiring in 2019 and considers where organisations need to focus their attention in order to fill the region’s human capital shortage. ​FIVE FORCES DRIVING HIRING IN 2019 1. FUND MANAGEMENT Selective legal and compliance hiring will continue to be a priority for the fund management industry in 2019. This is driven by a mix of increased regulatory pressure (including onsite inspections) as well as the rush to expand into China. The associated regulatory requirements via wholly foreign-owned enterprises (WFOEs) and licences for Qualified Domestic Limited Partnerships (QDLPs), private fund management (PFM), for example, have led to growing demand for increasingly-senior compliance talent throughout the region. In China, once the initial infrastructure and team is in place, we expect legal hires to be a hot trend in 2019. 2. INSURANCE COMPANIES Insurers in Asia face a period of continued growth in line with expanding middle classes in China, India and other South-east Asian countries. Greater regulatory scrutiny throughout the region, including Hong Kong’s new Insurance Authority, and more competition from nimble start-ups are creating certain challenges. We are seeing a shake-up in this industry and the resultant innovations as to how insurance products will be marketed and sold have all had a knock-on effect to their hiring. Legal and compliance staff with specialised IT/digital and data protection experience will be sought after as are candidates with bancassurance experience. We also see insurance firms poaching key staff and talent from more regulated environments such as investment banks and asset managers. Candidates, in turn, are attracted to a stable (and profitable) environment, fewer regulations and an increasingly innovative industry. 3. CHINESE-BACKED ENTITIES State-owned enterprises as well as PRC domestic companies are expanding their footprint across Asia. In a report from professional services firm JLL in the first half of 2018, Singapore was highlighted as one of the top destinations for Chinese firms expanding overseas. This included pioneers like Baidu, Alibaba and Tencent. These employers are specifically looking for talent with an international background coupled with fluency in Mandarin, comfort in dealing with senior stakeholders in China and the ability to bring knowledge of well-established compliance frameworks, including corporate, private equity and banking. 4. FINTECH / REGTECH Committed investment for technological and digital innovation is becoming an important focus for many CEOs and, as a result, digital, IP and data privacy lawyers are increasingly sought after. Solution-oriented candidates who can apply their understanding of an existing, more traditional financial services framework to a new solution are in high demand. We anticipate a spike in start-ups that will bring with it an increase in hiring in this area. However, these more cash-strapped employers tend to offer lower base salaries that are more ‘back-ended’. Established organisations are fighting back though – see the recent JPMorgan coin launch. 5. SPECIALIST ROLES Specialist experience is increasingly important in tackling the wave of challenges that organisations face today. The #metoo movement and the rising number of conduct investigations will keep in-house employment teams busy for some time. Digital and data privacy lawyers are in demand following the EU General Data Protection Regulation (GDPR) getting tougher on all entities that hold customer information (which pretty much includes everyone!). IN-HOUSE LEGAL In-house lawyers with specialist experience continue to be in demand. We have seen increased hiring in specialist functions such as: Employment Increased focus on conduct issues, in-house training and a need to uniform employment contracts across the region. Litigation Bringing large-scale litigation ‘in-house’ can be an effective cost management tool. Regulatory Affairs As regulators become more sophisticated in the region, many organisations have hired lawyers to act as ‘influencers’ and liaise with relevant regulatory bodies. IT/Digital Increased regulation and competition from fintech firms have led to a wave of innovation within established industries. In the rush to digitalise and make use of A.I., tech savvy lawyers have been in high demand. Data Privacy & Protection Companies have already been hit hard by increased fines for breaches of data protection but this is only the tip of the ice-berg. Increased regulatory scrutiny by the EU Regulator GDPR, the Hong Kong Commissioner for Privacy and the Singapore Privacy Commissioner have all placed a higher burden on companies to ensure their risk in this area is covered. Funds The relaxation of regulations for foreign owned asset management and securities firms in China has resulted in lawyers with funds experience and fluent Mandarin language skills to be highly sought after in Hong Kong and Shanghai. Knowledge of setting up WFOE, PFM and QDLP licences are at a premium. This trend will continue well into next year. In Singapore, the MAS announcement in November 2018 to launch a $5 billion fund for private market investments requires those global private equity and infrastructure fund managers wanting to pitch for mandates to be committed to either deepen their existing presence in Singapore or establish a significant one. We have seen this activity grow; it now accounts for more than 50% of our hires in legal and compliance within the local fund management industry. On the flipside, for a number of law firms, the upshot of the ‘poaching’ trend is shrinkage in their mid-tier ranks. China Corporate lawyers continue to be high on the hiring list in China as more companies look to grow their businesses, both organically as well as via M&A deals within the lucrative China market. Retail, manufacturing, insurance and branded luxury goods sectors all eye the domestic market with strong growth potential. This has put the spotlight on legal professionals with strong in-bound and cross-border experience, and the ability to advise businesses seeking to attain a foothold or grow generally within the domestic market. IP and digital/e-commerce lawyers are also in demand. Investment Banks Within i-banks, lawyers within M&A and capital markets remain in demand; derivatives/structured products lawyers and regulatory lawyers are also sought after, although usually at AVP to VP level. Budget-driven cost-cutting in this area dictates ‘juniorisation’ trends and a preference for language skills. We anticipate a sharp increase in demand in China for these skills as international securities firms seek to expand in line with relaxation of regulations. Private Equity Private equity firms have been busy in the region over the past 18 months with credit funds and special situation funds enjoying growth. As a result, legal and compliance teams have been quietly growing