New economic model needs best human capital

New economic model needs best human capital

MALAYSIA, which has plans to move up the value chain for certain high-growth industries such as information and communication technology, advanced manufacturing, energy and pharmaceuticals, faces certain obstacles as it struggles to grow its pool of talent workers in a globalised world.

Senior company executives, human capital services and management experts concurred that the country has to build up its human resources quickly to be more competitive in the face of challenges posed by other developing countries and financial hubs, as seen in the growing number of qualified Malaysians moving there.

»Malaysia needs to be known as a centre of excellence for specific qualities« JEFFREY A. JOERRES
SMR Technologies Bhd managing director Dr R. Palan said the country needed to step up its game in building and retaining its pool of talent, especially skilled professionals in various industries, to remain relevant and competitive, as other countries like China, India, Vietnam and even Thailand were fast catching-up.

“We are moving fast in developing our human resources capabilities but other developing countries are moving faster, despite coming from a lower base,” he said. Palan expects competition for in-demand skills and talent to become a lot more intense in the coming years.

“I suspect this (intense competition) will occur in three or four years,” he said, noting that Malaysian companies should brace for the stiff competition in attracting and maintaining quality staff. He said the country was already experiencing brain drain as many Malaysians were now working abroad, attracted by higher remunerations and better working conditions.

Palan said SMRT recently learnt that at least 50 Malaysian engineers were working for countries in the Gulf. “We suspect the biggest threat for Malaysia (in terms of talent loss) in the next decade will come from countries in the Gulf and possibly Vietnam,” he said, adding that the search for talent was a worldwide phenomenon.

“The reason is because companies, especially multinationals, know their competitive edge lies in the workforce and in the hands of talented individuals with special skills. They know a company's best asset is its people.”

On what was required to build a more competitive Malaysian workforce, Palan said the country needed to address many issues such as lifelong education, retraining of workforce and benchmarking itself against other countries in terms of standards and best practices. He said in human capital development, an important area that was often neglected in many organisations (private or public) was the need to encourage employees to move from “B” grade workers to “A” grade workers.

“Essentially these workers have the foundation and capabilities (with training and education) to become better workers but are not given adequate support and hence become demoralised,” Palan said, adding that talent could be home grown or acquired. Moreover, he said, there was a need for organisations to embrace automation, technology and provide greater funding for research and the enhancement of human capital development.

Deloitte & Touche Consulting Group Sdn Bhd director (human capital services) Andrew Lee said the firm's research showed talent management becoming a major concern, as the talent pool often did not match the global ambitions of organisations.

“The relentless quest for productivity growth and increasing service orientation are driving demand for higher skills,” said Lee, adding that while the shortage of talent differs across industries, a number of knowledge-intensive industries such as healthcare had been brought to the forefront. He said the Government is acutely aware of the lack of practicing doctors, especially in the public hospitals.

“Measures have been taken to attract local talent stationed overseas to come back but how successful is anyone’s guess,” Lee said.

Malaysian Employees Federation Datuk Azman Shah Harun said the country's business competitiveness could only rise significantly if the public and private sectors work together “intimately” to resolve the many outstanding issues slowing down progress.

“Besides having a pro-business government, right manpower and talent, the authorities must also strive to improve its administration, delivery systems and infrastructure to promote greater efficiency in work flow,” said Azman, adding that speed counts as competition for business was getting more intense every year.

Azman said for instance, efficient and smart companies know they need to operate virtually 24 hours or online if they want to get more business. “If a company is unable to provide service on-demand, then customers will go to their competitors who can provide the service,” he said.

Azman also said productivity and efficiency were issues directly linked to manpower competence and that any form of justifiable wage increment for employees should be merit-based on the issues mentioned. He also said it was important for Malaysia to develop a more comprehensive one-stop human resources data centre that companies (local and foreign) and human resource experts could access to obtain information or gauge the manpower and professional expertise available in the country.

A Singaporean economist agrees with Palan and Azman that the development and enhancement of human capital was critical to improving business competitiveness. “It's one of the key elements necessary to move up the value chain to improve a nation's competitiveness,” said the economist, adding that other factors included having a favourable tax structure to attract more foreign investor. The cost of doing business and political stability are some of the other considerations.

The economist said the Malaysian government's introduction of the key performance index (KPI) in the public delivery system also augured well to improve the country's competitiveness.
“The KPI is a measure of human resources productivity and efficiency on performance over a specific period and is important, especially when the pubic demands for accountability and transparency,” she noted.

