Are the problems of Malaysia Airlines, symptomatic in other government-linked companies?

Lots of public funds will be spent to make things right at MAS, and it will start with the RM1.4bil takeover of the airline.

THE events of MH370 and MH17 have soured the operations of Malaysia Airlines (MAS), where the extent of the damage from these events on its financials will be more accurately shown when the airline reports its quarterly figures next week.

While these tragedies have led to MAS’ major shareholder, Khazanah Nasional Bhd, offering to not only take the company private but also undertake what appears to be an exhaustive overhaul of the airline’s operations, the problems at MAS have been simmering for a long time now.

The airline has been losing money for some time, and previous turnaround plans, in hindsight, were akin to applying bandages when major surgery was needed. Previous turnaround plans might have just delayed what needs to be done now.

But all gloves are off with the upcoming overhaul when it comes to salvaging MAS. Political will appears to be there, judging from comments made by the Prime Minister and the airline will undergo a big transformation on how it operates.

Lots of public funds will be spent to make things right at MAS, and it will start with the RM1.4bil takeover of the airline. The overhaul of MAS should be more than just cosmetic or quick fixes.

While the airline’s revenue will surely slump, MAS also has to deal with its cost. As it stands, experts have pointed out that the size of its cost structure is one that supports a far larger network than what MAS currently operates.

Tackling costs won’t be easy also, given that it is a government-linked company (GLC) with social obligations. In fact, MAS, like its other GLC brethren, has commitments that most private companies just don’t have.

Will the overhaul of MAS take into account just how far it needs to go to remove a certain portion of such obligations, and if it is happening in MAS, are other GLCs too shouldering the same kind of burden as MAS is?

It has been long suspected that the airline has been losing lots of money due to leakages and some have even alluded to political interests having their fingers in the pie.

Khazanah should undertake a thorough review of the supply chain, and conduct forensic accounting if needed to ensure corruption is weeded out of the company. MAS needs to make sure that the services and supplies bought are at market rates and of a fair value.

For Khazanah, it needs to revisit its GLC transformation programme and see whether it has been as effective as what the market expected it to be. There has been a series of colourful books and manuals issued, and among them, the red book. Just how far have the initiatives of the red book, which deal with procurement, been successful in reducing costs?

But the need to ensure support for its social obligations can be tough on a GLC. For one, if the contracts given or services and goods acquired are inflated beyond an acceptable amount, then it will just balloon cost. Social obligations that relate to the need for support to help companies grow in scale is understandable, but not handouts.

Even Petroliam Nasional Bhd president and chief executive officer Tan Sri Shamsul Azhar Abbas has inferred that there is pressure from Government interference and the need to back vendors that charge quite a bit above market prices.

If such pressure is existent in the national oil company that is different from other GLCs, then one can hypothesise that such pressure is prevalent among GLCs.

There needs to be a balance between social obligations and market value. GLCs cannot go on supporting programmes at inflated costs if the companies they are supporting have not shown improvements or are detrimental to their own well-being. This is because doing so will have a telling effect on the performance of the companies.

Should its costs become inflated as a result of such support, then there could be implications on the performance of the GLCs. For one, investors will make that distinction and attach a lower market multiple for GLC companies compared with its private-sector peers. Some will say that it is already being seen in some GLCs.


By: JAGDEV SINGH SIDHU The Star/Asia News Network

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Malaysia paying the price for flight MH370 !

Flight MH370: Paying The Price Of 6 Decades Of Nepotism, Racism, Rampant Corruption And Incompetence

On January 23, 2008 a very peculiar thing happened. Commercial airspace at one of the world's busiest airports was shut down for over 50 minutes. On that day, an aircraft without an approved flight plan entered Singapore's airspace. Immediately, the Republic of Singapore Air Force dispatched a pair of F-16D fighter jets to intercept the aircraft and escorted it to land at Singapore Changi Airport. Upon landing, airport police immediately surrounded the plane.

"At 6.42pm (2142 AEDT), two Republic of Singapore Air Force (RSAF) F-16 fighters were scrambled to intercept a civilian aircraft, a Cessna 208, which was heading towards Singapore airspace without an approved flight plan,'' the ministry's director of public affairs, Colonel Darius Lim, said in a statement. "The aircraft was escorted to land at Singapore Changi Airport."

The above incident highlights the standard operating protocol an Air Force, Civil Aviation Authority and Local Police Force needs to follow in the event of an unidentified aircraft entering it's airspace without an approved flight plan.

However amidst this hoo-ha, there was one small detail worth noting. The plane took off from Koh Samui, Thailand. And running the full length between Thailand and Singapore is the land mass of Peninsular Malaysia.

In essence, this means that the Department of Civil Aviation of Malaysia and the Royal Malaysian Air Force had allowed an unknown aircraft to invade over 131 thousand square km of sovereign Malaysian territory and despite this occurring over a period of 3 hours, did not lift a finger to respond.

This incident highlighted a huge security flaw in Malaysia's Air Defence umbrella. One that if it had patched during any of the subsequent 6 years that followed, would have prevented a bigger tragedy that came with greater embarrassment, scrutiny and loss.

6 years later on 8 March 2014, Malaysian Airlines flight MH370 departed Kuala Lumpur International Airport for Beijing. It never landed at its intended destination. Instead, less than an hour after take-off, the transponder was turned off and 3 sets of military radars tracked the plane flying past Penang and across the breadth of Malaysia from the Gulf of Thailand towards the Indian Ocean.

Unlike the Cessna airplane in the earlier example which was intercepted by the RSAF, 3 sets of people manning Malaysia's military radars never sounded any alarms. The RMAF never dispatched any fighter jets on standby and the Department of Civil Aviation of Malaysia never shut down Malaysian airspace when a rogue plane very much larger than a Cessna aircraft flew across it's airspace.

