Hiring practices can be the solution in tough times

Each day the news from the West brings further economic gloom: crises in the Eurozone, predictions of negative growth in the advanced economies. It’s commonly agreed that there’s trouble ahead

The picture in the East – and specifically in Malaysia – is less clear. In a recent article on Malaysia, the Financial Times newspaper asked: “Is Malaysia set for sustained economic growth this year, or exposed to serious potential problems if wobbles in the West turn into another slowdown? It depends who you ask.”[1] Some economists speak of Malaysia being coupled to Western economies; others point to strong domestic demand, economic growth in Malaysia’s neighbours, and continuing demand for Malaysia’s oil, gas and palm oil.

Rather than let myself be submerged under mounds of contradictory macroeconomic forecasts, I prefer to look at the experiences of real businesses and real business owners. This view of what’s happening on the ground is precisely what the bi-annual Regus Business Confidence Index provides.

The latest edition of the Index is intriguing. It illustrates the uncertainty that Malaysian businesses feel about their economic outlook, but it also shows the strategies that businesses are using to navigate the situation. It thereby offers some useful tips for other businesses.

In Malaysia, the Regus Business Confidence Index has dropped by 37 points since April 2011, bringing it down to 117. (Nevertheless, this is still above the overall global index, which stands at 114.) The proportion of Malaysian companies reporting revenue growth (52%) has fallen 22% since April; the number of those reporting profit growth (32%) has fallen 32%.

So the picture is bleaker than in spring. But the survey also demonstrates that Malaysian businesses are taking active steps to counter the bad news. One strategy is talent acquisition. Despite falling confidence, seven out of ten (70%) Malaysian businesses plan to increase headcount in the next two years. This intention suggests a greater faith than ever in the power of human capital to create growth.

There’s a notable emphasis on hiring freelancers, graduates and remote workers: 57% of Malaysian businesses say they will hire more freelance staff in 2011/12, and 43% will hire more remote workers. The greater flexibility and efficiency provided by such employment patterns offers a competitive advantage for firms seeking to survive and grow.

Businesses never know what’s around the corner; in times such as these, they find it hard even to guess. Yet, ‘wait and see’ is not an option. Businesses need to plan, to adapt, to seek new markets. Introducing greater flexibility and scalability - by hiring freelance staff, or avoiding long-term property leases - enables firms to do this. It allows them to expand as soon as an opportunity arises; it also allows them to contract or withdraw if the opportunity evaporates or if unforeseen barriers emerge, without having to extricate themselves at great expense from long-term employment or real-estate arrangements.

The move towards flexible and remote workers and graduates also suggests that businesses are taking a more nuanced approach to recruitment. Rather than sticking with traditional employment practices, they’re looking for greater value: whether from ambitious young graduates, or from freelance workers who cost the company only when they’re actually contributing to it.

Using freelance workers or specialist consultants also increases expertise levels: it allows businesses to access exactly the talent, skills and knowledge they need for each specific situation or project. If different skills or expertise are needed subsequently, the organisation is free to access those instead. Again, it’s a more flexible, more efficient, lower-risk approach.

Times of uncertainty present great opportunities for business. If they can make a proposition work in tough times, they’re poised to make it work even better once times improve. Malaysian businesses’ intentions to increase headcount and acquire talent suggest they’re well aware of the opportunities. Their intentions to use more flexible employment practices suggest they’re also well aware of how to reduce risk. It’s an excellent combination, and one that businesses all over the world might adopt for themselves.

[1] “Malaysia’s economy: resilient?”, Financial Times, 17 August 2011.