Sincerity key human resources quality

By Bob Widyahartono

JAKARTA (JP): As we enter the APEC era, the question for many Indonesian businesses is not "what is the newest, or best, technique in human resources development (HRD)?" but "are they sincere in HRD, professionally?"

Can they claim that, with regards to HRD, their organizational capacities and capabilities are solid enough to meet the challenges of entering into alliances with partners from Indonesia and also from the Asia Pacific on a "win-win" basis.

If the answer is "yes" then there is ample reason to believe that many Indonesian businesses will have meaningful long-term relationships. On the other hand, if the answer is still unclear, then there is little chance that HRD will be of immediate benefit. Although some business organizations are becoming more enlightened in their treatment of workers in several sectors, they are also demanding greater returns on their investments.

Markets are growing more competitive. Alliances will be necessary to maintain market share and growth in market share. Indonesian businesses have no other choice but to become more productive and efficient if they want to prosper in the APEC era. It is not that their CEOs (Chief Executives of the Organizations) do not appreciate the value of a high-value working environment. In order to create an atmosphere in which members of the business can self-actualize, there must first be sufficient profit in the business to ensure its survival.

So much has been discussed among government officials, academicians and prominent leaders in the business community. There is a sense of eagerness to make the Jakarta APEC meeting next week successful. Are the business community members, particularly the medium scale enterprises, well enough prepared to cooperate with their prospective partners from the Asia Pacific?

In their second report the Eminent Persons Group of APEC mentioned that "... Among APEC member economies, the ASEAN countries and China now enjoy the highest growth rates... However, these economies already face bottlenecks to further growth in public infrastructure such as transportation and telecommunications, and in technical and managerial skills... A high priority on the APEC agenda must be given to technical cooperation on public infrastructure, competent small and medium enterprises (SMEs) and education and human resources development. All of these complement market-driven integration and enhance the effects of trade and investment liberalization and facilitation..." Inevitably private businesses will be the main players in the APEC era. Are they ready for it?

Many individual business entities of whatever size have argued that their personnel departments were formed, and to this day, to recruit new employees, to make up payrolls and to pay personnel expenses. In many business organizations, employees were, and still are, treated as production parts. Although a number of organizations are now more enlightened in their treatment of people, old attitudes have not completely disappeared.

Many business organizations are still family businesses. Their personnel departments (not referred to as human resources departments) are staffed by those non-family members who could be released from the "more important functions" of manufacturing, marketing and or finance.

In effect these personnel departments often become a "dumping field" for the organization's casualties. These personnel departments are merely assigned to recruiting, recording, and administrating payments as determined by the CEOs or owners.

In any business organization, the human resources department should be a system. Its primary subsystems are staffing, planning, employee relations, compensation and benefits, training and development. It is imperative for them to take time to formulate and explain the organizational philosophy. The human resources department's philosophy is derived from an organizational philosophy, which in professional business is as follows:

1. Human resources exist in any organization because they provide a necessary function at a competitive cost;

2. Human resources' mission is to enhance the productivity and effectiveness of the organization as it relates to both people- people and people-system;

3. Human resources should drive the organizations' management in regard to people issues;

4. Human resources is a professional function, staffed by people dedicated to the development of employees in ways which are satisfying to the individual and beneficial to the organization.

Once this kind of philosophy has been formulated, the next step is to work out a set of values which fit the philosophy. Values are social customs or ideals which a group regards as positive of negative. Behavior of employees is and should be closely related and therefore business should lay down a list of acceptable and expected attitudes of employees in whatever position. Behavior is role determined and a proper description of behavior is required.

Ideally, organizations should have values such as: allowance for risk taking and mistakes, high standards of performance, loyalty, proactive/initiating and personal responsibility and business ethics as well as social responsiveness. Exercises in formulating a philosophy, developing organizational values which everyone in the organization can accept, and describing related behavior could be very useful since this will commit employees to the business objectives.

As we enter the APEC era, business operations will grow and become more complex. CEOs and owners will find themselves faced with problems in a system that once awarded family ties more than professionalism. Medium and large enterprises will gradually become more aware of the challenges in their internationalization process.

Since the mid 1980s, the Indonesian private sector has become a major player in integrating regional economies. But as part of the Asia Pacific region, can the medium scale enterprises, which make up the majority of Indonesian business, live up to their rich promises as a booming region, home to the fast growing economies?

In the APEC era, I anticipate that the regional business scene will be dominated by multinationals that are owned by East Asians, Japanese and Chinese stockholders.

So far in this region, American capital will still be present. Their shares however will be significantly smaller although they are making every effort to invest. Capital formation streams in the region will be spearheaded by East Asians with their networking, which becomes increasingly professional and utilizes modern information technologies. They are flexible in employing host country nationals as executives, even at the highest management levels, rarely the case with American or western enterprises investing in the Pacific region.

For Indonesia, business ideas and techniques will become more Asian and less western in the areas of information and process technologies, manufacturing and service sectors. The critical issue faced by our private sector is what human resources qualifications are required in the transformation from traditional ways of doing business to modern and professional ways.

The issue remains: where to find the right caliber executives in individual enterprises since up to date, only a handful of firms are ready to meet the challenge of APEC. For a start there should be a change in the thinking of owners that human resources heads should become members of the management team, reporting directly to the CEO and with a deep understanding, as well as experience, in corporate objectives and philosophy. They will have to understand marketing, segmentations and the financing of firms in order to help define the human resources needed in the APEC era.

By understanding the changes and challenges ahead they will be in a position to collaborate with CEOs in order to identify, train and develop managers needed by the firm. As mentioned earlier, the most promising stars are very seldom assigned to human resources management, although the importance of human resources development is becoming crucial to enterprises.

What is needed by our medium size enterprises are human resources executives with a compelling vision of the future of the enterprise. Also needed are executives who communicate more frequently with employees, link compensation to individual performance, promote management training and development and plan for management succession in the future. Herein lies the challenge for change and growth of medium size enterprises in the APEC era.

It will be a long journey for Indonesian businesses, but also a very interesting one, particularly as they prepare themselves for the realization of "free and open trade and investment in the area (Asia Pacific)" as stated in the principles of the multilateral GATT system.

The writer is dean of the Faculty of Economics at Indonusa Esa Unggul University, Jakarta.

Window A: As we enter the APEC era, business operations will grow and become more complex.

Window B: What is needed by our medium size enterprises are human resources executives with a compelling vision of the future of the enterprise.