In most industrialized countries, the replacement birth rate is about 2.0 children per woman. In essence, that means that when the two parents die, they leave two kids behind to replace them. In lesser developed countries, the necessary replacement rate may be higher due to higher infant mortality rates, but generally speaking when we talk about replacement rates, we mean there will be two kids to replace the two parents. Here in Asia, though, parents are no longer replacing themselves, which is creating challenges for companies and for societies as a whole.

Since the mid-1970s, both Singapore and Japan have had birth rates below replacement level. By the mid-1980s, South Korea and Hong Kong had joined them, and they were soon followed by China. Less industrialized countries have also seen a dropoff, with Vietnam and Thailand both dropping below 2.0 births per woman at the start of this century. The result is that the pool of working-age people is getting smaller, even as economies in this part of the world are trying to continue growing.

The immediate social impact is that there are fewer people of working age to support the people who have retired. A recent article in The Economist pointed out the challenges in Taiwan’s public pension system, which used to have 9 working age people for each retiree, but which will soon have 3 workers per retiree. In many cases this also means that one child is taking care of both elderly parents, rather than having help from siblings, and that adds more stress to their lives. Of further concern is that people are being encouraged to keep working longer; Japan is losing half a million people from the 15-64 age group each year, and so people are continuing to work into their 70s and beyond, leading to a much “greyer” workforce.

While the government needs to address the impact on public retirement entitlements and support services, businesses must consider the effect a shrinking workforce will have on them. While one possible solution — importing more foreign employees — is often suggested, the usefulness of that is limited for two reasons. First, many populations have insisted their governments should make it more difficult to hire foreign workers, either for cultural reasons or so that jobs are reserved for local citizens; this has been especially true in Japan and Singapore, for instance. Another challenge is figuring out where those foreign workers would come from, since so many countries in Asia are facing the problem of declining populations. Rather than relying on the government to create more favorable immigration policies, businesses instead need to start doing more with less. This could include such things as:

Redesigned Job Roles Organizations need to consider how people are working and decide if some roles should take on greater responsibility while other positions can be cut. What processes can be combined, and what can be eliminated? How can repetitive tasks be made more efficient? Job descriptions should be assessed regularly to see if they are still relevant, as the nature of work evolves (for example, nobody needs a rotary-phone repair person anymore) and the skills of the workforce change (today’s high school graduates have skills that their parents did not). Consider how you might use freelancers for work that does not require a permanent, full-time employee. People are a valuable resource and you need to ensure the role they are in makes use of all they have to offer.

Flatter Managerial Structures For many organizations, this is the default response. “We will be flatter” and “We will get leaner” are common statements. But, going along with the first point above, that also means evaluating who does what work. If you are going from 7 layers of management to 3, the 3 remaining managers cannot do all the work that 7 were previously doing. You cannot afford to create new bottlenecks simply by loading the same decision points onto fewer people. Spread out the responsibility and authority among lower-level employees, cutting out the need for managerial approval. You also need to consider what you will lose by flattening: coaching and mentoring are likely to drop off, since there are fewer senior people to provide them. Being flatter sounds great, but it cannot be your only option.

Greater Collaboration Growing up in Asia, many educational systems teach students to do individual work, and grade them accordingly. While individual talents are valuable, they become much more powerful when combined into a bigger team. Learning how other functions work, sharing knowledge and practices openly rather than keeping great ideas to yourself, talking regularly with others so you can spot opportunities before competitors do…all of these help you get more value from each employee. A more inclusive workforce, where people are encouraged to speak freely rather than feeling like they have to sit against the wall in meetings for 20 years before it’s their turn to talk, allows you to benefit from everyone’s experience, not just the most senior people’s.

Stronger Innovation As your company grows, and the size of your workforce doesn’t, the changes you make today will need to be enhanced by changes you make in the future. Your employees need to be comfortable developing innovative methods and trying them out, but in many Asian cultures they grew up with the idea that “failure is not an option.” That has to change, and while you cannot change a whole society or erase your employees’ memories of school, you CAN put policies in place that require and reward innovation and risk-taking rather than punishing constructive failures. You also will benefit from a system for learning from failures so people can try new processes and, if they don’t work, can learn from them and move on quickly.

Expanded Talent Pool If you look around your employees and everyone looks pretty much the same, that means you are missing out on potential employees out there in society. You may need to change your recruiting so that people who felt they did not have the option to work for you now start coming in the door and contributing. If you are in a male-dominated industry, look at how you can recruit more women and integrate them into your workplace. Very often, people with disabilities in Asia are excluded from the workplace, so look at how you could reach out to those folks and work with them to accommodate any special needs they have (we have long suggested to companies that if they would like to hire some of the most persistent and hardest working people in the world, they should reach out to their country’s Paralympic Team). If you do not have an employment brand with a sense of diversity — if you are not an equally attractive employer to people of different genders, religions, ethnicities, LGBT, or physically disabled — then you are missing out on talented employees.

A Learning Culture In a growing company with evolving markets and changing technologies, you cannot plan on simply letting workers go and hiring new ones as things change, because finding those new workers may be very difficult. Instead, you can save yourself the time and resources that recruiting would require by creating a culture of continuous learning. Formal training and education, coaching from in-house sources or external coaches, and on-the-job learning, need to be a part of an employee’s job description. Keeping up with changes and anticipating both problems and opportunities requires exposure to more than just the day-to-day work. It’s important to have a plan for learning objectives so you can get the value from learning that is implemented back on the job, rather than simply paying for classes and coaches but with no benefit.

The challenge of the shrinking workforce is not a problem that can be solved tomorrow, no matter how much support a government provides. Even if the birth rate suddenly turned up sharply, the impact on the workforce would only start in about 20 years. Meanwhile, you would likely see people dropping out of the current workforce to take care of their larger families, further exacerbating the current challenges. We are in a situation where adaptation to the circumstances, rather than fixing the underlying problem, is the only solution. How organizations adapt will determine how successfully they will grow.