HR Best Practices In

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HR Best Practices in

Financial Institutions

in Thailand & MalaysiaSuprio Bhattacharjee*46

CAB CALLING January-March, 2008DBS Bank, United Overseas Bank, andStandard Chartered Bank. Banks aremore cost-conscious and need tocontinuously improve and add newservices in order to attract customersespecially retail clients. The marketleaders are private-run Thai banks -

Bangkok Bank, Thai Farmers, and SiamCommercial Bank. State-owned banks,i.e. Krung Thai Bank, are howeverreorganizing to compete and to preparefor future privatization.The Asian crisis of 1997 has been awatershed for the so-called "Tiger"economies of South East Asia. While thepre -1997 boom in these economies wasled by exports, the functioning of thedomestic financial institutions like banks,stock exchanges, etc. left much to bedesired. The crisis of 1997 and thesubsequent economic slowdownbrought out the need to modernize theseinstitutions and adopt international bestpractices so as to prevent future crises.Human Resource Management(HRM) practices in the region also reflectthe above trend. Attempts are beingmade in the countries of the region, toassimilate the international bestpractices in HRM with the local customsand sensibilities. Mr. Phillippe Kopcsan,Business Director, Prasena (Thailand)Limited (one of the major HR consultancyfirms in the region) while interacting withthe group outlined the following majortrends in the HR practices in the region:

HRM function in an organisation is beingincreasingly recognized as a strategicbusiness partner with the responsibilityof managing a key corporate resource. Itis expected that HR function mustHelp the organisation to bemore agi le by adopt ingpractices that allows it not onlyto adapt to changes in theexternal environment but also tobenefit from the same.


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Human Resourece ManagementPractices in ThailandEnsuring that the company is able to sustain its operation over aperiod of time.Ensure efficiency in the use of HR resources in the organisation inan 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) ison the rise in the organisations operating on a global scale. At the same time,the composition of the workforce itself is changing and different generationgroups, with differing viewpoints on the same subject, (Illustration 1) arerequired to work together. This requires adjustments to be made by allcategories. Organisation must facilitate such adjustments by creating enablingenvironments 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 withinits 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 technologiesGENERATION X (BORN 1960 -1975)Born among analog technologies but witnessed the introduction andgrowth of digital technologies.GENERATION Y (BORN 1975 1990)Born with the first generation of digital technologies , witnessed theintroduction of networked technologiesGENERATION E (BORN 1990 2005)Considers computers & internet as "natural" as refrigerators &telephones

Illustration 1: Generational Shifts in OrganisationsIn response to the change in the business environment, the competenciesrequired of the HR team have also undergone change. Michigan Business

School's HR Competency Study (Illustration 2) lists a number of behaviouraland technical competencies that an HR manager needs to posses forperforming 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 toserve 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 StudyBehavioural TechnicalStrategic Contributions HR DeliveryMaking Strategic Decisions StaffingMarket Driven Connectivity LearningFast Change Organisational LearningCulture Management Measurement & Reward

Personal Credibility Business KnowledgeInterpersonal Skills Value ChainGetting Results Value PropositionCommunication LabourThe following features stood out during our visit to the various financialinstitutions in Thailand:Most financial institutions in Thailand have been facing the dual challenges ofretirement of older and experienced personnel and higher attrition ratesamong the new recruit. Although the financial sector in Thailand is still relativelyclosed, it is poised to undergo significant reforms making it possible for foreigninstitutions to expand their operations in Thailand.


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Domestic institutions, realizing their inability to match the pay scales of suchforeign competitors, have increasingly been adopting non-monetaryinterventions as tools of talent retention. This takes the form of creating andmaintaining high level of team spirit and bonding among the workers in anorganisation. This is augmented by creating a working atmosphere which ismore informal in nature which helps the newer recruits to feel comfortable. Thecentral idea of this was creating and sustaining an organisational culture so as

to modify employee behaviour to a common goal. The top management of thecompanies is actively involved in this process. They keep in touch with theemployees 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 ofoperation in the organisation this motto has been applied to the HR functionalso. Performance parameters had been clearly laid down against which theperformances 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 recruitmentfunction was defined as the time taken between the request for candidates

Creation of a Family Atmosphere Within the OrganisationSetting Benchmarks for Measuring Effectiveness of HR Function

from an operational department and theHR department providing a list of suitablecandidates to the department forinterview. Similarly, numerical functionsare also set for other HR functions whichare benchmarked to the industry bestpractices and provide an objectivemeasure to judge the effectiveness of theHR function.

A conscious attempt was being made bythe organisations in Thailand to minimisethe recruitment period. As the manpowerpool of Thailand is relatively small, aquicker recruitment process allows thecompanies to recruit the best possibletalent from the market.