Suffice to say, had the Department of Civil Aviation of Malaysia or the RMAF been doing their job properly as exemplified by the example given above, we would not have gone 9 days and counting into a search for a missing and possibly hijacked plane.

Investigators may have recently concluded that the plane had its transponders deliberately turned off and its flight plan deliberately altered but it is the greater observing public who have the biggest conclusion of all; that Malaysian leadership is sorely incompetent when it comes to handling a crisis. In this respect, Malaysia has much to learn from its Southern neighbour. Had the supposed hijackers targeted a plane flying through a more efficient jurisdiction, the outcome would have been very different today.

 Posted by Dian Malaysia Flip Flop

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Time to change!

.

LADIES and gentlemen, we are now moments away from 2014. If you are an employee, most of you will be looking forward to this time of the year as it may mean year-end holidays and bonuses.

Some of you may also be busy making your New Year resolutions. But if you are a business owner, you may be busy coming up with your business plan for next year.

Planning for the year ahead requires a bit of both reflecting on the past and looking forward to the future. Apart from my own annual business plan, as a marketing consultant, I also help some of my clients come up with their marketing plans for the year ahead, or elements of the plan.

The first order of the day is to narrow down the objectives and then come up with goals and plans to achieve those goals.

Naturally, the goals and objectives are always positive and geared towards growth. But any marketer or business owner will tell you, the marketing plan is always one of the plans that are changed the most throughout the year. Depending on what the company is offering and which market they operate in, for some companies, the marketing plan can be so fluid and dynamic that it can be changed as frequently as once a month or week.

Marketers have it tough and I often tell people who aspire to be marketing managers or want to be hired as one that if you are the type of person who likes routine work or following a set of rules, you are not suitable to be a marketer. People who are successful marketers are not just required to be able to change quickly when it comes to their marketing activities but also know how to run faster than the pack. Basically you cannot provide strategic marketing direction without knowing what is ahead or at least having the foresight to understand what will take place.

But change is something not everyone can embrace with open arms, especially for entrepreneurs. It always feels safe to stick to the same business model or plan every year. They think that as long as that plan is not “killing” the business, why not? For example, I am always amazed by one of my friends who is still using a very old handphone (I think it is eight years old) while I have already changed three phones in the span of that period.

He can afford a new one, but stubbornly refuses to get one. Two years ago, his nephew had enough of his stubbornness and bought him a touchscreen smartphone. When I met this friend again recently, I saw he was still using the old phone. I asked about the new phone and he said it was sitting in his drawer as he found it just too troublesome to transfer all his contact details from the old phone to the new one. He was comfortable with the functions of the old one and did not feel like learning the functions of the new phone.

He does not realise just how much he is missing out on.

While there are few people like my friend, I think sometimes entrepreneurs can be like that when it comes to things they need to change in their business. It could be a non-performing employee whom they know they should have let go a long time ago, but just did not want to for fear of rocking the boat.

So they end up paying for non-performance year in and year out, to the detriment of the business.

It could be products they need to retire from their offerings or offices or outlets they need to relocate. It could also be about learning new things or new technology and starting from zero again.

All are hard and uncomfortable decisions especially when change is involved. Change is risky and can be a scary path, but if deep down we know and realise that the change will bring about something better, then we should not be afraid to change. Now is the time.

Contributed by Jeanisha Wan

Jeanisha doesn’t like last minute changes, but equates the need to change with water that needs to be constantly flowing to be fresh. She is more fearful of having her business end up like the water in the Dead Sea. Talk to her at talk2jeanisha@gmail.com. Happy New Year!

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Five steps to business success for 2014

Preparations: A well-crafted business plan is like a roadmap for the year.

 How to develop a business plan for the new year

Here we are at the end of another year. For many business owners, it’s the right time to map out a strategic plan for next year. A well-crafted business plan is your roadmap to success and an easy way to stay on task for future growth, projected income and increased profits. Take one or two days now to develop a plan and you will save time, energy and maybe even a few dollars. Here’s how to develop a business plan for 2014 in five easy steps.

Set projected income

The very first thing you need to do when creating a business plan for the year ahead is to decide how much you plan on earning and what specifically you are looking to achieve. Setting these goals is only the first step, because outlining your plan for future months describes how you will get there and is the true blueprint for success.

Reflect on your current business models and income sources to help you determine your ideal income. If you’re having difficulty, evaluate these factors:

• ·Do you need to identify a different profile that can spend more?
• ·Would including a recurring element to your business increase profit?
• ·Should your pricing be re-evaluated?
• ·How is your marketing plan? How can you expand it to achieve more?

Set incremental goals 

The key to success in creating a business plan is detail and consistency. And every goal needs to be broken down into smaller tasks and objectives to ensure you are reaching your target audience and you have a plan for how to obtain your new income level.

Even the best plan is useless without milestones and success at reaching large goals comes from knowing how to create smaller, more attainable objectives. Simplify your income goals by this equation: Income per client x number of clients x frequency of clients = income. Clearly defined and manageable objectives- six months, monthly and weekly- will give you the momentum you need to reach difficult milestones while keeping a larger goal in view. Besides, this process gives you a bird’s eye view of exactly what income level needs to be reached within a certain time frame to stay on track for success.

Map out marketing

After determining what your income stream should be, it’s time to create a formula for acquiring the clients. The most effective way to reach a target audience and the only way to secure new customers is through marketing. After all, if no one knows you exist, no one will buy your products or services.

Take a long hard look at your current marketing activities and decide which strategies are effective and can be reused, even expanded, and which should be discarded. The right marketing can bring a steady stream of new clients, as well as build brand loyalty and solidify trust with existing customers.

