10

Human Resource Management in Malaysia

Marlin Abdul Malek, Arup Varma, and Pawan S. Budhwar

Over the last 10 years or so, HRM in Malaysia has evolved from merely an abbreviation that HR personnel used to show that they are abreast of the current developments in the function around the globe, to a strategic function that is awarded due recognition. Indeed, the new-found respect for HRM is manifested in the establishment of the Ministry of Human Resources, in charge of all human resources related aspects and dedicated to producing a skilled, knowledgeable and competitive workforce through ongoing training. This ministry is also responsive to the current development of global HR practices through close ties with the employers and trade unions, and by encouraging and maintaining conducive and harmonised industrial relations between employers, employees and trade unions, for the nation’s economic development and wellness of people. This chapter will continue from the previous edition by highlighting the challenges that Malaysia faces in light of stiff competition and shifting global human mobility – the by-products of globalization. We start with a discussion of the historical development of HRM in Malaysia, followed by the role of HR in most companies, key factors in determining HRM practices and policies and key challenges facing HRM in Malaysia. We also look ahead to the future and speculate how the HR function is likely to evolve over the next five years. We conclude with a short case study that showcases HR practices in Malaysia with a discussion of how these practices differ from HR practices around the world.

Human Resource Management (HRM) in Malaysia

In Malaysia, the history of Human Resource Development (HRD) can be traced back to the 1980s, although there are no clear documents noting the emergence of HRD in Malaysia. It is speculated that HRD may have started when the Commonwealth Secretariat began developing the Human Resources Development Group (HRDG) in 1983 with the intention of assisting the Association of Southeast Asian Nations’ (ASEAN) countries in developing their human resources (Commonwealth Secretariat, 1993). This was followed, in 1984, by the ASEAN countries commencing their proposals to provide assistance in developing human resources, particularly in education, training and skills development for new technology (Hashim, 2000). On the other hand, it has also been argued that HRD in Malaysia could have started emerging during the mid-1970s when the government began developing the Bumiputras in businesses to improve economic disparities (Malaysia Government, 1971), or it may have started during the economic recession in 1985, as it was during this period that the government began its aggressive drive towards manufacturing and industrialisation (Malaysia Government, 1991). However, clear evidence of the emergence of HRD was seen when the Government of Malaysia began to include HRD strategies in the country’s development plans and policies in 1991 in the Second Outline Perspective Plan (OPP2) and the Sixth Malaysia Plan (6MP). One of the main thrusts of these plans is to become a fully industrialised nation with a skilled and knowledge-based workforce by the year 2020 (Malaysia Government, 1991). Nevertheless, it could be argued that HRD could have started even before Malaysia’s independence, when workers migrated from India to work in the tin-ore mining fields and oil palm plantations.

This chapter is designed to provide a general overview of the HRM practices and policies and a discussion of future challenges for HR practitioners in this country.

The Role and Importance of HR

At the outset, it is worth mentioning that while HRM has been around in the corporate sector of Malaysia for a while it has received limited academic attention. In this connection, Hazman Shah (1998) noted that Malaysian human resource managers tend to have little influence in the strategic management process, while Rowley and Saaidah (2007) have argued that the attention has always been on the politics and economy of Malaysia with little attention paid to its people management practices. These authors concluded that, in general, Malaysian people management would be better characterised as still tending to be more like the traditional ‘personnel’ function than the more current ‘HR’ management. Indeed it is often argued that management in Malaysian organisations tended to treat staff as a variable, rather than a fixed asset, and that HR issues were treated as being of secondary importance, as organisational priorities centred upon financial control and profit maximisation. Indeed, Hope-Hailey, Farndale and Truss (2005) have noted that one particular area of neglect in understanding the link between HRM and performance is the role played by the HR department. Chew (2005) concurred that although the HR role is gradually expanding in importance, the general notion is that the HR department still plays largely an administrative role. Consistent with Chew’s argument, a more recent study involving 32 manufacturing companies in Malaysia by Long and Wan Khairuzzaman (2008) found that HR professionals are lacking in their capacity to play an important role as strategic partners and agents for change. Clearly, to improve the performance of the HRM department, HR managers need to devolve some of the HR activities (that is, operational activities) to the line managers as a move to become more strategic in their orientation. This is borne out in a study by Perry and Kulik (2008) which found that HR managers perceived that people management was more effective when HR staff were less tied up with routine activities. As is obvious, strategic activities are time consuming for HR managers and consequently they feel overworked if they are still responsible for handling the operational tasks (Kulik and Bainbridge, 2006).

