The Changing Face of Management in South East Asia

Chris Rowley, Saaidah Abdul-Rahman, Chris Rowley, Saaidah Abdul-Rahman

• Publisher: Routledge
• Year: 2007
• Print ISBN: 9780415405447
• eBook ISBN: 9781134135837
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

South East Asia has undergone important economic, social and political developments in the last decade. The emergence of China as Asia's largest pool of cheap labour has resulted in remarkable changes in the volume of foreign direct investment it commands, while the 1997 Asian Financial Crisis has undoubtedly influenced managerial practices in the majority of the countries in the region. In response, South East Asian governments and businesses have sought ways of attracting new investors while intensifying their efforts to retain existing industries.

This important new volume overviews the development of South East Asian management practices, focusing on human resource management (HRM) as an indicator and measure of change. Written by prominent scholars of the region, the book focuses on reform in the human resource (HR) managerial domain, documenting recent changes and assessing current practices from both macro and micro perspectives. A consistent structure and content is used throughout, with each chapter incorporating 'real-life' local organizational and manager case studies, plus vignettes to give 'voice' to practitioners and developments.

This is essential reading for anybody with an interest in management, HR or the political, social, cultural and economic profiles of the countries of South East Asia.

1 Introduction

Rationale, overview and issues

Chris Rowley and Saaidah Abdul-Rahman

Overview

South East Asia—how coherent a group?

Country overviews

People management in South East Asia—personnel management versus human resource management?

Human resource management overviews

Globalisation, convergence and an Asian way?

Conclusion

Introduction

This latest book in the Routledge ‘Working in Asia’ series continues, but also develops in some fresh ways, the original purpose and conceptualisation of this somewhat unusual book series. The intention was to provide accessible, easy to read and use books written by experts, many local, and which importantly give ‘voice’ to local managers within organisations, often in a set of case studies or vignettes, to examine the changing ‘face’ and practice of indigenous management. This in turn would involve some commensurate downplaying of the more research monograph-type content in the books. With the increased interest in Asia the time was ripe for books using such a focus and format.

This particular book is concerned with the changing face of management in South East Asia, focusing on human resource management (HRM) as an indicative example. Other areas of management operate within the same contexts and face some similar changes as HRM outlined in the following chapters, of course. We undertake this journey via an examination of personnel management (PM) and HRM as both a function/profession and set of key practices across a broad range of countries in the South East Asian region set within national contexts. However, we did not want the book to fall into a set of disparate, isolated country-based chapters, but rather be a more integrated and thematic whole. To achieve this objective all the substantive chapters in the book have a standard and common format, structure and content.

The South East Asian region is important, containing several large economies, populations and labour forces. For example, in 2005 Indonesia alone had approaching 160 million people in the prime working age group (16- to 64-year-olds). Some of the economies have rapidly developed and become a destination for foreign direct investment (FDI) and multinational companies (MNC) from a range of different nationalities and in a variety of sectors. For example, in 2005 Singapore’s gross domestic product (GDP) per capita was US$29,000 with exports of US$245 billion, while even Vietnam received nearly US$6 billion inward investment. Despite this importance, some of the countries covered in this book tend to be less popular subjects and under-researched, especially in comparison with other Asian countries like Japan and China, albeit with some exceptions (see, for example, Rowley and Warner, 2006).

This introduction is structured in a further set of main parts. These cover an overview and explanation of the book (sequence, structure, cases studies and ‘voice’), how coherent a region this is, country sketches, perspectives on PM and HRM, people management and HRM country overviews, the area of globalisation and convergence, especially in relation to Asia, and a conclusion.

Overview

Sequence

Chapter 1 is the introductory chapter. This outlines the aims and objectives of the book and locates it within the wider area. An overview of the structure and content of the rest of the book is also provided. Chapters 2–7 are the substantive chapters. These are country based and written by experts, many of them local, covering six major economies of the region alphabetically: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Each chapter focuses on the specific country using the same common format. By doing this, the main contours of management and the evolution of people management, PM and HRM policy and practice at both macro and micro levels is traced in a similar manner. Each chapter incorporates cases and illustrations of two indigenous organisations in the country to provide more specific and empirical information on the country’s HRM. In addition, each chapter includes two cases and vignettes of individual managers who have succeeded in plotting exceptional management styles in their companies. Chapter 8 is the concluding chapter, which summarises the main findings and themes of the book, assesses the recent situation in the South East Asian region and discusses the prospects for the future.

