Malaysia is still eyeing the term ‘developed nation’ and with that ambition in mind, the country needs capable workhorses that can pull the cart through.
Still in dire need of skilled and semi-skilled workers to achieve the national agenda, the country needs not only to stop the brain drain currently plaguing the country but also upskill the workers that are in the active field.
Thus enters the Human Resource Development Fund (HRDF), a body formed with the aim of developing quality human capital towards achieving high-income economy.
“A wise man once said that the empires of the future would be the empires of the mind, which suggests the importance of knowledge and skills in determining the fate of nations.
“It is undeniable that the intellectual, cultural, social and economic empowerment of the people – also known as prowess – is needed for any nation to progress and to stay progressive,” quoted HRDF chief executive Datuk Vignaesvaran in an exclusive interview with BizHive Weekly.
The fund was formed in 1993 and has spent the last 23 years spearheading the upskilling of Malaysian workforce by financially assisting companies for HR development.
With this, employees with no formal education but have learnt the relevant knowledge, experience and expertise in the workplace can also be certified based on their competency levels.
Vignaesvaran affirmed that human capital is a critical enabler to create economic value and enhance a person’s quality of life – which can only be done through education and training.
“In this instance, Malaysia will need to gain a competitive advantage in the new economic order driven by powerful forces of the Asean Economic Community (AEC) and the Trans-Pacific Partnership.
“Hence, up-skilling and re-skilling of its talents are needed to meet the challenging demands of the dynamic global business and trade. Local talents in this context will need to possess qualities that will help them achieve global competitiveness and put them on a level playing field with their competitors,” he added.
As reinforced in the Eleventh Malaysia Plan, “An efficient and effective labour market is necessary for local, regional and global competitiveness which will attract foreign direct investments and propel Malaysia towards economic growth.”
Currently, Malaysia sits among 20 top economies on the Global Competitiveness Index (GCI) and will need to embrace solutions that will help them address challenges to include, skill shortages; talent mobility and talent retention.
“Up-skilling and re-skilling of our inherent talent and resources will not only fuel our high-priority sectors, creating high-income jobs, but will also help Malaysia transition from a developing to developed economy,” he enthused.
Problems arising from employers
Companies registered and incorporated in Malaysia who have registered with the PSMB and paid their HRD levy are eligible to apply for training grants.
They can defray all or a major portion of the “allowable costs” of training attended by their employees. Training must be in the area of direct benefits to their business operations.
The problem now is that most employers in Malaysia want to hire workers who are already skilled and do not need training, and yet without training, these workers would not have the necessary skill level – creating a Catch-22 scenario.
Aside from that, most training regimes chosen by employers usually come under the team building and motivation category as popularly requested – which is not the certified courses the HRDF is pushing for.
The concept that most employers in Malaysia fail to realise is that training the workforce is essential to the achievements of a business with the most positive benefit is of course, better employees.
The idea in this is that the better the employees are at their job, the easier it is for the company to attain the level of productivity required, and hence, success.
“Most of the people take training as a cost. But, as a matter of fact, training in itself is an investment,” Vignaesvaran highlighted. “For individuals, it builds skills and lifts earnings potential, while for businesses it contributes to a more productive workplace.”
The actual motivation to undertake training may come from the individual, the employer, or a combination.
Some employers fear that the benefits of investing in training are lost when employees leave and take their newly developed skills to another employer.
Meanwhile, many employees clearly see the benefit in taking charge of this investment in their future, setting clear goals as to the nature and content of the training that will best suit their career plans.
According to a survey done by Kelly Services, when asked to identify the main motivation for learning new skills or undertaking training, the largest share of employees (57 per cent) cite the opportunity for promotion with their current employer. A further 47 per cent cite the opportunity for promotion/advancement at another company, and 42 per cent plan to enter a new field of work.
