Find out how Kota Menara Ufuk's HR team ideated and executed strategic interventions that led to 28 new and revamped HR policies.

Vital stats: Dr Loo Leap Han has about 18 years of HR industry experience in manufacturing, healthcare and infrastructure construction, across themes such as talent management, employee competency gap analysis, HR financial and costing, workplace bullying, and more. He earned his doctor of philosophy from University of Malaya, with strategic HR management, organisational culture and firm performance being his areas of expertise.

Kota Menara Ufuk (KMU) was established in 1999 by Founder and MD, Ng Chor Huat, with just 10 employees and a one-ton lorry.

Today, the group is considered a classic case study of a successful family-owned business with a vision to be a top-ofmind market specialist in sewerage tunnelling infrastructure, locally and in Asia. It is backed by other companies under the KMU Group such as Eiscon Construction, Eiscon Engineering, Great Tunnel, and more.

Group Head of HR, Dr Loo Leap Han, joined the firm in mid-2017 to lead HR and Administration at the group and site level, with a team of nine under him.

This team leads strategic HR interventions for the approximately 1,000-strong workforce, comprising 74% of non-skilled workers, 15% of subject matter experts (also called SMEs, with professional degrees/masters and qualifications), 9% of semi-skilled workers (with diplomas and professional qualifications), and 2% of corporate office staff.

Q Developing such specialised construction and sewerage projects takes persistent innovation and intense research. How would you describe the company culture at KMU?

We embrace innovation and drive continuous improvement in our working culture. We constantly strive for new ideas to enhance our performance on process, person, team or organisation. The founder instilled the philosophy of, "our people are extremely important and we must take care of them", which drives self-belonging, caring and openness. As a result, our culture tends to be family-oriented and our employees stay with us for a long time. Employees' bonding through the workplace enhances and motivates them to perform at their best and have a healthy mindset.

In 2017, KMU introduced the "We Culture" campaign, with the tag line "can-do and right-do mindset" to show our commitment to the delivery of success. We had storytelling sessions from pioneers to share about the challenges and successes of the company and how "we" have survived and sustained to this date. This was legacy sharing for the younger workforce to inculcate KMU's culture into their working system. No fancy or expensive programme involved. In fact, the idea was not derived from the management team, but from the blue-collar employees. Subsequently, we changed the tag line to a "can-do, right-do and feel-do mindset". The outcome of the campaign was positive and engaging.

We constantly strive for new ideas to enhance our performance on process, person, team or organisation.

Q 2016 was pivotal to KMU's growth story as the decision was taken to corporatise the organisation and bring synergy among the three pillars – HR, operations and finance. What changes were planned as a result of this policy?

In late 2016, the Board of Directors (BOD) decided to reform the company structure to corporate management. KMU Eiscon Holding was formed and Ng Chor Huat was the Group MD along with two business partners.

My first question to the BOD was: "This is a family-owned business, and now we are moving to a corporate management. Should you bring in outsiders for leadership positions?" The answer was "yes". Evidently, the management was open to welcome new talent who will give different perspectives to better develop the company to the next level and amplify the leadership in the organisation. As for the changes to the three pillars, under Operations we looked at importing expertise from Germany and Hong Kong, and the rethinking of cost-effective methods, among much else. For Finance, we aimed for transparency of P&L announcements to all key personnel, introducing a case flow mobility facility, and more.

Under HR, which is where my team and I came in, we looked at about 10 key initiatives: develop a nomination and remuneration committee; introduce a panel of moderators committee for a bonus, increment and promotion exercise; enrich the employee compensation and reward scheme; form an HR core specialisation unit; activate a "HR Ways of Work" concept and champion HR lean management; an HR roadshow series across corporate and sites for HR town hall discussions; enhance employer branding for talent attraction and acquisition; develop succession planning for business continuity; use HR analytics for business decision making; and revamp HR policies and processes, and remove HR red tape.

Q What did the first 100 days of this project look like?

Lots of coaching and briefing sessions were conducted in English, Malay and Chinese for all the managers and persons in- charge for each business unit on the new implementation. Based on everyone’s feedback, we made improvements to the new initiatives. We also stressed that all managers were “HR managers” when it came to the implementation. Everyone needed to learn the basic HR management and principles.

Q I understand the first task was to undertake a talent segmentation exercise, that is, to better segment the subject matter experts into specialised areas as opposed to multitasking which created a number of issues. Tell us what the employee turnover rate looked like in 2017 to warrant this initiative.

Upon conducting an analysis of attrition for the previous three years, we found the average attrition rate was between 2%-4% among the semi-skilled up to the professional group. Exit interview findings pointed to a mismatch of skill sets to carry out assigned tasks that were not within their expertise, leading to job dissatisfaction. Career-specific reasons were also cited – for example, career focus changed, offered a new position from another company or lack of growth opportunities at KMU.

In summary, the push factors were very much linked to intrinsic motivation (knowing that KMU pay structures and reward systems are at par with market practice, or even better). We were lacking talent to uphold and execute huge, new projects, for example, the current RM500 million value project in Ipoh and the RM100 million project in Kuantan. As for the ongoing projects, we are yet to fill up certain key vacant positions.

We removed the concept of “sameness” in reward distribution to differentiated reward allocation to deserving employees.

Q How did you execute this plan, and more importantly, how did you change the mindsets around the importance of segmenting multi-skilled versus multi-tasking to retain staff?

The practice of talent management and development kickstarted when I came on board in mid 2017 (after analysing the attrition and push-factor records). We encountered the mismatch of job profiling, mainly in the operations team. Thus, the initiative was for HR and functional managers to collaborate to conduct job profiling exercises to identify the skill sets of our employees.

