Insight

Recently I came across a video clipping withthe title "The Human Capital Strategy" by chance. In this video (Note 1),CNBC's Karen Tso and Bernard Lo had an interview with Bradley Hall, Managing Director of Human Capital Systems. The main objective of this interview was to talk about why China needed to develop its human capital as it begins to lose its low cost advantage as the Chinese Yuan appreciates. 

Unlike other professionals from US, Brad did not recommend that the Chinese to learn from the their HR Systems. Just the reverse, in his latest book "The New Human Capital Strategy", he claimed that the HR Systems that are being adopted by the Western Companies "don't work very well". 

He stated that Economist's "CEO Briefing 2006" (Note 2) - a survey of around 600 CEOs across the world, rated HR as the poorest performing of eleven corporate functions. The same executives rated HR as the least important business function for achieving corporate strategic objectives over the next three years. 

Ironically,the same group of respondents rated HR issues like succession planning, retaining and acquiring of good talents and global teaming as the most important business issues for that same three years. In other words, the most critical and important thing to get right is managed by the least important and poorest performing corporate function.  This is the main reason that HR Systems of Western Companies "don't work very well". He further asserted that "China has not yet accepted the HR Systems from the Western Companies. There is a real advantage right now of doing something better (hinting that he has the solutions for them)."

Given that  China had just surpassed Germany to become the world's largest exporter; overtaking the US as the world's largest automotive market and is also forecast to overshadow Japan to become the world's second largest economy in 2010 (Note 3). Given this strong data on China, eventhough I found that Brad's idea is quite refreshing, but I feel there is no immediate need to look into it as yet. However, in just a matter of weeks, the unthinkable events happened one after the another in China - first the Foxconn's consecutive worker suicide drama; then the humongous wage hike by Foxconn which led to the Honda strike incidences; and China eventually allowed the Yuan's exchange rate to be more flexible again. So, I think that China really have to act fast to increase the competitive advantage of their Human Capital System and do not have much time to procrastinate.

In view of the potential threat of a highly unstable labor market, China may find Singapore's Tripartite System helpful. In this system, the Government, Labor Union and Employers are joining hands to prevent labor disputes and improve relationships between labor and employers.  Under this system, many nasty disputes between employers and employees, which would be rather difficult to solve otherwise, were settled amicably without major protests or strikes in Singapore. Take SIA and their Air Pilots' relationship as an example, it has been improved over time with the help of Government (Note 4). Government intervention is virtually impossible if the Tripartite System does not exist.  Next time, if China needs to look for help, besides looking for solution from HR Professionals based in US/Europe likeBrad, maybe, they should also consider Singapore HR Consultants for help as well.

Notes:-

(1)  Source from http://www.cnbc.com/id/15840232/?video=1478310746&play=1

(2)    Source from http://graphics.eiu.com/files/ad_pdfs/ceo_Briefing_UKTI_wp.pdf

(3)    Source from http://www.independent.co.uk/news/business/news/china-overtakes-germany-to-become-largest-exporter-1864052.html

(4)    Source from http://www.mom.gov.sg/publish/momportal/en/press_room/press_releases/2003/20031130-PrimeMinistersOfficePressStatementImprovingLabourRelationsInSingaporeAirlines.html