As such, it is imperative that Malaysian HR practices incorporate the flexibility and adaptability required in changing work environments such as those in multinational companies, joint ventures or other types of organisations (Abdul Malek and Budhwar, 2010; Chiah-Liaw, Petzall and Selvarajah, 2003; Rozhan, Rohayu and Rasidah, 2001) in order to be more competitive in the wake of internationalisation and globalisation.

In this connection, Musa (2007) noted that the Malaysian government has realised the importance of HR by emphasising HR and HR practices in policies, blueprints and development plans since the late 1980s. Other issues that HR authorities in the country need to look into are the changing demographics of the workforce as internalisation and globalisation not only brought in foreign companies to operate in the country but also brought in foreign workers to fill the need for white and blue collar workers. In Malaysia, the Ministry of Human Resources holds the responsibility for enacting a suitable work environment to enhance productivity and to ensure that the welfare of employees in the country is not neglected (Aminuddin, 1995). The Malaysian HR is governed by the Labour Law and the enforcement of legislation such as the Employment Act 1955, the Employees Provident Fund Act 1951, the Social Security Organisation Act 1969, the Trade Unions Act 1959, to name only a few. When Malaysia stepped into the 21st century, changing work patterns and the demographics of the workforce compelled the Ministry to update its policies to encompass foreign companies operating in Malaysia and foreign nationals working in Malaysia. The government also took it upon itself to create separate documentations for foreign workers and expatriates so as to create less confusion. In the following sections, we explore the various issues that could affect HRM in Malaysia.

Key Factors Determining HRM Practices and Policies

Intensifying Human Capital Development

First, it is well known that the quality of the Malaysian workforce is deteriorating, with many of the new entrants to the labour force falling short in terms of the skills needed for the industry. Specifically, the new entrants are lacking mostly in analytical and problem-solving capabilities. In addition, there are deficiencies in language proficiency and social networking aptitude that hinder progress in the adoption of cutting-edge technology and modern teamwork processes needed for high-value added activities. The pivotal need is a radical revamp of the current education system, ranging from the primary to the tertiary levels, and requiring improvements at each level. This constant refrain is well recognised yet the attempted fixes have failed to yield the desired results. The education system must move beyond the ‘nation building stage’ to providing the tools and skills to compete in the global marketplace. Close partnership among all stakeholders, that is government, industry, academia, parents and non-governmental organisations (NGOs), and drawing from past and international experience will be the key to achieving the desired outcome. To address this issue, among others, the National Economic Advisory Council (NEAC) was set up by the prime minister of Malaysia in May 2009 with a mandate to formulate a New Economic Model (NEM) that is designed to transform Malaysia into a high-income economy by 2020. The NEAC completed its mandate officially on 31 May 2011, and has produced the 2011 New Economic Model Report in which there is a summary of policy measures for intensifying human capital development (see Table 10.1).

Table 10.1 below depicts the policy measures that are needed to be implemented in order to transform the workplace and the workforce in line with Malaysia’s aspiration to intensify its human capital development. Some of the policy measures are already in place and will be explored further in the later part of this chapter. The policy measures set forth by the NEAC are holistic in nature and aim to address the issue of lack of a talented workforce especially to cater to the high-technology industry and to attract better quality talent.

