Small-medium enterprises (SMEs) are the backbone of the Malaysian economy, accounting for 38.9% of Malaysia’s total GDP in 2019. Furthermore, share of SMEs exports to total exports in 2019 was 17.9% and SMEs employment comprised of 48.4% from Malaysia’s employment (i.e. 7.3 million persons in 2019)
They say some of the best ideas come from the most unlikely of places. The Global COVID-19 Index (GCI) origin story is no different. The GCI’s inception came against a backdrop of a very difficult time for PEMANDU Associates. As an organization with most of our existing contracts abroad, COVID-19 hitting in full force meant calling all our colleagues back home in the interest of their health and welfare.
Alarming developments of the novel coronavirus have triggered a wave of panic buying across the globe. People have thronged to the supermarkets, clearing out shelves of food and fighting over basic hygiene necessities such as hand sanitisers and toilet paper,
The COVID-19 outbreak has tourism industries around the world on their knees. The pandemic has delivered one of the hardest blows to the global tourism industry.
A Halal Facilitation Agency has high aspirations of becoming a global mover in the halal industry. Under its new leadership, the agency is looking beyond its government mandate to become a revenue
Riddled with competing demands for road construction but with a shrinking budget, a Transcontinental Agency needed a strategy to deliver more roads, improve safety and optimise its
By Tengku Nurul Azian Tengku Shahriman, Executive Vice President & Partner
It is a sign of growth when countries start talking about raising the minimum wage. It demonstrates confidence in the resilience of the economy, and the need to prioritise the wellbeing of low-earning workers in the country. Malaysia had increased its minimum wage to RM1,200 earlier this year as part of a policy to address the country’s growing urban poverty and combat income inequality. However, it was met with outcry from some quarters who pointed out the lack of due warning and absence of a clear implementation programme for companies to adequately prepare themselves ahead of the wage hike. Others raised the issue that a RM100 increase was still not enough to cover basic expenses.
Malaysia is now under a different government, with a new Prime Minister at its helm. There is an opportunity here for the new administration to pick up where the former left off and turn the minimum wage increase into a positive and actionable policy. But first, it is important to understand the argument around minimum wage in its entirety, from its impact on the economy to how businesses can cope with the increase.
1. Why raise the minimum wage at all?
Setting a minimum wage protects workers against unduly low pay. It allows the government to set the terms of employment and working conditions.[1] With the right policies in place, the minimum wage can be a tool for the government to overcome poverty and reduce income inequality.
Malaysia first set a minimum wage in 2013. This was done as part of a larger programme aimed at ensuring inclusivity and boosting the economy to high-income status. It was calculated based on a variety of factors: the poverty line, productivity growth, consumer price index, unemployment rate (actual, region), average wage per household and medium wage. At the time, the wage was estimated to benefit about 27% of workers nationwide.
By right, the minimum wage should reflect increases in the cost of living to ensure that workers can afford to buy basic necessities. However, the minimum wage has only been increased a couple of times since its introduction in 2013 – first in 2016 when it was raised to RM1,000 a month, to RM1,050 a month, and then to RM1,100 a month in 2019. This year would be the fourth time.
This mismatch between the minimum wage and rising cost of living has had the biggest impact on low-income households. Since 2014, the monthly income of the bottom 40% (B40) has grown by 5.8% annually – but after accounting for the increase in the cost of living, the growth is actually at around 3.8%.[2] At the same time, household expenditure grew at a faster pace of 6%, leaving these households with very little money to spend.[3]
In 2018, Bank Negara Malaysia (BNM) introduced the concept of a ‘living wage’[4]. Defined as a wage level that could afford the minimum acceptable living standard, a living wage would allow individuals to sustain a decent standard of living beyond just the basic necessities such as food, clothing and shelter. It should also provide for personal and family development, social participation – such as occasionally being able to purchase gifts for family members – and financial security.
The report calculated the estimated living wage for Kuala Lumpur as follows:
Even with the RM100 increase, the current minimum wage of RM1,200 is still much lower than Bank Negara’s projected living wage.
