Better Equipped with IoD

Thailand's current economic crisis, fuelled by the spiralling global downturn and the fallout from domestic political turmoil, is a crunch point for most local businesses. Some will fail, many will survive by the skin of their teeth, and a few will excel.

Sound corporate governance, strong teamwork, effective communication and rapid responsiveness to market conditions, are essential management skills for any firm that wants to successfully navigate the current troubles and hit the ground running when the economy rebounds.
 
But such expertise is too often lacking at a directorial level.

Heather Suksem, managing director, PCS Thailand, a property support services company, explains to Director’s Greg Lowe how her board has upgraded its skills through its training with the Institute of Directors (IoD).

PCS is one of Thailand's single biggest employers with 23,000 staff, and a THB 3.4 billion turnover in 2008. As a private company it is not legally required to adopt standard core corporate governance principles (see box: "What is corporate governance?"). However, Heather says the firm is committed to doing so, and that by taking on the IoD's more thorough strategic and tactical perspective at a board level, it is now better equipped to lead the company through these challenging times.

Structured Thinking

While cost management and balance-sheet strength must be maintained, cutting back training programmes for staff and directors is a no-go area for PCS. Talent-retention, skills enhancement and employee engagement are fundamental to the business's success, whatever the situation, she says.
"In a crisis situation you must be close to your team, to the management and operations. You have to ensure that all systems and procedures are being followed. You have to keep your finger on the pulse, know what's going on out there, and to be able to respond immediately to any situation."

This is simple enough to understand. But developing the skills, strategies and tactics needed to execute effective corporate policies is no mean feat. It fundamentally relies on building sound corporate governance, and expanding the board's leadership, vision and responsiveness – which is where the IoD's training comes in, says Heather. "This company has been operating for more than 40 years. You can get very complacent and think everything is fine, but look at all of the major companies that led their field only to be taken down overnight.

"The IoD makes you look at things in a much more structured way. The whole idea is to have good corporate governance and to make sure our policies and procedures are effective. So it was important for us to first to gain a really deep understanding of what the role of a directors is, and our role in the company, so we can run the business better – to build our capacity and to ensure sustainability and growth."

The Corporate Approach

History is a great educator, and the IoD draws on it through in-depth case studies of major corporate failures, such as Enron. Directors gain a better understanding of how to work together more successfully to develop policy by examining how these management failures and disconnects occurred.

Breaking through silo-thinking to garner a more holistic corporate view is a key step in this process, says Heather. "All of our directors are now much more corporate thinkers. Previously some of the board members were more focussed on their area of responsibility, but everybody at PCS who has been on the IoD program now understands that on the board they aren't representing their individual area, they're representing the company. Growing this perspective has given us a much more corporate direction."

Having joined PCS in 1987, Heather rose to the position of managing director in 1996. Despite being battle-hardened by the 1997 financial crisis and the challenges of leading one of Thailand's major companies she was surprised by the anxieties she felt over going back to school, especially the final exam for IoD Fellowship.

"My other directors said they would only do the exam if I did," she laughs. "It was the first exam I'd sat for 30 years. It was quite daunting. The other directors were much closer to having been in education than me. One of them, Arnaud Bialeki, said the course was really stretching him. If it was stretching him, it was stretching me more. It really takes you outside of your comfort zone."

Money Matters

Facing fears and overcoming skill gaps is a part of every job. And while they do not come naturally to every director, they can be learnt, says Heather. She refers to how the IoD training enabled her to get the more detailed understanding of corporate finance needed for her job.

"I don't have a financial background, but I believe that directors with financial backgrounds, who can operate a company as well, make the best CEOs. This section of the course made finances extremely clear for people who don't have the background and often fear the balance sheet. You have to understand it, not just for your core business, but also for doing acquisitions and investments. We were shown exactly what we needed to know financially speaking, and the right questions to ask, to make sure we get our finances right."

Trickle-Down Effect

As with most businesses the biggest issue for PCS is employee engagement and communication, says Heather. Talent retention is essential in an industry where an annual staff turnover of 80-100% is not uncommon.

PCS has numerous staff that have been with the company for 10 to 35 years, but the highest churn is in the first three months of employment, and the company sees training at every level as the key way of extending the average length of service.

Beyond the IoD training for directors, it runs executive courses from Leadership Management International, as well as its own in-house programmes. This helps internal communication and the building of PCS' corporate identity with staff.

Listening and acting on management requests for capacity building helps build a stronger team spirit too, she says. "Recently, one of my managers in the pest control division said his staff weren't computer literate. They don't need this skill for their job now, but we're going to train them anyway. By doing so we upgrade the company's capabilities, and show the workers that we value them, thereby building loyalty."

The company also has a strong social and community programme that includes Hiv/Aids awareness education for staff.

Building For The Future

At a time when many of its clients are looking to save costs, PCS' focus on quality over quantity is one of its core strategies to maintain and build on its position as market leader. "We cannot operate in the old way, we must change," she says. "Clients are now willing to listen to how we can operate more effectively at a lower price, and move away from head-count to performance-based contracts. Its a win-win for all – client, PCS and staff."

For Heather, the IoD helped enshrine the importance of internal and external communication in PCS, and its commitment to all its stakeholder needs, including staff, clients and shareholders. The willingness to interact, communicate and listen to every part of the organisation, and to not be afraid to ask questions, has provided the firm with a much sounder footing for future business.

"The IoD gave me a more detailed holistic view of my role as a director. There was also a wealth of high-calibre people on the course who I can now use as a sounding board when I need to."

Adaptability and responsiveness to an increasingly challenging and fluid operational environment is the surest path to survival. Heather is confident that the IoD has garnered her team with the necessary skill to do so.

“The issue is to look at sustainability and not to think we're doing fine now because tomorrow is another day," she says. "The world is changing daily now and things are happening that you never dreamed of a year ago and an effective board needs to have the full range of skills to deal with that environment."