The workforce cost most APAC organisations are failing to measure

Look at the boardroom conversations across any serious organisation in Asia-Pacific and Japan and you'll see the same key topics recur when it comes to margin improvement. Leaders reach for process efficiency, double down on technology investment, and tighten headcount. These are legitimate priorities and any serious leadership team will have them in hand. What the data consistently shows, however, is that there is a larger and largely invisible opportunity that most are missing entirely.

Fresh research spanning eight APJ markets makes a case that the biggest workforce costs in the region are not the ones on most CFO dashboards. Preventable attrition, absenteeism and hiring inefficiency are quietly compounding across every market, and the research traces all three back to the same underlying cause: workforce capability gaps that organisations have no consistent system for measuring.

The findings come from The Hidden Number: The Economic Value of Culture and Capability, a new report published by workforce-readiness solutions provider Cornerstone OnDemand, drawing on surveys of 1,297 HR leaders and 2,435 employees across Australia, New Zealand, India, Indonesia, Singapore, Japan, South Korea and the Philippines.

The report is built around Cornerstone's Culture and Capability Index, a measurement framework that assesses organisational performance across six workforce areas: skills visibility, learning, career mobility, culture and trust, leadership, and AI and workforce planning. 

Scores are drawn from parallel surveys of HR leaders and employees, allowing the research to compare how capability is perceived at a leadership level against how it is actually experienced on the ground.

This article draws on the report's economic impact findings, examining where that value concentrates across APJ and what it costs organisations that have yet to make it visible.

The economic value of workforce capability in APJ

Revenue, cost and profitability are measured with precision. Yet the workforce conditions that influence those outcomes are harder to quantify. Culture and capability are central to those conditions. 

They determine whether people are trusted, skilled, supported and able to adapt, contribute and stay. Without a clear way to quantify them, organisations can underestimate the economic value they create, protect or lose.

A 10-point improvement in the Culture and Capability Index could unlock significant annual value per 1,000 employees across each APJ market: AUD 1.64M in Australia, NZD 1.33M in New Zealand, INR 7.03M in India, IDR 836.7M in Indonesia, SGD 1.25M in Singapore, JPY 62.38M in Japan, KRW 492.87M in South Korea, and PHP 4.46M in the Philippines. While the scale of impact varies by market, the drivers of value are consistent.

Three workforce outcomes account for the majority of economic impact across APJ: attrition at approximately 43%, absenteeism at 21%, and hiring efficiency at 13%. This concentration is important because it shows where culture and capability translate most directly into economic value: retaining people, reducing lost capacity and improving hiring efficiency.

Retention alone represents the single largest opportunity. The cost of replacing talent, combined with the operational disruption caused by workforce instability, means that even small improvements in attrition deliver outsized financial returns. Absenteeism reflects lost productivity and reduced workforce capacity. Improvements in engagement and workforce experience translate directly into higher productivity and more effective utilisation of talent. Hiring efficiency captures both the cost and speed of workforce acquisition. Organisations that improve internal deployment and reduce reliance on external hiring benefit from lower recruitment costs and faster time-to-fill.

Culture, Engagement and Trust is the single largest contributor to workforce outcomes, accounting for approximately 30% of total economic impact. Its influence is most strongly felt in attrition and absenteeism, making it the primary driver of workforce stability and productivity, and a critical lever for unlocking economic value.

A 1-point improvement in Culture, Engagement and Trust delivers measurable cost savings across all markets, driven primarily by voluntary attrition, followed by absenteeism and hiring efficiency. Even small shifts in culture, often seen as intangible, translate into immediate and measurable financial outcomes.

Understanding the disconnect between leadership and employee experience

Across APJ, organisations operate within the Progressing capability band, scoring 81.5 out of 100 on the Index based on HR leader assessments. This signals strong foundations, but clear opportunities to strengthen the underlying workforce conditions that drive performance.

Across all markets, HR leaders rate capability more than 15 points higher than employees. This indicates that capability systems may be well-designed but not consistently delivered or experienced across the workforce. That gap between intent and reality is where performance risk sits.

The most significant disconnects are found in AI and Workforce Planning, Leadership and Change Capability, and Culture, Engagement and Trust, the very areas required to deliver transformation, maintain workforce stability and sustain productivity.

While capability levels differ by market, the underlying patterns are remarkably consistent. High-confidence markets such as India and Indonesia report strong capability but large gaps with employee experience. Mid-band markets such as Australia and Singapore show solid foundations but uneven execution. Lower-confidence markets such as Japan report lower capability but closer alignment between leader and employee assessments.

Workforce capability does not operate in isolation. It influences organisational performance through its impact on a set of critical workforce outcomes, including retention, productivity, and hiring efficiency. These capabilities shape workforce outcomes, and it is through these outcomes that economic value is ultimately realised.

The capability areas are interdependent. Investing in learning without visibility of skills limits effectiveness. Strengthening culture without leadership credibility reduces sustainability. Improving workforce planning without internal mobility restricts execution. The greatest value is realised when capability is addressed as an integrated system, where improvements across skills visibility, learning activation, mobility, leadership, culture and workforce planning reinforce one another.

For organisations operating in the Progressing or Emerging bands, the opportunity is significant. Approximately 85% of economic value is driven by the ability to retain talent and reduce absenteeism, which is directly influenced by workforce capability. Across APJ markets, that represents millions in unrealised economic value per 1,000 employees. This is not new spend. It is already sitting across the P&L but not yet measured as a single workforce lever.

The full findings of the report, including market-by-market breakdowns, generational data, the economic model connecting capability gaps to financial impact, and guidance on where to prioritise capability investment for the greatest return, are available in The Hidden Number: The Economic Value of Culture and Capability, available for download now. 

Organisations can also benchmark their own capability score and estimate their economic opportunity using the Culture and Capability Index Calculator.