Having faced down the threat to their survival posed by the global financial crisis, companies now face a new struggle – the eruption of a talent war that will determine their future growth prospects.

A Nielsen Company quarterly survey on consumer confidence in Taiwan has shown over the past two quarters that local consumers cite the balance between work and life as one of their two top concerns (along with the economy) over the next six months. That means that companies empowering their employees to find a satisfying work/life balance will have the edge in the 2011 corporate talent war.

Considering that Taiwan generally ranks among the top countries in the world in terms of average work hours, such a result was not surprising.

According to IMD (International Institute for Management and Development) statistics, Taiwan's per capita income will soon surpass US$20,000, but Taiwan's people are tied down by the high number of hours they work on average. They put in even more hours than the average worker in China, which has a per capita income of under US$4,000. (Table 1)

"Taiwan's previous generation worked eight hours. At the end of the day, a sea of motorbikes and bicycles flowed out of export processing zones in a rush to get home. Why is it that the more society progresses, the longer the hours Taiwanese workers have to put in?" wonders Fuh Hwan-ran, head of the Council of Labor Affairs' Department of Labor Safety and Health.

Taiwanese entrepreneurs love to praise China's workers as being more industrious and cheaper than their Taiwanese counterparts. Over the past five years, however, the unit productivity of Taiwanese workers has risen faster than that of their counterparts in the three other "Asian Dragons" (Singapore, South Korea and Hong Kong) and China. One of the main reasons is that their work hours are long, while their wages remain stagnant. (Table 2)

Companies have now entered a new phase in which their operations and competitiveness no longer depend on brute strength. As a result, the work model followed by 7 million Taiwanese salaried workers, much like corporate strategy itself, is at a critical juncture.

"Companies that work their employees to death aren't capable of conceiving unique values," says Liu Shuen-zen, a professor in National Taiwan University's Department of Accounting. "When companies bind their workers to fixed, repetitive tasks, there's no way there can be any change."

In fact, from overseas to domestic companies, from leading contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC) to physically taxing service industries, to managerial-level EMBA courses, many highly competitive fields are gradually fostering a new ethos of dynamic competitiveness. Enterprises have increasingly come to realize that leaving their workers with greater vigor is the key to sustainable operations. 

Tragic Abuse

One of the first signs that change was needed came early last year when a Nanya Technology Corp. engineer died of overwork – a phenomenon known as karoshi in Japan, where it first came to media attention. A survey studying the labor practices of 30 electronics manufacturers conducted by the Council of Labor Affairs found that more than 80 percent of them were acting illegally, with the most serious violation being that people worked excessive hours. Prior to the Lunar New Year holiday, Taipei's Department of Labor announced the names of nine companies that were overworking their employees, shattering their carefully cultivated images and giving them new reputations as sweatshops.

The older sister of the deceased engineer released a letter on the Internet that excoriated Taiwan's high-tech companies for abusing the "results-oriented management system" and for depriving engineers of their health. The letter exposed how unfavorable to laborers the system was in trying to determine whether "overwork" could be classified as a cause of death.

The engineer's death was originally ruled not to have been caused by the long hours he put into his job, making his family ineligible for labor insurance compensation and other benefits. That prompted the Council of Labor Affairs, at the end of last year, to revise its guidelines on what constituted occupation-related disease and added cerebrovascular and heart disease caused by overwork to the list. 

The revisions not only broadened the definition of occupation-related illness, but more importantly, also shifted the burden of proof from the employee to the employer.

In the past, the council would rely on the employer to determine if an employee was overworked. If the employer denied there was a problem, it was up to the employee to furnish proof to the contrary. Under the new rules, however, employees are consulted first, and it is up to the employer to provide evidence if it disagrees with the employee's accusations. This increases the chances that stress-related death will be ruled as being caused by overwork in Taiwan.

"Taiwanese people started working so hard because of the trend led by high-tech businesses," observes Dorothy Tao, the senior vice president and head of human resources Taiwan for Hongkong and Shanghai Banking Corporation Limited (HSBC).

But the environment is changing. Not only are regulations being revised, but high salaries have virtually disappeared and stock bonuses have fallen since companies were required to treat them as expenses beginning in 2008. That has led many high-tech workers to change careers. And to prevent the further depletion of their talent bases, companies have been forced to adjust and shorten work hours. The trend extends to non-high-tech sectors.

HSBC: Flexible Hours, Long Vacations

"To change work hours and work modes, organizations have to have a mechanism," Tao says. Last year, the HSBC Group began promoting flexible work hours and one-year unpaid sabbaticals for senior employees, and established a dedicated task force to carry out the changes. It also designed supplementary measures to ensure the success of the program, such as labor, health and group insurance benefits and self-assessment questionnaires.

"Companies should rely on a system," Tao says. "In any job, no one is irreplaceable."

She cited as an example an employee whom HSBC identified as a core talent. Last year, soon after the individual assumed a new post in Hong Kong, he asked for a year off to slow down and compile a collection of essays he had always wanted to publish. HSBC approved his application and sent somebody from Britain to take his place. The bank not only satisfied the request of a valued employee, it was able to use the short-term opening to nurture a management associate.

