Effective HR system will be key to companies' survival in AEC
David Binnion, director of Indigo Consulting, explains some key human-resource issues that Thai companies need to address in order to compete successfully in the Asean Economic Community, in an exclusive interview with The Nation's Pichaya Changsorn.What are the key HR issues?
Thai companies seem to be worrying about 2015 [when the Asean Economic Community starts]. They think they are going to have problems. A number of companies want to strengthen their organisations in order to compete with companies from, say, Singapore and Malaysia.
It is a hot topic at the moment. I think this year is a good time to get started, because it takes a couple years to prepare for [the AEC]. Companies have to adjust to do things differently. Their people have to adjust to do things differently.
Different in what way?
They must have a clear vision and strategies to deliver that vision. They must know how to structure efficiently, how to be agile and efficient. They also need an HR process and to pay their workers appropriately. Some companies have a high turnover because they don't have the right pay system. Companies don't want to lose their people to foreign companies in 2015. An HR system needs to be in place to retain people.
One of the important issues we have found is leadership. With effective leaders, people are more likely to stay. We talk about leadership and organisation climate, how they feel about working at the company. Is it a nice or bad place to work? This depends much on the leaders. If you have good leaders who manage people well, then people will stay. Do leaders engage with their people? Do they inspire or motivate their people?
It's a big picture. There was an interview of a guy who was sweeping the floors at [US space agency] Nasa. When asked what he was doing, the guy said, "I'm helping to put a man onto the moon."
If your company does good things, exciting things, it gives your job meaning. A lot of leaders we've seen try to do everything themselves because they don't trust and develop their people. If you ask them, they will reply, "All my people are no good." Asked why their people are no good, they will say they don't have time to develop their people. Asked why they don't have time to develop their people, they will answer that it's because they do everything by themselves.
One thing I have told executives [is that] nobody goes to work in the morning thinking, "I will go to make many mistakes and make my boss angry." But they still make mistakes and make their bosses angry. Why? There normally are two reasons: first, because they don't know what their bosses want. The second reason is they don't know how to do it.
Whose fault? It's the boss's fault. Leaders must learn how to coach their staff. If people know what you want and how to do things, you can go and play golf.
Another important area is performance measurement and the linking of performance to rewards, so people can see a clear linkage. High performers like that, and we want to keep the high-performance [employees]. Also you have to look at career planning. If people don't think they have a future at the company, they leave.
How can a company have a good HR system?
The first thing to do is you need to have good HR managers who understand businesses and strategies and understand how to build organisational capabilities to deliver the strategies. One problem in Thailand is that we don't have many good HR managers.
HR is not very sexy in Thailand. It's not so attractive that you say "wow" when telling people that [you work in] HR, unlike finance, marketing or production professionals. In the past, HR was often a place for failed managers who were transferred from other divisions because they didn't perform well. The "super stars" don't come to HR. Now this perception is changing. HR is now a bit more sexy.
This is an issue that the "premier league" companies understand but the "second division" firms don't get. And that's part of the reasons they are in the second division. At premier-league companies, HR reports to the CEO. At the second-division firms, HR reports to someone else. The leading companies recognise that everything gets done through people.