bench marking - south east asia
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RESEARCH PAPER(Benchmarking in Malaysia)
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TABLE OF CONTENTS
Benchmarking in Malaysia
Benchmarking South East Asia
Effective Benchmarking
Benchmarking Power
Performance Management
Malaysian Management Style
Critical Success Factors in Malaysian Joint Venture Projects
Malaysian Enculturizing TQM
Future Research
Future Directions for Asia
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Benchmarking in South East Asia is growing although patchy to date and generally
dependent on support from the foreign aid community. Much of this benchmarking has
been focused on providing information to relevant government authorities and bankinginstitutions. It is contended that for benchmarking to be successful, it needs to be put
back into the hands of the water utilities. Complementing leadership from within, water
utilities need to have access to flexible and easy to use benchmarking tools (for example:graphs, diagrams and comparative assessments), that allows them to take advantage of
benchmarking power. Through increased awareness and better understanding of their
water utilities performance relative to their peers and the factors leading to success /
demise, constructive actions to build their water utility can be identified, implementedand monitored. This is a brief overview of benchmarking in South East Asia and a few
observations about the success or otherwise of benchmarking activities in this region.
The first point is that most agree that benchmarking is useful. They agree that knowing
what fellow brother and sister organizations are doing is useful, to know what worksand what does not, to identify relative strengths and weaknesses, to know the champions
and how they achieve their success and of course those of our weaker brethren who need
to be supported through institutional change, capacity building or whatever. So why is it
that benchmarking activities seem to struggle; they come and go and it seems sometimesthey take forever to get information and to compare utilities.
In recent times, most benchmarking activities have been sponsored by foreign aid (ODA)organizations, specifically the World Bank and for SEAWUN, the Asian Development
Bank. Some are ongoing programs, others come and go as financial support comes and
goes.
Country / Region Period Supporter
No. of
questions in
survey
Indonesia - PERPAMSI 2000 World Bank ?
2002 World Bank, WBI 82
Malaysia - KTAK 2002 Self funded 43
Philippines - LUWA 2003 World Bank ~150
Vietnam - VWSA 2001 - 2003 World Bank 220
South East Asia - SEAWUN 2003 Asian Development Bank 612005 Asian Development Bank 73
World - IBNET 2002 World Bank 92
As is evident from the above table, there is wide variety between the variousbenchmarking activities with some quite extensive and others less so. Many are linked or
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Benchmarking - South East Asia
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could be linked to the IBNET system. Some cover the whole country like the
Vietnamese and Malaysian benchmarking surveys, others cover a proportion of water
utilities; for example, Indonesian benchmarking covers about 15% to 25% of PDAMsdepending on the year.
In this part of the world, as a developing country region, performance based provision ofwater and sanitation services not always that strong. Further customer focused utilities
are more the exception, effective asset management is generally not well understood,
there is growing recognition of the importance of NRW management but patchy performance, financial viability is frequently problematic, and so on. In short, water
utilities are growing and often sometimes struggling to catch up with service provision
within their geographic area of responsibility. Benchmarking is frequently not
considered a priority and participation is often in response to a higher authority
requesting information.
This leads on to the next issue that many benchmarking surveys are collection of
information without much attention paid to giving feedback back to the information provider; what might be called the vacuum cleaner approach! It takes time and
resources (often in short supply!) to collate information for participation in benchmarkingand often the supporting information systems are not in place to support such high level
reporting. Data quality is a significant issue with this Vacuum Cleaner approach to
benchmarking.
In addition to limitations in supporting information systems, there are also the realities
that many water utility persons providing benchmarking information have limited
understanding. For example, from a set of about 50 water utilities when overhead costsranges from 10% to 90% of total costs or domestic water sales varies from 25 to 250
liters / persons / day for good water supply systems or calculated NRW indicators are
sometimes negative, it is clear that something is wrong. People are providing datawithout understanding what it says.
So there is considerable need for improvement in benchmarking. Much of this
improvement / change needs to be driven by the individual water utilities. They need to
be motivated to want to know more about their water utilitys performance and how itcompares to other water utilities. This is very much a chicken and egg situation in
that you do not appreciate something until you have it and you will not go looking for it
until you appreciate its value.
It is contended that one of the benefits of benchmarking is that potentially it leads an
increased understanding of what is going on in the water utility (compared to other water
utilities) and that it can motivate change and improvement in how the utility is set up and
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Effective Benchmarking
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operates that is, institutional strengthening, capacity building, investment for
organizational change and development, etc. the investment in the people in our utilities
and the environment they work in.
Benchmarking needs to change from the vacuum cleaner approach to the blower
approach where as an industry we give individual water utilities the power and curiosityto easily look at their characteristics and performance; to breathe new air into an
organization by facilitating them to easily understand how they perform relative to a
number of benchmarking and/or comparative performance levels of their peers. In theSEAWUN benchmarking the acronym FUEL has been used to suggest that
benchmarking should provide the FUEL for a water utility to better understand itself and
its relative performance leading to an awareness of the need for change and providing
some role-models for how this change could be effected.