in line with business needs. Generally, we are seeing compliance teams ‘up-skilling’ in these organisations, with candidates with experience from more regulated environments becoming attractive. The increase in PRC firms in this area has increased the demand for Mandarin-speaking lawyers and compliance staff. Candidates with Credit/NPL and special situations experience are in particular demand. This has all resulted in a wider set of opportunities for lawyers with specialist skills and knowledge and in some cases, real shortages. Poaching from the mid-tier associate ranks in law firms has become commonplace, resulting in law firms becoming more competitive in how they retain staff. Having a certain experience skillset alone does not ensure success in a career in-house. Being able to react to situations quicker to help resolve a real business issue is vital. The ability to influence key stakeholders is an asset in certain roles, as is the confidence and capability to lead an internal investigation where one of the parties involved is a senior executive. The importance of the China market is so strong in Hong Kong that few roles come without the pre-requisite for fluent (and sometimes native) Mandarin language capability. This makes it difficult to look to traditional overseas markets such as London, New York and Sydney for potential legal and compliance staff. Home-grown talent inevitably has a keen advantage. WHY ARE YOU CONSIDERING LEAVING YOUR CURRENT ORGANISATION? In 2018, Profile Search & Selection conducted a study in conjuction with Roffey Park on working life in Asia. The study found that more than two-thirds of survey respondents reported wanting to leave their organisations. Three of the top reasons were a lack of career growth and development, poor leadership and lack of promotion opportunities. FINTECH: A NEW CAREER PATH? MAS’ recent Singapore FinTech Festival 2018 was evidence of the potential in this sector; the event brought in more than 30,000 attendees from over 100 countries, leading to numerous partnerships and over $6.2 billion invested. The regulator also announced a fast-track approval programme for fintechs to register locally. In Hong Kong, the SFC has signed several fintech cooperation agreements with other regulators, and the HKMA has launched the Fintech Supervisory Sandbox (FSS) and Fintech Facilitation Office (FFO). Today, crypto funds and mobile apps have replaced the Googles, Facebooks and Amazons of the world as employers of choice for rising stars. We see lawyers in their 20s opting out of the traditional route of working their way up the career ladder in a bricks-and-mortar firm. Instead, younger practitioners, without the ties of families or mortgages are increasingly attracted to the start-up sector; they will even take pay-cuts to get there. Competition for these roles is also growing as fintechs hire lawyers with experience in a range of areas, including banking and lending, IT, corporate, employment and commercial. COMPLIANCE Across the region, there has been a pivot towards solution oriented compliance candidates. As both start ups and traditional companies start to focus on the digital economy, compliance candidates have to be able to apply their subject matter expertise to new online products and processes. For example, digital/fintech start-ups that are hiring for roles that didn’t exist 2 years ago –candidates from traditional AML and regulatory compliance functions from large financial institutions are now applying their subject matter expertise in the new digital economy framework. At the same time, as large multinational organisations look to add to their digital/online capabilities, they are starting to hire candidates from outside their own industry. This might include, for instance, hiring a technology/data privacy compliance specialist from a technology company for a newly-created position. We have also seen continued demand in the following areas: Digital and data privacy compliance Fund management compliance Regulatory compliance (across all industries) Anti-fraud/Anti-bribery/Corruption (especially in fast growing technology and consumer companies in emerging markets) Compliance monitoring Global markets compliance Automation and various artificial intelligence processes are reducing the operational aspects of the compliance function. For example, AML transactional surveillance is another area being automated and offshored. We are also seeing “juniorisation” across the banking industry as cost cutting measures are implemented. As a result of these trends, candidates see these areas as undesirable given the potential for career instability. Candidates currently in organizations where “juniorisation” is being practiced look externally out of their industry. In the last 12 months, we have moved more banking candidates to other industries than in the previous 5 years. The impact of the vast ongoing fines being imposed on companies for various breaches across data privacy, anti-money laundering and FCPA, for example, has shone a spotlight on the importance of the compliance function. In line with this, regional heads of compliance continue to have a significant say in strategic decisions, given their need for a ‘seat at the table’. As a result, compliance candidates are expected to be able to advise and influence senior management and business heads. This involves a ‘softer’ side – strong communication, influencing skills and gravitas. In particular, governance teams must be solution-oriented and business focused. Increasingly, senior compliance managers must also prove significant and established contacts and connections with the relevant regulatory bodies, such as MAS, HKMA and CBRC.​ CHARTING A LEGAL AND COMPLIANCE CAREER IN CHINA Within China, game-changing developments in the regulatory landscape over the past 12 to 24 months across securities, banking and insurance to open the domestic financial services landscape to foreign investment, are creating a frenzy of hiring activity. In addition to the WFOE-related talent, three other sectors need more human capital within the legal and compliance fields. SECURITIES JOINT VENTURES The roadmap for opening the China market that was put in place in April 2018 shows a clear timeline for securities business, with global houses planning their entries. With the complex business structure, given that there are eight major licenses in place with which companies can apply, firms with this vision need to recruit for compliance and legal functions. In compliance, the process is top-down; the priority is experience. In legal, unlike for fund houses, securities firms will hire legal talent as early as they do compliance practitioners. PRIVATE EQUITY AND VENTURE CAPITAL FUNDS The turbulence in China’s capital market since late 2017 has led the central government to place restrictions on cross-border M&A. In