Find, Attract and Retain Employees in Malaysia
Why should I read this document?
Many foreign or multinational companies replicate HR policies and management practices from headquarters at their overseas operations not only because it is easier to ‘lift and shift’, but also with the good intention of infusing a common corporate culture and maintaining equality across all its operating units around the world.
However, not being sufficiently aware of and taking into account cultural differences between the country of its headquarters and its overseas operations at best results in human resources not being leveraged to their full potential, and at worst results in tensions between management and employees with the potential to escalate into challenging labour issues.
This article aims to provide an insight into the mindset of Malaysian employees and what one may encounter when managing employees in Malaysia.
Malaysia is a very attractive destination for companies looking to grow their presence and establish regional centres in the Southeast Asia and Asia-Pacific regions. Malaysia is ranked 22nd out of 63 countries in the Institute for Management Development (IMD) World Talent Ranking 2019 on cultivating, attracting and retaining a skilled workforce, behind only Singapore, Hong Kong, and Taiwan in Asia . Commonly cited reasons for Malaysia’s attractiveness to foreign and multinational companies include highly-skilled, English speaking, as well as multilingual talent, and a diverse culture.
More than one-quarter of Malaysia’s local labour force is engaged in skilled labour, around 60% in semi-skilled labour, and approximately 12% in unskilled labour . Almost one-third of the labour force have tertiary education . Malaysia has high unemployment rates among university graduates with 60% remaining unemployed one year after graduation , pointing towards a large gap between what tertiary education institutions provide and what industry needs.
Malaysia is heavily reliant on migrant workers from other countries in Southeast Asia and South Asia (up to 30% of the country’s total workforce ) as a source of cheap semi-skilled and unskilled labour for ‘3D’ or dirty, dangerous and demeaning jobs shunned by locals. Some are legal while some are sanctioned illegal labour, and, unfortunately, many endure poor living and working conditions. Migrant workers are not covered in this article.
5 most important things to know about finding, attracting, and retaining employees in Malaysia:
The Malaysian workforce is very diverse. What works for one organisation or one group of employees may not work with another, and cultural norms or stereotypes do not apply to every individual.
The ideal employer plays a paternal role. Work is not merely a business transaction where labour is provided in exchange for payment, it is a relationship where the employer takes care of and looks out for their employees in return for the commitment and loyalty of their employees.
Publically singling out an individual, even for positive reasons and especially for negative reasons, can make people uncomfortable.
Employees may not voice their opinion openly or directly at the outset, but this does not mean they do not have anything to say. You have to make the space to let this happen.
Employee engagement and team spirit are high. If you are able to cultivate and leverage this, the organisation will be able to achieve great things!
The market preference for employment terms among employers and employees alike is still predominantly traditional, i.e. full time, permanent employment with full benefits. Fixed-term contractual employment also exists, but many hope to convert this to permanent employment at the end of the fixed term. Gig economy jobs such as freelancers, project-based workers, independent contractors and part-time hires have increased in recent years but it is still an exception; while job seekers have become more open to the concept, management and HR departments have been slow to adapt.
Malaysia is a highly collectivist country (see About Malaysia - Level 3 Dimensions for more information). Instead of American-style resumes that tend to speak highly of achievements and focus on individual contribution, expect Malaysian candidates in resumes and interviews to be modest, generally understating achievements and speaking of contribution towards a group effort. Candidates generally do not express achievements in terms of specific quantitative targets and can be uncomfortable highlighting individual contribution at the outset; gentle probing is needed to tease this information out.
Most urban Malaysians are multilingual, speaking two or more languages (Malay, English) plus a mother tongue such as Chinese (Mandarin or other Chinese dialects) or Tamil (or other Indian languages). Due to its diverse background, geographical location and ‘Look East Policy’ , foreign language speakers such as Thai, Japanese and Korean are also available in the workforce. Although English is taught as a second language in school and Malaysia is widely touted to be English-speaking, actual fluency can vary widely depending on socioeconomic and educational backgrounds. If the ability to speak English is important to your business, you may want to include an English competency test as part of the hiring process.