The old saying during times of revolution of power to the people is analogous in
benchmarking. It is contended that rather than just setting up a large set of performanceindicators, rather than collecting large amounts of information for the use of a
government organization or a banking institution, we should be playing this back to the
individual water utilities that participate in the various benchmarking exercises give
them Benchmarking Power! Using another analogy, benchmarking should becustomer driven such that it meets the customer (alias water utility) needs for them
to know and become aware of their situation and the reasons for it and then to change
practices leading to improved performance and service delivery.
As an example of this, the current SEAWUN benchmarking exercise has prepared an
Excel based benchmarking system that encourages participants in this benchmarkingsurvey to compare their performance against information provided for the first SEAWUN
benchmarking survey. To date this system has not been widely used mostly because of
limited SEAWUN resources to distribute and support this system. Persons to date who
have had contact with it appreciate the data review capabilities, in particular the usergenerated graphs and diagrams. The most recent Internet release of IBNET system also
includes graph capability as well as the traditional tabular outputs but is not as flexible as
the SEAWUN system. The front page for the SEAWUN system is as shown in Figurebelow.
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It is not possible to go further on Benchmarking Power other than to strongly emphasize
that any benchmarking tool should make it easy for water utilities and in particular theirmanagers to easily determine their relative strengths and weaknesses. It is suggested that
written reports and /or numerical tables have limited value; rather a picture is worth a
thousand words. The provision of graphs and diagrams that enable a manger tounderstand his/her water utilitys relative position and the reasons they are there is going
to be far more effective than a report with a whole bunch of benchmarking numbers that
needs to be digested and interpreted.
Further it is contended that while regulatory requirements and government directives may
generate change, unless this is matched and complemented by an informed, enlightenedand motivated strong leaders in the water utility, any change is going to be difficult, may
be short lived and potentially problematic. It is proposed that a benchmarking system
that encourages cooperative behaviors, self discovery and awareness rising in a nonthreatening environment will support positive change management and long term
sustainable water utility improvement.
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Usin
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Performance Management
A final key point for effective benchmarking is that for effective benchmarking, there
needs to be a wake-up call capability in benchmarking so that the champions can berecognized and those who are the weaker brothers and sisters can realize that they need
to pick up their game. Particular in Asia, this needs to be done in a non threatening wayto avoid embarrassment; to be done in a soft way reminding relevant water utilities that
their performance is not up to scratch. The Executive Director of SEAWUN Mr. VuKim Quyen calls this a health check where water utilities look at their performance to
identify just how healthy they are and areas where they need to improve their health. It is
a very useful analogy.
For the Vietnam Water and Sewerage Association (VWSA) benchmarking several years
ago this concept was first introduced and was well received by relevant authorities. It hassince been expanded and included in the SEAWUN benchmarking. The concept is called
the Overall Performance Indicator (OPI). It is a simple average of 14 standardized key
performance indicators that overall cover most aspects of a water utilities performance.A similar concept has been used in other countries such as Peru.
There are throughout the World a variety of other techniques that seek to quantify the
overall performance of a water utility involving various statistical techniques, differentweightings for different aspects of a water utilities performance, different opinions of
what indicators should be used and consideration of geographic, temporal variations and
various situational factors. It is recognized that the SEAWUN approach may berelatively simple but it is observed that given data availability and quality issues, there
does not seem much point in having a sophisticated methodology that is not supported by
available data. It is considered more important to give water utility managers tools they
can readily use and to at least identify which ball park they are in; to identify the needfor improvement, for recognition of their achievements to date and their capability to
support others within the industry while also gaining exposure of their achievements and
seeking further improvements.
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Customer IndicService Coverage in existi
Ho
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There is growing awareness of benchmarking within the water industry in South East
Asia, still some uncertainty about what benchmarking is all about and it is contended, a
desperate need to put benchmarking into the hands of the data and information providersso that they can take advantage of benchmarking power for the benefit of their water
utility and its customers.
A management style can be a set of behavior, attitudes or mindset of personnel within anorganization. Its uniqueness and characteristics can be easily noticed or felt by an
outsider. The "way of doing things here" can be an expression denoting "a style" which is
recognized. However "a style" is a consequence or outcome of several factors. Three
factors are discussed below, to determine whether an emergent Malaysian managementstyle is in the making.
a) Environment
b) System / Structure and c) Human Values.
a) Environment
Malaysia is in a similar situation like her neighboring countries due to accelerated
economic growth in the Asian Pacific region. However one uniqueness is the Vision 2020spearheaded by the Malaysian government. The leadership style of the great man behind
Vision 2020 (i.e. Datuk Seri Dr. Mahathir Mohamad, the Prime Minister of Malaysia) has
inspired many organization leaders. A compelling aspiration towards a futuristic goal canbe a powerful driving force for the leader of organization to move forward with his or her
personal quality attributes, thereby creating a style on its own.
b) System and Structure
In a large organization or corporation, the system and structure to support, manage andfacilitate running of the business are imported ideas. Generally the management system is
based on "divide and manage" doctrine with rigid compartmentalization of work. Like
many organizations, century old "Management by Part" Taylorism is crumbling down in
the face of advanced and fast changing technology, higher customer standards,
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Malaysian Management Style
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international competition and emergent global village economy. The search for an
appropriate management system / structure is a struggling process for most organizations.
