What do you do if your company is thinking about expanding to the Asia Pacific region? And how can HR compete in the culturally challenging and tough labour market? Anthony Caskey reports from Shanghai at The Conference Board’s recent Asia Pacific Human Resources Conference
What do you do if your company is thinking about expanding to the Asia Pacific region? And how can HR compete in the culturally challenging and tough labour market? Anthony Caskey reports from Shanghai at The Conference Board’s recent Asia Pacific Human Resources Conference
The media is often full of horror stories about worker exploitation in China and other parts of the region, with Chinese laborers working 16 hours a day, seven days a week in dim, dank, dreary factories. However many companies in the region, from their inception, choose to use fair labour practices.
Sweatshops a thing of the past?
“I think the sweatshop is on the way out,” predicted Conference Board director of Economic Research Robert McGuckin. To get quality, manufacturing must be mechanised, and uneducated employees can’t use these tools. “I don’t think you can rely on sweatshops and make it any more. You have to put the machines in.”
If a company chooses to run sweatshops, “there’s a price to pay for that,” explained Tom Algeo, human resources director for Esquel Group, a closely held, vertically-integrated Hong Kong garment company which employs 47,000 people worldwide. This price can include lower productivity, higher employee turnover and a bad reputation even if the exploitation is never exposed in the media.
But Esquel Group, which at one time focused heavily on finding inexpensive labour, has not stopped at just implementing fair labour practices. The group’s chairman, MIT- and Harvard-educated Marjorie Yang, places so much importance on values that she instructed her HR department to focus on Esquel’s values of ethics, environment, exploration, excellence and education. This emphasis has been met with cynicism in some corners of the company, Algeo said. “Companies cheat in China,” some of her employees have told her. But Yang, who took over the reigns from her father in 1995, hasn’t budged. “It’s very important for us to set an example in Asia as a company that can be both viable and socially conscious,” she said upon her acceptance of the Harvard Business School Alumni Achievement Award in 2002. “If we can continue to set that standard, others will follow in our path.”
CLP Group, a Hong Kong-based power company, also strives to set a good example, said its human resources chief Roy Massey. The HR department plays a key role in its corporate governance because “[while] systems and procedures are important, the application and enforcement of values is people driven.” CLP’s value framework includes a code of conduct which mandates treating others with respect and avoiding conflicts of interest and it forbids the payment of bribes. If one of its line managers finds an employee has breached the code, the manager is to report the alleged violation to CLP’s internal audit department, which will investigate the case. The line manager will then recommend how any infraction should be dealt with. But a breach of these rules is taken so seriously that the department must forward the recommendation to the company’s Code of Conduct Committee, comprised of the executive director, CFO, company secretary and group human resources director. The committee will test the recommended action for consistency and fairness and ensure the sanctions are appropriate in relation to the non-compliance. “These things do arise,” Massey said. “The good thing is that we’re actually catching them.”
A diverse workforce can be profitable
In addition to placing a high value on ethics, many companies operating in Asia are placing a strong emphasis on diversity and inclusiveness, which also benefits the bottom line. For example, when Shell executives first came to China to win business, they achieved limited success, senior Shell learning consultant Lai-Har Woon said. After leveraging the diversity of talent in the region, including PRC nationals, the company has enjoyed better results. In Russia, practicing diversity is even more critical for the company because its licence to operate there reinforces the need to develop local talent.
Other reasons for practicing diversity are to limit dissatisfaction of local workers and decrease employee turnover, according to Mike Wang, vice general manager for CIIC Human Resources Management Consulting Company. The pay differential between expatriates and local employees can sometimes lead to resentment. Also, a glass ceiling exists in many international companies based outside China. “The local Chinese are not allowed to the top,” Wang explained. “The Chinese look at their own self-actualisation. Usually these people cannot get their full respect.” And so they leave the company to work for a locally-owned company or to start their own, much to the detriment of the company with the glass ceiling.
Employee retention in flat organisations
Sean Kuan Thye, managing director of human resource performance strategies and development at Federal Express Asia Pacific, is proof positive that no glass ceilings exist in this international air express company. However, her HR department faces a different challenge: the company has less middle management positions to which their employees can aspire. “We don’t have supervisors and in fact, our organisation structure is relatively flat,” Kuan Thye explained.
Of course, when a management position does open, the company makes every effort to fill the position with a Fedex employee, and successfully so. “Our statistics show that a high percentage of our management positions are filled by hiring internally,” Kuan Thye said.
In addition, the air express company offers plenty of chances for its employees to grow. They can apply for a promotion or move laterally to other functions within the organisation – an employee can work in one function for 18 months and then apply for a job change to another to expand their knowledge and skills in different business areas. Employees are also engaged in cross-functional projects as part of their professional development.
When it comes to personal development, Fedex provides up to US$2,500 annually as subsidy for employees to take on higher education. This program encourages employees to upgrade their academic qualifications or language skills in preparation for their future jobs. The company also has its ‘Growth, Opportunity, Leadership, Development’ program to prepare non-management employees for management positions.
Improving HR competency
BP, the British oil giant, realised about two years ago it needed to standardise and upgrade the skills of its HR professionals, according to its vice president of Human Resources Asia Pacific Andrew Ditty. In 2000 BP Amoco bought the UK lubricants firm Burmah Castrol Plc. Because of this addition and others, BP often had up to multiple HR policies operating in the same region or country and even sometimes in the same city. The company realised that “everyone had a little different way of doing things,” Ditty explained. “There was no good reason why… except that they came from different places.”
So BP started a human resources training program consisting of five processes. One focuses on skill building and familiarity with BP HR and coaching. The strong suit of HR professionals worldwide traditionally has been their people and teambuilding skills, and not necessarily their business skills, Ditty said. So HR staff also study the company and its business units to increase effectiveness. In addition, HR processes were streamlined through Six Sigma methodology, a quality measure and improvement program that focuses on the control of a process to the point of allowing only 3.4 defects per million items. BP’s staff also study strategic HR it is “working in partnership with business leaders to identify and manage change”.
