The evolving people contract in companies

By Darryl Hadaway

JAKARTA (JP): Over the last three years, organizations have begun to undergo changes in order to alter their relationships with not just employees, but "people".

This change will predominantly affect the relationship between management, the people they manage, as well as the people who have come together as a community to create value.

Indonesia has progressed tremendously since 1998 in the treatment of its people and this is not just in a political sense but in the day-to-day openness of communication in newspapers, through labor movements and in the way people work.

This change, however, has already impacted the economics and investor confidence in several well-publicized industrial disputes (resulting in multi-million dollar losses) and is placing the reputation of the country, as a place of investment, at serious risk.

To improve the economic challenges that lie ahead for Indonesia, it is critical that the current industrial situation changes immediately, with greater dialogue and investment. All sides of the table need to look not only at today's issues, but at the root causes and to take personal responsibility for action in their own areas.

Let us take a look at the people at the table, the company, represented by people called management, the people themselves, who are now in many cases being represented by another party, the unions, and another player, the rule maker or arbitrator in the relationship... government.

The company. The company's desire is to manage a fair return for all stakeholders. Historically, the prioritized stakeholders have been seen as the shareholders.

Systems were established that lessened the opportunity for the employees to have a say or take action as a community if something was not perceived as fair.

Fairness also meant management rights given the relatively one-sided labor regime and lack of information provided to employees. Pressure on the management team was also intense as they responded to shareholder needs of global competitiveness; faster, better, cheaper. The employees largely did what they were told with few rights, creating a system of compliance.

The end outcome here has been inappropriate people systems, one not built on a mutual sense of responsibility but compliance. Historically, these systems drove administrative excellence but lacked the need, or desire, in most cases for anything more.

Companies have a role to start afresh. People systems need to develop to build communities of educated, loyal and inspired workforces. This involves starting to understand strategy, the alignment of the right people in the organization, who share the same vision and values.

Organizations like Apindo will need to take a step forward in this respect.The person. The person for so long has been asked to be compliant. It is only natural in today's Indonesia that the level of curiosity has risen dramatically. They are asking questions, the why's, why is my pay x? Why is promotion the way it is? Why do you hire people from outside and are not training me? Why is the company losing money?

The only savior for management today are tough market conditions where people's choices are at best limited. But, the best employers will always attract the best people.

So what is deemed fair here? First, from the people's side. The reality is that as companies try to identify core skills and values, a number will not share the same vision, dream or have the appropriate competencies or want to work in such a defined culture.

The union. The union was created out of the need for people to come together under a sense of and promotion of fairness. Many companies do not have unions by employee choice, out of respect of the fairness given to them by leadership and key stakeholders.

Others, by sheer size and distance of feeling from decision- making, use such mechanisms as ways of bringing employees together as effectively managing two-way communication and in order to share a feeling of involvement.

The union needs, however, to be accountable and be responsible for it's actions, just like leadership in an enterprise. A system of resolution needs to be created, whereby the costs of inappropriate actions is the same no matter which party is making unreasonable claims.

If asked to pay the bill due to inappropriate action, a system that allows for speedy dialogue and resolution of the issues of concern is absolutely essential. We trust that the dispute resolution laws currently being debated are put in place quickly and that an appropriate degree of accountability is placed on unions as they are with companies.

Government. The government is the arbitrator in this process. It provides a very important role in providing a platform of policy and providing research that backs up both legal and dispute resolution processes.

Government is in a state of reform and one area it will be judged on in economic circles is its ability to provide clarity on direction. Policies must be formulated alongside the creation of a process of openness in decision-making, logic and precedence in the law courts. Recently it has been slow and seen as reactionary. It will be essential as a view is taken on policy, through responsible public debate so that issues are then challenged not on the streets, but in the courts on the basic laws.

It will not be an easy journey but one we must go through. This transformation in many countries took decades. Expectations are high from all sides but we must create and believe in the dream and commence the journey. Each party must learn to start with themselves and to take active steps, today.

The writer is Partner Advisor of Andersen and head of the Amcham Human Resources Committee in Indonesia. Note: This paper consists of personal views and cannot be construed to be the views of either Andersen or Amcham, Indonesia.