turn, investment firms are looking to recruit individuals in supporting functions. Amid this trend, there is a healthy turnover of legal practitioners in the market, although many private equity and venture capital firms continue to be somewhat conservative in terms of talent acquisition. ALTERNATIVE INVESTMENT FIRMS The Chinese government’s “Belt & Road” project has been another driver for global asset managers to target the real estate, infrastructure and new energy sectors as part of a long-term investment strategy. As they create onshore teams to capitalise on these opportunities, the compliance role is essential to meet the regulatory demands of the local industry association as well as the securities watchdog. Legal professionals, however, do not yet see the same demand, although this is a trend that we expect to emerge in time. GROWTH IN CHINESE HEADQUARTERED ENTITIES AS WELL AS INTERNATIONAL MULTINATIONALS EXPANDING THEIR FOOTPRINT IN CHINA China continues to be a growth market for us – both in domestic Chinese companies as well as multinational clients. Our multinational clients have expanded their sourcing scope in China to include hiring outside of specific industries as well as identifying bilingual talents outside of China who may be open to relocate to China. Outside of specific functions that require interactions with financial regulators, there is a lot more flexibility from clients in their hiring processes in China. For example, we have moved legal candidates from gaming to retail and practice to various in-house roles. This is largely driven by the shortage of good bilingual candidates. WHAT DO CANDIDATES WANT IN CHINA? Legal and compliance candidates in China have their choice of employers and generally look for: Empowerment – does their role influence business development? Company culture – is there a collaborative culture? Career development WHAT DO CURRENT TALENT TRENDS MEAN FOR YOU IN 2019? For the year ahead, we expect all the key trends we are seeing to keep us busy across legal and compliance hiring within Asia Pacific. More specifically, based on the five factors we identified as shaping hiring decisions in 2019, there are three main trends that clients and individual candidates should bear in mind, and where we are increasingly focusing our attention in helping to fill the region’s human capital shortage: THINKING OUTSIDE THE BOX As businesses evolve generally, clients have had to become more agile in their hiring rather than going down the traditional route of poaching from a direct competitor. For example, we have moved in-house counsel from investment banks to fund managers, from technology firms to insurance companies, and from retail banks to fintechs. As a result, flexibility is key when sourcing within a candidate-led market that also has a shortage of skills. Offers of flexible hours and working conditions can be effective against this backdrop. We have also seen return-to-work schemes be successful, as well as recruiting from other Asian centres. BEING COMMITTED TO HIRING More and more, employers need to move quickly when they find the right candidate. Part of this is them accepting that in many situations, especially given the demands of today’s environment, a “perfect” candidate doesn’t exist. We see this in China, for example. In this highly-buoyant market that is still evolving at breakneck speed, candidates can often be holding multiple offers. Speed and being committed to the process is key. ADVOCACY AND EXTRACTION Recruitment of senior legal and compliance practitioners in Asia is moving away from purely being a task of identifying potential candidates to one of advocacy and extraction. In-house counsel and compliance officers are paid to be the most risk-averse people in their organisation. As a result, we are increasingly finding that the depth and length of our relationships with our candidates have been instrumental in helping our clients advocate their role to this passive population. We spend most of our time ‘extracting’ while social media-led recruiters are still focused on just ‘identifying’. Guiding candidates through the offer and resignation process is increasingly important – many sought after candidates find themselves with multiple offers and a counter-offer from their employer. IN NEED OF SPECIALISTS TO FIND TALENT It’s no secret that the move within many financial institutions towards an ‘internal recruiter’ model has changed how banks are hiring lawyers and compliance staff. Internal referral schemes, back-to-work initiatives and social media platforms like LinkedIn have all had an impact on hiring strategies and processes. Yet we constantly hear frustrations from clients – the internal recruiter often lacks the network or bandwidth to successfully attract the right type of candidate. This highlights the importance for recruiting within this sector and having intimate knowledge of the market and the professionals who work within it. RECENT PLACEMENTS BY PROFILE ROLE ORGANISATION LOCATION APAC General Counsel Private Equity Firm Hong Kong APAC General Counsel Global Insurance Firm Hong Kong Head of Employment Legal European Investment Bank Hong Kong Regional Head of Compliance US Investment Bank Hong Kong Head of Compliance, Greater China Global Asset Manager Hong Kong Regional Head of Legal & Compliance Global Asset Manager Hong Kong Senior Funds Lawyer European Asset Manager Hong Kong Derivatives Lawyer Global Investment Bank Hong Kong Corporate Secretary Global Investment Bank Hong Kong Regional Legal Counsel Multinational Construction Firm Hong Kong Senior Legal Counsel Global PE Fund Singapore SG Head of Compliance Global Fund Manager Singapore VP, Compliance Global Fund Manager Singapore VP, Compliance Global Renewable Energy Fund Singapore Manager, KYC Global Fintech Firm Singapore Director, Head of AML Global Corporate Bank Singapore APAC Legal Counsel Global Engineering Services Firm Singapore Contracts Counsel Global Management Consulting Firm Singapore China Legal Counsel Professional Sports League China Chief Compliance Officer, China US Asset Manager China Senior Compliance Manager US Asset Manager China Compliance Manager Global Venture Capital Firm China Chief Compliance & Risk Manager, China US Asset Manager China Chief Legal Counsel UK Asset Manager China Associate Director, Compliance Global Asset Manager China Chief Compliance Officer, China US Asset Manager China Compliance Manager UK Asset Manager China Chief Compliance Officer US Asset Manger China KEY CONTACTS For more information or individually tailored advice, please do not hesitate to contact our regional Legal & Compliance team: Hong Kong Office - please contact Laurence Munoz or Sonny Wong Singapore Office - please contact Suan Wei Yeo Shanghai Office - please contact Andy Zhi Beijing Office - please contact Winni Wei Click here to download the full report.