Compensation and Benefits
Malaysia is a collectivist, hierarchical society; employers/supervisors have an almost paternal relationship with their employees and are expected to ‘take care’ of them. As such, Malaysian employees have high expectations of receiving a full and generous benefits package including medical insurance coverage for themselves as well as their dependents, paid leave, and miscellaneous allowances such as for transportation, mobile phone, dental, optical, education/training, etc. In order to balance the increasing and varied needs of a diverse and demanding workforce with escalating costs to the organisation, more progressive employers now opt for a flexible benefits menu administered by a third-party provider that allows employees to select benefits based on their individual needs and preferences.
Compensation and benefits is a key deciding factor for most candidates when considering a job offer, and it is commonplace for employees (especially younger employees and those at lower levels) to change jobs for small increases in compensation and benefits. According to the 2017 Randstad Employer Brand Research report, the number one reason for employees leaving their job was dissatisfaction with salary and benefits .
Performance Management and Career Development
The report also found that the number-two reason for employees leaving their job was a lack of career progression. In more individualist countries with lower power distance such as the US and the UK, job grades/job titles matter less and employees are more comfortable taking charge of their own career progression. Conversely in Malaysia, which is a collectivist country with high power distance, job grades/job titles matter more and it is a common expectation that supervisors will manage the career progression of their employees for them by granting them development opportunities or promotions as recognition for loyalty and good performance. Some multinational companies practice having more job grades and job titles in Asia to allow for more frequent but comparatively smaller promotions. The same job title in Asia also may or may not be comparable in level to that elsewhere.
Performance management using individual SMART targets is commonplace when managing a highly skilled workforce as a result of companies in Malaysia complying to accepted international standards based on American management philosophies. SMART targets are useful in the sense that employees expect management to define and cascade targets in a top-down manner. However, some elements need to be adjusted in practice. Collaboration instead of competition is preferred; the pursuit of one’s individual goals above everything else and at the expense of others will not sit nicely with the rest of the team, so include team targets in addition to individual targets. Even though a joint target setting conversation may have taken place between the employee and their supervisor, it is unlikely that the employee will challenge the supervisor's requirements and assumptions at the outset, so allow some flexibility for the employee to periodically revise targets if necessary.
Providing negative feedback in public or being openly critical or confrontational is considered impolite and can result in the recipient ‘losing face’ or being embarrassed in front of others. Negative feedback should always be given discreetly and in private. Dissatisfaction towards supervisors will be shown indirectly or in a passive-aggressive manner, for example calling in ‘sick’ the next day or resigning due to ‘personal reasons’.
When providing positive feedback in public, such as during town halls, singling out just one individual can also make them uncomfortable. Instead, make an effort to recognise the entire team or a group of employees. No doubt high performing employees still deserve and appreciate individual recognition, but this can be done more discreetly.
Malaysia has a high power distance culture; there is generally a greater acknowledgement of and respect for hierarchy and seniority compared to in the West.
Organisations are still hierarchical and the concept of a chain of command applies, but the number of levels and adherence to it differs by industry, by organisation, and by individual. In general, work is delegated down the chain of command, peers work with peers, conflicts are typically escalated to higher-ups to resolve, and supervisors expect to be consulted and informed prior to their subordinates.
Decision making is often escalated to higher-ups as a matter of protocol and out of respect, and employees would prefer that the decision they have already arrived at in their mind is also supported by management. If you want employees to be more involved in making decisions, make it a point to explicitly inform employees that you delegate the decision-making authority to them and that you have full trust in them to make the right decision.
When asking Malaysian employees if they have any questions or feedback, you can expect to be met with silence at first. Do not mistake this for a lack of engagement, Malaysian employees are in fact very engaged and enthusiastic. You just need to know how to ask!
In large events such as town halls and training sessions,
Provide an anonymous way for input to be submitted, such as a physical or virtual suggestion box, or hand round and collect slips of paper.
Nominate a representative to collect the input and read them out anonymously. This could be a group leader or a team leader.
It can help to ask people to share and discuss their input with a colleague or the group first before sharing it with the wider audience.
Plant someone to ask questions you know people have but are afraid to ask.
Prior to the meeting, inform attendees that you would like to seek their input on the matter at hand and request that they come prepared with questions.
