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Speech at 2010 Singapore Human Capital Summit

Mr Teo Chee Hean, Deputy Prime Minister, Resorts World Sentosa, Compass West-Central 1 & 2 Ballroom

Skills, training and development
Mr Gan Kim Yong, Minister for Manpower

Mr Lee Yi Shyan, Minister of State for Manpower and Trade and Industry

Mr Hawazi Daipi, Senior Parliamentary Secretary for Manpower and Health

Distinguished guests

Ladies and Gentlemen

  1. I am delighted to join all of you at the Singapore Human Capital Summit 2010.
  2. This is the third year Singapore is hosting this Summit. Emerging from the global economic downturn, the Singapore Human Capital Summit presents an opportune platform for government and business leaders, human resources practitioners and academics to come together to deliberate people strategies that will enable businesses to fully optimise the opportunities arising from the recovery and future growth of Asia.

    Sustainable Growth – Focus on Productivity
  3. Asia has emerged strongly from the economic downturn, and is poised to be a key source and driver of global growth in the coming decade.
  4. According to estimates from the International Monetary Fund, Asia’s combined economies will be larger than that of the US and the European Union put together by 2030, with the region’s share of world GDP growing from under 30% to more than 40%. Urbanisation, rising income levels, and a growing middle class will create a huge and diverse market of emerging business opportunities.
  5. However, the evolving economic and manpower landscape will also pose new challenges for businesses operating in Asia. In the short term, the slowdown in recovery of the US economy is renewing fears that a double-dip recession in the world’s largest economy might become a reality and weigh on Asian economies. In the medium to longer term, companies will have to grapple with issues of economic sustainability, competitiveness and stability.
  6. An ageing population will increase dependency ratios, and make enhanced productivity an imperative for all countries to maintain our competitiveness and raise our standards of living. Asia will need to transform itself and produce more sophisticated products and services to stay ahead of the competition. We will need to focus on continually improving our productivity and innovation, to enable our workforce to move up the value chain and take on more skill and knowledge-intensive jobs. This is pivotal for Asia to stay ahead and enjoy sustainable economic growth.
  7. To bring about productivity improvements, companies instinctively understand that this can be brought about by investing more in capital equipment, product development and IT. What is less appreciated is how good manpower management and workplace practices also have a critical impact on productivity. This fact is reinforced by a joint study by the London School of Economics, Stanford University and McKinsey in November 2007, which showed that across 4,000 medium-sized manufacturing operations in Europe, the US and Asia, a single-point improvement in management practice score (on a scale of 1 to 5) resulted in an output increase that was equivalent to a 25% increase in the labour force or a 65% increase in invested capital.
  8. Good management practices raise employee engagement, which in turn will lead to lower turnover, higher productivity, and greater innovation at the workplace. We will be hearing examples of successful organisations in this respect tomorrow at the plenary session featuring the Asian Human Capital Award winners.

    The War for Talent – Asian-Centric People Strategies Required
  9. Asia is unique and diverse, and the absence of an Asian one-size-fits-all approach to deal with the recent economic downturn illustrates this.
  10. Similarly, the people issues faced in Asia are varied and complex. While there is a rich base of human resources in Asia, there is a scarcity of professionals well-versed in modern management techniques that marry good knowledge of local operating conditions in Asia with the global norms of business and trade.
  11. One key challenge for growing companies in Asia is therefore to build up a robust pipeline of professional and leadership talent to meet future business demands. Companies will need to think beyond attractive remuneration packages to create a holistic value proposition in order to attract, retain and develop their management team.
  12. The good news with Asia’s strong recovery and robust economic outlook is that many international companies are shifting operations and hence positions to Asia to leverage on this growth potential. For example, Medtronic, the world’s largest medical technology company and a Fortune 500 company, has chosen to relocate its International Headquarters to Singapore, as well as constructing a new manufacturing facility. Similarly, China’s Hanlong Group1 will be investing US$100 million in the research and development of solar energy solutions, system assembly and International Headquarter activities in Singapore.
  13. Talent from all over the world will also be looking to Asia for job and career opportunities to match their ambitions. While this contributes towards a greater pool of expertise available here in Asia, it also adds complexity to the myriad of people issues that need to be tackled. A better understanding of Asia is required to help integrate these global talents with the local workforce and society. Good pan-Asian research on people strategies will be an “enabler” here.
  14. Let me highlight three key human capital challenges and trends in Asia surfaced from such research.
  15. First, there is a need for effective and authentic localised leaders for organisations in Asia, and investing in this area will bring about great dividends. An Accenture study commissioned by Singapore Ministry of Manpower (MOM) showed that managers in Asia are more than twice as likely to be highly engaged when they have strong leaders who understand the local operating environment and culture. Conversely, when confidence in their local senior leaders is low, they are 5 times more likely to be disengaged.
  16. Second, organisations need to harness the strength of diversity and collaborate effectively across borders. The Asian workforce is naturally diverse due to the many cultures in the region, and organisations can benefit from tapping on this diversity of thinking, experiences and perspectives to tackle business issues and innovate. While managing a diverse workforce can be more challenging, organisations will be handsomely rewarded if this is done right.
  17. According to the same Accenture study, there is a strong positive co-relationship between cross-border collaborations and high performance in Asia, and some four out of five managers in high performance businesses surveyed stated that employees in their company regularly interact and collaborate with colleagues in other countries in Asia. For organisations with more than one physical location, enabling and promoting collaborations will enrich the quality of discussions and exchange of ideas, and help drive the desired high performance.
  18. Third, HR and Organisation Development policies need to address emerging demands from our workforce. Organisations need to consider the softer aspects of work, and enhance organisational structures and processes to be more productive.
  19. Employees in Asia are expecting to work smarter, not longer. They are demanding a higher quality of life. They seek greater meaning in their work, work flexibility and work-life harmony. For example, according to research on the “Future of Work” commissioned by the Singapore Ministry of Manpower, companies in Asia are not adequately prepared, physically and culturally, to provide flexible work arrangements and work-life harmony for their employees. Asia-centric people strategies will be required to engage the Asian workforce better. Companies will need to formulate a response, not only to address these current challenges, but also to “future-proof” their organisation to stay ahead of the game.