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Mental Well-being in the Workplace

This article first appeared in the December 2018 edition of Human Resources, the official journal of the Hong Kong Institute of Human Resource Management. ​ With Hong Kong's workforce showing high levels of depression and anxiety – 2.5 times above the global average, the city's frenetic work culture is a key culprit, impacting both the mental well-being of workers and their productivity. In spite of support groups calling for greater awareness to help sufferers, a competitive culture, strong stigma and a lack of understanding among employers mean that mental health issues are largely overlooked in Hong Kong. Mental health is a sensitive topic globally and particularly so across many cultures in Asia. There are often taboos associated with openly mentioning the topic of mental health, which in turn leads to the lack of discussion and initiatives around mental well-being in the workplace. In Hong Kong, a quarter of the workforce show levels of depression and anxiety – 2.5 times above the global average – according to a 2015 survey jointly conducted by the Hong Kong Occupational Safety and Health Council and the Whole Person Education Foundation. Workplace stress is a huge contributor to poor mental health. Collating data from a survey of more than 2,000 respondents in Asia, part of the 2018 Profile Search & Selection and The Roffey Park Institute "Working in Asia" survey found that a heavy workload and a lack of support are both major contributors to mental health issues. Stress at work has been linked to a drop in productivity, an increase in absenteeism, and even in presenteeism – a condition where employees work when they are ill or work longer hours than necessary, but not performing as well as they should be when they are at work. The culture of presenteeism is also associated with lower staff morale, employee errors and higher employee turnover rates, which is certainly not in any organisation's best business interests. To add weight to this, the City Mental Health Alliance Hong Kong (CMHA HK) – a not for profit member-led organisation supporting businesses to create mentally healthy workplaces – reported that 76% of employees they surveyed said they would still go to the office while suffering poor mental health. Of those, 21% admitted their work suffered as they are unable to function at the normal expected level. Through various company-initiated Employee Assistance Programmes (EAPs), however, the CMHA HK has noted that a number of respondents now have access to counselling and coaching services, and in some cases are able to attend mental health awareness talks. While this represents a positive step forward, EAPs tend to be offered as part of an organisation's well-being policies which creates grey areas around how often these programmes are utilised, evaluated for purpose or measured for effectiveness over the longer term. Furthermore, while a third of managers in Hong Kong reported to have been involved in supporting staff suffering from poor mental health, Profile Search & Selection and The Roffey Park Institute data reveals that more than 50% of managers in general do not feel equipped to support or assist those suffering from mental illness. What is more, less than 50% feel comfortable discussing mental health issues with colleagues. So, while there is a gradual and increased awareness towards mental health, far more needs to be done. Opening up about mental health in the workplace As the driver of employee engagement across an organisation, the HR function can play a leading role in raising awareness about mental health problems and ensuring the right channels are in place to help those that suffer from mental illness. Through working with management, for example, the HR function can help to put into action a top-down approach to help organisations to shift mindsets and company cultures. Recognising the importance of mental health and well-being is key to fostering a supportive working environment – quite simply because it is not just a medical issue as much as inherent to the culture and productivity of the entire workplace. The HR function is also in a strong position to encourage an organisation-wide culture of openness and dialogue on the topic of mental illness to reduce common misconceptions and reassure inclusivity by giving employees a voice without fear of reprisal. This is an important step to establishing a sustainable supportive environment and the foundation for future prevention, or at least, early intervention. There are some simple initiatives that could be launched internally to get discussions started. Mind HK, a charitable organisation in Hong Kong set up to raise awareness and increase understanding of mental illness issues, has launched the #LetsTalk campaign, encouraging people to share a photo with the hashtag and then tag it back to #LetsTalk#MindHK. As Hannah Reidy, CEO of Mind HK states "It’s time to start talking". Part of the taboo around mental well-being is the misplaced concept that those affected are in some way weaker, less resilient or lack determination. To combat this, the HR function could work to improve the perceptions of mental health by encouraging education on the topic as well as engaging in refining the language and discourse associated with mental health. For example, in the same way as the concept of "wellness" has gained mainstream focus within organisations –which is reflected through better work-life balance initiatives – organisations, and employees should understand that mental well-being is simply an extension of the same concept. Mental health awareness at work We all have good days and bad days and we all have times in which we are physically fitter than at others. Mental well-being is the same – sometimes exacerbated by work-related stress and sometimes external factors - but ultimately, we all need to understand that it is okay to not be okay. The more people understand the topic, the more confident they will be in talking about it, which is the next step to being able to practically assist someone struggling. As Olivia Parker, Board Member of Mind HK comments "colleagues who see you every day are the best-placed people to tell if your behaviour is out of character, because sometimes they are easier to talk to as they are one