Many un-successful attempts are impeding any orderly evolution of an appropriate andstable management style. The end result is more a "style" of chaos or inconsistency.
c) Human values
Human value-system has some unique characteristics in Malaysia. Its diversified cultures
with many different races are blended within organization, creating a potential synergyfor emergent strong culture. As it is more and more recognized that organization is
behaving like an organism, and not mechanical parts to be managed, the integrity of
human value system has a profound impact on any strong management style to come.
On the strengths of "Environment" (Vision 2020) and "Human-value" (rich culturalheritage and traditional Malaysian values), a unique Malaysian Management Style is
unfolding. However, the retarding force is the imported system / structure that undermine
the traditional value. Although not by design, the imported system / structure promotesindividualism, not teamwork: encourages fragmentation, not cohesion: induces disorder,
not harmony.
A distinctive Malaysian Management Style is certainly in the making when organizations
acquire the knowledge and wisdom to transform their present system / structure on thefoundation of traditional Malaysian value and sound principles towards the direction of
national Vision 2020.
General Characteristics of Agricultural, Industrial, and Information Age Management
Styles
Agricultural Age Management Styles: Riged social class divisions meant management bydominant social class
Industrial Age Management Styles: hierarchical management models in industrialized
Western countriesInformation Age Management Styles: network-based, participatory management;
consensus/tem building; quality circles and total quality management; Japanese
management models; and elimination of some middle management positionsInformation/Data on Malaysian Management Styles : Malaysia seems to have an
information age management style. Though there is no clearly defined style,
from what I have understood it seems like the American management system.
Owner-manager-middle management positions-workers
Conclusions on Malaysia (Whether Primarily Agricultural, Industrial, or Information Age
Re: Its Management Styles) : Malaysia has a mixture of the three ages and they
encourage team work for a higher productivity may be this is why the are where they aretoday
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Construction joint ventures have attracted a lot of research interest over the last twodecades. Since the early 1990s, construction joint ventures have developed and are
evolving rapidly in Malaysia. However, there has been relatively little empirical research
into the success factors associated with construction joint ventures in Malaysiasconstruction industry.
This paper presents part of a three-year programme of research to identify those success
factors which need to be achieved in a construction joint venture if success is to be
assured (particularly in Malaysia). Twenty-one main factors crucial to joint venturesuccess were identified from a wide literature review. A questionnaire survey
administered to local and foreign construction organizations in Malaysia identified twelve
factors as the most critical factors using mean responses.
The perception of local and foreign contractors taken from in-depth interviews conducted
in Malaysia early 2003 is discussed. Factors such as agreement of contract terms,
commitment, management control, inter-partner trust, cooperation, financial stability,
criteria partner selection, profit, equity control, mutual understanding, partnersexperience and cultural understanding were considered critical and were significant from
this research.
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Critical Success Factors in Malaysian Construction Joint Venture Projects
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An expert group will be used to validate the findings and to identify the most critical
success factors that will support the successful application of joint venture arrangements
in construction projects in Malaysia.
Explain the factors of benchmarking adoption as experienced by companies in Malaysia
in which benchmarking is one of the way to create a sense of urgency by telling them
where they are, how good they have to be, and what they have to do to get there.
Discriminate analysis was used to determine whether statistically significant differences
exist between the average score profile on a set of variables for two prior defined groups
and so enabled them to be classified. Besides, it could help to determine which of the
independent variables account the most for the differences in the average score profiles ofthe two groups. In this study, discriminate analysis was the main instrument to classify
thebenchmarking adopter and non-adopter. It was also utilized to determine which of theindependent variables would contribute to benchmarking adoption.
The finding from discriminate analysis revealed that employee participation was the most
influential factors on benchmarking adoption, followed by top management commitment
and role of quality department, whereas benchmarking limitation and customer
orientation did not contribute significant impact on the adoptions. Research limitationsOne of the limitations of this study is that the conclusion drawn from the data is
principally due to the variety of interpretations of what the term. Actually means. Froman organization point of view, attention should be given to improve employee participation and quality department should play a proactive role in adopting
benchmarking as a strategic tool. This paper fulfils an identified information/resources
need and offers practical help to an organization to promote the acceptance andimplementation of benchmarking. Government body can therefore focus on these factors
for further development of benchmarking.
