FOR FOCUS ISSUE JULY 21

FOR FOCUS ISSUE JULY 21

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Consultation-HR-focus

Grace Emilia
Contributor
Jakarta

More firms turn to professionals to improve their HR

Consulting businesses in Indonesia have been growing rapidly
during the past decade as more and more companies turn to their
services to help them survive and grow in a fast-changing market.

In the 1980s, finance and accounting-related consulting firms
were the ones that entered the heads of top management when they
thought of improving their corporate strategy.

However, in the early 1990s, when companies started to adopt a
human resources development concept in managing their employees,
human resources (HR) consulting started to gain a foothold in
Indonesia.

"People started to see the link between human resources and
business in a real sense," says managing partner of the Jakarta
Consulting Group A.B. Susanto.

The growing demand for HR consulting services has also
attracted many foreign consulting companies to the country. One
firm in the first wave of consultants to enter the country was
New York-based Mercer Human Resource Consulting.

"Mercer originally entered the Indonesian market via
acquisition of the Indonesian unit of Geneva-based Corporate
Resources Group (CRG). From 1998 onward we have been operating
under the Mercer banner," says Rina Sjoekri, Mercer's country
manager in Indonesia.

The economic, social and political crisis in Indonesia in 1998
has given many HR consulting firms more clients than ever.
"Companies were waking up to the realization that it was vital
for them to have good human resources management," Susanto says.

Although many business giants either in the financial or
property sectors have collapsed, following the worst-ever
financial crisis, the demand for HR advisers remains strong,
partly due to the emergence of several new giants in the media
and entertainment business, he says. Susanto believes the HR
consulting business will grow further.

"Being conservative, my prediction is that it will continue
to grow at a rate of 20 percent to 30 percent," Sjoekri says.

Sjoekri says that the scope of HR consulting in Indonesia
typically covers the full range of human resources management
(HRM) consulting, including reward management, talent management,
culture change, HR audit, HR strategy development and HR function
reorganization.

According to Sjoekri, the basic problem in Indonesia's human
resources development is that many companies still perceive
the HR department as having only an administrative function.

"The important role of HR is to develop an HR system that
supports the whole process, defines the requirements, identifies
skill gaps and develops a program to close the gaps, all in line
with a company's direction and needs, " he says. "Unfortunately,
many HR departments here work without the support of managers.
Employees also tend to wait to be spoon-fed rather than
proactively developing themselves."

In addition, many HR practitioners do not really carry out
what they are supposed to do, such as providing a lead in
strategic manpower planning and development based on the
company's vision and mission.

Lots of companies nowadays are able to define their vision,
mission and strategy, but they have difficulty in translating
this into people requirements and the expectations are often not
clearly stated and communicated to the employees.

The other weakness is that many companies' top management
still overlook the role of their HR departments. "Their HRD
people are rarely invited to attend strategic corporate meetings.

"How can HR facilitate the business process if it is not
provided with the same opportunities that are given to other
departments such as finance and marketing?," Sjoekri asks.

Talking of the duration of the consultation services provided
by his company, Susanto says that it depends on the scale of the
problem and the size of the company. "But generally a set of
consultation packages will last for four months to nine months,"
he says.

He says that his company charges its clients US$80,000 to
$400,000 (about Rp 3.5 billion) depending on the consulting
package they receive.

"However, should a company only ask for a segmented
consulting service, such as for preparing a salary structure or a
job evaluation, the fees range from $50,000 to $80,000," says
Susanto, who adds that 85 percent his clients come from state-
owned companies (BUMNs) or major private corporations, mainly
with annual turnovers of over Rp 3 trillion.
The remaining 15 percent come from family-owned companies whose
business are growing very fast but are falling behind in human
resources management, he adds.

Many consulting companies have also provided consultation
services on personal character development, such as character
building, self-development and inner motivation.

Character building is the most popular topic so far, as
companies have realized that, although they have many skilled
people, not all of them have the character to fill certain
positions.

"We are now valuing people, not so much from their high
skills, but from their willingness to change to be the best. It
takes character to do so." says the director of training at
management consulting firm Puncak Prestasi, Lanny Santoso. She
adds that her fee for a one-hour training session for a maximum
of 30 people is about $100.