To compare, the monthly income in 2016 for B40 households living in Kuala Lumpur was reported by the Statistics Department as RM5,344[5] – lower than the estimated living wage of RM6,500. This has made it challenging for such families to afford basic necessities, much less a home, car or other consumer goods, causing many to look for supplementary sources of income. More people are resorting to working two jobs or deriving income from a side business just to make ends meet, contributing to the rise of Malaysia’s gig economy.[6]
Increasing the minimum wage can provide these communities with a safety-net, allowing them to afford more than just the absolute basic necessities. It is also important to ensure that the minimum wage stays relevant. This can be done by holding an annual review, checking the set wage against current cost of living and overall health of the economy, and make the appropriate adjustments.
2. How will the increase impact the economy?
The biggest risk raised is that the wage increase would be set too far above the rate that employers can afford to pay their employees, forcing them to lay off workers if they can’t offset that cost in some other way.
However, research suggests otherwise. Studies have found that increasing the minimum wage is often beneficial. The University of Washington has been studying the impact of raising the minimum wage in Seattle on its economy; a recent report shows that low-income workers were better off as a whole after the increase.[7]
This is no different for developing countries. North Macedonia underwent a bold reform of its minimum wage system in 2017, increasing the minimum by 19% and introduced the same wage in all sectors. The International Labour Organisation (ILO) found that it was successful in reducing wage inequality without negative impact; after the reform, only 4.3% of wage earners were in the low wage category (compared to 14.7% before the reform), and the bottom 10% received a share of 4.6% of all wages in the country which is well above the European Union’s average of 3.6%.[8]
One of the challenges ahead for the new government will be to revive the national economy. Malaysia is currently facing various threats, from the Covid-19 outbreak to international trade wars, and is coming off the back of a slow fourth quarter growth. This is compounded by the recent political uncertainty which has caused the Malaysian stock market to plummet. One way to spur the economy is by increasing purchasing power of the rakyat; this can be done by increasing wages and thus providing them with a little more disposable income. It could also boost overall purchasing power and contribute to household consumption. [9] Higher basic wages to the low wage earners could boost the income of small- and micro-businesses in Malaysia. Even modest rises in the national minimum wage could make a big difference to disposable income.
3. What does this mean for businesses?
A gradual increase in minimum wage provides the opportunity for business leaders to review their operations and make the necessary adjustments or optimisation to balance the higher cost of employment. It may even stimulate a larger transformation in the organisation’s strategy or operations that will make their business stronger in the long run.
For businesses that might be impacted by the raise, preparation is key. Here are some ways they can ready themselves:
A minimum wage increase isn’t a death sentence for businesses. Rather, it can be an opportunity for companies to transform their organisation into one that is agile, productive and digitally-forward.
4. How can the government manage the shock to the economy?
When the RM1,200 minimum wage was first announced late last year, businesses were taken by surprise by the increase and resistant to any change to the minimum wage. Representing one of the major industries in Malaysia, the Federation of Malaysian Manufacturers has stated that the industry is not against the increase in the minimum wage, but there should be a “clear and certain roadmap for the phases of increase, including the areas of coverage, to provide clarity and certainty to the business community for their respective budgeting and planning purposes”[10].
As with any socio-economic policy, it is important that both the public and the private sectors are aware ahead of time about what is being planned and how it would be rolled out, as well as any support that would be available to ease its implementation. This could be done by publishing a public roadmap, followed by an annual review of its implementation and effectiveness.
To raise or not to raise?
Over 20% of Malaysian households earn below the relative poverty line.[11] Increasing the minimum wage – perhaps even to over RM1,200 – is a good idea and one that has the potential to help a lot of B40 communities. However, any increases to the minimum wage should be done gradually and openly.
Much of the resistance to raising the minimum wage was due to the suddenness and perceived lack of planning on a key socio-economic issue as opposed to the increase itself. A clear implementation plan, with a condition to review the set minimum wage each year to ensure its relevance given the current economic landscape, would help to clarify the issue and let the public know what to expect.