Here are the most effective and commonly used platforms for acquiring new clients. Make sure to allocate sufficient time and budget for each:

• ·Strategic Print Advertisement (Appear in front of your ideal prospects)
• ·Online Marketing Strategies (Content to educate and entice)
• ·Media Recognition (Position yourself as the expert authority)
• ·Social Media (Facebook, Twitter, LinkedIn, Google+)
• ·Networking and collaborations

Develop your team

Now that you have clearly defined, obtainable goals and a strategic marketing plan, it’s time to start thinking about how you are going to make it happen. It’s nearly impossible to achieve all of your goals by yourself and the best plans are always complemented by a strong team. Decide who you need and how they will help you achieve your milestones within your deadline.

Virtual teams are always an option, and can execute elements of your business plan simultaneously. On the other hand, you can also evaluate a current team or bring in someone new to free up time for you to execute growth campaigns.

Evaluate expenses 

Unfortunately, like everything in life — business costs money. However, by carefully evaluating all of your marketing activity and tracking return on investment stringently, you’ll have a better idea of where the money is going and how best it should be spent. Many business owners make the mistake of looking exclusively at gross profits, neglecting net profits. Make certain to record everything and be very clear about profits before taking on any new activities. This disciplined approach will help ensure that your ideal income is indeed profits.

Crafting an effective business plan is easy with a few good tips and the right information. By defining incremental goals, developing a marketing strategy, building your team and keeping an eye on expenses, you will be more than ready to charge into 2014 with spirited enthusiasm as you watch your business transform.

Contributed by Pam Siew

> Pam Siow is the founder of ThinkSpace. A renowned business coach within the region, Pam helps hundreds of business owners and corporations gain true success and profits with her knowledge and real-world experience. Find out more at ThinkSpace.com.my/ Internetbizownersclub.comnow.

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Transforming the company into a heavyweight, sharing his love

Tee (left) and Ooi chatting with Mazlin.

Transforming Daya into a heavyweight

Contributed by Tee Lin Say

YOU have to meet Daya Materials Bhd executive vice-chairman Datuk Mazlin Junid in person to understand why he appeals to people at large.

The first thing you notice is how witty and direct he is. So, no superficial talk on “how your day was” or whether “the coffee tastes okay”.

Mazlin tells you things as it is, so don’t ask if you aren’t prepared. That, however, is his charm. What you see is really what you get.

Physically, Mazlin is good looking. Despite the Prada loafers and 7 for all mankind jeans, there is an almost Neanderthal-like quality about him. In the band of brotherhood, Mazlin’s more of your Vin Diesel than an Orlando Bloom.

He has two great goals in life now. The first is a vision to transform Daya into a heavyweight. He’s aiming for the company to join the billion dollar club over the next three years. (For the nine months to Sept 30, 2013, Daya’s revenue jumped 110% to RM373mil in revenue and net profit increased 26.74% to RM18.9mil)

The other, is to look like his idol, Australian actor Hugh Jackman.

He loves the pain that comes with pushing himself to extremes. Dumb bells are his favourite toys. Why, he even celebrated his birthday in the gym with his gym mates.

“I am 52 now. I have done it all. The cars, the yacht, you name it. What turns me on now is winning contracts for Daya,” says Mazlin resolutely.

“At the end of the day, a company needs to deliver. We are very focused on creating value and growing the company over the long term. I have huge responsibility to my staff and the people who gave us contracts. We have to deliver based on my vision for the company, Daya is still undervalued, “says Mazlin.

“You must always take responsibility. It’s not about following your emotions. Whether it’s to your family, the people you work for, your client, or someone you dislike, take responsibility,” he says.

He adds that with Daya Offshore Construction Sdn Bhd (DOC) going out there to secure contracts from Norway, Daya is in fact going against the grain of typical Malaysian oil and gas companies.

When asked what Malaysia’s problems are, he responds: “If there is a hard truth Malaysian companies must learn, it is to stop the habit of political patronage,”

Not surprising, Daya has been one of Bursa Malaysia’s outperformers this year. On a year-to-date basis, the stock is up 116% to 41 sen as of Thursday.

While Daya started off in 1994 as a specialised polymer company, it has since expanded substantially into the oil and gas (O&G) business. Daya was initially more focused on the downstream O&G segment, where it was already established as a leader particularly in chemical services. It chugged along, growing organically until this year, which was clearly the inflection point for Daya.

This started with the formation of DOC last September, of which Mazlin appointed Mark Midgley CEO.

Almost immediately DOC began delivering results.

The arrival of vessels Siem Daya 1 and Siem Daya 2 literally created waves. DOC secured two major contracts in less than six months from Norwegian firm Technip Norge AS for charter and subsea contracts worth RM440mil and RM100mil-RM176mil respectively.

The latest research house to give its mark of approval to Daya’s efforts is RHB Research, which has a 48-sen target price. DOC is already contributing almost 50% to Daya’s topline.

“Suddenly Nathan (Daya’s MD Nathan Tham) was busy answering calls from some 40 fund managers. People wanted our shares and started saying Daya was the smallest O&G stock and with the most growth. I guess this is what happens when earnings have been growing organically over the last five years,” laughs Mazlin.

Sharing his love

Contributed by Xandria Ooi

FASCINATION is what I’m feeling when talking to Datuk Mazlin Junid, a man who doesn’t mince his words, yet laughs so often you know he doesn’t take himself seriously.

Work, however, is a different matter.

When you’re a business leader, he says, you don’t have to be liked. “If you want to be popular, you can’t get things done.”

