CLASS ACTION
With the economy expected to rebound, the art of retaining employees through education has become a top priority.
By Lotte Chow

It must have been the best email Lawrence Liu ever sent. Liu had always wanted to do an Executive MBA (EMBA) to boost his analytical skills and increase his knowledge in marketing and sales. After looking for months, in late 1999 he found the EMBA course of his dreams. But when he asked about the tuition, he nearly fell off his chair - it was US$56,000. So he sent an email to his boss, asking if the company would help him pay for part of the cost. "It was a very short email," recalls Liu, regional CFO at Geis-Cargo Asia, a German logistics and transport company. "I described the program and said how it would help me to do my job better," he says. The next day, his company agreed to pay half of his tuition, or US$28,000.

Across Asia, companies are putting more emphasis on training and developing their most-valued employees as a way to retain them for succession planning purposes. As the economic outlook starts to brighten, they know it's crucial to hold on to their best employees to help secure market share, deliver profits and stay competitive.

Other companies send their most talented managers back to school as a way to help them to do their jobs more effectively. Once back at their jobs, these managers help companies cope with fast-changing markets, technological innovation and shifting business practices.

Mid-career training is also a competitive issue. A recent McKinsey survey in the US titled "War For Talent" found that companies doing the best job of managing their talents deliver far better results for their shareholders and achieve competitive advantages over their rivals.

The survey shows that companies scoring in the top 20 percent of talent-management practices outperform their industry's mean return to shareholders by a whopping 22 percentage points. The companies say their top performers are 40 percent more productive than the average performer, and they help their companies raise profits by 49 percent and revenue by 67 percent more than the average worker. In short, talent gives companies a much higher return on investment.

No Luxury

Asian companies are beginning to see talent development and retention as a necessity, not a luxury. Aside from world-class offices, top-class technology and stable shareholders, they also need world-class managers in order to become global companies like some of their North American and European counterparts. "We value our people. They are our most valuable assets. We see to it that they are equipped with the necessary skills and knowledge to do their jobs," asserts Francis Mok, management training and development manager at MTRC, which operates Hong Kong's mass transit railway system.

Multinationals operating in Asia are also working more aggressively to train and develop local talents in an effort to reduce their reliance on expatriates. An expatriate manager with a six-figure salary, housing allowance, club membership, air tickets for home leave and subsidies for children's education can cost twice or three times as much as a local manager.

Companies are realizing that home-grown talents, with their knowledge of local cultures and markets, can be highly effective managers given the right nurturing.

These changes are causing a mini-boom in the demand for executive education, either in the form of EMBAs or company-sponsored programs. Universities in Hong Kong and Singapore say they've seen at least a 50 percent increase in enrollment in their executive education programs in the last 12 months compared to a year earlier.

Insead, the University of Chicago in Singapore, the Hong Kong University of Science & Technology, and the Richard Ivy School of Business in Hong Kong are expanding their classes and program curricula. Stephen LaCivita of University of Chicago's Executive Education department says his school has so far been very selective in the kinds of programs it chooses to run in Asia, but it intends to expand its programs to meet rising demand.

Geis-Cargo's Liu is just the kind of manager these schools are aiming at. When he joined Geis-Cargo four years ago as financial controller, his Asian background, accounting and finance training, decade-long working experience in Asia, and fluency in English and Mandarin deeply impressed his boss who was keen to expand in Asia. So when he requested his company's sponsorship for an Executive MBA a year later, he promptly got a yes.

Halfway through the 18-month program, jointly offered by the Hong Kong University of Science & Technology and the Kellogg Graduate School of Management at Northwestern University in Chicago, Liu was promoted to CFO. This kind of mid-EMBA promotion isn't uncommon. Many companies say having a robust staff development program is crucial to retaining their most talented individuals. That's because talented staff are often the most keen to broaden and deepen their skills to make themselves more competitive. They are also the most sought-after by other employers.

Trading in Futures

HSBC, the region's largest bank, routinely sends its bankers around the world as a way of giving them the experience they need for the top jobs. Its talent recruitment and development program is regarded in the industry as one of the most comprehensive. To start, members of the human resources team trek around the world annually to recruit university graduates of high potential to join its Management Development Program, which runs for three years in three phases.

In the first phase, for a period of 12 to 15 months, the recruit performs different duties in his chosen stream. Areas of interest can range from personal financial services to corporate and institutional banking.

If successful, the second phase is a seven-week intensive Executive Trainee Development Program held at the bank's Group Center in the UK. There, the trainee will work with other HSBC high-potential employees to get a perspective of the banking industry, of the bank's international operations and the management skills required to be in operational roles.

In the third phase of the program, the newcomer is assigned to key projects and placements within the bank. After the final phase, the high-potential banker continues to undertake new assignments, and enroll in advanced degree programs and skill-enhancing workshops. "We believe in investing in our people and growing our own people," says HSBC's senior manager for human resources development for Asia Pacific, Bryan Neal in Hong Kong.

Neal, a 20-year HSBC veteran, says the bank believes in filling a vacancy from within the organization, rather than hiring from the outside. "When you fill a vacancy from inside the bank, you get someone who knows the company and its corporate culture and who is familiar with how things operate," he says. "But if you get someone from outside the organization, the person has to learn the corporate culture and go through a learning curve, and he might not turn out as effective as we hoped," says Neal.