Tao admitted that HSBC has been able to promote flexible hours and yearlong leaves because of its huge pool of talent around the world. Whenever somebody takes a year off, there is plenty of talent ready to come off the bench to plug a short-term opening. The approach has been helped by technology, which makes it more convenient to move people around the globe and enables somebody from one location to fill the void left in another location.

CTCI: Ample Talent, Adept Digitization

For Taiwanese enterprises to be able to keep their employees energetic and enthusiastic, they must embrace the concept of building a deep reserve of talent.

When Taiwanese entrepreneurs contemplate their manpower needs, they generally only hire just enough people to do the job, leaving themselves little wiggle room. Tao attributes the long hours and excessive workloads in part to this shortsighted approach, which leaves nine workers doing the job of 10 people or even more over the long haul and completely ignores employee turnover problems.

If a company has a turnover rate of 10 percent, then the company will always have nine people doing the work of 10, in effect forcing everybody to work overtime on a regular basis. The resulting fatigue among the work force only leads other workers to quit, compounding the problem. An even more insidious consequence of limiting staff sizes is that supervisors are less likely to get rid of unqualified or sub-par workers, making it even harder to manage performance.

"In fact, having a reserve of talent does not cost the business a lot, but it reduces risk," says Tao, who suggests that companies should reconsider their human resource strategies.

Among the advantages of having a broad pool of people is that it gives employees time to be properly trained, to innovate, and to further reduce their work hours, as Taiwan-based engineering company CTCI Corporation has found out.

Two years ago, in anticipation of a boom in the market for petrochemical plants, CTCI bolstered its work force by 10-20 percent. When the company planned to move to a new facility, it had its surplus manpower help scan old documents and upload files, capitalizing on the opportunity to build its own knowledge base. By digitizing the knowledge it had accumulated over a long period of time, CTCI no longer had to move its old documents when it came time to relocate, saving moving costs.

CTCI's knowledge management system, which earned the company a "National HRD Innoprize" from the Council of Labor Affairs in 2010, has also enabled its employees to work more efficiently.

Su Feng-chen, the technical manager of CTCI's Piping Engineering Department, has been with the company for 28 years and is responsible for the piping and wiring of the petrochemical plants CTCI builds. The department, consisting of over 20 people, once had 30 tall cabinets full of documents. If Su wanted to find documents related to the Formosa Plastics project the company handled 13 years earlier, he needed to climb up and down a small ladder to get access to them. In his early years with the company, when he went out on a job or to see a customer, he would need to carry not only a heavy computer, but also every document potentially related to the job, and he eventually injured his shoulder lugging around the heavy loads.

Since the knowledge base was developed, Su and every other engineer in the company's design, construction, purchasing and testing departments have had access to CTCI's accumulated experience simply through a computer search, greatly reducing their work hours.

"I used to spend a lot of time searching for information. I'd get here at 8 a.m. and wouldn't leave until 8 p.m. Now, I generally get off work at about 7," Su says.

CTCI is making use of the added manpower and freed time to build a talent rotation and training system, to prepare the company for when the reins of management are handed to the next generation. 

CEOs Also Have to Improve Fitness

Aside from promoting a policy of "50 hours of work per week," TSMC recently had managers begin paying attention to the health of the company's employees.

"Right now, my department has over 100 employees. Every time the flu hits the area, there are always people who take time off, an indication that many people are not fit. Getting sick is a waste of resources to both the company and the country," says TSMC veteran Tseng Pin-nan, the company's senior director of customer service. He is extremely proud of the skill demonstrated by his customer service staff, but worries intensely about their health.

As a result, instead of giving flowers to his direct subordinates for the Lunar New Year holiday this year as he has always done, he gave each person a watch that could monitor their fitness levels at any time.

He realized through a National Taiwan University EMBA fitness class that, "no matter how much of a strategic mind you have, if you don't have enough stamina to see it through, then you have nothing." So he requested the 10 people to whom he gave watches to improve their fitness levels in the following three months. Failure would incur the "punishment" of buying watches for those people directly reporting to them.

The result: TSMC's customer service people have recently been spotted walking stairs. "Health is something you yourself manage. In the first three months, I asked each person to do at least 100 minutes a week of aerobic exercise. The ultimate goal is 210 minutes a week," Tseng says.

The concept originated with Huang Chung-hsing, the director of National Taiwan University's EMBA program. It was at his behest that the program began offering a "Fitness and Personal Health Management" course as an elective four years ago. In the beginning, the class was limited to 25 students, and it was overenrolled every semester, forcing students to draw lots to get in. This year, the program is offering a second class to make sure all those who work in a stressful environment have the chance to learn how to improve their "soft power."

As Taiwan advances toward an era where vitality and enthusiasm will be key, companies must thoroughly consider their human resource strategies. Only by leaving your employees with some energy can you create a future for yourself.

Translated from the Chinese by Luke Sabatier