In essence, the largest group of employees are motivated to undertake additional training or skills development by a desire to stay in their current job. At the same time, a smaller but still significant number are keeping their options open to a diverse range of opportunities outside their current employment.
From the employers’ eyes
From an employer’s perspective, one of the key motivations behind the investment in training is for staff retention. However, the likelihood of higher retention may not be uniform across the workplace.
There is a noticeable difference across generations when it comes to the main factors that influence their training decisions, explained Kelly Services.
The upheaval in local labour markets over recent years and business cutbacks in funding of professional development have changed the way that many employees view the need for upskilling.
Rather than relying on their employers, they are taking control of their own career development.
Globally, 60 per cent of workers are either actively seeking further education or training (23 per cent), or considering it (37 per cent) to pursue a new field of work.
The APAC region stands out as a skilling hotspot, with 69 per cent of those surveyed either considering or seeking further training.
The propensity for individuals to undertake fresh training or education will depend on a host of factors, including industry dynamics, the state of competition in the jobs market, and the likelihood of the training ‘investment’ producing a payoff in the form of salary or promotion.
For training to be meaningful it needs to be relevant and practical-not ‘training for training’s sake’.
In an era when employees are embracing the notion of self-directed training and continuing education, there is a new focus on providing the most appropriate type of training. Employees seem to possess an inherent understanding of what works best in terms of the development of their skills.
For the majority of workers, the most desirable training is that provided by their employer: training that is centered on the real and practical elements of the job at hand.
Keep in mind, in today’s evolving workforce economy, the last two decades have radically altered the way skills are acquired and developed.
Skills are no longer ‘front-end loaded’ onto a career but rather characterised by lifelong development and renewal as most skill sets have a finite life.
It was noted that the upgrading and renewal of skills plays a critical role in personal and professional development. It also has a vital role in broader workforce development, which is the cornerstone of organisational efficiency and productivity.
The responsibility for managing skills development no longer resides solely with the employer.
Employees recognise that they need to take control of this important aspect of their careers, and think strategically about how they invest in the development of their intellectual and professional capital.
What is clear is that personal decisions about training and professional development are now an integral part of the employment equation, and have an important bearing on employee morale, performance and retention.
However, despite all the research done, many Malaysian companies are still reluctant on upskilling and training their staff due to fear of the employees seeking better opportunities after receiving such training.
In certain sectors such as service based jobs, skills have become more flexible as the service industry has grown. Service jobs place a higher premium on good interpersonal skills and access to a large network-the kind of skills often developed precisely by changing jobs noted a Bloomberg article.
A new employer, after all, also means new co-workers. In all but the biggest companies, it’s almost impossible to develop the same skills by staying in one place.
“The result, though, is an example of classic economic short-sightedness. If job skills translate, companies can make the cost-saving decision to cut worker training and simply hire people with the skills they need.
“But if everyone makes the same calculation, we end up with a collective action problem: No one is training. The number of unfilled jobs suggest that employers’ expectations may not be realistic.
“More education might make up the difference, but school can rarely teach what most people learn on their first job,” it added.
While SMEs contribute up to 65 per cent of total employment, their GDP contribution is still nominal at best when compared to more developed nations.
Many Malaysians lack qualifications
HRDF’s Vignaesvaran observed that most employees in Malaysia are either unskilled or semi-skilled, and while there have been several initiatives by both HRDF and the government to employees to send workers for upskilling training, the results seem to be less than satisfactory.
“Many of our member organisations as well as industry associations in fact strategise on optimising the Fund to continually up-skill their labour force for greater productivity.
“However, some of the employers have submitted their feedback, which is currently being evaluated by HRDF for win-win,” he stressed.
Vignaesvaran said among concerns were expensive training courses, increase in demand from employees post training, training not suiting the needs of the company as well as employees seeking greener pastures post training.
Vignaesvaran also highlighted that another reason why SMEs are not keen on upskilling their staff is due to the fact that most SMEs operate with a limited number of staff.