We’re sitting in the quiet guest lounge of Daya Materials and Mazlin is extremely casual and candid. It feels like a chat, not an interview.

He explains to me how he doesn’t hesitate to fire people, even at the directorial level, because they either weren’t performing or did something that conflicted with the interests of the company.

“And he could be a friend,” he says matter-of-factly. “Friendship is secondary, the company always comes first. All that matters is our bottom line.”

I can’t let it go, not quite believing that a man as affable as he is, truly doesn’t care what his employees think of him. Don’t people who like and respect their bosses look forward to going to work and having the motivation to work harder?

“Well, I like them to like their jobs.”

Would you be okay if your successor in the future is a woman?

“Oh certainly, I’m not gender specific. I’d like to have more female board members but right now, there’s only a few. Malaysia’s industry has always been a bit chauvinistic with few women leaders, except maybe banking.”

He mentions Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz as a woman he feels is a brilliant leader, alongside Tan Sri Rafidah Aziz and Datuk Farah Khan.

“Women,” he says, “are more passionate. There are very few female business leaders who can be as cold-hearted as men. People like me, I’m very cold-hearted.”

In what way? “Well, when I take more than one wife, for example, I’m very cold-hearted about it.”

But that’s not business, I protest, laughing.

But since he brings up his wives, I assume I’ve just been given permission to delve into the topic of his rather large family, with four wives and now three, after a recent divorce.

People ask him, all the time, why he chose to have so many wives.

“And I tell them ... because I could. Although now, I wish I hadn’t.”

Why? I’m fascinated. This is, by far, one of the most interesting conversations I’ve had about relationships.

He makes a noise, somewhere between a grunt and a sigh. “The amount of stress and management! Obviously, all these things that happened, nothing was planned.”

I raise my eyebrows. What do you mean, nothing was planned? When you propose to a woman, isn’t it planned? I point out.

He counters that it wasn’t his lifelong ambition to get married multiple times. “Sometimes it was done on a spur of a moment”.

Are you the kind of man who gets swept away by love and that’s why you propose to women on impulse?

“That’s a good question,” he muses. “Somebody asked if I know what love means. Until today, I can’t figure it out – what love for a wife is all about. Responsibility, somehow, is stacked right at the top for me.

Running one household is hardly easy, but to run four (now three) at a time, takes some mighty management skills. Mazlin has it down to a workable, practical schedule that he says keeps everyone happy.

As he explains it, “Relationships are just like work. I use my work practices at home. There are tasks to be done and I implement the same regime for every household.”

I listen wide-eyed as he elaborates, describing how he sometimes repeats the same holiday three times with his different wives.

“No, my wives don’t mix,” he volunteers the information, knowing what I am about to ask just from the look on my face.

Surely there’s bound to be jealousy?

“They’re not jealous of each other, but they’re jealous of other women!” he declares and I am reminded of how he can now marry another.

“Somebody asked me if I’m on a fleet renewal programme,” he jokes. “But no, I have my hands full right now.”

Doing good well - there's greater impact in helping through informed giving

TWO weeks ago, I was on a flight back from Singapore. One of the newspapers had a poignant picture of a young boy in tears. I could practically feel him staring at me.

He had been rescued from a saree embroidery factory in Kathmandu. Child labour in the Kathmandu Valley is extensive and there are up to 80 such factories which employ more than 500 children, mostly below the age of 14, to make those sarees. And the sad part of the story is that many do not want to be rescued.

The Kathmandu operation was timed to coincide with World Against Child Labour Day which was on June 12. According to the International Labour Organisation, hundreds of millions of girls and boys throughout the world are involved in work that deprives them from receiving adequate education, health, leisure and basic freedoms.

More than half of these children are exposed to abuse because they work in hazardous environments where slavery, forced labour, illicit activities such as drug trafficking and prostitution, and armed conflict are common.

The plight of these children weighed heavy on my mind on this short flight back.

The following week, I was on the road listening to the radio and I learnt that World Refugees Day was on June 20. It is estimated that more than 45 million people worldwide have fled their homes due to conflict, persecution and other abuses.

In Malaysia, there are over 100,000 registered refugees in Kuala Lumpur alone, and one can imagine the actual figures nationwide, especially those not registered.

In looking at the two big issues here, we may wonder what we can do to make a difference in the lives of so many people.

Certainly there are many communities who will benefit from our giving and volunteer efforts – the aged, homeless, abused children and women, addicts, the poor,disabled, orphans, victims of human trafficking, etc to name a few. Then there are the sporadic needs in times of natural disasters.

And this is where the work of NGOs is significant. Many NGOs come about in response to a specific need and are small and limited in their operations. But there are an estimated 20,000 NGOs that operate globally because the causes they fight for transcend national borders.

And for the work they do, they need support. Some of these NGOs have a strong global presence and are able to draw funds and resources from many sources.

An executive from a large company once asked me what worthwhile organisation or group his company can contribute to.

I pointed them to a community in need of help for social change. They are children in estates who need assistance to enable them to stay in school. I told him that it would be better for him to visit the community in a somewhat remote area and understand their situation and needs.

The legwork proved to be a deterrent and so the company chose a children’s home in the Klang Valley instead. It was easier to arrange and provided ample photo opportunities for the company’s magazine.

There are many us who are willing to give and contribute. However, our giving can go further when it is done right.

For a start, we should go beyond being compassionate and generous, and instead be prepared to do due diligence to determine the deserving causes. This is called “informed giving” and it requires us to hold the organisation accountable so that the funds given are effectively used. It is not just giving, but following up for accountability and performance.

Sometimes it might be better to channel the funds raised to a reputable foundation to be administered instead of making the contributions direct. When I made this suggestion at a recent fundraising discussion, it was met with some laughter. Why would you give money to another organisation which already has so much money?

