Human resources challenges for Sri Lanka
By Dinesh Weerakkody
The recent Employers’ Federation seminar on “a more pragmatic approach to management rewards” highlighted the current state of play of executive compensation in the private sector and the need to move away from fixed pay towards short term and long-term incentives to drive superior performance and to retain top performers.
Today the Indian sub continent is becoming an employee market, with job seekers having the power of choice. Candidates are increasingly selective and know their market value. It is a candidates’ market as more of them are turning job offers or negotiating salaries aggressively.
Take Sri Lanka because of a short supply of good talent an open war for talent is being fought in our corporate corridors by companies to recruit the right candidates for their companies despite the number of CVs being received by them have increased drastically compared to five years ago. Good jobs are going begging and compensation skyrocketing due to the shortage of right people with the required financial sophistication. The brain drain too has added to this problem and made it difficult for companies to fill critical short-term talent gaps.
The demand for vertical skills and companies looking for a closer fit is putting pressure on recruitment consultants to move the limited talent from one company to another at a much faster pace causing much anxiety to HR managers.
Companies to prevent their business objectives languishing in the face of shortage of the right talent are willing to pay big bucks to prospective candidates; these companies have thus been involuntary contributors to a big increase in salary levels. In today’s context a talented employee can be as valuable and hard to replace as a loyal customer.
Even more so in companies where value is created by knowledge and information. In fact Lee Kuan Yew argued some years ago that “trained talent is the yeast that transforms a society and makes it rise.” Brainpower as we all know is today the foundation of value creation, therefore injecting an endless stream of top talent into the veins of the business and building the best team in the industry would become the key to ensure that organizations excel in the new global market place, deliver constantly superior products and services and set standards that others can follow.
Talent at all levels
Companies now need to build talent at all levels, people who can make a huge difference in organizational performance and continuously find people who make a difference, Jim Collins in his book ‘Good to Great’ says “we’re not going to figure out where to drive this bus until we’ve figured out who should be on the bus, who should be off the bus, and who should be in what seats. Then we’ll turn our attention to where we’re going to drive the bus”. So the challenge for any company is to first get the right people on the bus, the wrong people off the bus, the right people into the right seats- then figure out where to drive the bus.
The key talent in a business is the company's most important asset and a source of competitive advantage--everything else can be replicated. Companies then need to build talent at all levels that can make a difference in organizational performance and continuously find people who make a difference.
This is leading to more pressure on HR managers from the top to shift from being a personal administrator to being a strategic business partner in recruiting, motivating and retaining top talent.
Then, it is time the human resources department--the traditional keeper of the people function-is considered the company's most valuable strategic function.
HR professionals should strongly position HR departments to take on the role of a strategic business partner, and ensure HR is viewed on equal terms with other business partners, such as finance or sales. Today there is ample evidence to support this argument. For example in researching what drives corporate value, the Forbes/Ernst & Young Value Creation Index found this to be one of the top key factors in a firm’s ability to attract and manage talented employees.
So companies need to make sure they are getting the best people and have the competence to inspire and motivate employees to release their discretionary effort beyond the call of duty.
In today’s context companies have to work very hard to find good talent because there is a short supply of good talent. So when they find the right talent with the right profile they would have to make sure that they are not only offering very competitive compensation package, but also the kind of culture, development and other benefits that makes the company the kind of company that people want to work for.
Companies are fond of the maxim employees are our most important asset, yet beneath the rhetoric too many CEOs still regard – and –manage – employees as costs.
This is dangerous because for many companies the people are the only source of long- term competitive advantage. Therefore companies that fail to invest in employees jeopardize their own success and survival. If the CEO is expected to build and motivate talent it calls upon competencies of character more than technical expertise among CEOs. It relies upon on higher order abilities to create unity and harmony, to instill trust, to create hope and optimism and to work from a base of shared values and interdependence.
Leadership of this type is often indirect and behind the scene versus from the front and top down.
Today motivating people is very different to what it was some years ago, because nowadays, oversees assignments, stock options, casual dress and free gyms are just as important to attracting and retaining talented employees as salaries, job security and careers once were.
A happy workforce can reward a company through better profits, better productivity and lower staff turnover. Also there is no special magic in being a good employer.
It does not necessarily take money, size, or market to become an employer of choice. Rather, its enlightened HR policy and leadership that is committed to its staff. It is organizational capabilities that create products and services that result in a customer taking money out of their wallets and putting it into ours instead of giving it to their competitors.
Churchill many years ago observed that ‘the empires of the future will be empires of the mind.” In many of the developed world our immigrants tend to get criticized unfairly by the press. Many top economies of the world would be lost without our qualified professionals, and many governments would still be very happy to attract our best talent. The most mobile people are not our political refugees, but the educated, and they are being sought after as never before.
Most governments are easing restrictions on the entry of qualified people. One of the best programmes for drawing in good human capital was initiated in the ‘80s by the Singapore government. The initiative helped Singapore to attract some of our best brains and even today continues to go out of its way to attract and import foreign talent. For a start the government should focus on wooing our professionals working abroad by making it very attractive for them to come back. But the government’s effort will all depend on whether the country is backed up by a vibrant economy and also managed professionally.
A combination of sensible government policies and economic liberalization could work wonders for us. Our best bet would therefore be to woo back some of our top expatriates who have gone abroad to make their money but still feel the tug of their home country. We need to introduce attractive incentives that can entice them to return and also to retain our existing talent. However, despite the incentives they will not return until and unless we improve our governance record and manage the economy professionally. In addition to this the government should initiate a programme in consultation with the private sector to equip our university graduates with the required skills set.
Globalization has left only one true path to profitability for firms operating in high wage markets, to base their competitive strategy on exceptional human resource management.
Any benefits that historically have been associated with superior technology and access to capital are now too fleeting to provide sustainable advantage.
As this former source of advantage become less relevant, managing human resources by instinct and intuition becomes not only inadequate but also dangerous. The most successful countries in the future will be those that manage their people like the assets they are.
In the future the global demand for talent is only likely to intensify further, we are already struggling to find enough good quality engineers, technicians, doctors, HR, marketing and even English teachers.
The talent shortage may seem like a crisis to many of us, but like any crisis it’s also an opportunity. So for a change the government and the private sector need to be more imaginative about attracting, developing and retaining our best talent in Sri Lanka and abroad.