step removed from your home life". That said, a robust framework needs to be in place to effectively help line managers support employees that report to them and help employees in general cope with stress-related illnesses. While some employees do attend mental-health talks, CMHA HK studies indicate that 70% of its respondents had never received any form of mental health training. More HR practitioners should receive mental health training – and in fact HR departments could work towards being able to offer all managers the opportunity to receive relevant training and support. Managers are critical in driving change and by equipping them with these skills, they may be able to notice when an employee is experiencing difficulties. Training could mean employing external support or also form part of the firm’s internal processes. Working with managers and leaders to support employee mental health Furthermore, the HR function could work with senior leaders to promote and demonstrate their clear commitment by supporting those who need it and in doing so, show that mental health matters. The HR function could identify and work with a senior employee to be a sponsor or champion to drive the commitment forward and even develop an internal committee or group to support mental health awareness. Taking another positive step, the HR function could assist to promote the committee as part of the organisation's cultural DNA and could adjust or review relevant mission and values policies and workplace Codes of Conduct to reflect this support. In so doing, the HR function could play a greater role in embedding a culture of acceptance, collaboration and mutual education into the organisation's Employee Value Proposition (EVP). As a result, mental health awareness could be built into all induction programmes, and discussions can be encouraged on employees’ mental health during performance reviews, team discussions and regular one-on-one catch ups. They can also be imbedded into engagement surveys and a firm’s mental health can be subsequently measured and tracked. Job content and roles could be reviewed to ensure they are appropriate and conducive to productive work. HR can also ensure there is a process in place to help people return to work smoothly after a time of absence. On an ongoing basis, the HR function could encourage healthy behaviours, promoting well-being activities such as taking lunch breaks, exercising, getting enough sleep and enjoying a balanced diet. It is commonly accepted that organising company events to strengthen working relationships improves collaboration, trust and openness. Corporate Social Responsibility events for example are acknowledged to have a positive impact on general well-being. On the good news front, while many companies in Hong Kong are only at the very early stages of their journey to improve mental health in the workplace, there are undoubtedly signs of positive change. If HR departments in Hong Kong worked to implement just one initiative within their organisation during the coming year, it could make all the difference to a healthier and more productive workforce. For more information on mental health in the workplace, please contact Amanda Clarke, Director, Profile Search & Selection.
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Spotlight on China - Asset Management Outlook, Nov 2018

PHASE II - GLOBAL FIRMS CONTINUE TO VIE FOR TALENT IN A CROWDED MARKETPLACE In this report, we seek to explore how the market is changing and how the challenges are evolving as time passes. We are looking to share our experience of multiple hires and ongoing searches across the WFOE market; however, we also thought it important to engage CEOs, COOs, GMs and HR personnel involved in the process to share their views directly via Q&A. We hope you find this an interesting read and we are happy to field any questions. For investors backing the China growth story, recent road-bumps such as the ongoing stock market turmoil and rising trade tensions with the US have been a sobering reality this year. However, anyone watching the race for human capital within the on-shore asset management landscape would be forgiven for thinking that market sentiment is anything but bullish. The growing crop of international fund houses looking to plant flags or deepen existing roots in China has shown a real belief in – and commitment to – this long-term and compelling opportunity. This is clear from the ever-growing list of firms setting up wholly foreign-owned enterprises (WFOEs), applying for private fund management (PFM) licences and launching products targeting onshore high net worth individuals and institutional investors. This activity has simply exacerbated the human capital pressures arising from the relative scarcity of talent that we highlighted in our Spotlight on China six months ago. The significant challenge of attracting, hiring and retaining the right individuals, across the front-office and infrastructure positions, continues to be one of the big barriers to firms being able to capitalise on the business potential onshore. We are entering what we are calling “Phase II” of the recruitment landscape. The big difference being that the first movers had to either relocate staff or search from an onshore talent pool, but there were no PFM WFOEs to hunt from; heading into 2019 this is now very different. Established WFOE need to equally focus on Talent Retention as well as Talent Acquisition; new comers will hunt in the PFM WFOE pool as a first port of call; and we are now seeing WFOE to WFOE moves. There has been added complexity to the process of setting up or staffing a WFOE, however as of now these complications do not seem to have had a material impact on the appetite of the overseas asset managers. Recent changes to the Individual Income Tax (IIT) Law for foreign passport holders working in China (although now resolved) could have had a genuine impact, but the reality is a “wait and see”; whilst the slowing down of the approval process from the regulators again appears simply to be an issue to be navigated and not one to change tact. Whilst China remains a difficult market to navigate, and it still not possible to follow a strict formula for developing the WFOE (beware “experts” with concrete advice), the landscape for human capital is maturing. Attracting the right people is