I know of trustees in a charitable foundation who diligently visit the communities they support. They want to see for themselves how the money is spent, whether the classroom has been built, and how the children who received financial aid were doing.

Just as the executive could not find the time to check out the community I recommended, many of us also do not have the time to do follow-up and accountability.

So we should consider those organisations which take the work of giving seriously. They are the ones that are managed professionally, with full transparency and accountability.

Companies and individuals can partner with such organisations which are more efficient and have a proven track record in helping others.

This is the reason why Warren Buffett gives such generous amounts to the Bill and Melinda Gates Foundation to pass on to the right people. Buffet knows that he should just continue to do what he does best, which is to make a lot of money, rather than rolling up his sleeves to manage the giving directly.

There are many practices in companies which can be applied to social work to transform lives.

Like businesses, charitable organisations need the best leaders and people to execute the programmes.

Many of the issues faced are complex. We need to understand the issues and provide insights on the right solutions to address the root causes of the problems.

Which is why simply doing good is not enough. We need to move to “doing good well”.

TAKE ON CHANGE By JOAN HOI

● Joan is inspired and influenced by the book, Doing Good Well. What does (and does not) make sense in the non-profit world by Willie Cheng.

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 About Doing Good Well 

 The way we see the world can change the world. In this book, Willie Cheng frames and explains the nonprofit world while providing fresh insights as to where and why it works - or not.

He covers a spectrum of nonprofit paradigms including:

•	The structure of the marketplace - challenging whether a “marketplace” truly exists.

•	Concepts of nonprofit management - disputing why charities must follow corporate mantras of growth and reserves accumulation.

•	Philanthropy and volunteerism - questioning the motivations of givers.

•	New social models of social enterprises, social entrepreneurship and venture philanthropy - seeking to explain why these may not have worked as intended.

•	Nonprofit quirks - showing how the rules can result in the extension of the rich/poor divide into the charity world and make fundraising inefficient through an efficiency ratio.

In describing his ideas through an easy writing style and hearty anecdotes, Cheng engages and provokes the reader with a strategic review of the status quo as well as the enormous potential in the nonprofit world. After all, as Cheng describes it, charity is no longer simply about “Just Doing Good” but “Doing Good Well.”

Success is a state of being

VERY often the benchmark of ­success is wealth. Everyone is judged by the external signs of wealth.

People pass ­disparaging remarks about those who are doing service or providing for others but are not wealthy and do not display the signs of wealth.

If people identify more with their external conditions or roles, they will inevitably feel inferior or superior to others and so lack self respect.

The ways in which society works often blinds an ­individual from realising his/her own ­self-worth. For example, society sometimes gives ­acknowledge-ment only to those who are wealthy or occupy a position of authority. In reality, every individual has the right to know that worth is inherent in every human ­being.

Self worth can help ­individuals avoid feelings of inferiority or superiority. The middle path is a dignified way of life.

Success is not a material thing. It is a state of being. We might call it contentment, ­happiness or even peace.

How do you define success? It is the completion of a task, another job well done, an exam passed, a promise kept, or a mountain climbed.

Whatever we believe success to be will have a profound ­influence on our lives.


Bridget Menezes is the author of Self-Empowerment and Spiritual Counsellor. Readers can email her at lifestyle.bridget@thesundaily.com.

High salary and high performance require book smart and street smart!

Heera: ‘Qualifications bring credibility to the job’.

WHEN it comes to hiring suitable talents, it would be ideal to have a potential employee with the relevant qualifications as well as one that has practical experience.

But what if there was just one vacancy available – and the organisation had to choose between the two candidates? In a hypothetical situation between a candidate that’s “book smart” (has the relevant qualifications) and one that’s “street smart” (has the practical experience), who would be the more likely choice?

More importantly, is a high-paying job unattainable for those without formal education? Or is there still a chance for a candidate that does not have that oh-so-important diploma or degree?

The book smart candidate

Heera Training and Management Consultancy principal consultant Heera Singh believes a candidate with the relevant qualifications would generally be “technically competent” in that job.

“It certainly brings credibility to the job. For example, if someone has a Masters in Human Resources (HR) Management, then the qualification enhances his credibility,” he tells StarBizWeek.

“It also assists greatly in the recruitment and selection of employees. For example, if a job is advertised and does not specify technical qualifications, but only states practical experience required, then every Tom, Dick and Harry will apply and this will ensure lots of extra work for the HR department,” Heera says.

Leaderonomics finance and human resources leader Ang Hui Ming concurs that having the right qualifications adds more credibility to an individual seeking employment – at least on paper.

“Generally, the employee might probably have a wider knowledge-base theoretically of the function he is hired for and has some form of certification of his ability to understand at least the basic concepts of the function,” she says.

However, it has often been said that what one learns in theory can be quite different in practice.

Heera believes that the “book smart” candidate, though technically qualified, still lacks experience – an important element that may be vital in certain jobs.

Ang: ‘Being technically qualified doesn’t mean they can do the jobs well’.

“Being technically qualified does not mean that they can do the jobs well. They may be more academically inclined rather than hands-on.

“They may be technically qualified but may not like the job. Many people, for example, go to university and do courses that their parents want them to do, or courses which their friends are doing. All they want to do is to get their qualifications.”

Ang, meanwhile, feels that not having the relevant experience is not a big deal – as it is something that can be acquired over time.

“There is no real disadvantage, experience is to meant to be built anyway.

“At most, it’s the lack of reality. If a person is all academic, it is uncertain how he or she will handle real life situations where the theories they learn needs to be adapted to the situation, environment and culture of any given place and time.”

