Workplace transformation – a solution to Asia’s productivity challenges?January 29, 2014 / By
What’s on the minds of Asia’s corporate leaders as we enter 2014? The release of the Economist Corporate Network’s 2014 Asia Business Outlook Survey (ABOS) provides an interesting glimpse. The annual survey, which canvasses executives from 334 global and Asian MNCs, measures business sentiment and expectations in the region.
The aggregated responses indicate that 2014 could be a tipping point for companies in Asia Pacific to seek new ways of raising productivity to stay ahead in an increasingly competitive market.
The ABOS results show:
- A large expected gap between revenue growth and workforce growth in major markets across Asia Pacific– in China, this gap is 4.9%, In India, 4.5%, in SE Asia, 4.6% – meaning rising pressure to get more from fewer employees
- For many companies, productivity (defined as output per employee) is not keeping pace with cost rises – particularly in China and India (where nearly half of respondents report that productivity is rising more slowly than costs) – indicating that the required productivity gains are unlikely to materialise in the near-term
- Expectations for corporate performance are high–47% of respondents expect business to improve in Asia relative to 2013, while many expect that their AP businesses will comprise one-third of global profits by 2018
- Competition among MNCs is increasing, regulation and associated costs are rising, and the war for talent is an on-going battle across Asia
High revenue expectations, exploding costs, lagging productivity growth– it could shape up to be a challenging year for business in Asia.
Real estate and workplace strategy present opportunities to mitigate these issues. Indeed, respondents were also asked whether they have implemented specific real estate strategies which address the pain points identified in the survey (e.g. improving workplaces to attract and retain talent, promote innovation and enhance productivity; improving office density and adopting flexible space to optimize costs). Encouragingly, one-half to two-thirds have implemented such strategies or plan to do so (see chart below) – indicating acknowledgement of the potentially transformative effect of real estate on corporate performance. This echoes our findings in the 2013 Global Corporate Real Estate Survey, where 67% of respondents to our survey reported that the quality of their workplaces improved over the past three years.
But in light of the increasingly competitive corporate landscape in Asia, the balance of respondents who have not embraced workplace strategies could find themselves lagging further behind. Moreover, among respondents who already have considered or implemented a workplace strategy, it might be time to investigate other productivity-boosting opportunities that their real estate portfolio could provide.
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