This means that a single worker tends to hold multiple responsibilities, hence when one employee goes for training, there’s usually nobody to fill the vacuum causing disruptions to daily operations for the company.
As stated previously, the high turnover of staff is a disincentive for SMEs to invest in training hence it’s not uncommon that workers use SMEs as a stepping stone to a better-paying job with more established companies.
After gaining experience and skills working with SMEs, these workers would move on to bigger companies to enhance their career prospects.
Namely, a human resource startup, analysed more than 13,000 salaries in high-growth fields like technology, ecommerce, advertising as well as digital media and found that employees within a specific salary range are more likely to stick around.
It also added that incentives also encouraged employees to stick around.
Senior rewards and human resources professionals indicate that retention of key talent is one of their top challenges and that they worry about having the people needed to win market share when the economy improves.
They fear that key employees are becoming increasingly frustrated in their organizations due to layoffs, the resultant expansion of job accountabilities and constraints on reward programs – primarily limited base salary increases, lower incentives and fewer advancement opportunities.
CIPD noted that companies might offer a cell phone, travel reimbursement plan or even sodas in the break room, but in today’s modern workforce, those perks have moved more toward standard than competitive.
“Today, employees seek more intangible perks like a sense of community or a boss who understands them.
“Many companies achieve this by offering perks that help with team bonding. In fact, 55 per cent host company picnics, and five per cent allow employees to bring their pets to work,” it noted.
Increasing employee retention
The CIPD study found that increasing learning and development opportunities plays a significant role in increasing employee retention. Another study found that promotion opportunities were a major psychological factor in job satisfaction.
It’s apparent that companies need to offer advancement opportunities as a goal to work toward to retain employees. Employees who are bored or feel trapped will go somewhere else that gives them the room needed to grow their skills.
Vignaesvaran commented on the matter by noting that training and up-skilling programmes can be very powerful tools to motivate and enhance the productivity of employees.
However, it is crucial for employers to have in place employee retention strategies, which are independent of the training and development plans of employees.
“Training can actually improve performance and if followed by appropriate ‘placements’ within the organisation such as matching the enhanced skill sets with additional or enhanced responsibilities,” said the chief executive.
Remuneration is always a key factor for any employee. With higher skill set, employees tend to demand a higher wage which begs the question if this is among the key reasons why Malaysian employers are adamant on keeping the wage low despite the increase in productivity from their employees after training.
From HRDF’s perspective, the single most important factor that determines the pay or a worker’s employability is their ‘Skill Sets’.
Employees with higher skill sets would be able to increase their productivity as well as their contribution to the company’s profits as well as growth.
“Therefore, companies need to shift their mind sets and be prudent in planning their wages to commensurate with skill-sets of their employees,” he stressed.
He added “Companies should prioritise the welfare of their workforce by creating a positive working environment. As a suggestion – companies could start by promoting ‘good health’ through sessions on simple office exercises, dietary
counsel and lifestyle tips. This will keep them active and productive.”
Research suggests that workplaces that value employees’ well being have yielded the greatest rewards because of increase in productivity levels.
This is among the factors that contribute to the national brain drain whereby local talents start seeking greener pastures overseas translating to a decrease in skilled human resource locally.
Vignaesvaran clarified that one of the many reasons for the local brain drain is a wide gap that exists between the skills, salaries and the industry jobs.
He noted that people explore opportunities outside of Malaysia for want of better salaries for their skills or jobs that would put their skills to productive use.
“I strongly believe that the issue of Brain Drain can be managed well through re-skilling and up-skilling training programmes; mapping the right talent to the right industry and organisations (competency mapping); and a well-planned talent development and retention strategies by the respective HR units of organisations.
“Also, if we are able to build a high-skilled workforce, we will also be able to successfully reduce our dependency on foreign expertise in semi-skilled and skilled areas as Malaysia is expected to create over 1.5 million new jobs by the year 2020 in industries that require highly skilled talents!” he exclaimed.
