HR Best Practices in

Financial Institutions
in Thailand & Malaysia
Suprio Bhattacharjee*
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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
“ 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.
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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
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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)
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n
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.
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CAB CALLING January-March, 2008
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Calling'
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Sd.
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