Expats In Thailand Losing Their Jobs

[george]

Top jobs less secure than before

BANGKOK: -- While Thailand was off the radar when corporate cost-cutting swept the globe after the Sept 11, 2001 terrorist attacks, the focus has now switched to secondary markets, executive search experts say.

They note that the number of corporate heads, both Thai and expatriate, losing their positions from June 2004 to June 2005 has increased.

The global executive search industry has been picking up in recent months, though in the aftermath of Sept 11 the billings of some American search firms dropped by 50% as companies not only stopped hiring but actually fired staff.

``That is what had a dramatic effect, in Europe maybe less,'' said Urs Martin Wuthrich, the chairman of IIC Partners Executive Search Worldwide.

Mr Wuthrich made the comments during a recent interview in Bangkok where he met with Anthony Ainsworth, the head RGC Executive Search, Brian Burton of Canada-based G3 Communications and Ivo A. Hahn of Xecutive in China.

All of the companies are affiliated with the 19-year-old IIC Partners group.

Mr Burton noted that companies and the search industry tended to respond rapidly to changing conditions in his home market. ``I work in North America and when they see a signal, then it's a 180- degree turn,'' he said.

Mr Ainsworth explained that the Sept 11 events led to confidence disappearing at a time when corporate USA was already wracked by fraud scandals and companies exploited the prevailing anxieties to dismiss people because they could do so without facing a lot of problems with unions.

The focus of the big cost-cutting wave in 2001-02 was at corporate headquarters and Thailand was left alone, partly because corporations here had already slimmed down after the crisis of 1997. Today global companies are looking at the costs of their operations in secondary markets including Thailand.

Despite this, Mr Ainsworth pointed out that some expat heads of corporations have been focusing on the top-line packages rather than bottom-line performance in accordance with corporate headquarters' expectations.

``I'm not saying [cost-cutting is at] the worker and mid-management level, the cost-cutting is for heavyweight expatriates. It makes sense because you have the base [salary] and then normally with all the add-ins, it's normally double, so that's the trend. People are willing to look at local expatriates but it's very niche.''

His advises top executives to be a bit more open-minded about what they are receiving and what they are producing.

Even though the Thai economy is doing quite well, with growth of between 4.25% and 4.75% forecast this year, there is more caution in the wind, especially with inflation projected at 4.5% to 5% and anywhere between 3.5% and 5% next year.

Mr Wuthrich said inflation may be stronger than growth in Thailand but most corporate heads have not managed during highly inflationary times because inflation has been low here for as long as 10 years.

``Inflation hasn't been a subject over the last couple of years. You might have to remember the lesson you learned in the past or maybe look at South America _ they know how to handle it,'' he said.

The fact remains, though, that companies do look at personnel when they consider cost-cutting, but it can be a false economy if they let too much top talent go, Mr Ainsworth said.

``It depends on how lean and mean your structure is already. The key question before you do cost-cutting is how efficient is this organisational structure. And companies are changing their organisational structures. That is an ongoing process _ flatter, flatter and flatter.''

One strategy some companies have adopted is to give their top executives based in Bangkok regional roles, typically adding Indochina to their responsibilities.

Companies should also pay according to the performance of individual departments because people are going to get priced. ``Once we clear the bonus season this time of the year, it's going to be bidding season. If you are replacing someone who is earning 200,000 baht a month you won't be able to replace him at that cost if he is good, it's going to cost you 10-25% more,'' Mr Ainsworth said. ``This is the problem and that is why I think corporations should look to rewarding their star achievers accordingly, otherwise close the door.''

Mr Wuthrich said globalisation has raised competition dramatically all around the world, especially with the development of Internet which has made everything visible, apparent and comparable.

``You need talent nowadays to make the difference, you need the really best people, and this is good for our industry in a way because companies want the best people. You don't find them usually through an ad. ... You have to search for them, you have to dig them out, and you have to talk to them, convince them that this is a good career move,'' he said.

In terms of demand, with Asia-Pacific the manufacturing hub for the West, it is in this field that the need is greatest, Mr Ainsworth said. Other strong areas include trading, logistics and supply chain, with IT continuing to be a big driver.

While some search companies saw their business plunge after the Sept 11 events, IIC Partners actually prospered and has caught up with big international rivals. The chief reason is that it is a network that does not have a corporate reporting or cost structure. All of its offices worldwide own shares in a holding company and each runs its own business. It now ranks eighth globally in revenue.

In Asia IIC has 10 offices. Aside from Bangkok they include India, Singapore, Australia, New Zealand, Hong Kong, Beijing, Shanghai, Tokyo and Taiwan.

--BAngkok Post 2005-11-07