Thai Biz 101 - Doing Business in Thailand

From the most casual of sports fans, to NBA fanatics, “The Decision” was hard to miss last week. LeBron James, perhaps the greatest basketball player of this generation, and a Cleveland native, left the Cleveland Cavaliers to play for the Miami Heat, joining his good friend (and fellow superstar) Dwayne Wade and another star in Chris Bosh, who left the Toronto Raptors to be with the Heat. Following 2 years of deliberation amongst fans and interested parties, and a variety of potential suitors for LeBrons talents, the Heat ‘won’ and the three friends form what is potentially one of the most devastating 3-person groups ever to play together in the league.

To add further intrigue, instead of announcing his decision quietly, LeBron announced which team he was joining in a live, one hour special, billed as “The Decision”, but that has already been called “The Mistake”. Additionally, his former boss, Dan Gilbert, published an incredibly vindictive letter moments after the decision labeling James a coward, amongst other things.

The move has been commented on in every conceivable way amongst sport websites, publications, blogs and I’m sure has provided Twitter with serious need to review its current bandwidth. What has not been considered by anyone, as yet, are the incredibly interesting HR issues that this entire situation and series of events bring to the forefront. This article will discuss some of these.

Retention

The Cavaliers could not retain LeBron James, despite being able to offer him MORE money that their competitors. Despite 7 years of employment, not only did LeBron leave them, but hurt them in the worse possible way by announcing his decision on live TV. In Cleveland, fans burned his jersey and openly wept as the decision was shown on live TV. The bottom line though is that Cleveland did not do enough to retain LeBron James.

This demonstrates a serious issue in today’s workplace. Retaining key staff has never been more important, and it does not come down purely to money.

In Cleveland’s case, they lost LeBron because they did not build a contender around him, and provided only an average level supporting cast that could not carry the load when LeBron was ‘off’. In organisations, the provision of a ‘supporting cast’ can be applied to the provision of Employee Benefits.

Without a unique, creative and valuable Employee Benefits Program (EMP), employees feel less valuable and are provided less ‘ties’ to the organisation. An EBP cannot just include cash bonuses, pensions schemes etc, it must be more creative. Why not plan for team building events, off-site training to address specific needs, consider support for dependents of employees, provide staff loans at reasonable rates, plan staff events that will build unity and trust. It should be a holistic approach that takes in to account personal needs, not just financial needs.

Long term planning

The Cavaliers had 7 years to build a team around LeBron, but instead of applying a long term mentality to their moves (trades, acquisitions), they always went for the ‘home run’ summer whereby the team could win a championship immediately. If, 6-7 years ago the team had started to put the pieces in place around LeBron slowly, allowing a young team to grow together, the Cavaliers would have most likely become a championship-caliber team.

The short-termism of the Cleveland management team hurt them in the long run.

In HR, the same applies. At all times, senior management must be considering the needs if it’s team, and the growth of the team, not just this year but 3-5 years from now. Only then will employees feel a since of progression and be able to visualize the way the company is moving forward.

Recruitment

As much as Cleveland lost LeBron, Miami won by recruiting him… and recruiting him hard. Led by superstar in waiting Wade, a Miami hero for the past half decade, and Team President Pat Riley, regarded as perhaps the smartest and most creative executives in the sport, LeBron received the pitch from Miami, as well as 4-5 other teams, and eventually selected them.

Now, we don’t know what the pitch contained exactly, but it highlights the importance of having a strong recruitment policy, and ‘pitch’ for prospective employees.

In any interview, it is well known now that both parties are being interviewed. The employee needs to be impressed by the organisation as much as the organisation needs to be impressed by the employee. But how many organisations actually act upon this?

Every organisation needs to look at itself from the perspective of a prospective employee and ask itself honestly:

1. Why would I want to work for this company?

2. What would stop me working for this company?

3. How does this company compare, as an employer, to its competitors?

The answers to these questions are important. Even if you are a (on the surface) relatively boring organisation managing accounting services for clients, this doesn’t mean you have to be a boring employer. Why would an employee choose you over your competitors? What are the benefits that might sway their decision? Can you effectively communicate the benefits of being employed at your organisation to a prospect? Consider your benefits program, corporate culture, emphasis on HR planning, plans and growth of the company, the interesting and fun teams, exciting elements of the work, responsibilities, opportunities for creativity and investing ideas. Do your pitch to the prospect during the interview.

Balance

Have Miami done something brilliant or ridiculous? Every organisation has a budget that they wish to stick to. In the NBA, this is made more formal via the application of a salary cap. Teams cannot spend more on salaries than the salary cap figure, un less it is resigning current players, and even them they are to pay what is called a luxury tax. In today’s climate, most teams are working very hard to keep spending below the salary cap.

For Miami, to sign these three top players has taken the vast majority of their available ‘cap space’ or budget. Given that a team MUST have 15 players under contract, the Heat are left with the problem of filling the gaps and not having much money to do it with.