The country is in a race to deliver competent, highly skilled human capital to move the economy up the value chain but, ironically, Malaysia lacks one critical element to support its drive towards knowledge or a ‘K’ economy, a fact that the Economic Planning Unit (EPU) of the prime minister’s department concedes – that the country lacks a creative and highly competent and skilled workforce to move the economy up the value chain. Although this issue has been revisited many times over, and especially so in recent years, as the year 2020 draws closer it has not managed to take centre-stage until recently (under the 10th Malaysia Plan, that is, 10MP). Referring to some statistics from the World Bank’s previous report, one can perhaps gain a clearer picture of how urgent it is for Malaysia to produce a pool of innovative and highly skilled talent to realise its ambition to be a developed nation by 2020. According to the World Bank, only one quarter of Malaysia’s workforce is considered to be highly skilled. This pales in comparison to high-income economies that tend to have more than one-third or half of their total workforce being highly skilled. The majority of Malaysia’s workforce (about 75 per cent) has low skills, clearly indicating that most Malaysians have not been adequately equipped to handle high-value work. This pain is particularly acute within the engineering, life sciences, pharmaceutical, information and communications technology (ICT) and retail sectors.

The growing mismatch between the supply of skills and the requirements of various industries in the local market is a reflection of the inadequacy of the country’s education system in producing the relevant human capital that can drive the country’s economy in this globalised, new world order. Many quarters are of the opinion that the Malaysian education system needs to undergo a major reform at all levels. Education is certainly an important element of human capital formation. The curriculum needs to be revamped in order to produce knowledgeable graduates, with relevant and sophisticated skills, good attitudes, good analytical and interpersonal skills and good English proficiency in order to fit into the country’s changing economic landscape. One has to only look at the growing preference for private education to show that there is lack of confidence in the country’s public education system. However, it is not only the lack of talented students, the teachers should be better qualified to teach English and critical subjects such as mathematics and sciences. Thankfully, the government has demonstrated its willingness to spend money to attract well-trained and qualified teachers as part of its effort to improve the public education system.

Furthermore, there need to be better alternatives for school leavers who are not academically inclined to learn new skills that can contribute to the country’s economy. For instance, the general academic stream equips one with general skills that may be more appropriate in a services-sector driven economy while vocational/technical training equips one with specific skills that are more responsive to technological change, and hence, more relevant to an industrialising economy. As such, one can contribute better in his or her chosen field and there is no question of being left out from being employed. In some Asian industrialised countries such as Japan, Singapore and South Korea, for example, vocational/ technical education features prominently in schools, colleges and polytechnics. Some economists even attribute the industrialisation of these economies to their strong focus on vocational/technical training. In this connection, economists argue that vocational/technical education can cultivate a skill culture and contribute to the progress of an economy. In addition, such training can also help reduce unemployment and mitigate the challenges faced by school dropouts. Unfortunately, however, vocational/technical education is not yet well regarded by most Malaysians. Indeed, Malaysian society has a strong bent towards an academic culture and it seems that vocational/technical education has not garnered enough confidence to go mainstream. In light of this, the Economic Planning Unit (EPU) is reported to be working on looking for ways to encourage greater appreciation for vocational/technical skills in the society and can perhaps help to dispel the perception that those who are not academically inclined cannot contribute to the economy and nation. The government’s seriousness in raising appreciation for vocational/technical education is evidenced in the injection of the related financial means to the establishment of 10 skills training institutes and the upgrading of 16 existing institutes under the 9th Malaysia Plan (9MP). This move has resulted in the rise of the number of trainees to 88,050, or a student intake growth of 1.5 per cent per annum from 2005 to 2009. Ironically, however, the number of graduates from vocational/technical institutions had decreased from 72,557 graduates in 2005 to 57,782 in 2009, and this slide needs to be stemmed.