    Singapore to Facilitate Asia’s Growth as a Talent Base
  20. Singapore can play a vital role in facilitating Asia’s growth. Singapore can be of value to global companies expanding their footprint in Asia, and also Asian enterprises seeking to regionalise and globalise from Singapore.
  21. Having a strong base of multicultural and cosmopolitan talent, who can appreciate Asian markets, cultural and business practices, Singapore is uniquely positioned at the confluence of global talent flows between the East and the West, where we can develop new products, services, knowledge and practices customised for both markets.
  22. First, Singapore can be a hub where talent is harnessed and developed to drive business and innovation for Asia and the world.
  23. I am pleased that we have made significant progress in bringing in some of the world’s most renowned companies to set up their corporate universities and training facilities in Singapore. Procter & Gamble, for example, has just opened its Asia Leadership Development Centre at Novena Square last week. This centre will see 500 P&G managers across Asia trained in Singapore annually, and help develop a pipeline of P&G leaders that can manage across its Asia businesses.
  24. The Human Capital Leadership Institute, set up by MOM and the Singapore Management University earlier this year, will be bringing together the top minds of the world to offer best-in-class executive programmes to examine pan-Asian human capital challenges and solutions. An example is the collaboration with the London Business School to conduct its renowned executive programme on “Human Resource Strategy in Transforming Organisations” for the second time this year, with an Asian focus.
  25. It is also important that a small country like Singapore continues to invest in raising the human capital and leadership capabilities of companies to more effectively manage their people challenges.
  26. As part of the national Singapore Workforce Skills Qualifications (WSQ) framework, the Singapore Workforce Development Agency, has been developing a comprehensive menu of Human Resource and Leadership & People Management courses, which will total 114 by the end of next year. Leadership & People Management will also form a core component of a new Business Management WSQ framework to be launched next month. Singapore-based companies will be able to tap on these courses to enhance their human capital capabilities. On enhancing the capability of SMEs, the Singapore National Employers Federation has just launched the SME Leadership Enhancement Programme for C-suite executives to develop their leadership and people management capabilities.
  27. Second, Singapore can be a centre for good pan-Asian research to help companies in Asia remain at the forefront of effective people strategies. I am happy to learn that our efforts here are also yielding positive results.
  28. PricewaterhouseCoopers will be setting up their Asian Saratoga Centre in Singapore, bringing along their premier Saratoga program in measuring and benchmarking Human Capital and HR functions. This centre will develop a new Asian database, metrics and benchmarks for comparison with existing Western benchmarks, and explore the need to develop new metrics for Asia and globally.
  29. Aon Consulting’s Global Research Centre in Singapore has also developed a new tool, the People Risk Index, which can be used to measure the people risks of doing business in global cities. This will help businesses make location and policy decisions that take into account people risks, including making a more holistic assessment of a city as an investment location, as well as identifying high impact areas of people risk so as to devise intervention or mitigation strategies.
  30. Third, Singapore can provide a platform to build strong networks and relationships, and facilitate the exchange of insights and ideas amongst the various stakeholders in the Asia human capital ecosystem.
  31. A strategic conversation amongst leading thought leaders, Asian business leaders and Chief HR officers that we have initiated is the Executive Roundtable organised by the Ministry of Manpower. In the third roundtable held earlier this year, these top leaders deliberated on business challenges that they face, and the leadership interventions that can be put in place as a response. The thoughts generated at this session culminated in the book “Asian Leadership: What Works”, edited by Professors Dave Ulrich and Robert Sutton; which I understand has been included in your conference kit.
  32. And of course not forgetting, this Singapore Human Capital Summit is another exclusive platform where global and regional business leaders, industry practice leaders and human capital thought leaders gather, to discuss the latest trends, ideas and practices in managing and developing human capital in the Asian context.

    Conclusion
  33. To effectively and sustainably capitalise on the immense growth potential in Asia, organisations will need to develop a holistic Asia-centric people strategy and build a strong leadership and talent base. I hope that the discussions at this summit will yield useful insights for all participants in this ongoing quest.
  34. I wish you all a fruitful summit.

    Thank you.
1Hanlong Group is one of the top 20 largest private companies in Sichuan Province in China, and is the leader in concentrated photovoltaic (CPV) in China. It is a growing industrial conglomerate with diverse business interests, including solar power generation, wastewater treatment, infrastructure development, mining resources development, alcohol beverages, pharmaceutical production, education and tourism.