HR Best Practices in Financial Institutions in Thailand & Malaysia
CAB CALLING January-March, 2008 DBS Bank, United Overseas Bank, and Standard Chartered Bank. Banks are more cost-conscious and need to continuously improve and add new services in order to attract customers especially retail clients. The market leaders are private-run Thai banks Bangkok Bank, Thai Farmers, and Siam Commercial Bank. State-owned banks, i.e. Krung Thai Bank, are however reorganizing to compete and to prepare for future privatization. The Asian crisis of 1997 has been a watershed for the so-called "Tiger" economies of South East Asia. While the pre -1997 boom in these economies was led by exports, the functioning of the domestic financial institutions like banks, stock exchanges, etc. left much to be desired. The crisis of 1997 and the subsequent economic slowdown brought out the need to modernize these institutions and adopt international best practices so as to prevent future crises. Human Resource Management (HRM) practices in the region also reflect the above trend. Attempts are being made in the countries of the region, to assimilate the international best practices in HRM with the local customs and sensibilities. Mr. Phillippe Kopcsan, Business Director, Prasena (Thailand) Limited (one of the major HR consultancy firms in the region) while interacting with the group outlined the following major trends in the HR practices in the region: HRM function in an organisation is being increasingly recognized as a strategic business partner with the responsibility of managing a key corporate resource. It is expected that HR function must Help the organisation to be more agi le by adopt ing practices that allows it not only to adapt to changes in the external environment but also to benefit from the same.
Human Resourece Management Practices in Thailand
Ensuring that the company is able to sustain its operation over a period of time.¶ Ensure efficiency in the use of HR resources in the organisation in an integrated manner with all other corporate resources. Organisations are becoming increasingly aware about the impact of generation gaps in the interaction between the various parts of its workforce. With increasing globalization, the diversity (both geographical as well ethnic) is on the rise in the organisations operating on a global scale. At the same time, the composition of the workforce itself is changing and different generation groups, with differing viewpoints on the same subject, (Illustration 1) are required to work together. This requires adjustments to be made by all categories. Organisation must facilitate such adjustments by creating enabling environments so that the needs of all generation groups are satisfied, simultaneously with the achievement of the organisational goals. At minimum, the organisations must be aware about the diversity of generation groups within its ranks and tailor their personnel practices accordingly.
Appreciation of New Technology
³ SILENT" GENERATION ( BORN 1930 -1945) Born with military technologies that were to lead to analog, digital & virtual technologies. "BABY BOOM"GENERATION ( BORN 1945 -1960) Born with analog technologies which led to digital technologies GENERATION X (BORN 1960 -1975) Born among analog technologies but witnessed the introduction and growth of digital technologies. GENERATION Y (BORN 1975 1990) Born with the first generation of digital technologies , witnessed the introduction of networked technologies GENERATION E (BORN 1990 2005) Considers computers & internet as "natural" as refrigerators & telephones
Illustration 1: Generational Shifts in Organisations
In response to the change in the business environment, the competencies required of the HR team have also undergone change. Michigan Business School's HR Competency Study (Illustration 2) lists a number of behavioural and technical competencies that an HR manager needs to posses for performing his duties efficiently. As can be seen from the results of the study, HR has to expand its horizons and delve into non-traditional areas so as to serve as an important enabling function for the organisation as a whole.
CAB CALLING January-March, 2008
Illustration 2: Michigan Business School's HR Competency Study Behavioural Technical
Strategic Contributions HR Delivery Making Strategic Decisions Staffing Market Driven Connectivity Learning Fast Change Organisational Learning Culture Management Measurement & Reward Personal Credibility Business Knowledge Interpersonal Skills Value Chain Getting Results Value Proposition Communication Labour The following features stood out during our visit to the various financial institutions in Thailand: Most financial institutions in Thailand have been facing the dual challenges of retirement of older and experienced personnel and higher attrition rates among the new recruit. Although the financial sector in Thailand is still relatively closed, it is poised to undergo significant reforms making it possible for foreign institutions to expand their operations in Thailand.
