|A test area at OSI Electronics Bantam, Indonesia facility.|
Does low cost have to translate to low workplace quality of life? That was the question being pondered during a series of interviews with executives at several Singapore-headquartered manufacturers whose operations include facilities throughout Asia. The interviews took place in late June 2010. All of the companies produce products for medical original equipment manufacturers (OEMs). Although their answers didn’t reveal any earth-shattering new techniques, they did focus on good core management principles including a strong teambuilding focus, consideration for diversity, and recognition of the value that well-trained employees bring to the organization.
This focus on the basics can be particularly important to medical OEMs, who face the challenge of cutting costs while not sacrificing quality. Programs that reduce turnover, drive employee understanding of the need for superior quality, and enhance worker skills over time also tend to result in higher quality products.
Harnessing Employee Initiative
The overall theme in all interviews was that management teams recognized that employees who felt they were an integral part of the organization tended to be more productive. Each company’s approach focused on teambuilding activities in two groups: continuous improvement activities designed to solicit input at all levels of the organization and social activities designed to build stronger relationships between managers and employees.
Meiban Group Ltd, a contract manufacturer with facilities in Singapore, Malaysia, and China instituted a new program this year to drive internal improvements through divisional innovation challenges. Teams within each division come up with innovations to reduce cost. The best of these are funded and the divisions and teams behind those ideas get recognition and monetary reward.
“We don’t see this as a divisional competition, since multiple ideas may be funded. The competitive challenge is simply coming up with an idea worthy of being implemented. All levels of employees are engaged in this process improvement effort. We are evaluating its effectiveness and if successful may make it an annual event, “ said Basil Sim, Meiban’s general manager.
Beyonics Technology Ltd, a contract manufacturer with facilities in Singapore, Malaysia, Thailand, and China, also has a formal innovation initiative. Its Employee Quality Enhancement program was initiated four years ago. Managers submit ideas from their teams for improvements or cost savings on a quarterly basis.
|A CNC machining line at Beyonics Technology Limited. Improvements to CNC machine jigs driven by Beyonics’ Employee Quality Enhancement program have saved more than S$150,000.|
“The positive results of this program are being felt in our profit and loss. One recent machine efficiency enhancement saved over S$150,000 in its initial implementation and ultimately will contribute to continue reductions in capital equipment investment, direct labor requirements, and facility floorspace,” said C.P. Goh, Beyonics CEO.
Status-less social activity was also an important component of all the companies’ programs. At OSI Electronics Pte. Ltd., a diversified manufacturer with EMS facilities in Singapore and Indonesia (shared resources in Malaysia and a U.S. operation) there is a monthly soccer game between management and engineering. The event is followed by dinner. “This type of socialization helps build stronger relationships and better understanding among different areas of the organization,” said Michael Tan, OSI’s Singapore general manager.
OSI is also capitalizing on this deeper understanding among teams in different regions through a quality awareness program. Regionally, Indonesians have a strong reputation for excellent craftsmanship. OSI’s quality program in its Batam, Indonesia facility emphasizes the link between this reputation and its role in ensuring high quality products.
Providing Strong Support
Team building shouldn’t simply focused on motivating employees to build better products. the interviewees demonstrate strong efforts to provide support and guidance to employees.
CEI Contract Manufacturing Limited, an EMS provider with facilities in Indonesia, Vietnam, and China, has a Work-Life Balance Committee in each facility that evaluates what programs would best serve employees. Some of these are traditional programs such as dinners, social activities, and in-house exercise classes, but there are also softer elements.
For instance, during the last recession, Managing Director Ka Huat Tan coached his managers to watch for employees who might be in financial difficulty. While the company didn’t provide handouts in those cases, managers did provide informal assistance such as a supportive environment and suggestions on contacts or resources that could help with financial difficulties. Tan also had CEI’s HR department communicate informally that there would be no layoffs. That decision had positive impact on the bottom line. By keeping its job levels unchanged in 2009, CEI benefited from the Job Credit incentives provided by Singapore’s government.
In another case, Tan brainstormed with his materials director on the best way to show appreciation to purchasing personnel who had been working consistent overtime to deal with component allocation issues. While occasional overtime is a fact of life in most EMS companies, when he noticed that people were voluntarily staying late he felt it was important for management to send a strong signal that their contributions were appreciated. As a result evening snacks were provided for the purchasing team.
On the flip side, Tan also realizes that there are always some employees who will take advantage of a supportive environment. He has worked with his key HR staff to develop a daily sick leave monitoring process that flags frequent users of sick leave for further evaluation. The HR staff then evaluates each situation to determine whether the employee has a new health situation that needs to be accommodated or may be starting to abuse sick leave. Disciplinary action is a last resort, taken only if there appears to be no legitimate reason for chronic sick leave use. One of the results of that focus is a fairly consistent 1% absentee rate with no chronic abusers.
“There is really no secret. We just need to treat our people with respect and provide a balanced work-life and supportive environment. At the same time we need to maintain good work attitude and practices,” CEI’s Ka Huat Tan said.
