Human resources and the economic crisis

Characterised by an “end of the line” industry, Thailand is a country where staff costs are high. Nonetheless, the annual Compensation and Benefits Survey has revealed that 76% of the 120 Thailand-based companies questioned have continued to recruit during the crisis.
This group of two studies, piloted by the Chambers of Commerce of Australia and the United Kingdom with the participation of six European Chambers, covers the first half of 2009. “This figure is not really surprising,” says Isabelle Michelet, Research and Consultancy Director with Prasena, a resources management consultancy that made the same observation in an independent study. If companies have continued to recruit it is because the crisis has not had the same impact here as in Europe and the United States. “Only companies exporting towards those regions severely affected have seen their businesses falter,” she explains.
The first study by the Chambers, carried out by Aon, shows that 56% of the companies questioned noticed an immediate drop in their orders, whilst 16% spoke of no change and 28% even mentioned an increase. Their problems were above all centered on a shortage of cash, in particular the subsidiaries of the big western groups. “Although local market conditions did not justify them, directives have been drastic (...). Sometimes, the subsidiaries have had to downsize, even though the market was there,” explains Isabelle Michelet.
Encouraged by their head office or taking advantage of this troubled period to “put their house in order”, companies have nevertheless attempted to limit mass redundancies in favour of voluntary departures by staff who were then not replaced. “These cuts have most often been carried out laterally, so as not to destabilise the production tool,” adds Laurence Ricca, Manager of the Employment Centre and HR for the Franco-Thai Chamber of Commerce (CCFT) which took part in the studies. “The situation is nonetheless very different across the sectors,” she says, “and this survey is limited to the number of respondants. Only two transportation companies, one of the worst hit sectors, sent in their questionnaire, for example.” For its part, the civil engineering industrial manufacturing company Dextra Asia Co Ltd., which saw its business decline sharply in February-March 2009, chose to play on its production staff.
“Often employed by the day, employee numbers followed the fluctuations in the order book,” says Director Jean-Marie Pithon. “On the other hand, we have done our utmost
to retain our managerial staff, even in periods of stagnation. We have even taken he opportunity to recruit for key positions, since the time was right.“Circumstances have, in fact, put the emphasis on the idea of “talent” with companies trying to retain these “good” employees to be ready for recovery.
In a country where recruiting a non-manager takes an average of 40 to 50 days, “those who have not been in a position to do so may now have problems handling recovery,” says Laurence Ricca of the CCFT. The study also shows that companies have tried to optimise their human resources in recent months, in particular by improving performance systems. “French companies that had not yet set up a performance-linked remuneration system have done so, or will do so,” explains Laurence Ricca.
As for salaries, the second survey bythe Chambers, carried out by the Merc consultancy, indicates that they have increased by an average of 5% this year. Bonuses are only slightly lower than last year and forecasts for 2010 are the same. “Problems within companies stem from incoherences,” says Isabelle Michelet, citing the example of General Motors Thailand. The manufacturer has offered just a one-month bonus to its employees despite large profits last year. At the beginning of October, its Rayong factory (150 km south-east of Bangkok) had to suspend production as a result of an all-out strike by its workers. “Generally speaking, the crisis reveals a great lack of internal communication, on which we must work,” concludes Laurence Ricca.