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Is Your Organization Ready to Hire in South-East Asia?

Following the Wrong Approach

Frequently, our European corporate customers appoint us to scout qualified local workforce for their business operations across South-East Asia – both in Thailand and in the neighboring countries.

The first gap we need to fill is the common misconception that Asian hiring process follows European standards. It doesn’t.

Thus, for European HR managers and entrepreneurs, selecting local staff has proved to be a hard task.

We do believe that the real challenge comes after the selection – managing multicultural teams requires human and professional skills, which aren’t always present in Western firms.

For European HR managers and entrepreneurs, selecting local staff has proved to be a hard task.

Based on our experience, the incomprehension and miscommunication between expatriate managers and local workers have lead successful ventures in Europe to perform poorly in South-East Asia. The path to failure in Thailand is an inaccurate selection process and, even worse, a Western alike human resources management.


Understanding Thai Labour Market

Let’s get back to basics and examine some figures.

In Thailand, the unemployment rate hit the figure of 1.1% in February 2017 (according to the data provided by the Bank of Thailand).

Thailand historically has had one of the lowest unemployment rates in the world.

The average Thai unemployment rate has been around 1.5 percent from 2001 to 2017, reaching its worst level (5.73 percent) in January 2001 and a record low of 0.39% in November 2012.

In European Union, the unemployment rate has been averaging 9.07 percent from 2000 until 2017, reaching an all-time high of 11 percent in February 2013 and a record low of 6.80 percent in February 2008.

It decreased to 8 percent in February 2017 (the data have been collected by Eurostat).

Opposite to European standards, Thai candidates are used to finding a new position with astonishing facility – in Thailand are the employers which struggle to find the best human resources out there.

If we compare Thai rates with European figures, a huge difference leaps out.

European unemployment rate is eight times higher than Thai unemployment rate.

Consider that we haven’t mentioned any data yet about youth unemployment rate.

The European youth unemployment rate (as of February 2017) decreased to 17.3 percent. In sluggish Southern-European economies, the reality is less appealing for young workers – for instance, Italy steadily lags behind Europe with a skyrocket high rate of 35.2 percent.

To be honest, from this point of view, Thailand has faced a deterioration. Thai youth unemployment rate increased from 3.5 percent (as of January 2017) to 5.2 percent (as of February 2017). Yet, over the latest five years the worst level reached by Thai labour market has been 5.8 percent, which should be considered as a positive outcome, if compared with a record low of 24 percent in European Union.


The Help European Companies Need

This brief macroeconomic introduction enables us to help our clients better understand Thai hiring process.

Firstly, Thailand, such as many other Asian countries, is essentially fully employed. Thailand historically, for different reasons, has had one of the lowest unemployment rates in the world.

While European population accounts a large share of elderly people, Asia still has a young bold population, plus a skilled and affordable workforce.

For those who have experience in Asia and in emerging markets, this doesn’t sound like a big surprise.

Automation and high technology have been seldom adopted by many Asian manufacturing firms, especially small-medium sized companies (SMEs).

While European population accounts a large share of elderly people, Asia still has a young bold population (although some Asian countries are getting older as well – Japan above all).

Skilled and affordable workforce is another major factor, which has made “going East” so appealing for multinational industrial companies over the recent decades.

Further, Asia has seen the implementation of many policies to support its labour market. Indeed, Asian policymakers traditionally focus on keeping the unemployment rate low.

On the other hand, lawmakers scarcely concern about the improvement of other traditional welfare-state services (just to mention a few, like health care, retirement funding, public education, etc.).

Hence, how should the European employer address these markets? How to find the right people who fit his business?

Our first advice is as elementary as straightforward – don’t think and act as you were in Europe!

Start adopting a different approach.

Hiring new staff – from factory workers to experienced managers – should be carried out quickly. The process has to be as fast and lean as possible, in order to keep potential candidate’s interest alive.

Thai candidates are used to finding a new position with astonishing facility and speed. They are not accustomed to a long and tedious selection process.

Consequently, for them shifting from a job to another – and from an employer to another – is business as usual.

If you have a chat with any Thai employee, you will find out that working twelve months with the same company appears to be quite a long period of time. If an average European employee still sees rooms for an internal career improvement after a year, for the Thai working mindset it’s time to land on a new position – hopefully with a higher salary.

The hiring process in Thailand of course needs to be as selective as it is in Europe; however, employers should be much more proactive.

In other words, you should be aware of a simple truth: here in Asia, the supply in the labour market is not overwhelmingly in excess compared to the demand. Smart employers should act accordingly and adjust to the new environment.

In Thailand, the role models are the opposite – here are the employers which struggle to find the best human resources for their organization.

Another essential characteristic of Asian labour markets is the shortage of highly skilled and reliable employees. This makes hard for employers to find the right people who eventually will foster their firm growth.

Therefore, highly skilled Thai candidates are aware that they can bring a positive impact to your organization.

They are unique and they know it. They will make everything they can to get a higher salary, good bonuses, benefits, etc..

Savvy employers first must attract them. Afterwards, retain them within the firm.

In addition, all the candidates want to get practical and valuable offers from their prospective employers. Often, things are more ground to earth than in Europe.

If your organization isn’t listed among the Fortune 500 companies, a long, complicated application process won’t be easy to enforce with local candidates.

Personal assignment, homework, group assessments, etc. haven’t gone viral yet. Especially as regards group assessments, we perceive them as critical, since they could easily raise “face saving” issues within the pool of candidates.

Don’t think and act as you were in Europe! Asian working culture is quite distant from traditional Western approach.

In the end, don’t forget that Thai and Asian candidates behave quite differently also during the first interview – you will barely meet scary European alike candidates who are playing all-in during that interview, probably the first they got in several months.

On the contrary, you will get in touch with self-confident and relaxed candidates, eager to get the job at fair conditions for them too. Job opportunities are so frequent for them that they won’t be ashamed to ask their prospective employer to get refunded for the transportation costs, which they might have anticipated to attend the interview.

In the next post, we will have a look at the best practices to follow for a successful selection process in South-East Asia… plus some insightful tips!

Carlo Gardella - Managing Partner of AdvisingAsia

Pietro Borsano - Associate of AdvisingAsia

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