The economist said the maximisation of assets such as machinery and equipment, including intellectual property, was made possible only if companies had the necessary human capital trained to use such assets. She said that in developed countries, the pool of talent or human capital base was generally higher as a percentage to population, compared with developing countries.

On Malaysia's human capital, the economist said local workers, especially those with good professional qualifications or highly skilled tooling experts, were in demand globally because of their skills as well as their multilingual abilities. Another foreign economist said Malaysia's business competitiveness, especially in the agriculture sector and to some extent manufacturing and service sectors, were underpinned by fairly cheap labour.

“But this strategy is unsustainable as Malaysia has a small population relative to its neighbours and would not be competitive in the long-run. “The country needs to move up the value chain faster via mechanisation and develop a stronger local workforce in the service sector to boost economic growth,” he said, adding that the current strategy was only a stopgap measure.

Malaysia has a local workforce of about 10.5 million people out of a population of 26.6 million and employs around two million foreign workers . Manpower Inc chairman and chief executive officer Jeffrey A. Joerres said to improve Malaysia's competitiveness, the country needed to have a “cluster” approach to economic development.

“Malaysia needs to be known as a centre of excellence for specific qualities or abilities that multinationals recognise,” said Joerres, citing India for having an edge in information technology and China's low-cost manufacturing. On the political scenario affecting Malaysia's business competitiveness, Joerres said it was important for the country to remain stable to maintain investors' confidence.

“Investors like to see stability in a country before investing,” he said. Joerres said there was now a lot more opportunities for people with in-demand skills to work in various parts of the world. “It's common now for developed countries and economies experiencing high growth to offer attractive pay packages and perks,” he said, adding that human capital flight for better wages was a major concern for many countries, including Malaysia.

Manpower Inc is a world leader in the employment services industry offering the entire employment and business services, including permanent and temporary contract recruitment, employee assessment, selection, training, outplacement, outsourcing and consulting.

Source : thestar.com.my

Performance Appraisals take centre stage !

As human resources become increasingly critical to the growth of businesses, measuring human capital, identifying, developing, rewarding and managing employee performance is being looked at more strategically than ever before. With investors and other stakeholders evaluating company performance on a quarterly basis, appraisal systems are being tweaked regularly to suit changing business needs.

Illustration by Jayachandran/ MINT

Beverages firm Coca-Cola India, for instance, recently replaced its five-point rating system with a four-point grading methodology to force reviewing managers to take that tough call on rating appraisees, and not take a median approach. “We found out, in many cases, that the appraiser would take the easy way out and assign a score of 2.5 or 2.7, rather than making the difficult choice of giving 2 or 3,” says Nalin Garg, vice-president, human resources, Coca-Cola India.

Five months ago, business process outsourcing company vCustomer Corp. went online with its performance management system. The company broke down quarterly reviews into monthly objectives, and put in place informal feedback sessions every month to avoid any surprises, both for the employee and the employer, at the end of the quarter.

At Jindal Stainless Ltd, raises and promotions of managers will now depend more on tangible deliverables. All managerial staff at the steel firm is evaluated on the basis of current performance—measured by supervisors (40% weightage), and an outside agency, which assesses the leadership potential of the appraisee, weighted at 40%, while 20% weightage is given to the assessment made by cross-functional teams (for all-round feedback). “Along with a sharpened focus on deliverables, this year, we plan to increase the variable component from 15% of the gross salary to 20%,” says S.K. Jain, senior vice-president, human resources, Jindal Stainless.

Like Jindal Stainless, electrical distribution company Schneider Electric India Pvt. Ltd has made it mandatory for reviewing managers to evaluate appraisees according to the specific levels and bands they fall under, and not in clustered groups. For example, regional managers in sales teams will be compared with each other or employees in similar job roles. “The idea is to compare apples with apples,” says Robin Singh, director, human resources, Schneider Electric.

From this year, data analytics and customized process solutions provider eClerx Services Ltd has linked part of the bonus given to managers to competency-based development. For instance, a manager who is found lacking in soft skills is sent for training to fill that gap. “We made this change to make sure managers take training and development to fill competency gaps seriously,” says Kishore Poduri, head of human resources at eClerx.

Through these changes, eClerx and others are aiming at a performance-driven culture—among the first few to do so.

