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The Nation: Sustainable 21st Century Business: Top human capital platform now vital

02 May 2003

Human Capital Infrastructure

Editor: In 2004, Edwin Sim established Human Capital Alliance, Thailand’s  Premier Executive Search & Senior Advisory Firm. Between 1997-2003, Edwin Sim was Managing Partner of Korn Ferry Thailand.  This article was first published by the Nation in May 2003. 

KI Woo reviews comments made at the recent Sustainable 21st Century Business’ seminar organised by The Economist Intelligence Unit. Second of a two-part series.

Most Thai business leaders realise that if they want to compete successfully in the 21st century they must adapt global business practices to local cultural and business environments.

However, in the fast-moving globalisation era many Thai companies – particularly those that acquired foreign joint-venture partners during the 1997 economic crisis – were forced to jump-start the globalisation of their businesses by parachuting in top-level managers trained by multinationals.

Speaking at the recent “Sustainable 21st Century Business” seminar in Bangkok , Edwin Sim said that many of his clients were now saying they must align their human capital infrastructures with new business strategies if they want to successfully recruit and maintain top-level managers.

“Companies know they must provide a global-standard human capital platform for their top managers if they want them to succeed in the current global business environment,” he said.

Specifically, Sim said such companies wanted to ensure that their human capital infrastructures and business strategies were in complete alignment.

“Top-level managers with multinational company experience normally will not take a position with a family-controlled business unless they have an understanding with the current owners that changes will be made to the company’s human capital infrastructure,” he said.

Although top-down command-and-control structures have long been the standard for family-owned companies everywhere, Sim said new globally competitive companies now relied on dynamic human capital infrastructures which had been developed for multinational companies to drive business.

“The mantra today is developing infrastructures which allow your managers to mobilise and drive everyone in the company toward the company’s business goals.”

Many old-line family companies complain that they are still bogged down by a top-down command-and-control psyche within their firms, he said.

“No one will do anything unless the boss says yes.”

First and foremost, he said companies must ensure their human capital infrastructures were on stable foundations by instituting effective human resource systems in their organisations.

In general, global-class HR systems encompass detailed processes and plans in the following categories: profiling, planning, matching, evaluating and appraising.

“An effectively-functioning HR system requires all these elements,” said Sim.

Within the five key categories, he said detailed sub-categories addressing a company’s specific and unique needs were developed and implemented.

For instance, in the profiling area, key productivity indicators were developed for everyone in the company.

“These are tied directly to the company’s business plans and goals,” he added.

Competencies and organisation structures were also identified and developed in the profiling area.

Manpower, career and succession issues were developed in the planning element of human capital development.

“Questions such as recruitment, personality assessment and employee retention are developed in the matching area,” he said.

To ensure that everyone’s performance is objectively evaluated, Sim said global-standard HR systems required an appraisal and then an evaluation element.

“The appraisal element addresses such issues as learning and development and performance appraisal while the evaluation element addresses issues such as compensation and benefits and performance evaluations.”

Specifically, he said a company’s business plan was initially used as a basis for developing employee job profiles into action plans.

“The moment a company creates job profiles, it has begun creating performance management.”

Sim said job profiles were normally created by finding out employee goals.

“By comparing the standard to what you think they should achieve to what they think they can achieve, you’ve identified any gaps.”

The objective of new global-standard human capital infrastructures is to ensure that employees at all levels are motivated and rewarded when their efforts drive the company toward its business objectives, the country manager said.

“Everyone knows what they must do and they know what the company expects of them.”

Sim said today’s global-standard human capital infrastructures compelled individuals in companies to make decisions and drive the company toward its business goals.

“People now believe that everyone pushing the company together in one direction toward its business goals is the way to go.”

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