Domestic institutions, realizing their inability to match the pay scales of such foreign competitors, have increasingly been adopting non-monetary interventions as tools of talent retention. This takes the form of creating and maintaining high level of team spirit and bonding among the workers in an organisation. This is augmented by creating a working atmosphere which is more informal in nature which helps the newer recruits to feel comfortable. The central idea of this was creating and sustaining an organisational culture so as to modify employee behaviour to a common goal. The top management of the companies is actively involved in this process. They keep in touch with the employees on a regular basis through events like Corporate get-together, Bonding exercises, etc. A common motto which most of the companies we visited subscribed to was "You cannot manage what you cannot measure". Like all other areas of operation in the organisation this motto has been applied to the HR function also. Performance parameters had been clearly laid down against which the performances of the HR function in the organisation would be judged. Attempts had been made to define numerical targets for areas like recruitment, employee satisfaction, etc. For example, in one of the banks, a measure of effectiveness of the recruitment function was defined as the time taken between the request for candidates
Creation of a Family Atmosphere Within the Organisation Setting Benchmarks for Measuring Effectiveness of HR Function
from an operational department and the HR department providing a list of suitable candidates to the department for interview. Similarly, numerical functions are also set for other HR functions which are benchmarked to the industry best practices and provide an objective measure to judge the effectiveness of the HR function. A conscious attempt was being made by the organisations in Thailand to minimise the recruitment period. As the manpower pool of Thailand is relatively small, a quicker recruitment process allows the companies to recruit the best possible talent from the market. A case in point would be the practice followed by Siam Cement Limited (SCL), a multi-business company having presence in the Cement, Paper, Banking and other industries. SCL recruits fresh graduates annually for filling their management trainee positions. The recruitment process consists of an examination followed by interviews of candidates who have cleared the examination. The examination, which earlier used to be conducted on a designated day all over Thailand, has
Recruitment Process Through Use of Information Technology
CAB CALLING January-March, 2008 perception of the organization as an employer by both our current and potential employees. It can also be called the employers' "brand image" which helps it to attract and retain talent. EVP once created needs to be continuously reinforced and improved. The Malaysian banking sector is unique in that Islamic banking exists alongside the conventional banking system to provide a great diversity of
financing and financial products to meet the varied funding and investment needs of the country's economic sectors. The Malaysian central bank is liberalizing the country's banking sector under the Financial Sector Master Plan (2001-2010), which is aimed at developing a more diversified, robust, efficient and resilient financial system. The plan is now entering its third phase, which will see more foreign banks coming into the country in line with the country's requirements under the World Trade Organisation. The banking industry comprises 23 commercial banking groups, of which 13 are locally- incorporated foreign banks. The central bank has issued licenses for 11 Islamic banks, of which three are foreign banks. It has also issued 13 investment bank licenses, and currently Malaysia's merchant banks are consolidating their stock broking businesses and transforming into investment banks. Besides the commercial banking sector, Malaysia has 11 licensed registered development finance institutions (DFIs) which provide financing to certain strategic sectors of the economy. There are also 655 scheduled institutions comprising building credit companies, credit token companies, factoring companies and leasing companies that provide credit and financing facilities to the public. To achieve success in the field of banking, as well as any other area of finance, domain knowledge is a prerequisite. This domain knowledge is usually about the various financial tools and practices and about the general financial environment. However, as people move higher in the organisation, domain knowledge alone may not be sufficient. As higher positions also call for guiding and motivating a group of pe opl e , a cqu i r i ng /improving leadership skillsbecomes important. ICLIF was setup with the aim of developing such leaders in the
Malaysian Banking System
International Centre for Leadership in Finance (ICLIF), Malaysia
now been moved online. Candidates can get themselves registered on the exam website and sit for the exam at the time of their choosing within a designated period of six months. The details of the candidate along with the marks obtained are stored in a central database. At the commencement of the recruitment process this data is analysed and the candidates to be called for Interview are shortlisted. The final list of candidates is then prepared and offer letters issued. This changed procedure has enabled SCL to bring down the time between the interview and final offer to as low as 6 days, thereby, giving them the first mover advantage in attracting the best talent. Moreover the candidates too are aware about the time by which their results will be known, thus, removing uncertainty Almost all the organizations visited have adopted the Competency Mapping Framework (CMF) to achieve best fit for the various positions. This requires understanding the requirements of each job and thereafter breaking such
requirements down to specific traits or requirements expected in the candidates selected for filling the position. This is further reinforced by Key Performance Indicator (KPI) which serves as objective criteria for measuring performance. The CMF and KPIs are freely shared with employees so that they are aware of the requi rements and standards of performance expected of them. The assessment of performance on the basis of the KPI is shared with the employees who are also mentored in areas where they need improvement. Training programmes are also decided on the basis of such assessment to fill the knowledge gaps. The organisations have also made attempts to evolve a credible Employee Value Proposition (EVP). EVP is the most accurate way of describing the
Extensive Use of Manpower Planning Tools Illustration 3. The Breakthrough Leadership Model (ICLIF)
CAB CALLING January-March, 2008
financial area so as to provide effect leadership to the organization in which they serve. ICLIF has developed the Breakthrough Leadership Model (BLM) (Illustration 3) which focuses on the core principles and values which lie at the very centre of effective organization e.g. Fairness, Ethics and Integrity. This is supplemented by groupings of interpersonal competencies like Innovation, Execution and Transformation which have been identified by leaders as keys to their personal success. The model depicts the leader as one who exists within the broader institutional environment that has its unique mix of organizational capacitates such as risk management, talent management or customer orientation that define the drive for operational excellence in the institution. The study visit provided several insights into the practices which are being adopted successfully and which can be adopted by Indian financial institutions. The specific learnings may be enumerated as follows: a) Organisations may become aware about the changing age & social profile of their employees and tailor their policies accordingly. The "one size fits all" approach will not succeed in future.
Learning & Conclusions
b) Organisations may create a congenial working atmosphere that can serve a s a n i m p l i c i t compensation for the employees and can act as a potent retaining force. c) Organisation may conceptualise and nurture its brand value as an employer so as to attract the best people to work for them. d) Organisation may shorten the recruitment process which can serve as a major strategic advantage in
attracting the best employees. e) Organisation may evaluate the HR function itself by setting specific targets and goals and measuring achievements against them.
CAB CALLING January-March, 2008
Statement about ownership and other particulars concerning 'CAB Calling'
I, Sandip Ghose, hereby declare that the particulars given above are true to the best of my knowledge and belief. Sd. Sandip Ghose Date: April 1, 2008 Signature of Publisher
Place of Publication Pune Periodicity of Publication Quarterly Editor and Publisher¶s Name Sandip Ghose Nationality Indian Address Principal and Chief General Manager College of Agricultural Banking Reserve Bank of India, Pune ± 411016 Printer¶s Name ANSON Advertising and Marketing Nationality Indian Address 25, Laxmi Nagar Commercial Complex Laxmi Nagar, Pune - 411009 Names and addresses of Individuals College of Agricultural Banking who own the magazine Reserve Bank of India, Pune