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Benchmarking New evidence from Malaysia
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former. By looking at such circularity of transfer this she concluded that the
political/ideological discourse can be discerned Steiner-Khamsis (1997) culturalist
rather than consensual and dependency perspective in analyzing reforms and educationalpractice modeling is relevant in looking at the quality management movement in this case
study. G. Michael Vavrek (1992) gave a historical account of the development of W.
Edwards Demings concept of quality management.
Deming, a distinguished professor of management at Columbia University since 1985originated the concept of quality in management comprising of a fourteen-point
methodology with the underlying missions of improving organizations, particularly
corporations, through continuously focusing on improvement. A statistician by training,Deming believed that corporations, albeit complex systems can be improved if people
work smarter and management provides insight into how to improve output and
efficiency.
Vavrek (1992) wrote that Demings philosophy gained popularity in Japan after World
War II, and his idea was not well received in the United States. It was only in the 1980s
that American corporations responded to the success of Japanese corporations trained in
the Dewing philosophy. Vavrek (1991) wrote of Demings success in that his idea wasrevered in Japan by the fact that The annual Deming Prize, the most coveted industrial
honor in the country became a testimony of the Japanese commitment to qualify
improvement. Schmidt and Finnigan (1993) wrote about the concept of total qualitymanagement based upon the philosophy of W. Edwards Deming. These authors discussed
the basic ideas behind TQM which comprises the underlying assumptions such as the
complexity of the modern organization, the modern organization for quality product and
services, continuous improvement or guiding principle, working in teams, and opennessand trust. Only through commitment by the different levels of management to the TQM
principles can an organization succeed.
Schmidt and Finnigan (1993) note that TQM is a synthesis of long-standing arrangementconcepts which in combination produce a way different way of operating an
organization. They however admit that TQM has worked in some organizations and
failed in others. The post World War II transnational flow of Demings philosophy fromAmerica to Japan, which resulted in a Nipponization of an American management idea,
can best be looked at in part, through the ages of Ritzers (1998) McDonaldization thesis.
Ritzer (1998) talked about the phenomena of the franchisation of concepts alaMcDonalds fast food chain, in that elements such as rationality, calculability and
efficiency are predominant. From fast food to credit cards and educational systems,
McDonaldization has spread not only in America but also globally, carrying with it the
discourse which perceive human behaviors as systems which can be rationalized,predicted and controlledminds within the demands of productivity through efficiency.
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Ritzer (1998) suggests the idea of stepping out of this McDonaldization mode of thinking
occasionally in order to contain the further spread of this improved way of being. The
complexity by which ideas flow transnationally is analyzed by Arjun Appadurai (1996) inwhich a general theory of global cultural processes is attempted to be derived at.
Appadurai (1996) wrote of the fine dimensions by which the complex flow occurs within
what he called ethnoscape, financescape, mediascape, technoscape andideascape. He asked one to move beyond looking at transfer of these dimensions; from
conceptualizing them in mechanical terms such as sender-receiver to one based upon
complexity and chaos theory. Appadurai (1996) believes that the conditions ofpostmodernity entail such and differences in transnational flow to be looked at not only
through historical-materialistic, but more pertinently through culturalist and
contextualized frame of analysis in order for a fractal pattern of such movements to
emerge. In this context, similar to pattern of such movements to emerge. In this context,similar to Steiner-Khamsis (1997) advocacy for a culturalist perspective, the
complexity of the flow of the TQM ideafrom its American origin to its Nipponization
and later its Americanizationcan be traced when analysis is further made in case of
Malaysias adoption of TQM model. Philip McMichael (1996) analyzes the discourseembedded in the development projects which have characterized the dependency
syndrome of the Third World particularly within the age of corporate developmentalism.
Through an intriguing web of interlocking systems of production, the First World nations
particularly the United States have been able to work in cohort with Third World leaders
in a production scheme which transformed the global system into a huge, rationalized and
efficient production house. Transnational banks, cheap pools of labor, authoritarianregimes, the International Monetary Fund and World Bank developmental projects are
the main denominators of the continuing system of international distributive system ofinjustice which has evolved from the times of Marshall Plan and Bretton Woods.Particularly relevant to the context of TQM is the notion of transfer of discourse on
rationality in the political-economic paradigm of developmentalism. In effect, the TQM
model provides the leit motif of the McDonaldization of national economic systemmodeled after a sophisticated version of neo-classical economics.
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Malaysian Enculturizing TQM
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Transfer of rationalized model as such as TQM is made possible though education and
training which take the missionary zeal of making the workforce literate enough to be
part of the corporatist model of development. David Ashton and Francis Green (1996)wrote of the relationship between global capitalist formation and the primacy of
education and training for skills-formation. Echoing the idea of human capital revolution,
modern nation-states such as those in Southeast Asia becomes integrated into the worldeconomy though educational and training models borrowed from business systems, and
its attendant discourses. Skills training, in forms tailored from the shopfloor workers to
top management is geared towards preparing nation states to be integrated into the globalcapitalist hut. Ashton and Green (1996) argued that the institutional and political context
of skills formation training must become a necessary point analysis in our effort to frame
the issue within a materialist conception of education and training systems.