How we executed this was, first, HR presented the KMU talent competency gap analysis findings to the BOD and all business unit heads. The key action items were to identify important skills, assess current skills and build action plans to either train or hire for skill gaps. The BOD saw the seriousness of the findings in relation to the quality of work, delivery of the end product, and costs of repair works caused by poor technical decision making.

We then designed and developed the KMU talent management framework, which focused on talent segmentation into three groups: (a) Talent that drives the company goals – strategic roles with specialised skills or knowledge (need to strengthen and sustain to driving the company’s longterm plans and strategies). (b) Talent that supports the company goals – subject matter experts with unique core skills (need to protect and develop to delivering the tasks). (c) Talent that is impacted by the company goals – talent whose skills sets no longer align with the company’s direction (need to redeploy and retrain).

This was followed by charting career growth plans, with a special focus on the target group (b), preparing them as future KMU leaders to lead upcoming projects at different regions. This included sponsorship for education and professional upgrading, and multiple training and learning opportunities.

Finally, we reformed the performance management practices whereby the reward and incentive schemes are based on individual and team-based accomplishments. We removed the concept of “sameness” in reward distribution to differentiated reward allocation to deserving employees.

Q The second priority was around lean management, abolishing unnecessary bureaucratic systems and simplifying decision making. How was this undertaken?

HR introduced the "Ways of Work" methodology focusing on creating a culture of delivering value to our clients and eliminating inefficient processes or procedures. Employees were trained to identify wasted time and effort in their own job and to come up with the best solution to simply the process. This encouraged better working relationships among colleagues as the processes were linked to other department/business units.

Similarly, the management decentralised the organisational structure at project operations to achieve efficient operations. Project managers were given greater autonomy to make their own decisions and to allow them to make better use of the knowledge and experience they had gained. For a growing company such as KMU, decentralisation can facilitate the process of expansion. For example, when opening a new project in a different geographic area, decentralisation allows the new project team unit to operate as an independent entity, meaning it can respond more easily to the specific needs of the area.

Likewise, the reward and incentive plan was divided into two approaches: periodic goals (mainly for the operations team) and year-end goals (mainly for the corporate office teams). The former is to encourage the construction team to complete the project earlier (by stages) than the targeted timeline. The latter is standard company practice. The head of the department is then empowered to determine the quantum and amount of reward and incentive of the employee.

Q How easy or how difficult has it been to roll out this two-pronged road map? More importantly, what challenges did you face, and how did you clear those hurdles successfully?

The first challenge was management changes. As KMU’s business grows, its strategies, structures and internal processes grow along with it. Consolidating all the company’s practices is a major task. Some senior team members have had a hard time coping with these changes. In these cases, management and HR both communicated the benefits of the change for everyone through regular staff meetings and dialogue. When your team understands the why, how and when of the change, they’ll be more likely to get on board.

The second challenge was the designing of a competitive compensation and rewards scheme. KMU is a SME and must compete not only with businesses of a similar size, but also with big corporations in the infrastructure industry. As such, HR came up with a system to reward for excellent performance, and offer incentive programmes such as profit sharing, which are a winwin for both the employee and company.

The third challenge was in retaining senior talent. KMU doesn’t have the funds for retirement plans, expensive insurance plans and other costly items that our larger competitors do.

In light of this, the management incorporated Employer Provident Fund contributions that range from 12%-30% to employees (by category) as retirement plans; a group term life policy to all the employees; sponsorship for a master’s programme; and individual bonus recognition in order to retain talent.

The fourth challenge is leadership development, whereby HR is expected to provide the structure, processes and tools to select the best and develop the future leaders of the organisation. Currently, KMU has about 2% key personnel and 15% subject matter experts in our workforce. Our desired number is 10% and 35% by 2020. To hit this target, we have initiated employee competency gap analysis exercises to identify the competency gaps, what skill sets are required, how to close the gaps and the best methodology predicting success at the workplace. The findings will enable KMU to build the next set of leaders.

The final challenge is creating a good employee experience. It’s common to find staff get burned out in this industry (the job expectations, timelines, unforeseen geographical roadblocks such as rock and soil issues). To combat this, KMU invests in employee wellness, solicits and acts on employee feedback, celebrates individual and team achievements, and organises "lunch and learn" sessions to create a sense of belonging to the company.

The three success factors in launching such large-scale change initiatives? Transforming leadership, continuous communication and a purpose-driven performance culture.

Q How do you measure progress on this journey?

This has been measured in multiple ways. The average attrition rate as at December 2018 is 1.5%, even as we’ve had 11 promotions (key personnel and subject matter experts) as at 2018. While 28 new and revamped HR policies were implemented as at December 2018. Additionally, 15 HR roadshows were conducted; as well as HR town hall meetings and briefings on HR policies and programmes as at December 2018.

We have revamped our group performance appraisal format and applications, and group remuneration and benefits structure as at January 2018. We have also introduced a better and value-added group health policy with less cost, which has resulted in savings of RM200k worth of premium across the group of companies for 2018. Finally, we have organised company trips to Hong Kong (two batches/two trips), Korea (two batches/two trips) and a cruise (one batch/one trip). Participants were from the supervisor level up to the management level.

The three success factors in launching such large-scale change initiatives? Transforming leadership, continuous communication and a purpose-driven performance culture.

Q What's the one myth you would change about working in the construction sector?

The myth is that construction is deemed to be a simple profession that is made up of people slinging tools and not a place for women. On the contrary, construction requires the ability to think inside and outside the box; and requires detail-oriented, creative, innovative, as well as in-the-moment problem-solving skills that are required like many other professions. This profession, today, sees both men and women work as respected professionals (registered profession with Board of Engineers Malaysia) on the same construction teams and earning equal pay. You can find talented, intelligent and well-trained women in this industry, and employers and co-workers appreciate their professional skills.

Photo / provided

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