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HR in Cambodia


The second of EuroCham’s annual Cambodian HR Forum was held in June. Management Insider went along to find out the hot topics among the country’s HR professionals, and what they predict for the future of the industry.

HR-Forecast

Know Your HR History
Understanding Cambodia’s recent past is the key to solving current problems within the human resources industry. Amaury de Saint Blanquat, managing partner of Saint Blanquat & Associates, told the crowd that “HR is the main complaint of employers in Cambodia, but they should always remember where the country comes from.”

“In the 1980s there were almost no official jobs, salaries, contracts or labour codes,” he explained. The first labor law was only introduced in 1997, but was not properly enforced until much later. “Cambodia’s private sector is only five to seven years old, so the country is moving extremely fast. 10 years ago, HR barely even existed in the country,” said Saint Blanquat, who has watched Cambodia evolve from the inside for the past 10 years.

The result of this sudden acceleration in legal enforcement means that small and medium companies often aren’t HR compliant – and many don’t even realise it. Indeed, Saint Blanquat revealed that, shockingly, “only 7% of Cambodian workers have formal employment with contracts.”

“ TEN YEARS AGO, HR BARELY EVEN EXISTED IN THE COUNTRY… ”
This historical lack of legal structure is why Cambodian businesses have an average HR compliance rate of just 48%.
-Amaury de Saint Blanquat,Managing Partner, Saint Blanquat & Associates

Saint Blanquat believes that this historical lack of legal structure is why Cambodian businesses have an average HR compliance rate of just 48%, well below the global average. But having noticed a far greater employer awareness over the past few years, he predicts a drastic improvement on that figure.

Why Comply?
Why should companies go through the trouble of becoming HR compliant, especially if they’ve gotten by for years without doing so? Khak Chenda, the head of human resources at ANZ Royal, explained in her speech that “HR compliance means looking after payroll benefits, worker eligibility in the hiring process, employee relations, terminations, health and safety and reporting requirements. Good employee relations protect both the workers’ rights and businesses against potential lawsuits.”

Not only does compliance mean a happy, healthy workforce, it also means businesses are safe from accidentally flouting the law. “Cambodia is receiving more and more regulation and enforcement. As the world changes, we need to get better in order to catch up,” she said.

“ GOOD EMPLOYEE RELATIONS PROTECT BOTH THE WORKERS’ RIGHTS AND BUSINESSES AGAINST POTENTIAL LAWSUITS. ”
-Khak Chenda, Head of Human Resources, ANZ Royal Cambodia

“Most importantly, it’s the right thing to do: not complying is risky and costly. HR compliance attracts good employees and strengthens employer-employee relations.”

Permit Crackdowns
Recent police crackdowns on foreigners working in Cambodia without proper permission was a recurring topic at the conference. Ouk Chanthou, director of Labour Ministry’s inspection department, confirmed in his speech that it was one of his priorities.

Attendees of the conference expressed concerns, however, about the methods and speed of the crackdowns.

Vatana, an advisor at a Phnom Penh law firm, has witnessed a recent rise in the enforcement of work permit laws, and says that “the process for obtaining a work permit is really long, about six months, and many foreign workers get in trouble during the processing time because police don’t believe they have really applied. The process needs to be faster.”

Building a Workforce
The conference also examined why so many foreign workers were required in the first place: a perceived lack of education and skill amongst the Cambodian workforce. Jean-Francois Cautain, the European Union’s ambassador to Cambodia, emphasised the need for strong cooperation between the education and private sectors in order to close the gap caused by a high secondary school dropout rate. “There is a mismatch between what the education system is providing and what businesses require in terms of skills.” he said. “Skilled workers mean better, diverse jobs and harmonious relations with foreign organisations.”

One method to fill the education-skills gap is in-house training, as used by Pao Roatana, a PR manager for a firm selling premium motorcars. “It’s hard to find skilled workers and technicians,” he said. “We recruit people with basic skills, and then send them to Thailand to train them in specialist skills, sending them back regularly to upgrade. This also means we have a somewhat high turnover – our workers often get headhunted – but we’re happy to see our staff grow.”

After the conference, Ngorn Saing, chief executive officer at RMA (Cambodia), confirmed that “some of the biggest challenges in HR are recruitment, market supply and the job demand gap. Right now, people try and poach from other companies, but some big companies are starting to have a talent management team in order to grow tomorrow’s leaders.”

A New Ethical Drive
Alexandra Herbel, general manager at TÜV Rheinland Cambodia, urged businesses to start including an ethical element – or social auditing – to their HR practice. Social auditing goes beyond basic compliance, and factors in the company’s ethical responsibility, too. Herbel believes this process can change the whole playing field of any industry, as businesses’ ethical demands on the practice of suppliers influence their requirements.

“ THERE IS A MISMATCH BETWEEN WHAT THE EDUCATION SYSTEM
IS PROVIDING AND WHAT BUSINESSES REQUIRE IN TERMS OF SKILLS. ”
-Jean-Francois Cautain, Ambassador, European Union 

“Cambodia is high risk for non-compliance. Many companies don’t do social audits, have bad working hours, no compensation or health and safety rules. Yet employees appreciate workplaces that go beyond the basics,” she said.

Herbel believes that this slowness of businesses to widely adopt social auditing is hampering Cambodia’s development, but that change is indeed starting to occur. “We see the garment industry beginning to change,” she said. “There’s a new trend of customers asking where things come from, which pushes companies to comply. Consumers expect more.”

Going Beyond the Minimum
Saing closed the conference with a powerful message reminding companies how HR can be used to push both Cambodian business – and the country itself – forward. “We need to go beyond simple compliance,” he said. “People are the most important thing in the corporate world: If the right people aren’t there, the business’s strategy is ruined. Jobs are not just about compensation, but about training, development and recognition.”

His speech touched on the conference’s key message – the lacklustre education system and the chaotic history of the country are creating a business environment that can be sometimes challenging. But the booming economy means the power of change lies in the hands of Cambodia’s HR departments to create a better future for Cambodia’s workers, through compliance, training, and the setting of higher workplace standards.

 


Text by Eve Watling | Photo Courtesy EuroCham

 

 

 


Words by Eve Watling