In the foregoing brief review of selected literature, attempted to provide necessary
linkages of concepts to contextualize and frame the discussion on the genealogy of theTQM model. Steiner Khamsis (1997) culturalist perspective presents the paradigm of
looking at how the TQM idea, American in origin and contested and unpopular in itsapplicability in post-World War II corporate America, is fervently embraced in Japan.
Vavreks (1992) account of the historical development of Demings philosophy of
management also alludes to the notion that because the Japanese work ethos is ripe forthe rapid embracement of the rational-efficient model of organizational control, the
Nipponization of the TQM becomes a natural phenomenon. It was not until the 1980s
that the circularity of transfer became evident; American corporations began to see the
success of an American management concept tested in Japan.
How then does this circularity of transfer relate to the indigenization of the concept in a
developing country such as Malaysia. Whilst TQM is American in origin, Malaysia can
be said to have looked at and emulated the success of the Nipponized version of theconcept. Post-Independence Malaysia was searching for a model of corporate
management, which would propel the nation into rapid industrialization. Particularly in
the 1980s during the early years of the Mahathir Administration, development policiespursued along capitalist lines carried the rhetoric called The Look East Policy; to
particularly emulate Japan as a model of an advanced industrialized nation of the Far East
which has been able to keep its cultural and spiritual tradition intact. A Nipponized TQM,
among other models of organizational change, was adopted and enculturized to fit thedemands of the Malaysian national ideology.
Islamization, an ongoing process of hybridizing contending incoming ideologies relating
to economic, political, and cultural development became a major frame of reference in
any endeavor to borrow and adapt systems of social change. The 1980s onwards was aperiod of social, political, and cultural, and educational re-engineering which saw the
emergence of concepts such as Islamic banking system, Islamic guidelines on
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broadcasting, Islamic-based curricular approach, and the compulsory teaching of the
course Islamic civilization for first-year undergraduates in Malaysian universities.
Professor Zein-Yusof, a strong advocate of Islamization in management looked at theconcept of the quality person as one who is Islamic in totality of his/her principles of
living and being and who manages his/herorganization based not only upon MalaysiasIslamic-based national ideology, but also upon moral and spiritual values. TQM is
indigenized as the managing of oneself as a moral social being as and as a God-fearingservant living by the grace of Allah. The Nipponized and the Americanized concept of
quality, in this Malaysian interpretation is thus not alien to the total quality being if it
helps one to diligently perform the daily prayers, give alms to the poor, fast thirty days inthe month of Ramadhan, and perform the pilgrimage to Mecca.
Productivity and the drive for profits, and to be as rich as one can be is also in line with
this Islamic conception of quality living. Islam, according to this advant garde
interpretation calls upon its adherents to adopt modern concepts of management as such
as TQM and breathe spiritual dimension into them. In fact, the idea of applying qualitymanagement principles has its goals in adding spiritual value to the business
organizations so that higher productivity can be achieved which entails more alms (zakat)can be channeled to the poor and needy. The more zakat is disbursed, the faster poverty
can be alleviated.
The work of the TQM institute involved process consulting for corporate and
governmental organizations particularly in the northern region of Malaysia. In 1997, aftera year of pilot project work, the institute in collaboration with The Ministry of Education
helped certify two government schools (primary and secondary) for the ISO 9000
certification. In the following year, the universitys library became the first college
library in the world to be awarded such a certificate of management fitness.
Coming back to the question in what way is the TQM model enculturized in Malaysia
within the context and via its application as an educational restructuring program?, the
answer lies in its ideological reconceptualization as it responded to the value-free contextof the original concept. It is that TQM has undergone an Islamic and Malaysianized
facelift to be made presentable to the customers it is intended to serve. What has been
transferred is culturalized so that its habitus, using Bourdieus (1994) term will bemade relevant to those living in the nation-state governed by an Isl
amic-based national ideology. The dimension of the circularity of transfer lies in the fact
that Demings philosophy was contested in the United States in the 1950s, popularized in
Japan, rediscovered in the United States in the 1980s, and the Nipponized version wasadopted in Malaysia and given an Islamic slant in the 1990s.
With the beginning of Malaysias business involvement in Third World countries ofAfrica, Asia, and Latin America, and with the stronger emphasis of Malaysiasmanagement practices tobecome more Islamic, would such hybridized concepts be then
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exported along with an equally hybridized discourse of developmentalism. Appaduaris
(1996) notion of disjunctures in the flow of ideas within the realm of ideoscape, using
complexity and chaos theory a conceptual lens may perhaps be able to be used to predictwhat the ongoing outcome would be, as ideas continue to flow in circular into the next
millennium.
