• Madani Sahari

Focus on human capital development during downturn

The current economic uncertainty is not only unique to the automotive industry, but the Malaysian economy in general.

Economic downturns are a cyclical and we have learned that the activities carried out by companies in “survival mode” are key to wading the downturn, until the economy regains its momentum.

It is now timely for automotive businesses, be it OEMs or vendors, to implement strategies that ensure their products are manufactured at the most competitive cost and quality.

Improvement of in-process efficiency can be done through Value Added-Value Engineering (VA/VE) activities, waste reduction through Lean Production approaches, and labour optimization through mechanisation.

Businesses may also venture into activities that maximise their capacity utilisation. The depreciated ringgit makes exports a timely and viable option, and vendors also have the opportunity to venture in product diversification, such as consumer based products.

Imported consumer based products may no longer be a competitive option. This creates an opportunity for businesses to promote the use of local products as a viable option for consumers, which can allow increased production volume for domestic manufacturers.

Despite these strategies, companies must never undermine the most important resource – the people that contribute to the success of their businesses.

The need to reduce costs during economic slowdowns may pressure businesses to overlook the importance of talent retention.

While downsizing may allow for short term breathing space for a business’s cash flow, the impact of separation schemes affects the entire workforce, leading to reduced morale and lowered productivity.

Numerous high performing companies around the world have become examples of how the “humanization” of business operations lead to increased employee productivity and financial performance.

During an economic slowdown, it is the human factor that employees look for in their employers. It is therefore crucial that human capital development be made a priority, and downsizing as a last resort.

The importance for companies to focus on human capital development activities during slow economic times cannot be undermined.

As daily operations may slow down, businesses can take this opportunity to enhance the knowledge and skills of their workforce, preparing them for an increased performance when demands improve in the future.

Businesses often face problems in allowing time for their staff to undergo training, as the realities of daily operations force workers to focus on their results, rather than on personal development.

Top performing companies in the world take the opportunity in slow economic times to send their staff for training. This not only enhances their capabilities, but maintains work momentum so the workforce is always ready to respond to an increase in demand.

MAI has developed numerous programmes and initiatives to enhance the competitiveness of all stakeholders within the industry including OEMs, vendors, workshops, employees, students or anyone interested to be part of Malaysia’s automotive industry.

MAI has also developed a strong relationship with many local universities, an important knowledge resource that can assist the industry in dealing with technical issues.

All stakeholders are free to approach MAI should they have any issues to be highlighted.

In conclusion, businesses must strike a balance between survival and future goals. The critical mass that sways this balance is the ability to make difficult decisions with a human touch.

“Tough times never last, but tough people will always last.”

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