For, says Ganesh Shermon, head of human capital advisory service at consultant KPMG India : “Most companies in India still have basic, ad hoc models that have neither clear objectives set out nor the recognition of the criticality of a performance management system.”

Increasingly, however, companies are moving from a traditional performance management approach to the balanced scorecard—a framework developed by Robert Kaplan and David Norton in the 1990s, which aligns business activities to the vision and strategy of the organization, and monitors the performance of the organization against strategic goals.

Interestingly, there is an increasing amount of scrutiny on quality of work, with companies placing significant importance on qualitative measures. “It is no longer only about numbers and meeting targets. The means to the end (goals) has become very important,” says Shermon. “Companies want to know how employees are meeting their key performance areas. Is there a strategy and ethics involved in it?” says Shermon. “It is often seen that an employee may have met targets but also diluted a bit of the organization’s brand.”

“Appraisal is also about competencies or manifestation of the corporate behaviour an employee deploys while achieving goals and targets, in conformity with approved behaviour,” adds Shermon.

Some companies that have adopted balanced scorecards or other performance management methodologies—such as KPMG’s value-based management, Arthur Andersen’s value dynamics, Stern Stewart EVA—include Coca-Cola India,PepsiCo India Holdings Pvt. Ltd, Godrej and Boyce Manufacturing Co. Ltd, Syngenta India Ltd, Cargill India Pvt. Ltd, eClerx, HCL Technologies Ltd, Satyam Computer Services Ltd, Toyota Kirloskar Motors Ltd, Samsung India Electronics Pvt. Ltd, and public sector firms such as Indian Oil Corp. Ltd and Bharat Petroleum Corp. Ltd.

Explaining the rationale of changing appraisal systems, Sanjay Bali, vice-president of human resources, Samsung India, says: “Measuring the quality of human resources on changing performance parameters in a scientific and unambiguous way is critical since revenues and profitability are so dependent on it.”

Thus, companies are adding and/or modifying more variants, metrics and key result areas to the performance measurement system to bring in objectivity and align individual goals with those of the organization. For example, a sales executive is now evaluated on parameters such as leadership skills and initiative, teamwork and cooperation, people skills and contribution to the overall corporate brand, in addition to key result areas such as sales generated, customer retention and acquisition. The definition of key performance areas is better articulated now and these have become more measurable than before.

For instance, all employees at PepsiCo get rated on business and people results, with 50% weightage on each parameter. People results comprise four key areas—values-based culture, inclusion and diversity, talent management and personal development. PepsiCo India executive director of human resources, Pavan Bhatia, reasons, “The kind of business we are in, it is important that all employees, starting from the frontline staff to the business head, focus on people results.” He adds, “Along with business results, building the capability of the next line of employees is very important.”

The appraisal system, which was put in place in 2006 by PepsiCo India, is now being adopted across the beverages company’s offices worldwide.

As organizations move from the concept of individual business units to entrepreneurial business units, where entrepreneurial capabilities are applied within an organization, people management and leadership skills are becoming key performance areas, even for junior employees. Companies are driving the leadership objective right from the lowest level in an organization.

K.K. Swamy, deputy managing director at Toyota Kirloskar Motors, says: “Employees across levels are measured on leadership competencies, only the weightage on leadership skills increases from junior to senior levels.”

Human resource consultants say the orientation to performance management has changed over the last several years—appraisal systems now play a far greater role in an organization’s overall strategy. “Companies want to get it right not just in terms of measuring current performance, but also measuring an employee’s potential,” says Anita Belani, country head, Watson Wyatt India Pvt. Ltd, a global human resource consulting firm.

Human resource managers say that while it is important to have measures in place, an unbiased, transparent measure mechanism is necessary. While PepsiCo India’s Bhatia has put in place a survey called Connect that tracks whether people results are being fulfilled, Schneider Electric’s Singh has made it known that an appraisal report will not be considered complete till the appraisee and the reviewing manager’s manager, who is often the chief executive, send their comments on the appraisal. Singh says objectivity is not easily achieved since, culturally, employees in India are not geared to deal with performance rating professionally.

But, it is essential. “Performance management is the big picture of a company’s vision, and (of) how the contribution of individuals, teams, divisions and, ultimately, the organization as a whole can help realize it,” says Navyug Mohnot, chief executive officer of QAI India Ltd, a consulting firm that deploys process improvement and quality initiatives in organizations.

Source : Livemint.com

Autor : Rajeshwari Sharma