This is an opportunity for the new administration to take the lead on a popular issue and work together with both businesses and unions to deliver a truly transformative policy.
[1] International Labour Organisation (ILO), 2020
[2] ‘The Living Wage: beyond making ends meet’, Bank Negara Malaysia, 2018
[3] New Straits Times, 2018
[4] ‘The Living Wage: beyond making ends meet’, Bank Negara Malaysia, 2018
[5] The Star, 2019.
[6] Ibid.
[7] Evans School of Public Policy & Governance, 2020
[8] ILO, 2019
[9] The Edge Markets, 2019
[10] The Edge Markets, 2020
[11] The Star, 2019
In the past few years, the world has seen the growth of many movements that champion gender equality and diversity, both inside and outside of the workplace. Despite these efforts by advocacy groups, a recent report shows that women remain underrepresented at every level in the office; making up less than 50% of the workforce [1]. In addition to this, some industries, including consulting, remain heavily skewed towards men.
In response to the trend, we talked to three consultants in PEMANDU Associates to have them share their experiences in the male-dominated industry. What stood out from their reflections is their mutual agreement in the importance of building and extending support systems in order for women to empower each other.
Cheryl Lim, Executive Vice President & Partner
Cheryl has been in consulting for the most part of her career. Throughout her past ten years with PEMANDU Associates, whilst rising to the ranks of Executive Vice President & Partner, she also became a mother.
Based on her own experience, Cheryl observes that the field offers equal opportunities to both women and men. She explained, “Consultants are selected for projects predominantly on the basis of their expertise and their contribution to the expected outcomes. It’s a case of the best person for the job.”
There are, however, different roles that women and men play in various phases of life, and at times, expectations towards both genders vary in this respect. Having said that, one changing trend that she noticed in the workplace is that employers today are making more conscious efforts to acknowledge that people have other responsibilities outside of the workplace. “I can see that among the leadership team, we are making an effort to appreciate and accommodate personal needs where possible, without putting work at risk. Everyone brings a different perspective to the table, and work outcomes benefit from this diversity.” Accommodating personal needs has also resulted in staff going the extra mile to get the job done.
Within the office confines, Cheryl pushes for women to be more proactive to find the support that they need, and this was, she believes, to be a key factor in the growth of her career. She sees value in building both formal and informal mentor-mentee relationships as the insights shared can benefit both parties. She shared, “I have also been inspired by my mentees as it is a symbiotic relationship.” And as a leader, it is paramount for her to create an inclusive working culture. For her, this means emulating and extending the support that she received from her peers when she became a mother.
At the end of the day, for female consultants to make their mark in the industry, Cheryl believes that it is all about doing great work and intentionally building relationships with people inside and outside of the office to help one flourish and grow.
Ilham Fadilah Sunhaji, Senior Vice President
For Ilham, empowering women takes a different form – advocating for progressive policies to be institutionalised within Malaysian corporations.
She has been a consultant for more than ten years with eight spent at the firm. Apart from consulting, she has also led projects in other typically male-dominated industries such as Oil & Gas and Manufacturing. The hard truth is that unconscious gender biases do occur, and in male-dominated industries, females have to work far harder in order to prove themselves due to persisting perceptions that males are more suitable for the job.
However, Ilham’s perspective is that showing direct resistance to behaviours like this will not bring about change nor alter perceptions. What she believes in is channelling her energy to the right causes, which was what drove her to help establish Malaysia Women in Energy (MyWIE), a platform that strives to give equal opportunities to women in the Energy industry.
MyWIE’s initiatives encompass all levels in the organisation – from entry-level positions to C-Suites, and up to those at the highest decision-making positions in the company. She has worked on providing policy recommendations to companies on how to create a more inclusive culture for women at work and also on ways to create a healthy environment where there is a level playing field for women to climb up the career ladder in the Energy industry.
Apart from MyWIE, she is also part of the 30% Club Investors Community Working Group (ICWG) that calls for a more gender-balanced board, especially in public-listed companies. This is aligned to the policy under the Malaysian Code of Corporate Governance whereby all 959 public-listed companies should have at least 30% female representatives on the Board. To date, the percentage of women directors appointed as Board Members in these companies has increased from 7.5% in 2008 to 16.3% in 2019. Moving forward, she plans to intensify her efforts in promoting best practices of gender diversity in corporate governance to the Institutional Investors Council and the Investment Group under ICWG.