Without an adequate talent pool, innovation-led growth can only be sub-optimal and it is imperative that for industries to move up the value chain there needs to be less dependence on unskilled or low-skilled foreign workers in the economy; instead there should be a growing reliance on a skilled or highly skilled work-force that can be tapped from the Malaysian diaspora and expatriates. Malaysia’s over-dependence on low-cost, unskilled foreign workers is perturbing. Official estimates put the influx of low-skilled foreign labour in the country to more than double since 2000 to 1.9 million. Experts believe that a more sustainable solution lies in developing the domestic human resources at all levels as ultimately it is the human capital that is the greatest asset to the country’s economy.

Brain Drain

In the recent issue of the World Bank’s Malaysia Economic Monitor (2011), Malaysia was flagged as a country with a serious case of ‘brain drain’. The World Bank defines ‘brain drain’ as the emigration of individuals aged 25 or over with an academic or professional degree. Apart from offering a thorough analysis of this issue, supported by an online survey of about 200 Malaysians studying or working overseas, as well as data from Malaysian government departments and other countries, the World Bank report makes several key points. First, human capital is the bedrock of any high-income economy. For Malaysia to be successful in its journey to high income, it will need to develop, attract and retain talent, but the sad truth is that talent seems to be leaving. According to the report, the brain drain represents about one-third of the unskilled and skilled men, women and children born in Malaysia but now living overseas. Conservatively estimated to total one million, the World Bank labels this group the Diaspora. Second, Malaysia’s brain drain is the symptom, not the problem itself. This suggests that the government must address all the factors that caused the brain drain instead of focusing solely on persuading migrants to return, a challenging task that cannot be the sole responsibility of institutions like Talent Corp, established to tackle the issues of brain drain. Key factors that motivate Malaysians to move overseas include better salary levels, career prospects, access to high-quality education and quality of life issues that include safety and security.

Third, brain drain is a phenomenon that is inevitable. The World Bank report suggests several ways that Malaysia can tap this global pool of talent – for example, by employing more expatriates and encouraging a greater number of foreign students to study in local universities and to work in this country after graduation. Instead of fixating on persuading migrants to return to Malaysia, the report suggests they can help in other ways, for example, by acting as a bridge between foreign technology and markets and local entrepreneurs. In China and India, migrants have helped to develop high-tech industries and the same can be done in Malaysia. Fourth, Malaysia’s brain drain intensity is high. For every 10 skilled Malaysians who were born in this country, one of them elects to migrate, which is a ratio double that of the world average. While these figures are comparable with Hong Kong and Singapore, the World Bank argues that their high numbers are typical for small and open economies.

Fifth, although the share of Malaysians with tertiary level education increased considerably from 16 per cent in 2001 to 22 per cent in 2008, during the same period the proportion of Malaysians with higher skill jobs changed only marginally from 18.4 per cent to 19.9 per cent. The report suggests two possibilities: because employment opportunities were insufficient to absorb people with higher education, these graduates were forced to take jobs with a lower skills requirement. Another possibility is that the higher education curriculum and market demand is misaligned. In short, the report implies that Malaysia’s brain drain is not merely a human resource issue but a structural economic problem. And although the brain drain may be economic in origin, minimising or reversing it will require decisive political action as well as a sustained and steely political commitment.

Minimum Wage and Retirement Age Issues

Malaysia’s minimum wage policy, which was announced on the 1 May 2012 sees starting salaries fixed at between RM800 and RM900. The National Wage Advisory Council (NWAC) stated clearly in its proposal that the minimum wage salary should be above RM740, which is the poverty line. Although some quarters are of the opinion that the salary should be above RM1,200, especially in the wake of the current economic conditions and the rising of the price of goods and services, the government has not managed to fix it at a higher rate due to other important financial commitments. The NWAC has been cautioned by the World Bank and other studies that any figure above RM1,200 could have some challenging impacts on the Malaysian economy. There are, of course, other complicated issues when salary is fixed at above RM1,200. These include the risk of unemployment, the risk of being non-competitive and the risk of inflation. While effort to introduce the minimal wage should be applauded, there are also those who are unhappy with the radical changes. Overall, however, this is definitely a step forward for Malaysia in emulating the practise of a minimum wage policy.