Structure

All contributors followed detailed specific guidance to ensure integration, compatibility and consistency across and within every chapter. Thus, all the six country-based chapters have the same sequential structure and format. This not only makes reading easier but also aids explicit comparisons across aspects or dimensions of countries. For example, political, economic and social contexts, labour market features, key HRM practices, and so on, can be quickly identified and even compared as ‘stand alone’ parts. Furthermore, the bibliographies are important as many students and teachers of international management/HRM and business find it difficult to locate up-to-date sources of information for some of the countries covered in this book, and particularly easily accessible texts written by locals. Thus, all the chapters have the following common structure of nine main parts and sections:

• introduction;
• political, economic and social/cultural background and context;
• key labour market features and developments;
• development of PM and HRM and the HR function and profession;
• HRM practices: employee resourcing, development, rewards and relations;
• case studies of indigenous organisations;
• case studies of individual managers;
• challenges and prospects for HRM;
• conclusion.

Case studies and ‘voice’

This is an important and unusual aspect to the book and the series which it forms part of. The ‘voice’ element in all the chapters comes out clearly in the cases and vignettes. Data for these were collected and compiled in a variety of ways. Sometimes individuals were interviewed directly about their experiences and expectations of the HRM practices described and discussed previously. For instance, the extent to which the experiences and expectations of these individuals conform to local attempts to achieve ‘best practice’ in the HRM described are sometimes apparent. Some cases highlight enduring constraints and emerging opportunities in local and regional HRM practice and development. Thus, a key purpose and differentiator of this book and its series is to elicit local ‘voices’ with which readers might identify and feel inspired—or warned—by. This focus is different from more traditional empirical or theoretical, dense and heavy, research monograph-type books.

South East Asia—how coherent a group?

So, to what extent do the constituent countries in the South East Asian region form a meaningfully coherent group? On what basis, other than geographical proximity, might this be? Steeped in antiquity, South East Asia stretches across a large and highly diverse spatial area. Furthermore, there is a widely varied pattern of experiences, such as being colonised and occupied, involving countries ranging from the UK, the Netherlands, France and Spain to the US and Japan.

The region’s countries themselves are internally heterogeneous in terms of ethnicity and race (for example, Vietnam has fifty-four and Indonesia hundreds of ethnic groupings) and religions (including Buddhism, Islam and Catholicism), which can be official/state ones or countries can be secular. The region’s economies and populations are variegated (Table 1.1), ranging from relatively small city-states like Singapore with a few million inhabitants to the vastness of the Indonesian archipelago and its many millions, the world’s fourth most populous country. Other differences include urbanisation, which varies from the almost total urban population of Singapore and approaching the two-thirds level in Malaysia compared with less than one-third in Vietnam. Demographically there is diversity, for example, the under-15s account for one-third of the population in the Philippines but less than one-fifth in Singapore whereas the over-65s account for 12.2 per cent in Singapore but only 4.3 per cent in Malaysia and Thailand. Sectoral employment varies too. Agriculture accounts for no jobs in Singapore and only about one eighth in Malaysia, but well over half in Vietnam. Industry accounts for over one-third of employment in Malaysia, but only one-sixth in the Philippines. Services take over two-thirds of jobs in Singapore and over one-half in Malaysia in contrast to less than one-sixth in Vietnam. Unemployment rates differ too, ranging from less than 2 per cent in Thailand to over 11 per cent in Indonesia. Importantly, these variables, amongst others, help shape the nature of product and factor markets, and in some instances the potential for economic development (Rowley and Warner, 2006).