Neal also says that having long-serving talented employees is good for business, especially in banking, because clients value long-term relationships with their bankers.

Keeping Retention on Track

On the other side of Victoria Harbor, in the industrial district of Kowloon Bay, MTRC's Mok is poring over the latest training manuals and staff development courses. MTRC consistently ranks as one of Asia's most preferred employers. A look at Mok's office explains why.

On the corridor wall hang two management awards from the Hong Kong Labor Department for Comprehensive Human Resources Strategies and Policies, and for Training and Development in 2001 and 1999. In his office there are three awards for Excellence in Training from The Hong Kong Management Association and one from the American Society of Training and Development for Excellence in Practice. A prime reason for the awards, Mok says, is MTRC's Accelerated Development Program, or ADP, to fast-track its high-potential employees for senior posts.

ADP is targeted for middle to junior managers and the Executive ADP is aimed at senior managers. The program sends its candidates to advanced management courses, followed by action learning projects. They will then participate in study meetings to exchange ideas and discuss company issues. They will also have mentors who will give them support and sharpen their managerial competencies. "It's an all-around program to boost the employees' business knowledge and management skills," Mok explains.

In other parts of Asia, companies look outside the region for mid-career training. Take Malaysia's state-owned oil producer Petronas, for example. When the company was founded in 1974, it was a domestic operation with little overseas revenue and no offices abroad. Today, it operates in 25 countries and has 30,000 workers worldwide, one-third of whom work outside Malaysia.

"We are a global company. We need global competencies to compete with other world-class companies. Where do we get global competencies? By constantly sending our best people to Harvard and Wharton business schools in the US and universities in the UK," says Petronas's Education Advisor En Ibrahim Hassan in Kuala Lumpur.

A fast-growing company like Petronas demands a lot from its managers. In the past, a division manager supervised a small staff, had a small budget and ensured quality control. Today, he is likely to be looking after a much larger team, is involved in financial planning and budget forecasting, negotiating business contracts, doing investor relations, sales and marketing, and meeting with the media when needed. In short, he is a man of many hats. "The senior manager's job is a lot more complex today than it was several years ago. To make them better at their jobs, we have to upgrade their skills," Hassan says.

Few sectors in few countries have more need to update the skills and knowledge of their workers than the IT and finance sectors in India. Ashwini Kakkar, managing director & CEO at Thomas Cook Travel and Financial Services India in Mumbai knows this well. "India has a large IT sector and IT is a knowledge business. There's no way we can keep up with the new technology unless we constantly send our people for training and courses. It's the same for the finance sector where new financial products are rolled out all the time," he says.

Every year, Thomas Cook sends 120 of its top managers worldwide to a nine-day residential program at Insead in Fontainebleau, outside of Paris, to discuss company vision, modern management techniques and best practices. For its high-potential managers in India, the company has professors from the University of Buckingham in the UK to visit Mumbai once a year to give talks and seminars on business trends and industry issues.

The programs are costly, but rewarding nonetheless. "There are a lot of workers out there, but talents are few and far between," says Kakkar. "They help the company to stay on top and we have to do our best to keep them," he says.

Find the Leader

If talents are vital, how do companies spot the future Jack Welch or Carly Fiorina?

Many large corporations have well-defined and well-designed schemes to extract talents. They look at a person's job performance, technical knowledge, core competencies, leadership potential, ability to focus, thinking and communication skills, and personal effectiveness. Before being picked for bigger and better things, an employee goes through skills and personality assessment tests and interviews. "Is there scope for future growth for this person and what contributions will he make to the company?" These are the key questions the selection panel asks.

But what happens after all the Executive MBAs, pricey workshops and seminars, the high-potential employee decides to quit to run his own business or join a rival next door?

Some companies have their staff sign a contract promising to stay with them for a certain number of years after they pay for their education; others have their employees reimburse the training cost should they decide to leave early. Most however, prefer not to have a leash.

"First, the contract may not be legally enforceable. Second, we do not believe in asking our people to pay us back if they really want to go," reckons Thomas Cook's Kakkar. "Instead we ask ourselves 'Why do they want to leave us after what we have done?' Sending your talents to schools is not enough if you want to keep them."

Companies and consultants agree that giving employees an attractive pay package, equitable retirement benefits, a pleasant work environment, satisfaction on the job, and further opportunities for growth and development are all equally important.

For Liu, it was all these factors and more that made him stay at Geis-Cargo after he completed his Executive MBA last year. Autonomy to do what he wanted in the company and having a supportive boss were high on Liu's list. "I like taking new challenges," says Liu. "The autonomy my company gives me in running the Asian operation and expanding in China is very exciting. The fact that I get to travel to China to explore market potential is very appealing." And how supportive is his boss?

Last November, Liu sent him another email, asking for company sponsorship for a four-day "Meet the China Challenge" workshop. His boss promptly said yes. This time, Liu didn't get a 50 percent sponsorship; he got 100 percent. The tuition was US$4,000.

Not bad for an email.

Lotte Chow is a contributing editor at CFO Asia based in Hong Kong.