AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2003 arrow Vol.33- No.10 arrow Editorial: Resetting Mindsets
Editorial: Resetting Mindsets PDF Print E-mail

Paul Lo, the dynamic chairman of Bank Sinopac in Taiwan, recently spoke to an international gathering of CEOs about what companies have to do to be competitive and stay that way. His observations were equally applicable to the way government leaders need to act to promote a strong economy.

CEOs, he said (quoting Michael Dell), fall into two categories -- the "quick" and the "dead." If executives are slow to craft and implement business plans, their companies fall behind and eventually fail. And at the heart of a CEO's job is recruiting, training, developing, and retaining "human capital." Lo said that the need to attract people with the "right stuff" has put human resources management (HR) at center stage in today's business plans and CEO decision-making. Cutting-edge companies must attract the best of the best, and keep them.

 

Lo's comments are particularly relevant to the current macro-economic shift under way in Taiwan from a manufacturing-based society to one dominated by service industries. It appears that the business concept of people as a form of "capital" is not well understood in Taiwan government circles. Despite nearly a decade of basically sound government policies aimed at internationalizing the economy, transforming the island into a regional operations center, and making it a haven for R&D, progress has been disappointingly slow. Why?

Taiwan has yet to jettison the old mindset of "government control" honed during decades of and one-party rule. Despite the lifting of martial law in July 1987and the stunning democratic developments since then, Taiwan still retains excessive control over the private sector. This paternalistic orientation, fitting for a command economy, is now woefully outdated and inconsistent with the government's own policies. The official orientation toward business products and services remains one of "illegal unless approved" instead of the more democratic (and innovation-friendly) stance of "legal unless prohibited."

HR is one of the most critical areas where a mindset adjustment is needed if the goal of a "knowledge-based society" is to be achieved. The labor law and regulatory framework have not kept up with the shift to service-industry dominance of Taiwan's economy. Government micromanaging of HR, and the resulting compliance costs to companies of excessive paperwork, increasingly impede timely business decision-making. At a time when the government should be encouraging the inflow of greater international expertise across the business spectrum in order to meet its own proclaimed objectives, its labor law and work permit processes reduce Taiwan's competitiveness as a place to do business.

Instead, let companies take their own hiring risks, starting with elimination of the two-year work experience requirement. How can you have a regional operating center when you can't bring fresh graduates to Taiwan for training? Immediately simplify and speed up the work-permit process. And respond to the business needs of local and foreign multinationals by facilitating more and regulating less.

Like CEOs, there are two kinds of economies -- the quick and the dead. If an economy doesn't encourage innovation, it falls behind. The government needs to have confidence in its own people by eliminating paternalistic attitudes.
 
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