Measures to boost human resource management
In its effort to assist the nation, HRDF has embarked on a multitude of programmes to motivate employers to train their staff.
The group have kicked off the 30 per cent Consolidated Fund on April 2016.
There are six major programmes under this pilot project which includes the 1Malaysia Outplacement Centre for retrenched local workers, and the Train and Replace Programme for training and replacing foreign workers with Malaysians.
Vignaesvaran explained that the 1Malaysia Outplacement Centre would lead to job opportunities for retrenched Malaysian workers and unemployed graduates to fill various positions in the aviation, hotel and retail sectors.
For the 1Malaysia Outplacement Centre pilot programme which begun on April 18, 200 retrenched local workers are currently being re-skilled for guaranteed job placement in either the same or different sectors.
Several companies from the aviation, retail and IT sectors have already approached HRDF for collaboration with this programme.
As for the ‘Train and Replace’ pilot programme which started on March 28, employees from the retail, aviation, oil and gas, and hospitality sectors had been selected to replace 115 foreign workers with Malaysians.
For this, four courses had been approved to provide specific skills for local workers. Among the courses identified are Certificate in Retail, Abridged Helicopter Commercial Pilot Licence, Certified International Welding Inspector, and Professional Certificate in Animal Husbandry.
The 1Malaysia Outplacement Centre aims to train 3,000 workers while the ‘Train and Replace’ programme would train 7,000 workers annually
Other major programmes which HRDF plans to carry out with the unutilised portion of the levy, include SMEs up-skill and re-skill programmes, the 1Malaysia Globally Recognised Industry and Professional Certification Programme (1MalaysiaGRIP), and the certification or value-added programmes.
In its efforts to get in touch with the Sarawakian employers more, HRDF is also planning to open two more branches (Sibu and Miri) to get a better footprint in Sarawak as well as to enable an easier dissemination of information to local employers here.
Vignaesvaran noted SMEs need to build their organisational human capacity and capability by acquiring the latest knowledge, expertise and technology through continuous up-skilling of their workforce.
“As such, and in line with the recommendations under the NEM, most of the training programmes offered under this initiative will be focusing on certification and are internationally recognised.
“Our teams are extremely adept not only in meeting the objectives set out in the HRDF Act, but also in providing continuous feedback to improve the system, making it more efficient and effective in its implementation.
“I strongly believe that the story of Malaysia does not end with what we are today, but what we can be tomorrow. At HRDF, our endeavour is to harness such potential towards catalysing development of competent workforce through various upskilling and capacity building programmes.
“What is most critical in all that we do is to educate and raise awareness through various promotional initiatives on the need for effective skills enhancement programmes to remain competitive as individual professionals, as progressive businesses and as a productive nation,” said Vignaesvaran.
Despite the uphill battle the HRDF is currently fighting in order to persuade employers to upskill their employees, the 67 false claims made by human resources trainers is not making things easier for the fund.
As a recap, local media reported that a total of 44 registered human resources departments have collaborated with 13 training providers to make 67 false claims from the HRDF.
The false claims totalled RM1.17 million and so far 49 training providers, as well as eight fraud cases, have been referred to the Malaysian Anti-Corruption Commission (MACC) for investigations.
“I believe that Malaysia (in to the future) will have no choice, but to build the quality of its human capital to gain and retain its competitive advantage in the global marketplace.
“This will require for the industry and our HR principles to evolve and our mind-sets to change, making way for policies that will motivate and encourage talent to continually enhance their skills and thereby, their income.
“A high-skilled workforce is one of the absolute determinants of a high-income nation and sooner than later, we as a nation have to get there, in keeping with our aspiration to achieve a knowledge-intensive, developed economy status,” enthused Vignaesvaran.
At the end of the day, the panacea for the current issue of the limited pool of skilled workers are there, it is just a matter of employers actually reaching for the remedy and taking it.