Further agenda for research however should best not be limited to such a conceptual
framework, particularly if one would choose Edward Saids (1978) notion of politically-
embedded discourse as a rallying point of analysis. The questions in the next paragraphs
need to be framed. Can an Islamic TQM be another rationalizing agenda to create inRitzers (1998) term, a sneakerization of a capitalist Weltanschauung. A postmodern
reading of the question allures me to McMichaels (1996) analysis of advanced capitalist
formation which has integrated the world of nation-states, Islamic and all, into yetanother advanced Center-periphery machinery of production. Is the Malaysianized or
Islamized version American or Nipponized management model yet another palatable way
to present post-Fordist thinking to those who think and speak in indigenous capitalistterms. In this age wherein language is power and information is commodity and currency,
a postmodern/postcolonial approach to the study of such circularity of transfer and the
value-neutrality of hybridization as such as the TQM model discussed, seem necessary.
Auckland University of Technology, Auckland, New Zealand. As the rationale for
representative employee participation has become more compelling in recent years, theEuropean works council model has become internationally influential. The 1994
European Works Council Directive gave further momentum to the internationalisation of
this model within an expanding European Union, and potentially beyond the EU. Thisarticle surveys the existing structures for representative employee participation in the four
countries of the Asia Pacific where they are the most substantial: Japan, Korea, the
Philippines and Malaysia.
Noting the limitations of representative employee participation in these countries, and
more generally in the Asia Pacific, the article explores a major opportunity for
developing multinational representative employee participation by exerting pressure onfirms operating in the Asia Pacific which are subject already to the European Works
Council Directive. It identifies the main firms in this category, and suggests a major role
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Future Research
The Internationalization of Representative Employee Participation & Its Impact
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for global unions the international trade union secretariats in instigating the
momentum for multinational works councils in the Asia Pacific.
In recent years employee involvement or participation in workplace decision making has
been a major focus of international attention for researchers, managers and policy-makersalike as they seek means for improving communication and co-operation between
management and labor. This trend has been the product of broader changes in
management practices associated with the spread of strategic human resourcemanagement, which seeks improved enterprise efficiency in the context ofintensified business competition.
The concern with employee participation has included direct job-orientedemployee involvement through, for example, teamwork and quality circles,as well as representative forms of participation. The main forms ofrepresentative participation are works councils and employee representativeson boards of management. Although the growth in employee participation
practices has been a global trend, globalization has more commonly beenperceived as a threat to labor rights and the power of unions, because of theundermining of the capacity of nation-states to regulate labour-marketconditions and the ability of capital to move between countries (e.g. Tilly1995; Campbell 1996). There has also been considerable focus in recentyears on the role of multinational corporations (MNCs) in reshapingemployment relations practices in different national locations, usually to thedetriment of labor standards where they are successful (Ferner, Human andQuintanilla 2002). However, there has been little or no attention amongemployment relations scholars to the potential role of MNCs as a conduit forexpanding the influence of labor.
This article explores the possibility that globalization offers opportunities forthe expansion of representative employee participation (REP) through largeMNCs, because of specific institutional circumstances originating in theEuropean Union (EU). In this sense, the argument applies the favorableconjunctures thesis of Poole, Lansbury and Wailes (2001) in emphasizing theimportance of contingency and agency of the employment relations actors,through an examination of the macro-conditions external to organizations aswell as strategic choices of the actors. The article first examines the rationalefor representative participation, and the circumstances under which it hasspread internationally. It particularly notes the European initiatives whichhave led to the international spread of the works council model, especiallythe 1994 European Works Council Directive. It then draws on a variety of
statistical, survey and secondary data to review the existing structures forrepresentative employee participation in the four countries of the Asia Pacificregion where they are the most substantial:
Japan, Korea, the Philippines and Australia. Noting the limitations ofREP in these countries, and more generally in the Asia Pacific, thearticle explores the possibility for developing multinational REP byexerting pressure on firms operating in the Asia Pacific which aresubject already to the European Works Council Directive of the EU.
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The main Asian Pacific-based firms in this category are identified usingthe European Trade Union Institute database on European workscouncils (EWCs).
Finally, the article examines means by which trade union organizationsmight initiate the formation of multinational works councils whichinclude representation from Asia Pacific employees. Multinational REPis conceived as an extension of works council institutional structures toinclude representatives from all countries in which an organizationoperates. How this might occur is subsequently discussed.
The rationale for employee participation and representation in theworkplace generally is threefold. First, a longstanding human relationstradition has argued that employees, have non-pecuniary needs forcreativity, achievement and social approval. By allowing employees avoice in the workplace, participation may promote employees sense of
competence, self-worth and self-actualisation (see Wilpert 1998, 4064; Mathieu and Zazac 1990). As the workforce becomes moreeducated, and basic material needs are better satisfied, thisperspective has gained greater currency. Second, employeeparticipation has been advocated as a form of power sharing on thebasis of democratic principles (Bullock 1977; Knudsen 1995, 1416;Poole 1986; Vanek 1971; Streeck 1995). This is sometimes referred toas industrial citizenship.