difficult (but not impossible), and a local lens does need to be applied. OUR SEVEN OBSERVATIONS As already mentioned, the onshore market is moving so quickly right now that we are in uncharted waters as regards to human capital challenges. Below are seven themes we have identified as being relevant and consistent in the past few months, and as we head into the end of the year. 1. Shift in talent pool means a shift in priorities It seems simple to point out, but the reality of the evolving market means that those firms entering China in 2019 are facing different recruitment challenges and opportunities to those faced by the first movers in 2016 and 2017. The first movers had to either relocate staff or hire from JVs, Chinese Mutual Funds or Advisory/Research WFOEs; and the challenge of culture and operating in an international environment were always seen as a critical part of the hiring decision. Those looking to enter in 2019 will naturally look to hire (in part) from the existing PFM WFOEs as a logical first step, a luxury not given to the early arrivals. This means that the first movers need to focus very hard on Talent Retention over the coming 12 to 24 months; this does not mean simply competitive compensation, but good people management and following through on the strategy that attracted the team in the first place. 2. Sought-after staff still hard to find For new WFOEs, the priority remains a general manager. Since this individual will spearhead the business, it is a decision that will impact the ability to hire within the group going forward. As a result, foreign fund houses face a dilemma: while the available talent for them to consider is shrinking in number, they know that hiring the wrong GM is probably the costliest human capital mistake they can make. In addition, there is an increasing focus on expanding the various front-office and infrastructure roles. Competition is hottest for compliance professionals, traders and portfolio managers. In terms of the latter, however, many global players are now opting to bring on board what some practitioners call “shadow PMs” – where a global fund house puts in place a less experienced individual on-the-ground, with a more senior PM offshore having oversight. 3. Regulatory changes to JV structures to create new openings Recent regulatory changes in China to loosen restrictions on foreign investors’ ownership in joint venture (JV) fund structures are the source of further competition. There is uncertainty around the outcome of existing JVs based on ongoing negotiations, bargaining power and the existence (in some cases only) of previous agreements between the foreign and Chinese parties. As a result, many senior candidates from JV mutual funds are now more active in the job market. Many foreign firms are trying to look to the potentially-larger commercial opportunities outside the PFM world and see this as a journey where the map is becoming clearer over time. 4. Demand moves beyond Shanghai Whilst Shanghai undoubtedly remains the hub for the PFM WFOEs, increas­ing business needs in Beijing especially for foreign managers are apparent. We see a shift in demand among our clients towards Beijing-based executives, which represents an evolution from the previous focus on hiring only in Shanghai. Among the drivers of these trends are: a need for replacement staff; gaps left by individuals leaving current representative offices; and new roles created as a result of recently-established advisory WFOEs in Beijing. The current market environment is also challenging international asset managers to tap the existing, relatively-shallow talent pool. Some other foreign funds setting up WFOEs are run by life insurers and even private banks. 5. Sequencing of hiring is becoming critical As the number of international asset managers with WFOEs grows, we are seeing a sequenced and pragmatic approach to human capital becoming more prevalent. Best practice in today’s market seems to be hiring the GM and Chief Compliance Officer first, with the top-picks being individuals who possess a combination of strong government relations, deep market knowledge, relevant contacts and an ability to interface with management in offshore offices. A second wave of hires will tend to consist of heads of legal, operations and trading. Firms then need to decide on the type and size of Investment teams they want onshore. Sales hires are now more likely to be much later in the process to avoid staff being hired who are unable to perform their duties while waiting for regulatory approval. 6. Differentiation starting to pay From an investment perspective, many investment management WFOEs are looking to differentiate themselves by offering a more diversified range of products today than they did a year ago. In line with investor demand, these include, for example, quant strategies, commodity trading advisors (CTAs), multi-asset funds, real estate, private equity and fund of funds. To achieve this, these WFOEs need to either hire local talent onshore, or relocate employees from outside of China, including Hong Kong. Another option is to acquire local private funds or mutual funds. 7. Buy or build? We have observed a number of overseas firms exploring the possibility of buying existing fund management companies in China. This seems to be driven by a desire to either turbo-charge an organic build, or to short-circuit the organic build altogether. The strategy seems simple in theory, but execution appears fraught with complexity. In China’s vast fund industry, the foreign presence is still small. To date, a total of 14 foreign managers have received permission to launch products that invest onshore to domestic professional investors. However, this is out of 9,000 PFM licence holders, according to recent statistics from the Asset Management Association of China (AMAC). Foreign managers have launched 16 funds aimed at domestic professional investors out of 36,000 total products available. This poses an interesting question to global firms: is it better to buy a PFM-licensed firm or a local mutual fund to leapfrog the process via the existing track record and AUM? LATEST FUND ACTIVITY The current WFOE landscape offers multiple opportunities for international asset management firms to access the local base of institutional and high net worth investors. The business scope depends