Next, the lifespan of Malaysians has increased from 55 to 65 and with better health facilities and improving lifestyles, Malaysia is in the middle of drafting a bill to actually fix a retirement age for the private sector, something that is currently left to individuals, although most employers use 55 as the retirement age. However, in the public sector retirement age is 60, and the private sector should align their retirement age accordingly, so as to give individuals five more productive years. This would help families, as well as the economy, and ensure that efficiency and productivity levels are maintained, which is critical to the growth of an organization. In addition, understanding and leveraging the differences between generational groups and their levels of experience is critical for organizations in order to get optimum performance outcomes. Before the retirement bill is passed, organisations will need to be prepared to integrate the culture within the generational workforce and design a systematic knowledge transfer programme between their ageing workforce and the incoming and younger work-force in order to maximise productivity.

In this connection, private employers surveyed want the bill to address all gaps and concerns well after in-depth study and consultation with stakeholders instead of having it amended simply based on employee concerns. One way to ensure that the workers remain productive after the age of 55 is that senior employees aged 55 should be re-employed under the retirement bill as per their current employment terms until they reach the age of 60. After 60, this pool of senior employees will be re-employed based on their capabilities and new terms of employment will be in place where they may be posted into new roles such as in training and mentoring programs for knowledge transfer to the younger generation. This will help to fully utilise their expertise while minimising redundancy. Of course, there needs to be a shift in the mindset before the policy can work its intended benefits. The teething phase may see some reluctance on the part of employers, who may remain reluctant to hire a potential candidate who is 50, compared to one in their 30s or 40s, but the government could play a pivotal role by offering subsidies or medical benefits for hiring older employees as an incentive, which is the case in Singapore where the upcoming budget proposes offering subsidies to employers who hire older workers. Most importantly, the bill should be passed with the view that older employees with the relevant skill sets and experience should have equal opportunity to be hired and should not be let go without valid reasons.

Acute Shortage in the Domestic Maid Sector

According to the Indonesian embassy, there are 300,000 Indonesian maids working in Malaysia, and according to the Deputy Human Resources Minister Datuk Maznah Mazlan, Malaysia needs some 200,000 domestic helpers. Whichever figure you choose to look at, it is an alarming one. The Indonesian government has already put up some resistance in the recruitment of their nationals to work as maids in Malaysia, given the reports of the cases of maid abuse. The fact remains that Malaysia is facing a problem that most developing nations face at this stage – a severe shortage of human power in the labor sector. Relatedly, the role of women as traditional providers of care for the family has evolved over the last three decades. In the past, women have been a key part of Malaysia’s workforce and have been instrumental in its socio-economic growth. Over time, however, family structures have changed with more women having joined the labour market, either through choice or necessity, which means that households with both spouses at work need domestic help to either care for their children or their ageing parents, or both. As a result, there are many instances when female employees have to take ‘emergency’ leave due to not having people to look after their children while they are at work. In many countries, there are facilities and programmes in place to provide a favourable support system for families, specifically for working mothers and families. Studies have shown that where childcare services have been integrated into a framework that involves local authorities, NGOs and even trade unions, the benefits are tremendous for families, society and the economy.