Ilham believes that it is efforts like these that would make an impact to the society, consequently subtly fighting the unconscious discrimination that some may have towards women. She also advised for one to be patient and to be strategic on how to deal with these situations. “I believe that having patience and compassion in the face of adversity will only enrich the individual,” she said.
As a member of the firm, Ilham is glad that the company does not stop her from championing causes that are close to her heart. In fact, the company’s CEO, Idris Jala, goes to the extent of providing coaching to her as well as other potential women board directors. This is part of the PEMANDU Associates DNA in terms of Situational Leadership. By getting involved in activities to uplift women’s position in the workplace, this will inspire others to do the same.
An avid hiker, Ilham concludes that regardless of the industry they are in, women must be aware of their own strengths, and to not let society dictate the roles that they should play. In her words, “Know your value, and if you want things to change for the better, pursue the right channels to do so.”
Qaleeda Talib, Associate
Qaleeda describes herself as fortunate. Throughout her three-year stint as a consultant, she has not experienced any form of discrimination based on her gender. However, this does not mean that she should be turning a blind eye to those who have.
Fresh out of school, the University of Oxford graduate joined the firm as an intern, which then turned into a full-time job. The supportive and healthy culture at the firm has been one of the reasons why she chose to continue her career path here, alongside being surrounded by highly-skilled-yet-understanding seniors who are always helping her to grow. “My seniors see my gaps as an opportunity to nurture me to become a better version of myself,” she said.
She added that what she also liked about working in the firm is that she has not been impeded by her gender when it comes to participating in or leading projects. Based on her experience, with everyone’s mind set on achieving big and fast results, it leaves little space for gender-based prejudices to influence the delegation of work and responsibilities. “I have had the opportunity to collaborate with excellent male and female team leads, and this suggests to me that people are selected to do the job because they are able to deliver quality outcomes, and not because of their gender.” A former student of History, she recently pitched a project related to deliver business turnaround for one of the museums in the country. But little did she realise how much support she’d get from her seniors and peers! “What I can see is that people here will recognise you for your passion and your hard work. Nothing else comes into the picture.”
Even though her experiences as a female consultant may have been very positive, she’s cognisant of the fact that not all may feel the same. On one of the projects that she was on, a female teammate was treated badly by a client. Noting her teammate’s distress, Qaleeda extended support and help by escalating this issue to her Team Lead to ensure that the matter was managed. For Qaleeda, part of empowering female consultants is also providing a safe space for each other so that everyone can have equal access to a healthy and conducive work culture.
She also shared her two cents about today’s movements that are geared towards ensuring equal opportunities for women. To her, it is about ensuring individuals getting the right recognition for what they do more than it being a gender supremacy issue. Furthermore, she can see that the movements that started off with women-rights agenda are now extending their support to the opposite sex. “There are women organisations out there that now fight for paternity leaves. At the end of the day, people just want a better quality of life for everyone.”
To thrive at the workplace, particularly as a woman, focus on building your network of supporters, said Qaleeda. Just like other female consultants, she believes in recognising one’s own value and having the right people around who would support your aspirations. And for her, is it also crucial for one to always be mindful of what is happening to others, and to extend help whenever it is needed.
[1] McKinsey & Company, 2019
In spite of being a household name in the private education industry, Education Co was struggling with declining profits and student enrolment over the last four years. Meanwhile, its competitors were catching up with newer facilities and fresh entries to the market. The company needed to boost its profitability while remaining true to its purpose of delivering holistic education. PEMANDU Associates dove in to deconstruct the problem and find the best solutions to meet their objectives.
The Story
As one of the private oldest education providers, Education Co had maintained its strong brand heritage through decades of operations, with its university ranked among the Top Tier of Private Higher Education Institutions in its country of operations, and the Top 250 universities the QS: Asia University Ranking. The company’s operations now span business units across a university, college and schools.