on the specific category of licence: Qualified Domestic Limited Partnership (QDLP) licences apply to managers that have only registered a QDLP WFOE with AMAC Private funds are for managers that have only registered an investment management WFOE as an onshore private fund manager with AMAC Dual-track applies to managers that have registered both a QDLP WFOE and an investment management WFOE with AMAC There are also firms with an unconfirmed status – a licenced QDLP and/or investment management WFOE but which have yet to register a WFOE with AMAC. Approved QDLP managers in 2018 International fund houses with PFM licences ​​ Q&A WITH LEADERSHIP GROUP As the market moves quickly and the competition for the best staff intensifies, we conducted confidential interviews with three senior industry decision-makers to gather comment directly from individuals responsible for hiring staff for their PFM WFOEs onshore. Below is the summary of this cross-section of views based on the same six questions around human capital opportunities and challenges. Respondents A Hong Kong-based CEO of a fund manager that has built a WFOE (CEO) A Shanghai-based General Manager of a leading WFOE (GM) A Hong Kong-based Chief Human Resources Officer of a fund manager that has built a WFOE (HR) Q&A Attracting talent What do you see as the most significant barriers to hiring the right talent in China’s asset management market? CEO – Cost and candidates with sufficient and relevant experience, such as in asset management, both locally (ideally in private funds and mutual funds) and globally. GM – There are certainly challenges today, but not in comparison with those I expect to see in the future, once WFOEs move in to the direct retail distribution channel. When this happens, there will be direct competition between foreign and local players. At that point, language and investment skills will become more important and will be in even greater demand. HR – The challenges often depend on the role; for some, there could be language barriers, whereas for others there is a small talent pool, such as for PMs with three to six years’ experience who do traditional bottom-up investing. We find that we need to move much quicker in China than in some other markets, so we don’t have the luxury of trying to compare three or four candidates and bring them all through the process; we need to be decisive. In addition, educating internal managers that are new to working with Asia, and especially China, requires us to choose the right people, not just those who are the best communicators. Finally, the increasing tax for potential internal transfers is another challenge. Biggest talent influence in the China market Has the shortage of talent in some areas of the China market influenced the plans for expanding your business? CEO – Not yet, but the universe of decent candidates for certain functions is very small, for example in compliance. GM – Unless we have the right people, we won’t be able to launch funds across various asset classes. It is challenging to attract the right investment personnel as some of the best people work at local funds and are often managing funds of significant size, at least in comparison with the AUM of WFOE-run funds. HR – No. Hiring pain-points What would you say are the main ‘pain points’ when hiring talent in China? CEO – Cost, along with candidates who can understand the bigger, global picture. GM – Finding people who understand China and also how to work within a global franchise. Very few, if any, candidates that we speak to are going to be perfect; we need to look more at the value they can bring. We need to approach the situation with flexibility and not get too focused on someone’s ‘day one’ value. A ‘growth and potential’ mind-set is more appropriate in determining someone’s long-term value, rather than finding ‘plug and play’ talent. HR – Dealing with regulators. This can make it difficult for people to resign from current companies, depending on their previous role and what they will do at their new firm. Leadership characteristics What specific leadership characteristics do you look for in the talent you hire for your China business? CEO – The ability to see beyond China, to accommodate a global perspective and champion the culture of a global organisation within China. GM – Cultural fit is the most important characteristic. The desire to put clients first is also essential in anyone we decide to bring on board. They need to operate in a transparent way and be able to articulate themselves. They also need to be a team player. HR – Adaptability, strong communication skills and an ability to work across functions versus just being a technical expert. As there are many challenging situations that are very complex, we need someone who can navigate the ambiguity and keep internal stakeholders informed. We don’t necessarily need someone who has done this type of role before; we prefer someone who is looking to build a business, so that they are hungry and driven. We want to hire someone who really questions our business plan and strategy before they are willing to join us, since this shows they appreciate that it will not be an easy road for a foreign firm. Trade tensions Are the ongoing global trade tensions having any impact on your plans for the expansion of your asset management WFOE business in China? CEO – Not yet, but recent news about a policy shift back towards another QDLP slowdown suggests that the global trade war is now having an impact on asset management. GM – Not at the moment from the standpoint of investment into the WFOE. The only risk, for a US WFOE, is multiple licensing processes being potentially delayed in some way. However, at this stage there is no evidence this is happening. Talent retention How are you approaching talent retention in your China business? Do you have a specific strategy in what is a very competitive market? CEO – This is a work in progress. A critical success factor in talent retention will be finding a way to give Chinese employees ‘skin in the game’ via equity in the organisation. GM – We try as best as we can to bring in the right people under the right conditions in the first place. We have put in place a hiring process that places honesty and transparency at its core. We aim to ensure, through constant open and honest dialogue, that we know what people