Turning a Crisis into an Opportunity By Olga Yung, Managing Director, Michael Page Hong Kong

The past two years haven’t been easy for anyone in the world of work, and the challenges have led many employees to seriously reconsider their career priorities. Reeling from a combination of social unrest throughout the second half of 2019 and the economy adversely affected by strict COVID-19 pandemic policies, it would not be a stretch to say that Hong Kong has had a more challenging time than many other developed economies.

As early as 2019 there were signs that “the great resignation” was under way in the city, with employees leaving their jobs without another lined up – a phenomenon known colloquially as “naked resignation”. The reasons for this were quite diverse – some wanted to take a break from full-time work; others were exploring leaving Hong Kong for opportunities elsewhere. However, when COVID-19 first erupted in early 2020, resignations tapered off as those still employed full-time preferred to err on the side of caution, taking a wait-and-see approach while staying in their current roles. For many, their health and the wellbeing of their families became the top priority.

As the pandemic wore on, employees got used to the new rhythms of working. They went about their days with a sense of stoic resoluteness, whether working from home or in A or B team. During a time of change and uncertainty, stability and familiarity were desirable and people weren’t prepared to take on the risk of trying something new.

More movement in the job market since 2021

In 2021, people started taking a renewed interest in their careers. The Michael Page Talent Trends 2022 report, The Great X, confirms this phenomenon, with one in five respondents in Hong Kong reporting that they have been in their current jobs for less than one year.

A talent migration is under way in the city. Candidates are also becoming more discerning about the next job they apply for. A desire for change and progress is fuelling this trend, with 55% saying that their main motivation for resigning from their current job is to change industries or their roles in industries. Other prevailing reasons for wanting to leave their current job include unhappiness with their current salary (40%) and being on the lookout for career growth or a promotion (38%).

Furthermore, there is evidence that this trend will not be reversed any time soon, with three-quarters of Hong Kong survey respondents saying that they plan to resign in the next six months. The trend is consistent across all age groups, ranks, and industries.

According to the survey findings, attrition rates are expected to be highest in the industrial and manufacturing, technology and telecoms, and property sectors.  For organisations and their HR function, this should be a clear indication to not only prioritise talent attraction, but also contemplate how to improve their organisational culture to create reasons for existing staff to stay.

Tackling the brain drain problem

Hong Kong’s stringent quarantine and travel rules have led to an exodus of expats over the past two years, exacerbating the talent shortage problem in sectors including banking, financial services, and technology. The anxiety over talent scarcity is reflected in The Great X report, in which the top three recruitment challenges in Hong Kong for 2022 were identified as competition over applicants, a lack of applicants, and a lack of required skills.

While companies hold no control over the government’s COVID-19 policies, they can mitigate the risk of talent shortage by continuing to recalibrate working arrangements to provide staff with greater flexibility. The survey findings show that when searching for a new job, four out of five Hong Kong respondents prefer a hybrid work arrangement of working from home and at the office. To help attract more job applicants, if organisations offer hybrid or flexible working arrangements, they need to highlight it in their job postings. Instilling a culture that supports hybrid, flexible, and remote working and putting in place processes is a priority for the HR function.

Hong Kong hiring managers and HR personnel are optimistic about the possibilities of remote employment, which could be a viable solution to addressing the talent shortage issue. However, this means that organisations need to get comfortable with at least a part of their workforce working remotely 100% of the time. On an affirmative note, the survey indicates that almost half of Hong Kong hiring managers and HR personnel respondents said they no longer feel restricted by geography when searching for candidates.

Mass resignations – a double-edged sword

On the one hand, significant numbers of people resigning can be viewed in a positive light – in a tight labour market it means potentially there are more talent entering the pool. On the other hand, with employers fighting for talent from the same pool – or a smaller one, due to people leaving the city – getting the talent value proposition right will be pivotal. Furthermore, employers will need to be mentally prepared for their top talent to be headhunted, which means that the war for talent will be taking place on two fronts. With talent shortage emerging as a risk to organisations, senior leaders and the HR function can’t afford to put off workforce planning. Even as they work to urgently fill positions in the short term, they will also need to look ahead to the company’s future needs to establish a talent pipeline.

Factors that influence employee job decisions

Since 2021, employees have been on the move in search of greener pastures – better job prospects and remuneration packages. Unsurprisingly, The Great X survey shows that salary, bonus, and rewards remain the number one factor influencing candidates’ decisions on where to work. What may come as a surprise though are the other important factors in a candidate’s decision to sign on the dotted line. After monetary factors, candidates value company culture and values, a greater sense of purpose in their roles, and inspiring leadership. Seven in 10 respondents also said they would be willing to accept a lower salary or forgo a pay raise for better work-life balance, overall wellbeing and happiness.

How should employers interpret these findings? Clearly it is no longer a smart or sustainable strategy to compete for talent based on salary alone, especially in a market where a candidate – particularly one with in-demand skills – may receive multiple job offers. If a candidate has the luxury of choice, they will likely opt for the job that best appeals to their passion and interests, the company that offers the better cultural fit, or the organisation that takes their employees’ mental health to heart – not necessarily the one that offers the highest pay package.

If organisations want to stand a good chance at winning the war for talent – and entice their staff to stay with them – they will need to get their employee value propositions right and build a supportive culture with the appropriate diversity, equity, and inclusion policies in place. The shortage of talent is not a problem unique to Hong Kong – it affects the entire Asia Pacific region. In the city, however, the problem is exceptionally complex due to its strict COVID-19 policies, and because of that, a shrinking workforce thanks to emigration. And while the city is finally opening up again, firms can’t afford to sit back and hope that candidates will come flooding back.

Emerging as a winner from the “the great resignation” will not be like flicking on a light switch. Instead, organisations will need to take a studied look at their talent attraction policies, company culture, and employee experience to see what else they can offer candidates beyond monetary compensation.