OSI Electronics also offers benefits designed to improve employee quality of life. One example in Indonesia is an in-house medical clinic with a full-time nurse and weekly doctor visits.
“This makes it easy for our employees to seek medical care. We are one of only a few companies in Batam doing this, “ said OSI’s Michael Tan.
Although many Westerners still view Asia as a single region, the reality is that Asia is incredibly diverse in terms of cultures, religions, and nationalities. On top of that there is significant socio-economic change occurring in developing countries and all countries are starting to see the same generational conflict experienced in the United States.
“Our company has baby boomers, generation X, generation Y and generation I (for iPod). Each group needs to be motivated separately. We need to be mindful of the generation gap in designing motivational programs. We can’t stick to the authoritarian approach that worked 20 years ago. Given the generational variance, we need to use a bigger carrot and a smaller stick,” said CEI’s Ka Huat Tan.
Beyonics’ CEO sees variance between each country it works in. “In Malaysia there are both Malays and foreign workers. It is important to understand the culture of these employees and observe the cultural traditions important to them. Religious observances may need to be integrated into the workplace. For example, our Muslim employees have special needs for areas in which to pray and wash. In Thai culture, the Buddha may have four faces, whereas Chinese Buddhists pray to a Buddha with one face. It is important to provide employees with a safe place to come and work with friendly colleagues. While we may change our approach slightly in each facility to be better aligned with the cultural mores of that workforce, our management team applies the basic concept of a safe and friendly workplace as their core philosophy in every country,” said Goh.
On the generational issue, Beyonics values older workers. “Singapore has extended its retirement age from 55 to 62 to encourage reemployment. We also encourage our older workers to remain with the company as long as they are willing to work. We do not have a mandatory retirement age. If an older worker makes a request, we will also look at transfers to less demanding jobs. This contributes to low turnover, “ said Goh.
OSI Electronics has extended its diversity sensitivity initiatives to its wellness program. “In Indonesia, we created special yoga and aerobics classes for our female Muslim employees. Their religion requires more clothing than found in a typical exercise class. We wanted to create an environment that allowed them to comfortably participate in our wellness program, “ said Michael Tan.
The Training Component
Training was a strong area of focus among the interviewees. All of the companies used operator certification programs and some level of cross training. A pay-for-skills technique was a component in some compensation programs.
“We’ve increased our training budget by 5% for the next fiscal year. As work becomes more complex and we increase our levels of box build, order fulfillment, and system test we’ve found we need to do some retraining. We also send some of our Asia-based staff to the United States for demand flow technology (DFT) training. Program management also trains globally. It creates stronger bonds between facilities,” said Bruce MacDonald, OSI’s president.
Tuition refund is another area in which OSI Electronics is increasing funding. “We are increasing our tuition refund program from up to US$1500 to $5000 for job-related degree pursuits. While this is a global program, it has been traditionally most heavily used by our US employees. One of our goals for the coming year is increasing participation in other facilities,” said MacDonald.
In addition to its internal programs, Beyonics is participating in a new program offered through the Singapore Workforce Development Agency (WDA). The Singapore Workforce Skills Qualifications (WSQ) is a national credentialing system. Based on national standards developed by WDA in collaboration with various industries, WSQ comprises industry sectoral frameworks which serve to establish recognized continuing education and training qualifications, and enhance labor market flexibility and skills portability as demand shifts between industries. Beyonics is sending seven trainees from five different business units to the Certified Productivity and Innovative Management (CPIM) program. This program consists of four modules covering operational management, business process reengineering, Six Sigma, and practical application of business process reengineering techniques. Participants are required to sit for the individual exams after the first three modules.
“Beyonics was one of only two companies in Singapore selected for this program. Approximately 90% of the funding is provided by the Singapore government. This is one of the benefits of doing business in Singapore. It is well-established as an education center within Asia and the government’s tax deductions or offsets to companies participating in these training opportunities are much better than those offered by other countries within the region,” said Goh.
Meiban’s Sim highlighted another interesting aspect of Singapore’s worker training focus. Singapore has long imported foreign workers to fill jobs in fast growing industry segments that would otherwise have worker shortages. However, the Ministry of Manpower has created a system of checks and balances designed to protect Singaporean workers, while enhancing the skills of foreign workers. Companies hiring foreign workers pay a levy for each worker. If the company enhances foreign worker skills through additional training, there is a reduction in the amount of the levy. Part of that discount may be returned to the employee as a salary increase. The end result is that companies have a broader range of options in filling positions and foreign workers have an opportunity to increase skills and compensation over time. According to Sim, some of Meiban’s divisions participate in this program in areas where critical skills are in short supply. The Company’s divisions are given a fair amount of autonomy in terms of workforce recruitment, training and compensation programs so individual practices do vary.
None of the executives interviewed indicated that turnover was a significant issue at their companies, even in regions with reputations for high turnover. Nor were there any issues with labor relations, even in markets undergoing significant socio-economic change. As CEI’s Ka Huat Tan summed it up, “if you ask me to rank the priorities a company should have, I’d say that satisfied employees equal satisfied customers and that in turn creates satisfied shareholders.”