A case in point would be the practicefollowed by Siam Cement Limited (SCL),a multi-business company havingpresence in the Cement, Paper, Bankingand other industries. SCL recruits freshgraduates annually for filling theirmanagement trainee positions. Therecruitment process consists of anexamination followed by interviews ofcandidates who have cleared theexamination. The examination, whichearlier used to be conducted on adesignated day all over Thailand, has

Recruitment Process Through Use ofInformation Technology

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CAB CALLING January-March, 2008perception of the organization as an employer by both our current and potentialemployees. It can also be called the employers' "brand image" which helps it toattract and retain talent. EVP once created needs to be continuously reinforcedand improved.The Malaysian banking sector is unique in that Islamic banking existsalongside the conventional banking system to provide a great diversity of


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financing and financial products to meet the varied funding and investmentneeds of the country's economic sectors. The Malaysian central bank isliberalizing the country's banking sector under the Financial Sector Master Plan(2001-2010), which is aimed at developing a more diversified, robust, efficientand resilient financial system. The plan is now entering its third phase, whichwill see more foreign banks coming into the country in line with the country'srequirements under the World Trade Organisation.

The banking industry comprises 23 commercial banking groups, of which 13are locally- incorporated foreign banks. The central bank has issued licensesfor 11 Islamic banks, of which three are foreign banks. It has also issued 13investment bank licenses, and currently Malaysia's merchant banks areconsolidating their stock broking businesses and transforming into investmentbanks.Besides the commercial banking sector, Malaysia has 11 licensed registereddevelopment finance institutions (DFIs) which provide financing to certainstrategic sectors of the economy. There are also 655 scheduled institutionscomprising building credit companies, credit token companies, factoringcompanies and leasing companies that provide credit and financing facilitiesto 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 aboutthe various financial tools and practices and about the general financial

environment. However, as people move higher in the organisation, domainknowledge alone may not besufficient. As higher positionsalso call for guiding andmotivating a group ofpe opl e , a cqu i r i ng/improving leaderships k i l l s b e c o m e simportant.ICLIF was setup withthe aim of developingsuch leaders in the

Malaysian Banking SystemInternationalCentre for Leadership in Finance (ICLIF), Malaysianow been moved online. Candidates canget themselves registered on the examwebsite and sit for the exam at the time oftheir choosing within a designated periodof six months. The details of thecandidate along with the marks obtainedare stored in a central database.

At the commencement of the recruitmentprocess this data is analysed and thecandidates to be called for Interview areshortlisted. The final list of candidates isthen prepared and offer letters issued.This changed procedure has enabledSCL to bring down the time between theinterview and final offer to as low as 6

days, thereby, giving them the first moveradvantage in attracting the best talent.Moreover the candidates too are awareabout the time by which their results willbe known, thus, removing uncertainty

Almost all the organizations visited haveadopted the Competency MappingFramework (CMF) to achieve best fit forthe various positions. This requiresunderstanding the requirements of each

job and thereafter breaking such


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requirements down to specific traits orrequirements expected in the candidatesselected for filling the position. This isfurther reinforced by Key PerformanceIndicator (KPI) which serves as objectivecriteria for measuring performance.The CMF and KPIs are freely shared with

employees so that they are aware of therequi rements and standards ofperformance expected of them. Theassessment of performance on the basisof the KPI is shared with the employeeswho are also mentored in areas wherethey need improvement. Trainingprogrammes are also decided on thebasis of such assessment to fill theknowledge gaps.The organisations have also madeattempts to evolve a credible EmployeeValue Proposition (EVP). EVP is the mostaccurate way of describing the

Extensive Use of Manpower Planning

ToolsIllustration 3.The BreakthroughLeadership Model (ICLIF)

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nfinancial area so as to provide effect leadership to the organization in whichthey serve. ICLIF has developed the Breakthrough Leadership Model (BLM)(Illustration 3) which focuses on the core principles and values which lie at thevery centre of effective organization e.g. Fairness, Ethics and Integrity.This is supplemented by groupings of interpersonal competencies likeInnovation, Execution and Transformation which have been identified by

leaders as keys to their personal success. The model depicts the leader as onewho exists within the broader institutional environment that has its unique mix oforganizational capacitates such as risk management, talent management orcustomer orientation that define the drive for operational excellence in theinstitution.The study visit provided several insights into the practices which are beingadopted successfully and which can be adopted by Indian financialinstitutions. The specific learnings may be enumerated as follows:a) Organisations may become aware about the changing age & social profileof their employees and tailor their policies accordingly. The "one size fitsall" approach will not succeed in future.

Learning & Conclusionsb) Organisations may create acongenial working atmosphere thatcan serve a s a n i m p l i c i t

compensation for the employeesand can act as a potent retainingforce.c) Organisation may conceptualiseand nurture its brand value as anemployer so as to attract the bestpeople to work for them.d) Organisation may shorten therecruitment process which can serveas a major strategic advantage in


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attracting the best employees.e) Organisation may evaluate the HRfunction itself by setting specifictargets and goals and measuringachievements against them.

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Statement about ownership and other particulars concerning'CAB Calling'

Form IVI, Sandip Ghose, hereby declare that the particulars given above are true to the best of my knowledge andbelief.Sd.Sandip GhoseDate: April 1, 2008 Signature of PublisherPlace of Publication PunePeriodicity of Publication QuarterlyEditor and Publishers Name Sandip GhoseNationality Indian

Address Principal and Chief General ManagerCollege of Agricultural BankingReserve Bank of India, Pune 411016Printers Name ANSON Advertising and MarketingNationality Indian

Address 25, Laxmi Nagar Commercial ComplexLaxmi Nagar, Pune - 411009Names and addresses of Individuals College of Agricultural Bankingwho own the magazine Reserve Bank of India, Pune

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