G&A Group

SME 2014

Mr. George Lim’s Speech at SME 2014 Awards

[fusion_text][dropcap color=”” boxed=”yes” boxed_radius=”0px” class=”” id=””]S[/dropcap]MEs play a key role to enhance the economy of country. In Malaysia, SMEs contribute 33% to our GDP as compare to Indonesia of 57% and China of 60%. For employment, they contribute 59% in Malaysia, 90% in Indonesia, 80% in China, and for developed countries, 78% in Germany and 87.7% in South Korea. They are SMALL but they are significant to the country economic development. There are many opportunities for SMEs to growth their businesses, Malaysia Government is targeting the SMEs to reach 40% of GDP by 2015.

Malaysia is ranked 7th for economic performance and 4th in business efficiency in the World competitiveness ranking 2013.

SMEs are not without constraints.

I will briefly mention 3 areas : Ethical Capitalism, Globalisation Workforce and Manage Generation Y.

ETHICAL CAPITALISM

There is a shift in business from the focus maximise profit for shareholders, to the focus of creating a “share value” between the business and the stakeholders, that is, a shift from focus on the interest of the shareholders to the interest of stakeholders.

Peter Draker said the purpose of business is “to create customers and to keep customers”.

Who is our Boss now?

The good news is When we looks into the interests of stakeholders, it open up new innovation and new opportunity.

This allows the company to identify – what is their business constraints and create business initiative to address the constraints. Bayer Cropscience in India built care centre, school and provide education to children. They paid higher price to famers so that the farmer can afford their children go to school. By doing this, they are creating skill and educated labor in the future.

The old model are not concerned for stakeholders and thus the following could be the consequences:

Customers do not buy the products
Suppliers supply poor quality of raw materials
Employees not motivate for low pay and thus low productivity
Community disapprove the existence due environmental harm
Government enforce penalty for toxic waste disposal
The new model of business are ethical and create share value for the stakeholders in order for the business to be successful over a sustained period of time.

The social costs caused by company created an internal costs to the firm. These internal costs such as Government penalty for polluting the river. This penalty shall reduce the profit of the company.

Ethical capitalism is a new branding of business. By connecting the business and the stakeholders recognize the basic human right to good health, economic advancement and an improved standard of living. For example, lower wage should not be reason for relocate factory to cheaper labor country. Nestle re-design procurement to work closely with capable local growers to improve their productivities, and offset lower wages and input costs from outsourcing overseas.

Therefore, by addressing the social costs through invest in green technology, fair trade and education could offset from improved revenue in productivities, quality and efficiency in operation.

Stakeholders’ focus connect community than doing charitable contribution. We should identify what is Government’s limitation in the communities and within our strength, we something positive to help the communities.

Because of environmental concern, Veja eco fashion brand design shoes of sustainable materials and was so successful that they paid their first bank loan within a year.

Ethical capitalism open up new innovation, new opportunity and create differentiation in the market. The old model of maximization profit for shareholders and charitable contribution is under siege.

Globalisation Workforce

With globalisation and advance of social media, the workforce becomes more mobile. Malaysia is experiencing an acute shortage of talented workforce. TalentCorp has “Returning expert Programme”, 5 years personal income tax at 15%. Is this the solution? Are we able to compete our neighboring countries, Singapore / Hong Kong / Australia/ New Zealand for the better working environment and higher pays? Is his the reasons that Malaysia Chinese population has dropped from 30% to 25%. Aging population continue to rise in the world, and by 2030, more than 16 million will retire leaving 8 million job unfilled. Malaysia has 6 million people age between 25-54 years old, 3 million will retire in 30 years.

Manage Generation Y (35 years and below)

90% of my workforce are gen Y. They are very connected in IT, they are mobile, they are not workaholic and their private time are very important. How will we managed? When keeping the workforce engaged and being productive are so important to the bottom-line. After my 15 years in my practise, this year, I have started In-House training program, not only to our staff and also to our clients and public. We want everyone to be competitive in the market. The gen Y staff are perceived to be less committed and less hard-working than the generation X (Year 36 – 50) and Baby Boomers (After 50 years). Gen Y seeks leader who has strong leadership, they like challenging work and work well in a structured environment.

To fit them in our company, we have made our company into more structured:

We set goal and target, and we have a regular meeting with them to monitor the work progress.
We provide training for career development to engage them to work more effectively.
We respect their opinion and ideas, and we reward for innovative ideas.
We create fun activities and allow them to make friend at works.[/fusion_text]

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