The street-smart candidate

The advantage of hiring an employee with experience means that they can do the job straight away with minimal disruptions, says Heera.

“There is minimum need for any job orientation and at interviews, you can ascertain the type of practical experience they have and see if it suits or meets your job expectations.”

Ang concurs: “Generally, the employee might have deeper expertise in the function and would have experienced real-life situations in the function. This makes the person more adaptable and adept to handle similar natured situations more wisely and calmly.”

“The type of experience is important. If they have the wrong type of experience, then it is of no use to the company. For example, if a person has worked in a HR capacity in a government department, then his experience may not necessarily gel with what is wanted in the HR department in the private sector.

“Experience can be a bad teacher as it is always difficult to mould a person who has the experience but has picked up some bad habits along the way.”

Ang feels there’s no real disadvantage to hiring someone that has no paper qualifications but is oozing with experience.

“At most, probably a possible lack of what’s new in the market, or what’s happening on a global scale or what new technology is out there that can better equip him or her in the function.

“This is only an assumption as people that are hands-on can still learn market trends and future technology if they read up and do research on their own. There is just no paper qualification – that’s all.”

Does it really matter?

According to an article on online investment site Investopedia, “Is It Better To Be Book Smart Or Street Smart,” its author, Tim Parker, points out that one does not need to have the relevant paper qualifications to be truly successful.

“Steve Jobs, co-founder of Apple, is widely regarded as one of the best businessmen of his day. He didn’t have a college degree and neither did Steve Wozniak, the other founder of Apple.

“Other successful businessmen without college degrees include Dell Computer founder Michael Dell, Microsoft founder Bill Gates and Virgin Brands founder Sir Richard Branson. People all over the world have found success without a college degree,” he writes.

But is that the rule or the exception, he then asks.

“Unemployment data shows that more than 8% of the population looking for a job (in the US) can’t find one.

However, for those with a bachelor’s degree, the unemployment rate is only 3.9%. The unemployment rate is 13% for people without a high school diploma.

“A college degree doesn’t guarantee success, but Bureau of Labour Statistics unemployment statistics show book smarts more than double your chances of finding a job.”

Of course, having an employee with both the relevant paper qualifications and practical experience would be the optimum choice, naturally.

“This would definitely be an ideal combination,” says Heera.

Ang says having both qualities would indeed be a plus point, adding however that having both relevant qualification and practical experience does not make one a best employee.

“It’s a person’s character, values and attitude that makes him or her a good employee. Qualifications and experience are all things that can be accumulated as long as one has the right attitude and desire.”

By EUGENE MAHALINGAM eugenicz@thestar.com.my

New economic thinking

LAST weekend, over 400 top economists, thought leaders, three Nobel Laureates and participants gathered in Hong Kong for the fourth Annual Institute for New Economic Thinking (INET) conference, co-hosted by the Fung Global Institute, entitled “Changing of the Guard?”



So what was new?

In the opening session, Dr Victor Fung, founding chairman of Fung Global Institute, quoted Henry Kissinger as saying, “Americans think that for every problem, there is an ideal solution. The Chinese, and Indians and other Asians think there may be multiple solutions that open up multiple options.”

That quote summed up the difference between mainstream economic theory being taught in most universities and the need to build up a new curriculum that teaches the student to realise that there is no flawless equilibrium in an imperfect world and that there is no “first-best solution”.

Instead, what is important is to teach the aspiring economist to ask the right questions, and to question what it is that we are missing in our analysis. It is important to remember that theory is not reality, it is only a conceptualisation of reality.

Nobel Laureate Friedrich Hayek, one of the leading thinkers on open societies and free markets, explained why the practice of mainstream economics is flawed. In 1977, he said, “A whole generation of economists have been teaching that government has the power in the short run by increasing the quantity of money rapidly to relieve all kinds of economic evils, especially to reduce unemployment.

Unfortunately this is true so far as the short run is concerned. The fact is that such expansions of the quantity of money, which seems to have a short-run beneficial effect, become in the long run the cause of a much greater unemployment. But what politician can possibly care about long-run effects if in the short run he buys support?”

Sounds familiar on present day quantitative easing?

In his 1974 Nobel Laureate Lecture entitled “The Pretense of Knowledge”, Hayek showed healthy scepticism: “This failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences an attempt which in our field may lead to outright error.”

Hayek understood what is today recognised as quantitative model myopia. What cannot be easily measured quantitatively can be ignored. Then it is a small step to assume that what can be ignored does not exist. But it is precisely what cannot be measured and cannot be seen the “Black Swan” effect that can kill you.

In other words, economists must deal with the real world of asymmetry information, that there exists Knightian uncertainty, named after University of Chicago economist Frank Knight, what we call today unknown unknowns.

Unknown unknowns arise not just from accidents of Mother Nature, but from the unpredictability of human behaviour, such as market disorder, which is clearly complex and ever-changing.

If unknown unknowns are common in real life, then a lot of the economic models that appear to give us precise answers may be wrong. In other words, for every question, there is no unique answer and the solutions are “indeterminate”.

George Soros, who helped found INET, explained his theory of reflexivity based on the complex interaction between what he called the cognitive function (human conception of reality) and the manipulative function (the attempt by man to change reality).

His theory of reflexivity in markets differs from mainstream general equilibrium theory in one fundamental aspect. General equilibrium models assume that market systems are self-equilibrating, going back to stable state. Borrowing from engineering systems theory, we now know that this is a situation of negative feedback a system that gets disturbed fluctuates smaller and smaller till it returns to stable state.

The trouble with nature and markets is that positive feedback can also happen. The fluctuations get larger and larger until the system breaks down. Nineteenth century Scottish scientist James Maxwell discovered that steam engines can explode if there is no governor (or automatic valve) to control the steam building up.