Clearly, there is an urgent need to reconcile the labour shortage and make child-care available for families. Efforts by all stakeholders – the government (including local councils and authorities), employers, employees, NGOs and trade unions – are required towards developing a policy for long-term solution. Governments in a number of countries, such as Australia, Singapore and the United Kingdom, specifically encourage and help employers to provide some form of childcare support, in some cases backed by incentives. For instance, besides crèches in workplaces, childcare centres, child-minder or nanny services should be made available in housing areas as part of the framework of national policies, or even local government policies or regulations. With policies covering child-care, it will also benefit the low-income groups, who form a big part of the labour market. Access to affordable, good-quality childcare goes beyond the welfare of individual children and their families because it works favourably in the social and economic development of the whole society. Among the societal benefits of childcare are promoting gender equality and the rights and development of children as well as contributing to the national economy. In fact, well-structured childcare support policies can pay for themselves: Without support, parents can face a more difficult time participating in the labour force, which can lead to ‘higher welfare’ expenditure, lost tax revenues, inhibited growth and wasted human capital.

Management Culture and HRM in Malaysia

About 60 per cent of Malaysians are Muslim. And similar to other Muslim societies, management practices are influenced by key Islamic values and principles. However, more than 30 per cent of the population is Chinese or Indian, the former strongly influenced by Confucian values of collectivism (see Mansor and Ali, 1998). These authors argue that Malaysian management practices should be understood in the context of interposing Confucian, Islamic and Western values.

It is pertinent to note here that the former colonial power, Britain, deeply influenced organisational cultures, especially in the public sector, which was followed, in the 1970s, by an increasing Americanisation of workplace organisation, due to US dominance in management education. As noted, Japanese success led to the adoption of the Look East policy in the 1980s, coterminous with moves towards indigenisation. This interposition is, at times, contradictory. The persistence of religious and cultural difference has precluded any single cultural paradigm from gaining predominance; neither American nor Japanese managerial cultures have attained hegemony.

In terms of national culture, Malaysia is a collectivist society (Noordin, Williams and Zimmer, 2002), where social relations, self-sacrifice and family integrity are an important part of the social fabric. The Malay culture is essentially a cooperative society based on kampung (village) and gotong royong (mutual help) values (Taib and Ismail, 1982). Malaysian kampungs were self-sufficient, small and dispersed, and thus created a sense of community and need for collective work. Wolfe and Arnold (1994: 207) noted: ‘Malays were socialised to place the needs of the kampung above their personal needs.’ Gotong royong implies that people who offer help or services will expect the same service or help to be returned at some point (Taib and Ismail, 1982: 109). The gotong royong is underpinned by the Islamic concept of the Ummah (Islamic religious community) where each Muslim is responsible to his fellow Muslims. Taib and Ismail (1982: 109) noted: ‘The unity of the Malay community thus rests on the adat resam (social customs), which include the institution of gotong royong, and the concept of ummah and malu (self-respect).” The Malay culture puts a strong emphasis on the importance of having and maintaining, ‘face’, an emphasis shared by many cultures in the Far East.

Further, Islamic values and teaching put strong emphasis on obedience to leaders. Beekun and Badawi (1999: 16) noted that in Islam ‘at all times, the leader must be obeyed’. They added: ‘Islam considers obedience to the leader so important that it views any kind of insubordination to be abhorrent unless in very specific circumstances.’ The authority of the leader or manager is thus accepted as right and proper, and subordinates are expected to show respect and obedience to superiors. Beekun and Badawi (1999: 16) noted that although ‘Islam emphasizes that followers should comply with the directives of their leader, it does not condone blind subservience’. That is, although the typical Muslim worker does respect his or her leader, the onus in most cases is on the leader to convince subordinates that his or her orders are worth obeying rather than imposing his or her will on others by administrative fiat. This is why, according to Sharia, Muslim leaders are asked to consult their subordinates before a decision is made. In addition, Islamic teachings put heavy emphasis on forgiveness, kind-heartedness and compassion. Atiyyah (1999) noted that Islamic values emphasise harmony, cooperation and brotherly relationships, and conflicts should be avoided or suppressed. The business leader, in turn, is expected to show responsibility for the quality of work life of employees and concern for their families and the surrounding society.