Despite its reputation for academic excellence, the company’s net profits had been declining at a 5.1% CAGR over the last four years:
Out of the three business units, its college operations in particular had suffered, risking insolvency in two years if it continued operating in the status quo.
PEMANDU Associates was tasked to employ its Big Fast Results (BFR) – 8 Steps of Transformation Methodology© to help the company achieve a quantum leap in their profitability.
Our Approach
Over the course of six weeks, PEMANDU Associates undertook the following steps:
1. Establishing the Lab’s True North
The True North sets out the overarching goal that aligns all the initiatives identified at the labs. At a Strategic Management Workshop involving the CEO and key decision makers, the True North was determined as: “Delivering holistic education by operating at optimal capacity to achieve the targeted profit by 2020.” Success in optimising capacity and profitability would validate Education Co’s value proposition of delivering “whole life education”.
2. Structuring the Lab to support the True North – Workstreams
The True North was broken down into two focus areas for the labs:
a) Holistic Education – Fulfilling its value proposition
To ensure that holistic education relates to tangible outcomes, a framework was developed to clearly define the delivery of holistic education for the organisation
b) Capacity Optimisation – Achieving this requires a function of:
3. Landscape analysis
This would benchmark Education Co against their competitors in the industry. A study of the industry landscape revealed:
4. Internal assessments
To have an in-depth understanding of its operations, the business streams mapped out their programmes based on Gross Profit (GP) Margin vs. Capacity Utilisation (CU). This enabled a high-level assessment of the appropriate strategic action for each programme:
The mapping revealed:
5. Identifying key initiatives and opportunities to achieve the True North
This final step began with brainstorming by workstreams for ideas to achieve the True North. These ideas were then prioritised according to their potential impact and related issues. Prioritised initiatives were fully developed into detailed implementation plans, outlining the action items and timelines, persons in charge, the stakeholders involved, resources required and potential issues and mitigation plans. Based on these plans, the initiatives underwent a final prioritisation assessment according to their overall impact on the True North and feasibility of implementation.
The solution: Key recommendations
59 initiatives were developed and prioritised for Education Co across several key areas. Among the key initiatives were:
The outcome
The initiatives developed at the lab aimed to yield an increase in profit after tax by 178% in 5 years:
Providing quality education to generations of students is no easy task. Faced with competition from newer institutions, Education Co sought to boost its profitability while still remaining true to its mission of delivering holistic education.
By performing a landscape analysis and company-wide internal assessment, PEMANDU Associates was able to identify certain projects that could be turned into quick wins and deliver the lab’s true north – enabling Education Co to deliver holistic education by operating at optimal capacity to achieve the targeted profit by 2020.
By Serene Tan Zheng Xiew, Manager at PEMANDU Associates
Speak to a management consultant and what becomes apparent very quickly is not only the maddening work hours, but the constant travel. While this may bring about glamorous images of consultants with their customary Tumi bags working out of airport lounges, the constant travel can take quite a toll on – both physically and mentally.
Throughout my almost two-year stint here with PEMANDU Associates, our work in government transformation and my expertise has provided me with opportunities to not only work in a host of countries but to collaborate with people from different cultures. Projects would usually take ten to twelve weeks and throughout that time, we’re just working tirelessly to ensure that we can facilitate and develop strategies that will help achieve a business’ or government’s True North. And given the firm’s belief in delivering Big Fast Results, we often hit the ground running from the moment we land.
I’ve learned very quickly that one of the keys to a fruitful engagement is to quickly adapt to the people and the work culture of the country you’re in. There are no playbooks for this, so you have to be nimble enough to adapt on the job. This may sound trivial but acclimatising to new work cultures is important in ensuring that you can successfully manage project stakeholders and produce results. This is all part of the Big Fast Results approach that we at PEMANDU Associates consultants anchor our work on – in other words, to deliver tangible results in the quickest, most effective way possible.
