Corporate Governance, Publications

The Nation: Finding world-class management

26 May 2004

Edwin Sim - Human Capital Alliance

A top human resources executive tells KI Woo how companies are building global-class infrastructures.

Building infrastructures that can help companies compete successfully against global competitors is fast becoming a top priority.

Acquiring, and more importantly, keeping the best talent is now viewed as a critical ingredient for building a sustainable and profitable business.

Edwin Sim, president and CEO of Pathfinder Asia Ltd and its affiliate Human Capital Alliance Ltd, said that as companies begin riding the economic recovery and become highly profitable again, they are all seeking ways to sustain growth by upgrading their management and operational infrastructures.

“Most companies are now saying they must further professionalise their operations,” he said.

After decades of establishing strong bases in Asia , many local family companies are now aiming to build sustainable global businesses and realise that they must develop appropriate infrastructures that will first attract and then retain top management talent.

A key infrastructure ingredient is developing an appropriate internal corporate culture that will attract management leaders. “Top professional business leaders thrive best in high-performance, meritocratic organisations,” he said.

The economy now features many large, family-controlled companies that are gradually evolving into professionally run organisations. These companies are constantly wrestling with issues such as how to meld the best Western management practices with Asia ’s unique culturally influenced business environment, he said.

Pathfinder Asia Ltd and Human Capital Alliance, he said, are led by experienced United States and Canadian-trained professionals who spent their formative education and business years in North America before returning to Asia .

“Our people have the ability to recognise and bridge the gap between Western management practices and the unique requirements of Asian family companies,” he said.

The key to developing successful global management practices in Asia and particularly in Thailand is knowing how to combine pragmatic, analytical-based Western business strategies with holistic Asian practices that emphasise balance and harmony.

“Successful Asian companies of the future will be those that can efficiently and effectively meld the best of both worlds,” he said.

Another key element is identifying and then dealing with the unique needs of a company’s stakeholders. An Asian family company’s stakeholder structure is in most cases much more complex than its Western counterpart.

A major reason for the difference is the family’s inherent influence in Asian cultures. “Family is business and business is family”.

In most Western companies, stakeholders are limited to their shareholders, management team, employees, communities and customers. However, in Asian companies, family relationships strongly influence stakeholders’ interactions.

“Stakeholders in Asian companies may simultaneously belong to several stakeholder groups, each representing a diverse range of often-competing interests,” he said.

For example, a family company’s management team may include executives in key functions throughout the company.

These executives are also share-holder/stakeholders. “These managers/shareholders’ interests in the company may have resulted from marriage to the founder’s children or grandchildren or nieces and nephews,” he said.

Any successful transition from a traditional family-run company to a professionally run company requires identifying and dealing with each company’s unique stakeholders’ interests before pragmatically applying the latest Western management practices, he said.

A CEO of an Asian family company, who may putatively control the board and may even represent the family bloc that controls a majority of the company’s shares, may not be able to act similarly to a Western company CEO because of these unique family relationships and the need to maintain balance and harmony.

“Thus the successful implementation of pragmatic Western-based business processes and the building of modern global-class business management infrastructures in many cases must be complemented with an acute awareness of the unique internal culture of most Asian companies,” he said.

Thailand has developed a strong core of top senior managers, who have been trained locally and overseas by major multinational companies, that can help major companies compete globally.

“Many top professional business managers are now realising that large, local family-owned companies may indeed now be where they can best maximise their own personal potential,” he said.

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