Time will tell whether 3 superstars can win a championship with 12 low cost role players and rookies, and it will be interesting to see the results from an HR perspective. For SME’s especially, there is always the temptation to break the bank and hire a superstar General Manager to manage the business, and trust that this one person can carry the load of the Managing Director, and handle marketing, operations, HR and sales. Sure, maybe they can, but if that budget was instead spent on hiring 4-5 lower cost managers in each department, would this provide more stability and a better structure. What happens when your superstar decides to leave (or for the Heat, gets injured)?

Stakeholders

Whilst we may look at HR as an internal issue, it should be remembered that there are greater stakeholders in the mix too. Look at Cleveland fans, who cried and shouted and screamed and were silent after hearing the decision. Yes, in sports this is more relevant, but organisations also need to consider the effect on other stakeholders when managing their HR function.

As an organisation, hiring and firing effects employees yes, but also families, competitors, customers, suppliers and more. Consider the relationships you have in place with these stakeholders, and how a staff addition or replacement might affect these groups. In the end, the best business decision needs to be made, but sometimes the best business decision is also one that takes in to account factors not directly related to business itself.

Greater good

What the Miami Heat have done especially well is create a team spirit already. Their two superstars, and star, have all accepted LESS money than other teams could have paid them in order to ensure they could play together and build something special. This seems like an alien concept in today’s “I want” economy. Accepting less for yourself, in order to achieve the greater good for the team.

This can come down to corporate culture. The best organisations can retain their employees without having to break the bank. By creating an interesting corporate culture where success is recognised and rewarded, politics are minimised, hard work is prevalent and fun is had by the team, employees WILL stay longer for less money. Looking back at Employee Benefits Programs, these should enhance benefits for employees over time, thus keeping the employee looking forward… “just 2 more years until my bonus plan doubles”… “wow, in 6 months my department gets free tax planning training”.

Conclusion

The HR issues that come from “The Decision” are interesting and provide a slightly different view on the entire event.

Written by Stuart Blott, General Manager, Sutlet Group Co., Ltd

Sutlet Group is Thailand’s leading provider of business services and solutions, including accounting, visa and work permit management, HR, legal services and marketing solutions. See www.sutletgroup.com for more information on how to start up, development, support, management and grow your business in Thailand. All the HR issues outlined above can be addressed by the Sutlet Group.

As everyone has seen on the news over the past 6 weeks, Thailand is currently experiencing some very serious political problems. Red shirt demonstrators are protesting against the current government, in the hope of calling new elections within the next month. These protests have occasionally turned violent and, tragically, lives have been lost in the fighting. At the time of writing, there still appears to be no logical solution to solving the problems, and even quick fixes (like military intervention) are just that… a quick fix.

We have been asked by numerous people overseas - how is it all effecting business in Thailand? This is an excellent question.

For the vast majority of businesses, we are attempting to continue as normal, although with constant disruptions taking place as a result of the red shirt activities, this is becoming harder and harder to achieve. On a daily basis, we need to check whether the BTS skytrain and MRT underground are actually functioning, and also whether new road blocks are disrupting traffic in certain areas. We have a dedicated person in the office responsible for checking the news and advising the team of new events and problems to be mindful of. On several occasions we have closed the office early, or even all day, in order to avoid potential problems for our staff getting to and from work.

Imagine the lost working hours because of all of this - and this is for a company located several km from the trouble spots.

We have clients, partners and suppliers who have offices in the trouble spots, and many of them simply do not want to ask their staff to go to work. One partner of ours has decided to tell their staff to work from home, whilst others in their team are working from our office. This is an incredible disruption to his business activities.

Meetings are generally going ahead for businesses - but everyone is making allowances for late arrivals and traffic problems. Chamber Events have been postponed or canceled in some cases, but in most they continue. Many companies and groups are turning to teleconferencing and video conferencing as a solution.

Almost all companies here have accepted that 2010 and even 2011 are going to be hard years now. This is especially true of those working in tourism and hospitality, we some hotels reporting occupancy drops of 90%. compared to last year.

At the Sutlet Group, we are therefore making plans to work within the problems, rather than use them as an excuse. Our focus will turn to providing clients with cost-efficient solutions aimed at reducing costs. This will be addressed in the next post.

How are are troubles effecting your business? Let us know.

Hello to all our readers!

We do apologise for our lengthy absence, but Thai Biz 101 is now back and will be posting regularly in conjunction with the Sutlet Group, PB Legal Services and FCA Thailand (all providing business services and solutions to Thailand’s corporate community).

As an update - Sutlet Group has been very busy over the past few months, recruiting the management team necessary to take the business to the next level. This includes:

Stuart Blott as our new General Manager - Stuart has 9 years of management experience in Thailand has has worked in IT, membership programs, tourism & hospitality and corporate team building. With an eye for operations and marketing, Stuart aims to lead the team to new levels of performance and customer service delivery. Stuart is based at our Bangkok office.

David Mitchell as our new Business Development Manager, with a focus on financial solutions and accounting. David will be based at our new Pattaya office and will oversea all financial services, providing our clients with a level of expertise unparalleled in Thailand. Davids international success and experience has involved both private sector and senior government enterprises.

One last Sutlet Group update! Our Chairman, Chris Thatcher, was recently elected to the British Chamber of Commerce Board of Directors! Congratulations to Chris.

Thats all for now - keep posted for more Thai Biz 101 updates!