Not surprisingly, Wolfe and Arnold (1994) reported that the kampung headman received respect, obeisance and loyalty but was expected, in turn, to display generosity and anakhuah, a fatherly concern for the welfare of his subjects. Taib and Ismail (1982: 113) noted that in Malaysian schools, the power distance factor is further reinforced:

Wolfe and Arnold (1994: 208) argue that, in addition to the above, power distance is a product of the kampung values where there is a strict code of behaviour that applied to both leaders and followers. They noted that, ‘recognising one’s relative status and acting in accordance with one’s station were the hallmarks of a halus person, the idealized member of society’. Further, Malays are socialised to be non-assertive and compliant, and humility, courtesy and tactfulness are strongly held values. The latter have strong impact on HRM policies and practices. For instance, Wolfe and Arnold (1994) noted that Malay values make direct discipline at work unacceptable because it leads to the loss of face. Over time, there has been a widespread diffusion of new management practices in Malaysia. These have taken the form of changes to the business culture and HRM policies and practices. They have invariably been accompanied by Western practices and sometimes by Japanese practices including quality control (QC), total quality management (TQM) and teamwork. The new business environment has shifted management culture from collectivist behaviour towards individualist practices, ever so slightly. This has led to the erosion of some of the old HRM practices and to attempts, especially by transnational corporations (TNCs), to Westernise HRM practices through the use of Western universalist best practices. In this context, there has been increasing interest in the effect of these economic and social changes on HRM practices. Indeed, there has been some speculation that HRM practices in Malaysia may be becoming more individualistic in their management practices. From this perspective, the new Western management practices can be seen as a direct threat to indigenous Malaysian practices. For instance, Lim (1998, 2001a, 2001b, 2002) found that while power distance in Malaysia is still high, and masculinity is still moderate, there is evidence to suggest that the levels of uncertainty avoidance and individualism in Malaysia have increased over the past few decades. However, others have argued that new forms of participation have done little to erode a tradition of autocracy and deeply entrenched managerial prerogatives (Elger and Smith 2001: 460).

Indeed, it has been suggested that the alleged drift to individualism does not necessarily lead to the eradication of traditional Malaysian practices; the impact of the individualisation of Malaysian managers should not be overstated. Noordin, Williams and Zimmer (2002: 46–47) note that individualism is most pronounced in the new middle class whereas the upper class pay attention to traditional collectivist values and social norms that secure and prolong their comfortable position in the society. Nonetheless, these authors suggest that at least one facet of individualism, an emphasis on global competitiveness, has infiltrated into the collectivist values held by Malaysians, but harmony and social behaviour still appear to be important for Malaysian managers as well as relationships, self-sacrifice and family integrity. However, while Malaysian managers remain inclined towards collectivism in situations involving in-groups, they appear to be individualistic in situations that involve out-groups, and the organizations they work for may fall into the latter category. Table 10.2 highlights Malaysia’s scores on the Global Leadership and Organisational Behaviour Effectiveness (GLOBE) Study, a worldwide study on leadership attributes.

Human Resource Development Strategy

From the discussion above, it should be clear that if Malaysia is to become a developed nation by the year 2020, an educated multi-skilled, disciplined and productive workforce has to be created. Several critical factors demand this – the rapid transformation of the economy during the late 1980s and 1990s, the shift from traditional to modern technological production processes, and the need for bold and innovative HRD strategies to meet the challenging skills requirements. To further encourage and stimulate the private sector to introduce training and development for its employees, the HRD Act 1992 requires organisations employing more than 50 employees to contribute 1 per cent of their monthly payroll to a fund to promote training. In turn, the fund aims to provide financial assistance to defray part of the allowable costs in training undertaken by employers. It acts as an incentive scheme whereby grants from the fund can be provided to employers to undertake and accelerate systematic training programmes to equip the workforce with high skills, knowledge and positive industrial attitudes. The fund was initially open only to the manufacturing sector but has since been expanded to the service sector.