To date, I have been assigned to projects in three different countries across three different continents, so you can imagine the vast differences in cultures. However, in preparing myself for the trips, I usually stick to a few ‘rituals’ which have been a lifehack of sorts, regardless of where I’m headed to.
Do Your Research!
Preparation begins way before you take-off!
Like a true consultant, every trip begins with an obsessive flurry searches into available databases shared by the Engagement Manager to study the country, its people and its customs. Next, I’d look out for information about the specific industry related to my assigned workstream and speak with our colleagues who have experience in similar industry experiences.
I’ve been involved in quite a few socio-economic transformation projects so my pre-reading also helps dig up insights on the country’s laws and policies. The last thing you would want to happen is to devise strategies based on policies that didn’t work before!
Call it old-fashioned, but appearances matter. Getting familiar with a culture’s dressing etiquette is another great step to ensure that you adhere to cultural boundaries. Prior to one of my work trips to Oman, I made sure my wardrobe was prepared to suit the Muslim-majority Sultanate to avoid offending my counterparts. Being outcome oriented, the last thing we’d want is for wardrobe mishaps to discount or hinder our work delivery.
Get Off on the Right Foot
My first two days in a new country will determine how the rest of the project will turn out. Ergo, it’s extremely important for me to make the right impression to my counterparts. The early stages of an engagement allow working teams to establish working processes, hours and norms. Use this time to communicate with your counterparts to understand the issues they have been facing so that they know you are here to help. One of the firm’s leadership principles is ‘building a winning coalition’ to ensure alignment towards a common outcome. And taking a people-first approach has been key to helping me achieve this!
R-E-S-P-E-C-T!
Aretha Franklin’s famous lyric has never rung more true. Respect is the foundation to being able to work well with people who are from different backgrounds. Afterall, you’re on their home turf so you have to play to their rules.
In St. Lucia, the people adhere strictly to their working hours (9am-5pm). This means any e-mails or work requests sent after 5pm will need to wait until the next day. For us Asians with a habit of working through ungodly hours, this means, if you promise to deliver something ‘by EOD’ it doesn’t mean end of day by your standards.
The good news is, the firm believes in rigorous planning (we call it a ‘3 feet plan’) which favours granular activity plans toward an outcome or deliverable. This makes it easy for us to plan our time efficiently to ensure that things are done with a clear direction and on time.
Keeping Your Mind on the End Goal
With the limited timeframe that we have on a given project, you need to maintain a razor-sharp focus on the project’s true north. There will be roadblocks in reaching the finish line and when they do appear, there are times where a stand has to be taken, and perhaps unpopular decisions made to move the needle. Problem solve the issue by finding alternatives, and in my case, I would seek information from other individuals who might also have access to stakeholders with greater authority. If there is a need to bypass individuals, seek help from your team lead or Engagement Managers, to get some time with the stakeholder in question (but remember to do so diplomatic in your approach!).
In the business of Big Fast Results, we don’t have the luxury of time to entertain prolonged inaction on a matter. So carry out your tasks relentlessly, monitor progress, and when faced with difficulties, continuously find solutions that can help you overcome them.
Build Camaraderie
Your work assignment is probably going to be the only time you will be visiting the country so why not make friends out of it?
One of the key components of PEMANDU Associates’ Big Fast Results (BFR) Methodology – 8 Steps of Transformation© is to hold a Lab. This is an intensive process where cross-functional groups of stakeholders are brought together over a period of 6-8 weeks to identify prioritised initiatives and action plans toward a common goal. A Lab can get very intense for everyone involved so to lighten up the mood, I usually utilise break times to chat with my stakeholders. Sometimes, we even play simple games just to break the ice! This actually helps build my relationship with my counterparts, which will consequently result in better working relations.
Spend time with your stakeholders, and get them to share more personal things. It will make adapting so much easier once you have newly made friends who can guide you on how to navigate around their culture.
Challenges abound when you carry out work in a different country. And while we may sometimes learn things the hard way, the key is that we learn. Our CEO, Dato’ Sri Idris Jala says that in the pursuit of a goal, even if we slip up the important thing is that we’re transformed along the way. And boy have I learned and transformed!
