Trends to watch out for in 2012

Indigo Consulting Group's directors David T Binnion and Jiraporn Pruksarnukul examine some of the hottest issues concerning human resources trends in 2012 during an interview with The Nation's Pichaya Changsorn.

How do you assess the impact of the new Bt300 daily minimum wage and the minimum Bt15,000 a month salary for new graduates?

Binnion: I believe companies have concerns about this minimum wage and the minimum salary for new graduates in the case of whom it's quite a sharp increase from the Bt10,000 salary that companies paid for students hired from less well-known colleges. It's going to cause some problems. Companies will think more carefully before hiring.

Many companies have come to realise that they have to take their head counts more seriously and are undertaking some restructuring. Thai companies tend to carry big head counts compared to western firms and they will tighten their head counts if the labour cost becomes more expensive.

Jiraporn: That's why this year many companies have projects to streamline their work processes.

Binnion: Particularly, when work processes cover different functions that can certainly improve in efficiency.

New graduates may find it more difficult to get work. In Thailand, graduates do quite small jobs such as working at a reception desk. At Thai banks, tellers are university graduates. In Europe and the US, bank-tellers are high-school graduates. Companies will review the qualifications of each job.

Jiraporn: Many companies have stopped hiring graduates with a bachelor's degree as permanent staff. They hire staff with a master's degree and use those with a bachelor's degree from outsourcing companies. There is no career path for someone with a bachelor's degree.

Binnion: Thai Airways International no longer hires bachelor's degree graduates for less complicated work. They have set up a new company to hire staff to do less complicated work that offers less benefits to workers. Outsourcing has become more popular. Zuellig Pharma, for example, does a lot of outsourcing, such as on warehouse management.

Jiraporn: Companies will reduce their hiring of new graduates and will hire ones with 1-2 years experience instead. For example, if they pay Bt16,000 salary for candidates with 1-2 years' experience, they can work immediately.

Regarding the Bt300-a-day minimum wage, I have talked with many HR professionals who told me many firms already have adjusted their wages to that level, incorporating all allowances and everything into the salaries. Because they think if they do it later when the government's order becomes effective, there would have to be a lot of negotiations with the workers. And employees are happy with this advance adjustment.

What are the other hot HR issues this year?

Jiraporn: Other hot HR issues right now include the career path design. This is because companies have been asked by their Gen-Y workers and from their engagement surveys about their future career path. A succession programme is also quite popular. Nearly all of the top-10 companies in Thailand face a problem that their top management teams are going to retire in the next 3-5 years.

Workers now want to see a clear career path. They want to see 'Where I'm going to be in five years' time and a quicker promotion. Because in the past, companies had rigid rules such as staff would need to be at a certain position for 3-5 years before they could move to the next level. Now that has changed. If you fit all criteria, not only years of services, you can move up.

Right now, companies are also requiring their top management to rotate to other functions before getting promoted in a bid to allow the executives to see things from the other angle and learn to "speak other languages". This "rotation model" is very popular. But it will cause a problem, too, because Thai firms use it in a wrong way. Normally, a rotation should last at least 1-2 years because the purpose is to learn new things. But some Thai companies will do the rotation only 3-4 months for "just to tick that box".

Binnion: [Another trend is that] small entrepreneurial companies are catching up fast and becoming more competitive. Five years ago, these small firms wouldn't contact us. There is an increase in awareness on the need to manage people well, and to be able to compete more effectively. I am surprised to be contacted by companies of this size. They want to know how much they should pay their staff; how to put a performance management system in place; how to make a clear strategy and cascade it, how to have a right structure; designing a career path and so on. They realise they have to retain their people, keep them challenged, or they will leave.

Jiraporn: Small companies normally try to keep their talents. They design reward packages, which include profit sharing [scheme]. Staff are challenged because they can get profit sharing as a percentage of profit or EBITDA (earnings before interest, tax, depreciation, and amortisation). Big companies can't use this model.

You will be surprised. Some small companies can pay very well and they can recruit good people. One of my clients got a talent from a big company through offering things that the person needs. While he receives almost the same salary, this talent has been challenged with a profit-sharing scheme, and also he can come to work to the office three days a week and working from home two days a week. At his old company, the boss refused to promote him only because he came to work late, while he argued that he often worked late till midnight to finish all work from home. He feels he doesn't fit with the big companies. Likewise, Gen-Y gets bored with a "clock-in, clock-out" [work style].

From your experience of working with Burmese organisations, how fast do you think Burma can catch up economically?

Binnion: I don't think Burmese people are as "aggressive" as the Vietnamese. They will not become like another Vietnam but they will grow fast. Burmese are a bit "sabai sabai". But there are a high percentage of Chinese entrepreneurs in Burma who I think will have a big impact on the future of the country.

pichaya@nationgroup.com