At about the same time, English bankers learnt that banks can go into panic regularly without the creation of a central bank to regulate the system. Markets therefore need a third party the state to be the system “governor”. Free market believers think that the market will take care of itself. John Maynard Keynes was the first to recognise that when free markets get into a liquidity trap, the state must step in to stimulate expenditure and get the economy out of its collective depression.

In the 21st century, we have evolved beyond Keynes and free market ideology. Belief in unfettered markets has created a world awash with liquidity and leverage, but the capacity of advanced country governments to intervene Keynesian style has been constrained by their huge debt burden.

Larry Summers has pointed out that Keynes invented not a General Theory, but a Special Theory for governments to intervene to get out of the liquidity trap. The fact that we are still struggling with the liquidity trap means that economists are searching for new solutions, such as borrowing from psychology to explain economic behaviour.

The INET conference introduced the thinking of French literary philosopher, Rene Girard, and his theory of memetic desire, to explain how social behaviour more often than not get into unsustainable positive feedback situations, either excessive optimism or pessimism. How do you get out of such situations? Girard introduced the concept of sacrifice. We will have to wait for the next conference to explore this new angle.

Intuitively, all life is a contradiction. The sum of all private greed is not a public good. It does not add up. Someone has to sacrifice, either the public or a leader.

Schumpeter's great insight about capitalism is that there is creative destruction. He only restated the old Asian philosophy that change is both creative and destructive. But out of change comes new life.

In sum, contradictions are creative. What is new is often old, but what is old can be new.

 
Tan Sri Andrew Sheng is president of Fung Global Institute.

Performance culture lacking, Malaysian workers!

PETALING JAYA: Malaysian workers lack performance culture and generally spend half their working hours on matters unrelated to their job, said experts.

Leaderonomics chief executive officer Roshan Thiran said the laid-back working culture was partly to blame for the country’s low labour productivity.

“We tend to mix our working hours with bonding with colleagues and relationships whereas in other countries, working hours are made full use of,” he said.

He advised employees to perform self-audits to identify unproductive activities in the office that drained their working hours.

A check by The Star with several human resource practitioners revealed that Malaysian workers in general only spend four hours in a regular nine-to-five work period being productive.

Another two hours are spent on social networking sites or browsing through the Internet, whilst long lunches, cigarette breaks, tea breaks and office chatter make up for the other two hours.

Malaysian Employment Federation executive director Shamsuddin Bardan said our low productivity levels could drive away investors to neighbouring countries.

Shamsuddin said the unprofessional attitude among workers was in stark contrast to high-performance nations which encouraged a professional working culture with a focus on developing human capital.

“Some here have the ‘so long as I show up to work, it’s enough’ attitude, which shouldn’t be happening,” said Shamsuddin.

Human resource consultant Dr Asma Abdullah said Malaysian culture generally regarded the workplace as a social unit where work and social interaction mixed.

Meca Employers Consulting Agency executive director Dharmen Sivalingam said some employers had difficulties addressing their under-performing staff.

“Malaysian employers generally find it hard to converse with their employees on the matter of their productivity. It may be because they don’t want to be put in positions where they have to confront their subordinates,” he said.

Sivalingam also said workers in foreign countries were constantly under probation which keeps them performing at their best.

He said managers need to develop a proper key performance index system and see to it that employees understand how they are being assessed.

By NICHOLAS CHENG The Star/Asia News Network

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Malaysians lag in productivity

PETALING JAYA: Malaysians work longer hours than their counterparts in many benchmark countries, but produce less than them.

According to the Malaysian Productivity Corporation, our employee productivity levels are a lot lower than those of countries like the United States, Japan, United Kingdom, South Korea and Singapore.

MPC director-general Datuk Mohd Razali Hussain, citing the 2011 Productivity Report, said Malaysian workers had a productivity value of RM43,952 a year.

“But compared with Singapore, Hong Kong, Taiwan, South Korea, Japan and the United States, we are still far behind,” Razali said.

He added that the country was still recording an average productivity growth of 4.5% annually, which was lower than that of Indonesia and India.

Labour productivity levels are measured by the real gross domestic product over the number of workers in the country.

“In other words, it is how many workers it takes to produce a profit,” said Razali.

According to the report, which analyses information from the Department of Statistics, workers in the top benchmark countries outperformed Malaysian workers almost six times over.

American workers topped the list with a productivity level of RM285,558 a year, followed by employees in Japan (RM229,568) and Hong Kong ( RM201,485) (see graphic).

In 2011, Malaysia had a productivity growth rate of 4.55%, which MPC said was on track for the country in becoming a high-income nation by 2020 with a productivity level of RM87,500.

However, Malaysians lost out to several benchmark Asian countries like China, which had a growth rate of 8.7%, Indonesia (5%) and India (4.8%).

“Even though we can see there is growth based on the data we have, Malaysian workers have not been creating enough with the resources that we have,” said Razali.

He clarified that an employee's productivity was not measured by the number of hours clocked in but rather by his or her overall output during working hours.

“Actually, most hours are not spent being productive. We have had foreign agencies complain that their Malaysian staff were taking very long tea breaks,” he said.

Razali said that working long hours could even be counter-productive.

“There is a lot of waste in productivity when you drag the hours ... The company would have to pay more for electricity and overtime,” he added.

Razali said management practices should be reviewed to boost productivity.

He stressed the need to reward employees for better productivity with gain sharing, and suggested project-based incentives, improving workplace conditions and providing more flexible time for employees to rest while on the job.

According to the report, productivity levels grew by 2.82% with improvements in labour efficiency recorded in five key economic sectors.

Productivity levels in the services sector expanded by 4.9% to RM53,938 in 2011.