Those who advance this argument for participation commonly favorthe terminology of industrial democracy, although this has usually notbeen the preferred terminology of employers. On the left of the
political spectrum, workers control extends industrial democracy tothe polar opposite of managerial prerogative. Both of the broadrationales described here refer to empowerment of employeesthrough participation.
The case for employee participation has been based upon theargument that it contributes substantially to organizational efficiency.An extensive literature has argued that employee participation has thecapacity to enhance the quality of decision-making by broadening theinputs, promotes commitment to the outcomes of the decision-makingprocess, improves motivation, communications and co-operation in theworkplace, may reduce the workload of supervisors, encourages skills
development in the workforce, and can contribute to improvedemployeeemployer relations generally in the workplace (Thesearguments represent a reaction against Fordist mass productiontechnologies, and their tendency to deskill employees. Someresearchers argue that employee participation and empowerment areprogressive management practices which have universal benefits toperformance enhancement, as opposed to most other HRM practiceswhose success is contingent upon the organizational context.
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Historically, the main appeal for employee participation has shiftedbetween the three broad rationales referred to above. Humanistic andpower sharing arguments were dominant in the 1960s and 1970s.However, organizational efficiency has provided the strongest base forpromotion of employee participation since the 1980s, in a context ofintensified competition in a globalize economic environment and thedominance of economic rationalism in public policy. It is notable that inGermany, where works councils are well established, they areattributed with a major share of the responsibility for the efficiency andcompetitiveness of German firms.
These general rationales for employee involvement apply both todirect and representative forms; however, representative participationattracts its own supporting arguments. With the decline of trade unionmembership and consequent weakening of unionism as a form ofcollective representation and employee voice in many countries, theimportance of representative institutions such as works councils hastaken new significance in recent years, filling, or potentially filling, acollective representation gap in the workplace.
Representative participation through works councils or employeerepresentatives on boards also have become a consideration in the
growing international concern with corporate governance which hasemerged as a result of a series of major corporate failures since thelate 1980s, the most spectacular recent examples being Enron andWorldCom.
Until recently the corporate governance debate had focused uponstrengthening the position of the shareholders, but these compriseonly one of the stakeholders involved. The specific orientation onshareholders interests (and shareholder value) carries the risk of a tooone-sided focus on mainly short term results and the value of theshares. The shareholder model does not allow sufficiently for other
interests such as those of the employees or the environment.
A too one-sided focus on profitability may adversely affect the attentionfor the longer term policy and the companys future, not to mention thesocial responsibility of the company. In his preface to the World Bankpublication, Corporate governance: A framework for implementation(1999), Sir Adrian Cadbury recognized a broader range of stakeholders,including employees, customers and community. In the stakeholder-
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model of corporate governance, the employees representatives playan active role as participants in corporate governance, in theprocess of strategic decision-making at corporate level (Goodijk 2001,180; also Hill 2003). With the continuous process of mergers,takeovers, re-organizations, downsizing and internationalization ofcompanies and the growing global character of business, the issue has
assumed growing importance.
In the states of eastern Europe the issue of employee participation incorporate governance has had particular salience during atransformation process from centrally planned to market economies inthe past decade or more. As these states grappled with the dual issuesof constructing private enterprise firms with a capital base as well asnew industrial relations systems, the two issues often overlapped, withemployees receiving privileged access to company shares andparticipating in new forms of collective representation through workscouncils and/or trade unions, in addition to employee representationon boards of management (Kollonay-Lehoczky 1997; Kavcic 1997;Konecki and Kulpiska 1997).
Two further measures of the EU provide support for EWCs and otherforms of representative participation. Late in 2001 a Europeancompany statute was adopted, to provide companies with the option offorming a European company Societas Europeae (SE). These areable to function on a Europeanwide basis governed by EU law, whichfacilitates mergers and multinational operations under a uniform set ofrules for management and reporting systems. The creation of a
European company requires negotiations for employee participationwith a special negotiation body (which may include union officers orbe in effect a works council) representing all employees in thecompanies involved. Failing agreement, a standard set of principlesrequire regular reporting to, and consultation with a body representingemployees, concerning business plans, production and sales levels,restructuring and retrenchments (europa 2001a; OKelly 2001).
This was followed early in 2002 by the Information and ConsultationDirective, which obliges all businesses with over 50 employees toimplement genuine consultation of their employees prior to all majordecisions, particularly if they affect jobs, and later that year by a draft
directive on information and consultation in relation to companytakeovers (europa 2001b; eironline 2002a, b).
As with works councils, these structures vary considerably in terms ofthe size threshold of companies, level of employee representation, oreven the sector in which they apply. In the Rhineland countries(Germany, Austria, the Netherlands) and Denmark, companies operate
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with a dual structure of supervisory and management boards, and inGerman firms with over 2000 employees there is fully parityrepresentation on supervisory boards (Knudsen 1995).
