HR Change and Transformation in Malaysia

Malaysia is one of those APAC countries, which is keeping the Chapman Consulting Group very busy with an on-going demand for key HR talent. In just one generation, Malaysia has been transformed from a relatively poor economy into a vibrant middle-income country full of promise and the ever-present construction. Recently as the sun rose over the Petronas Twin Towers in Kuala Lumpur, I was looking forward to co-hosting and meeting 30 HR Leaders at the offices of DHL for ChapmanCG’s APAC Series.

In a dynamic atmosphere with the boardroom full to capacity, an engaging and determined discussion took place. The conversation was focused on ‘HR change and transformation’, a topic clearly at the top of many people’s agendas. Alongside co-host Raja Rajagopal, HR Director with DHL, HR Leaders were in attendance from a broad range of industry sectors and organisations including Alstom, Baker Hughes, Barry Callebaut, Berjaya Corporation Berhad, Fosroc, Henkel, Honeywell, SPIE, Standard Chartered Bank and Towers Watson. We would also hear case studies from business leaders in American Express and British American Tobacco on their HR transformation journeys and talent agendas.

Challenging…but Optimistic

What struck me most about the session was the undeniably large set of on-going challenges as companies and HR Leaders focus on getting the structure right for robust world-class HR teams in Malaysia and the wider region. In spite of these challenges, some fantastic success stories were highlighted indicating that despite the barriers, a stable and engaging environment can be achieved. I know that these stories, along with the creative and positive thinking in the room, inspired many as 2014 approaches.

Carolina Bogado, HR Director for American Express, shared, “Our HR and business transformation has been running for one and a half years now and has been a huge success, leading to multiple corporate awards in Malaysia, for which we are very proud. Our ‘Employee Value Proposition’ has been the key – what makes AMEX different? What else has been important? A deep understanding of demographics, strong insights from data analysis, financial investment, talent management — including engagement and development – and collaboration across the board. Managers and leaders have to ‘walk the walk’.”

Holding onto Talent

Most agreed that identifying, and then protecting your top talent is very important. Engagement, particularly when a large percentage of the workforce is Generation Y, is crucial. Interestingly, most felt this was part of an overall culture shift and have seen a positive trend of Gen Y staying with a company for friends, personal development and ultimately an emotional bond with the company, as opposed to moving for purely financial gains. It was also agreed that if the organisation involves partners/spouses then employees are much less likely to leave.

This has of course resulted in reduced attrition rates, another major cause for concern in the room. One HR Leader indicated that tackling this issue head-on, right at the very start of the recruitment and hiring process, has seen their attrition numbers fall. We also discussed the potential dangers of insufficient on-boarding, assessment, expectation setting, and even CEO communication whilst in probation, which can create problems.

When it’s Time to Move on

One attendee raised the question of whether there is still a place for the exit interview when staff does leave. Absolutely, argued some, especially with the increase in on-line interviews where more detailed, and essentially more honest and frank feedback will be acquired. The exit interview may provide timely insight into issues that require attention. “People join organisations, but they leave managers,” reminded an HR Director of a multi-national oil and gas company.

HR Leaders in the room agreed that they are facing the following overall challenges in the Malaysian HR market today:

1. Sourcing Talent

Identifying high-calibre talent is tough. The pipeline seems to be drying up in Malaysia, so how do we keep filling up this pipeline and is the right talent coming out of the Universities? There are still lots of good people leaving the country to work elsewhere, and once they are exported, that knowledge base is gone. Many companies are looking internationally to find HR and business talent to bring back to Malaysia, but the draw is not as significant as somewhere like Singapore, which is fast becoming a talent hub. Interestingly, one of Malaysia’s biggest competitors for key talent is the Singapore government.

2. Developing Talent

With this lack of readily available local talent, companies need to hire not necessarily for relevant experience and track records, but rather for attitude and potential. In the recruitment and hiring process, HR Leaders must broaden the net and seek out future talent. Once these employees are brought on board, it is crucial to focus on talent development to ensure the right leadership is there to support organic growth in future. It was also noted that Generation Y now occupies a large percentage of HR positions and tackling engagement and retention within this group specifically is a huge challenge.

3. Technology

This is likely to be an HR challenge for the foreseeable future — keeping up with technological advances and capabilities in the workplace, including social media. Many companies seem to be constantly changing technologies as the search for the right business model is sought. It can be tough to manage on-going change and the pace can be relentless. The necessity for change must be balanced with the need for some degree of consistency.

4. Culture

Many companies seemed to be struggling with how to change the mind-set of the workforce from a local to a global outlook. The question of how to unite cultures, languages and labour laws, for example, was on the minds of many. Achieving the right balance where local culture is respected but the global organisational culture comes through is a delicate balance.

5. Structure

This issue is on-going and continues to be top of mind for HR Leaders today, with a particular emphasis on ensuring HR teams are built for growth. In addition, there is the question of how HR structures itself to best manage an increasing number of stakeholders in complex and highly matrixed environments. Also of interest were the challenges involved in managing an employee workforce after a merger. Handling this successfully in the inevitable uncertainty following any M&A is crucial, so as not to lose key talent.

I look forward to watching the developments in the Malaysian market and will continue to keep our HR Leaders around the globe up to date with Malaysian HR trends. A special thank you again to Raja and his team for hosting a productive and successful session and we look forward to bringing this group together again in Malaysia in 2014.