Good HR practices vital to enhance corporate competitiveness

Good HR practices could help increase the value of a firm’s human capital and ultimately improve a firm’s competitiveness, said Commercial Bank of Ceylon, Chairman, Dinesh Weerakkody, at the CPA-AMDISA International Management Conference 2013 recently.

He said that the knowledge, expertise, experience and training that employees possess will eventually differentiate one organisation from another.

He said that in most firms the cost of the workforce represents around 70 percent of operating expenses. Therefore, the economics of good HR for a firm is the value of the firm’s HR practices and functions to all stakeholders of a firm. If HR practices are robust and function smoothly, it helps to improve employee productivity, line manager’s ability to implement strategy, increase customer share, enhance investor intangibles and improve community reputation.

Weerakkody said that in 2012, the Singapore Ministry of Manpower commissioned the RBL Group and PWC to oversee a research project on talent management in Asia, to develop practical knowledge and showcase approaches that can assist Singaporean organisations to increase the value of their human capital and ultimately improve their competitiveness.

The findings were:

There was a significant gap in talent development in Asia: It appears that Asian leaders invest resources in areas that matter least. Asian companies are more proficient at screening, steering and motivating, while demonstrating less proficiency at the talent domains that have the highest impact on business performance: i.e., identifying and grooming leaders, developing employees, managing promotions and communicating with employees.

Talent was essential for business success in Singapore, India, and China. Talent explains an extraordinary 69 percent of business performance in China, suggesting that 'bang for buck' spent on talent in China will be much higher than in other regions.

Leadership was the HR domain with the highest overall impact on business performance: Identifying and grooming leaders has more impact on driving business performances than any of the other HR domains.

High performing companies consistently build stakeholder value by investing in their leadership pipeline.

The right talent directly impacted strategy formulation and Innovation.

Weerakkody said more educational opportunities should be created for young people and primary and broadbased secondary education strengthened to improve nation’s productivity and income distribution.

A more common, alternative is for the government to reduce the direct costs for schooling by making quality public schooling available free or at subsidised rates.

He said that most interventions generally consist of making schooling available free and sometimes even compulsory.

Weerakkody said that the difference between social and economic returns from education at a macro level is probably higher at the primary and secondary levels than at the university level.

Many positive spillovers come from literacy acquired at lower levels of schooling, while the returns from training at university level are almost fully captured by the higher income of university graduates.

Vocational training also has high economic pay offs, if it improves worker productivity. More importantly, evidence suggests that vocational training is most cost-effective if the trainees have a solid primary and secondary education.