think about the direction things are going in. We also look to ensure there is a firm-wide understanding of how to engage with people in different geographies. We want to provide the right amount of support and resources for staff, so we continually seek to understand how comfortable the staff are with the business strategy, their personal progress and how they are evaluated. We try to create clear goals to which people are held accountable. Stability is key, as is the need to ensure that the views from both the Hong Kong and China perspectives are aligned. HR – We ensure they have accountability and the right level of autonomy. We also want their voices to be heard, to get lots of regional and senior leadership attention. We fully understand that there will be turnover, so we need to focus on building the right infrastructure to be able to sustain turnover and not cause issues in other functional areas. WHAT ARE BOTH SIDES LOOKING FOR We thought it would be useful to provide a recap from our previous China asset management report on the common factors and recurring themes that continue to impact the decision-making for candidates and potential employers in China. Some of these factors remain unchanged from six months ago, while some have risen in significance and others have fallen. We have included drivers for foreign employers in non-PFM WFOE structures also. Local candidates – considering a foreign employer Drivers Increasing their compensation, including potential equity participation Boosting their status in the domestic market Being part of a firm committed to growth in China Gaining autonomy to make management decisions Playing a bigger role within the development of the industry Leveraging a strong global product-set yet working within local distribution channels Deterrents Concerns over the sustainability of the target employer’s strategy in China Limited opportunities to advance beyond a mid-tier role A potential culture clash within a foreign firm Challenges in communication with offshore management Fear of not having a ‘voice’ – a lack of autonomy in devising onshore strategy Missing out on the opportunity to grow organically with a Chinese firm Senior staff do not want to be the “execution arm” of the global strategy Foreign employers – looking to hire local talent Drivers Market knowledge, experience and connectivity in the domestic market Language skills and a similar mind-set to connect with global colleagues A track-record working within global firms to understand international processes An ability to cut through red tape onshore and be effective in ‘getting things done’ Able to be a trusted advisor locally with corporate best interests at heart A strong appreciation of the overseas/HQ regulatory environment Deterrents Insufficient knowledge and/or connections within China A lack of seniority or gravitas to attract other hires and drive growth Limited (or zero) experience working within an international firm Questionable motives or loyalty stemming from a (perceived) focus mainly on money Weak communication/language skills and/or cultural awareness Unable to generate genuine levels of personal trust WHAT'S NEXT Forgive us for stating the obvious, but the market remains hugely busy; demand for talent is high and the qualified candidate pool is thin. However, behind the self-evident headline, we genuinely feel that the landscape in China is changing and the challenges that go with this are changing too. Foreign firms that are established now have a much better grip on the market and are being driven equally by their local leadership. New entrants, meanwhile, have a different talent landscape to look at, including those that have already trodden the WFOE path. 2019 promises to be a busy and eventful year. Our observation and opinion is that we are entering “Phase II” in the evolution of the WFOE story from a human capital perspective. Conclusion Both employers and potential employees understand the market better, and whilst high demand persists the slightly frenzied atmosphere of early 2018 has passed. The demand for talent in the roles of GM, Compliance, PM and Sales remains high, and fundamentally the decision-making criteria for both parties has not changed. Many foreign firms are thinking two steps ahead to majority JV control or gaining local Mutual Fund Licenses. The importance of sequencing hires and establishing goals for the next 24 months is thus paramount. Demonstrating strong commitment to the China market and to the regulators, and others who influence the issuance of licences now and in the future, is very important to those who hold the keys to success; and those foreign firms attempting to be “fast followers” will face increased challenges. The ability to clearly articulate a well-thought-out, long-term China strategy is the key to attracting the best talent; however, then having the organisational fortitude to deliver on that promise in a complicated market is crucial to either retaining, or losing them. Outlook 2019 and 2020 will inevitably see more regulatory change and the firms that are forward thinking, adaptable and nimble will continue to be the ones who make the most progress. “Talent Retention” for established WFOEs is key in 2019. We have started to observe candidates moving WFOE to WFOE to trade upon their experience gained, and this is usually at a premium. Those firms arriving in the market a little later face a double-edged sword – there is a talent pool whom have 18 months WFOE experience; but they are harder and more expensive to shift. Clear articulation of the long-term China strategy of the group is even more important in 2019 than it has been before – there are simply not 50 tier-one GMs or Heads of Sales, and the best will be discerning. Many firms are exploring innovative ways to tie in senior staff long term via incentive programs. These could be linked to equity, shadow equity or profit share in the WFOE. This is a sticky topic and a difficult one to work out, but the goal is aligning senior staff to the success of the WFOE. OUR ASSET MANAGEMENT TEAM For more information on recruitment trends, please contact Profile Search & Selection's Asset Management team: Hong Kong Office - Andrew Oliver Singapore Office - Stanley Teo Shanghai Office - Yao Xiong Beijing Office - Winni Wei
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