Table 1.1 South East Asian management—contextual factors (2005)

Economies in the region have developed, although with unevenness temporally and sectorally. Perhaps these can be seen as a part of the so-called ‘Asian Miracle’ of the late twentieth century? For some commentators Asian achievement was indeed miraculous, although others argue it was more a ‘mirage’. For example, the idea of an economic growth ‘miracle’ was challenged and put down to extraordinary inputs of capital and labour, as opposed to gains in efficiency (Krugman, 1996), with ‘perspiration’ rather than ‘inspiration’ being the defining characteristic of the Asian experience, and hard work and persistence the trademarks (Rowley and Warner, 2006). Also, some highlight the role of the interventionist state (Rowley and Warner, 2005). These forces and factors can certainly be seen in the following country overviews and chapters.

Whatever one’s views on this Asian phenomenon, the period of high growth rates for Asian economies was interrupted by the 1997 Asian Financial Crisis and its aftermath. The effects for each country in the region varied and were non-standardised (see Rowley and Warner, 2004). Indeed, some economies were resilient and their businesses bounced back in varying degrees, although in some many firms collapsed or languished. We only need to compare the Philippines with Singapore to see the range of impacts and reactions. The crisis also impacted on HRM in different ways. To help understand this variation we present some country overviews and key characteristics.

Country overviews

We now present a set of supplementary, very broad-brush country overviews covering such variables and areas as geographical size, organisation, ethnicity, and political, economic and socio-cultural dimensions. Some recent business-related developments are also added to each country profile.

Indonesia (first paragraph based on Prijadi and Rachmawati, 2002)

Indonesia is the largest country in South East Asia and the world’s biggest archipelago with 17,508 islands and islets lying between mainland Asia and Australia. Its large population is unequally distributed with most (62 per cent) on Java alone, an island comprising only a small total (just 7 per cent) of the land area. During the Second World War this former Dutch colony was under Japanese occupation until 1945. It has twenty-seven provinces, sixty-three municipalities and 247 districts. There is racial/ethnic diversity, with four main groups: Melanesian, Proto-Austronesian, Polynesian and Micronesian, subdivided into hundreds of ethnic groupings, with more than 250 local languages. There is no state religion and four major ones are recognised—Christianity, Hinduism, Buddhism and Islam—the last followed by approximately 85 per cent of the population (the largest Muslim population in the world). In terms of its rapid economic development, FDI, especially from Japan and in manufacturing, contribute significantly to growth.

The period since the 1997 Asian Crisis has seen both a shift from corrupt authoritarianism to fledging democracy in Indonesia but also an ending of its former fast economic and social development. For example, unemployment figures shot up from 8 to 13 million and those people living below the poverty line rose to nearly 60 million, almost one half of the population (Chapter 2). The country has continued a struggling recovery with unreformed financial, legal, judicial and state sectors; an exodus of important professional Chinese Indonesians (ethnic Chinese control very large amounts of economic activity although only constituting less than 5 per cent of the population); continuing high costs of doing business; corruption; and political instability with ethnic, religious and labour unrest.

Some recent developments in Indonesia with impacts on business and management include the following example. In 2006 there was a proposal to amend labour laws, weakening minimum wage provisions and reducing entitlements to severance pay while increasing restrictions on the right to strike and possibilities for employers to impose disciplinary measures on workers, described by the Indonesian Trade Union Congress as a ‘race to the bottom’ in terms of working conditions (ICFTU, 2006).

Malaysia (first paragraph based on Ayudurai et al., 2002)

Malaysia is bordered by Thailand and the Philippines to the north, and Indonesia at all other points. This former British colony gained independence in 1957. It is divided into two regions: Peninsula Malaysia, with eleven states from Johore in the south to the Thai border in the north; and, separated by the South China Sea, Sabah and Sarawak, the two states on the island of Borneo. The multi-racial/ ethnic population is classified into two main categories: Bumiputera (‘sons of the soil’), the Malays...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• List of boxes
• List of contributors
• Common abbreviations used in the text
• Acknowledgements
• Currencies
• Map of South-East Asia
• 1 Introduction
• 2 The changing face of human resource management in Indonesia
• 3 The changing face of human resource management in Malaysia
• 4 The changing face of human resource management in the Philippines
• 5 The changing face of human resource management in Singapore
• 6 The changing face of human resource management in Thailand
• 7 The changing face of human resource management in Vietnam
• 8 Conclusion