Instead of opening the floor for questions and expecting people to speak up, go round the room one-by-one to provide each person with the opportunity to speak. This not only gives them ‘consent’ to speak, but also allows the quietest voice in the room to be heard.
Follow up the meeting with an email requesting further input, and if necessary organise another forum to address these points.
If it is a matter of importance, you may want to meet with each attendee privately in-person before and after the meeting.
Once people get over the initial discomfort of being the first to speak up, you will find it hard to get them to stop!
A similar approach can be said for continuous improvement - employees are unlikely to bring up areas for improvement out of the blue but will be happy to contribute when suggestions are solicited as part of an official continuous improvement initiative. Be aware though that Malaysia has low uncertainty avoidance. This means that things are not planned out in great detail beforehand and preparations do not need to be perfect, rather a high-level approach will suffice to start with and the details will be refined and adapted along the way according to the situation. This is very agile, but if it is not suitable for the nature of your business you may want to put in place necessary controls.
The key concept in the scenarios mentioned above is ‘sanctioned’; permission or approval from management is preferred in order to give employees the comfort they need to proceed. Direction is appreciated, but definitely not micromanagement.
Being a highly collectivist society, personal relationships and being part of a community play an important part in the workplace. Allocate a larger budget for team building, meals and entertainment, and internal company events than you would for other countries. Corporate branded items such as t-shirts and bags allow employees to show that they belong to a reputable organisation, and large organisation-wide events such as family days or sports days allow all levels of the organisation to mingle. Leverage on the local team to advise on and organise suitable events.
Short case study
A large company headquartered in the United Kingdom established a new team for one of its global functions in Malaysia, in addition to existing teams in the UK and North America.
Part of the new team in Malaysia was a group of young graduate trainees who were rotated through various assignments in order to give them exposure and experience. One of them in particular, Kenneth, was seen by his supervisors based in the UK and North America as a high potential and candidate for promotion. However, Kenneth did not get along with his Malaysian peers. They complained he was focused only on achieving his own targets instead of helping his fellow trainees and constantly promoting himself by letting his supervisors know of his achievements. When the supervisors in the UK and North America heard about this complaint, they suggested that perhaps the other graduate trainees do the same as Kenneth. After all, how else were the supervisors supposed to know about the trainees’ achievements unless it was actively shared with them? This just made the other trainees resent Kenneth even more.
The majority of the new team members in Malaysia, however, were highly skilled experienced hires from the industry. After two years of successfully delivering key projects and receiving excellent feedback from global stakeholders, the local management felt that several employees were ready for promotion. One of the requirements from headquarters was that candidates for promotion to senior levels take and pass a psychometric test to determine their suitability for a leadership role. However, not a single Malaysian candidate passed the test. The psychometric test was based on criteria deemed to be necessary to become an effective leader … in the UK.
Key Takeaway: There is no easy solution - managing a diverse workforce is challenging! What is seen as desirable behaviour in one culture may not be desirable in another, and what works in one culture may not work in another. Try to adjust HR policies and management practices to be more effective for the local culture, but also be aware that cultural norms and stereotypes do not apply to all individuals.
References & Links
 Institute for Management Development (IMD) World Competitiveness Centre. IMD World Talent Ranking 2019. Retrieved from https://www.kearney.com/digital-transformation/gsli/2019-full-report
 TalentCorp Malaysia. Key Figures. Retrieved from https://www.talentcorp.com.my/key-figures/key-figures
 Department of Statistics Malaysia. Labour Force Survey Report, Malaysia, 2019. Retrieved from https://www.dosm.gov.my/v1/index.php?r=column/pdfPrev&id=TlVMbEtBVXBGTi80VjdqZ1JUdVRHdz09
 International Labour Organization. Triangle in ASEAN Quarterly Briefing Note - Malaysia (April to June 2019). Retrieved from https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/documents/genericdocument/wcms_614381.pdf
 Embassy of Japan in Malaysia. The Malaysian Look East Policy. Retrieved from https://www.my.emb-japan.go.jp/English/JIS/education/LEP.htm
Attorney General’s Chambers of Malaysia. Employment Act 1955. Retrieved from http://www.agc.gov.my/agcportal/uploads/files/Publications/LOM/EN/Act%20265.pdf