The agriculture sector grew by 6.23% to RM29,466, while manufacturing increased by 1.97% to RM54,509.

Construction productivity levels went up by 3.09% to RM24,635 in 2011, while the mining sector recorded a negative productivity growth of -6.14% to RM866,246 from RM922,914.

Asked why the mining sector had a negative productivity rate when its turnover was higher than other sectors, Razali said this was because the turnover did not correlate with the large workforce.

By NICHOLAS CHENG The Star/Asia News Network

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Right person for the right job, how and what to do?

MEASURE twice, cut once is a term often used by carpenters and tailors when measuring material for a specific purpose. The point is to be very careful and judicious when measuring to avoid nasty outcomes once the wood or material has been cut.

However, this phrase is just as appropriate for the hiring process as well. Once an employee is hired, the company has to ensure that the individual assimilates well into the organisation and achieves the desired level of performance; otherwise the remedial action that needs to be taken can be very tedious and even unpleasant.

One of the many pitfalls of this situation is that employers, under the pressure of filling a vacancy, could end up hiring individuals who may not be the best fit, and as a result, could be setting a whole series of messy events into motion.

Not too long ago, one of my clients approached us to take on a sales director search. The client shared that he had been a bit too hasty in hiring the last sales director, and had failed to dive deep into the strategic value and scope of the role before making the hiring decision.

In our post mortem discussion with the client, it was clear that he had hired an individual who might have been suitable for a sales manager's position; one level below the sales director's position, but had given him the sales director role because of urgency and the lack of suitable candidates at that time.

The unfortunate result of that scenario was that the newly-hired sales director resigned after only three weeks on the job under the pressure and scope of the work, leaving a path of chaos amongst all the company's clients and suppliers. As such, half-way into its financial year, the company was forced to start looking for another candidate for the sales director role.

In this instance, the company may have benefitted from measuring twice and cutting only once, rather than having to repeat the process of hiring for the same position after such a short period of time.

Other than experience, another critical-but-often-overlooked consideration in the recruitment process is the salary range or the package offered for the role. Salaries and wages are always moving in tandem with the demand of a particular skill-set or type of profile. The more in demand a particular type of skill is, the higher the cost of acquiring that skill.

Some organisations are willing to pay above market rates for certain key positions, as the alternative of not having someone in the role may actually cost the organisation more, from a commercial standpoint. On the other hand, there are some companies which would rather keep within a certain salary band rather than pay the market rate to an individual with the right amount of experience for the job.

From my experience, it is essential to have not only a good understanding of the market salaries but also what the candidate's realistic expectation is.

If we pay too high above the market rate, this often sets a very high expectation for this person to perform. And in some instances, if the individual is unable to deliver the expected results, the risk of paying an inflated price to acquire this individual might not have paid off; and if the company had hired someone less qualified because that was all its budget could afford, then the less-experienced individual may also not be able to deliver on the expectation, as he or she may not have the knowledge, capability or necessary life-experience to do so.

Finding a solution

How can we put the measure twice cut once concept into practice?

One innovative human resource director shared with me recently that he had been trying unsuccessfully to fill a role in his department for quite some time. During this period, he was introduced to an individual who was not an ideal fit to the role in terms of experience but one who was teachable and would be able to work well with the rest of the team.

So, he crafted a role around the individual's profile and experience and got the revised role approved by the top management. This worked out well for both the company and the individual, as the expectations set were achievable and realistic. The human resource director, in this case, had to measure twice but only had to cut once as he managed to find a solution to his problem. The solution turned out to be a good one, as the individual successfully completed her probation period and met her key performance indicators.

Another client who was looking for a managing director for his company was also forced to take a less conventional route to filling his needs. The client shared with me that he had already interviewed more than 20 candidates for this role before approaching us to assist with this search. The only candidate who was given an offer turned down the job when he was counter-offered by his current employer.

As such, the client already knew the market and we were hard-pressed to come up with a new slate of candidates for the search. The client liked one of our candidates but felt he wasn't ready to take on the role of managing director yet. However, instead of disregarding a good talent, the client decided to hire the individual as an operations director.

As such, the individual was able to grow into the managing director's role and the company would also have the benefit of securing a good talent who could potentially achieve more for the company in the future.

In this example, our client knew exactly what he needed for the role and exercised some flexibility to acquire good talent rather than missing out on a high-potential candidate. In addition, he did not compromise on his requirements but was able to see beyond the immediate need to find a managing director.

Different approach

When to measure and when to cut? An important aspect of measure twice cut once, is that the person doing the measuring needs to take the time to get it right and not be in too much of a hurry to get to the cutting stage. A carpenter or tailor is a craftsman who takes pride in his work. Therefore, when we hire, it is essential to look carefully at all aspects of the role which needs to be filled and take the time to understand how a potential candidate will fit that role.

The technical expertise or hard skills are only one part of the whole equation. We should take the time to understand the personality profile of the individual, his or her motivations and long-term goals.

Most hiring managers often forget to look at options in the recruitment process. There is a finite pool of talent and the best talents would also have been earmarked by your competitors as well.

So, instead of doing the same thing and expecting a different outcome, perhaps it's worth the effort to try a different approach. Tailor the job to fit a good talent, or give the person another role to allow time for the individual to grow into the intended position. Although we may not always have the option of changing the status quo in this way, the purpose of this article is to offer another alternative solution to the talent shortage problem, and hopefully, bring about a better outcome.

Talking HR with Pauline Ng

Pauline Ng, consulting director and head of BTI Consultants, encourages every hiring manager to explore all options and leave no stone unturned when making the decision to hire by utilising assessment tools and having a comprehensive map of the talent market.