This European model of representative participation, in its variousforms, has underlay the EU-wide developments of recent years. As wehave seen, its influence also is reaching beyond Europe. What is itsrelevance for Asia? Employee representation structures in the AsiaPacific as a whole are not as well-developed or longstanding as inEurope. Even trade unions are relatively weakly established in mostAsian countries, although they have strong roots in Japan, Australia,and New Zealand and have begun to become better established asindependent organizations in Korea and Malaysia in recent years. Non-union employee representation structures in Asia are less commonthan unions. Only in Japan, Korea, the Philippines and Australia havethey been established in any substantial measure, although there have
been recent efforts in this direction in Indonesia (Gatchalian 2004b, 510; 2004a) and Malaysia (Parasuraman 2002, 2005).
It is unlikely that countries in the Asian region will alter significantly theirstatutory arrangements for REP in the short-term. However, it is likely thatfirms operating in this region will be affected by the internationalization ofworks council models identified earlier in this paper. Based on the EWCmodel, an employer representative at the 4th Regional InternationalIndustrial Relations Association Congress in Manila in November 2001 calledfor the establishment of Asian works councils. The increased momentum of
market (including labor-market) globalization and international mergers inrecent years provides considerable incentive for the globalization ofparticipative and consultative practices, especially from the employeesperspective.
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Future Directions for Asia
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Working with Malaysia
Synopsis:
Learn communication strategies to improve your effectiveness with Malay, Chinese and Indian
Malaysian counterparts. Gain their collaboration by understanding their cultural values, country
background, business and social etiquette. Management practices and business communication in
meetings, E-mail and teleconferencing are covered. Excellent preparation for business trips and
hosting Malaysians. for technology transfer.
Goals:
This workshop is for employees who want to understand the cultural values operating inMalaysia, gain strategies and tactics for business and management opportunities, and practice
intercultural communication to work effectively with Malaysian coworkers, customers andsuppliers.
Training Content - Participants will learn:
a) Cultural Values:
Key Malaysian cultural values that shape the Malaysian identity and worldview, outlook
and behaviors. Learn how to build relationships, respect and trust with Malaysians.
b) Business and Management Practices:
Gain insights to Malaysian project management and problem-solving approaches, gaining
buy-in and commitments to projects; perceptions of time, including punctuality and meeting
deadlines; gaining personal contacts and professional credibility; leading and participating
in teleconferences and meetings; decision-making and escalating; giving feedback, rewardsand recognition for performance management.
c) Corporate Contrasts:
Similarities and differences between Malaysian culture and your corporate culture (values
and business practices), i.e., how customer orientation, risk-taking, quality, innovation,
work/life balance, safety, valuing diversity, etc. are viewed or practiced in Malaysia.
d) Fundamentals:
Essential briefing on "must know" facts about Malaysia, the moderate Muslim state and
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Minidragon economy, covering its multicultural evolution and governmental policies
affecting business and society. Explore how history, politics, and demographic diversity
(religious, ethnic, linguistic, etc.), shape business behaviors of Malaysians.
e) Communication Style:
Learn how to work effectively with Malaysian indirectness, organization of information,
style of giving feedback, negotiation, and persuasion. Learn techniques in conducting
effective meetings, using E-mails and teleconferencing. Learn conversation openers and
topics to avoid; learn Malaysian naming conventions and phrases in Bahasa Malayu;
interpret gestures, body language, and appropriate personal space.
f) Business Travel:
Packing, gifts and dress recommendations; personal safety; hospitality, business
entertainment and social etiquette with Malaysians; dietary (hallal, vegetarian) and hygiene
issues; holidays and festivals; transportation, local laws and dealing with authorities.
References
Appadurai, A. (1996). Disjuncture and difference in the global cultural economy. In A. Appadurai (Ed.) Modernity atlarge. Minneapolis: University of Minnesota Press.
Ashton, D., & Greene, F. (1996). Education, training, and the global economy. Brookfield, Vermont: Edmund ElgarPublishing Company.
Bourdieu, P. (1994). Structures, habitus, power: Basis for a theory of symbolic power. In N. B. Dirks, G. Eley, S. B.Ortner (Eds.) Culture/Power/History. Princeton: Princeton University Press.
McMichael, P. (1996). Development and social change: A global perspective. California: Pine Forge Press.
Ritzer, G. (1998). The Mcdonalization thesis. London: Sage Publications.
Said, E.W. (1978). Orientalism. New York : Vintage Books Edition.
Schmidt, W.H., Finnigan, J.P. (1993). TQM Manager: A practical guide for managing in a total quality organization.San Francisco: Josey Bass Publishers.
Steiner-Khamsi, G. (1997). Transferring education, displacing reforms. Comparative Education Review. in review.
Vavrek, G.M. (1992). An American leads the Japanese and the U.S. follows. In P. F. Fendt & G. M. Vavrek (Eds.),Quality improvement in continuing higher education and service organizations. Wales, U.K.: Edwin Mellen Press Ltd.