The HR Ministry’s Manpower Department and the National Vocational Training Department formulate the curriculum of training programs and supplying skilled and trained workforce to meet the needs of the economy. Their aim is to minimise skill mismatches and to conduct training to supply a multi-skilled, innovative and adaptive workforce, in order to facilitate the transition from labour-intensive to knowledge-intensive industries with a strong science and technology base.

The HRM Function

HRM is currently a rapidly growing field in Malaysia. Indeed, since the late 1980s Malaysian managers have increasingly used the term HRM instead of personnel management (Todd and Peetz, 2001; Yong, 1996). Yong (1996) argues that the diversity of the composition of the modern workforce in Malaysia requires more appropriate and imaginative HRM solutions than have hitherto been deployed. In 1990, the former Ministry of Labor adopted the new term and changed its name to Ministry of Human Resources in keeping with the international trend and ‘need of recognizing people as a key resource for national development’ (Yong, 1996).

Malaysian HRM departments are usually staffed by people who have general qualifications and usually substantial working experience in the field (Todd and Peetz, 2001). Yong (1996) describes the typical HRM professional in Malaysia as ‘a male with a social science degree plus qualifications in personnel management with five years experience and around 33 to 45 years old, able to communicate well, in Bahasa Malaysia, and English’. However, it is interesting to note that Todd and Peetz (2001: 1,373) found evidence of the increasing strategic integration of the HR function.

The Human Resource Ministry plays a key role in shaping HRM policies and practices in Malaysia. The government is responsible for developing labour administration policy, promoting workers’ welfare (especially bumiputras) and promoting industrial harmony. More importantly, it plays the role of a coordinator with the private sector by maintaining the supply of a multi-skilled, disciplined (through controlling union activities) and efficient workforce.

Conclusions

Overall, Malaysia represents a success story in many respects. From an economy centred on the production of primary commodities, it has graduated to developing a significant manufacturing sector. In particular, the country has assumed an important role in the global consumer electronics industry. Moreover, from a predominantly poor, rural grouping, bumiputras have increasingly urbanised, and gained representation at the highest levels of industry. In some ways, the Malaysian experience highlights the continued relevance of state interventions – globalisation notwithstanding – and the possibilities of active industrial policy. At the same time, Malaysia’s growth trajectory is fraught with contradictions. While official HRD initiatives have had some success – above all, in enhancing productivity – chronic skills shortages persist in certain areas. Moreover, both the kind of products that tend to be manufactured in Malaysia – mature standardised products, and components thereof – do not always readily lend themselves to be regarded as high value-added products. Further institutional barriers to a high wage–high skill scenario include an autocratic managerial tradition, with geographic, ethnic and regional barriers being deliberately erected between managers and workforces. This is not to suggest that in certain niche areas, Malaysia may retain global competitiveness on grounds other than cost. However, the diffusion of a culture of autocracy from the political centre would seem to mitigate against the emergence of a genuine culture of involvement and participation, unlocking the fullest potential of the country’s human capital. In other words, HRM can only be developed if corporate and societal governance systems have the ability to support and follow through the necessary investments in physical resources and trust (see Marsden 1999: 268).

We would like to end on a positive note with a cautionary caveat – Malaysia has come a long way in the last two decades in terms of the growth of its economy, and the efforts put towards developing its workforce have clearly paid dividends. However, it is imperative that the government does not rests on its laurels – instead it needs to continue its efforts in partnership with all stakeholders, if the vision of 2020 is to be realised.

Useful Websites

Human Resources Development Council, Malaysia www.hrdnet.com.my

Industrial Relations Department Malaysia http://61.6.32.133/jppm

Ministry of Human Resources, Malaysia: http://mcsl.mampu.gov.my/english/fedgovt/Human_resc.htm

References

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Beekun, R. and Badawi, J. (1999) Leadership: An Islamic perspective. Beltsville: Amana Publications.

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