Distinguished Guests

Ladies and Gentlemen

Good Evening

MTI has just released the third quarter economic report card. The outlook is still not good. There is a global slowdown and uncertainty arising from the 11 September incident.

Economic growth declined further in the third quarter by 5.6%. All key sectors of our economy registered poorer performance compared to the previous quarter. Manufacturing recorded an unprecedented double-digit decline of 19.1%.

The export of Singapore-made goods fell for an eighth consecutive month in October. US orders for semiconductors and mobile phones have plunged.

For the first time in more than two years, our services sector shrank in the last quarter. The 0.5% shrinkage means that the services and manufacturing sectors are now both experiencing contractions. Fewer tourist arrivals saw the hotel and restaurant sector shrinking by 4%. On an annualised quarter-on-quarter basis, the economy contracted by 11%, worse than the minus 9.7% in the previous quarter.

But, now is not the time to lose our orientation and be paralysed by the uncertainty. If we take this opportunity to regroup and consolidate, we will be well positioned when the economy recovers. And it will. We must recognise that economic recovery does not mean that everyone will be well again. Some sectors that are suffering badly now may perhaps not recover. Companies should take a hard look, and "look for new cheese" if they are in such sectors.

So it means re-investing. I am a bit concerned that the private sector has not been investing. Many are adopting a "wait and see" attitude. Private sector investment in machinery, equipment and buildings fell by 14% in the last quarter. The government is stepping up its road building and infrastructure projects. But if the private sector does not chip in to do its bit, it will be more difficult to pull through this period.

Rather than think long term, many companies are taking a short-term view. They are cutting back on staff and training. Training places supported by the Skills Development Fund (SDF) have dropped by about 13.8% in the last three months, compared to the same period last year.

The service sector is expected to play a stronger role in the economy. Success in this sector will depend on customer satisfaction. Unfortunately, Aattention to customer satisfaction is declining. The 2001 Global Competitiveness Report released this month shows that our customer orientation ranking has declined further to 23. Last year we were ranked 16. We have dropped by 7 places. This is the sharpest fall in the last five years.

And this time, unlike previous years, it is not because we have not moved forward enough and others have overtaken us. This time we have slipped back. Our score for attention to customer service has declined for the first time to 5.4. It was 5.5 last year. Though the dip in the score is slight, we need to address it before it becomes irreparable.

While restructuring to strengthen our position, we need to take cognizance of our customers. Whether we are in manufacturing or services, getting customers back once we lose them is one of the most difficult things to do. It costs five times more to win a new customer than to keep one totally satisfied.

Research shows that over 90% of dissatisfied customers never complain to the company they are disappointed with. Some 70% of them will never come back to the company. And worse, the average unhappy customer will tell 10 other people about negative experiences. In contrast, satisfied customers tell half that number - five other people about positive experience. 

In the hustle and bustle of restructuring, companies often overlook their customers. The merger between DBS and POSBank is a case in point. The streamlining and closure of branches following the merger resulted in complaints from customers. DBS CEO Phillipe Paillart frankly conceded that the bank had "forced a large number of customers into a smaller number of branches without sufficient ability to handle the greater workload". Learning from experience, the bank has now improved its services.

To seize the opportunities in the next wave, we need to adopt a more total approach that makes not only business sense but also customer sense. Management gurus tell us that Wwhether we are in manufacturing or services, being competitive today is no longer about meeting requirements. It is about exceeding them. With so many choices in the market, customers today need to be wooed and wowed. While we should not be dazzled by such superlative words, we must remember the basics, and apply common-sense. Staff serving customers should be trained to place themselves in the shoes of the customer, so that they know what matters most.

In the past, the focus on developing people to meet requirements was adequate. Today, we need to develop our staff to think, apply common-sense, take initiative so that the customer feels that hisexceed requirements are exceeded. We have to teach staff toand manage exceptions. This requires people excellence - developing people to excel, to be the best and do their best for customers.

One company that has done well here is Robinsons. Its people strategy is built around the notion that its people are part of its future – come rain or shine – and that there are alternatives to damaging downsizing.

At a time when others are reducing their investments, staff and training, the company has gone boldly ahead to consolidate and expand its retail operations. The company recently took up 95,000 square feet in Raffles City - a place vacated by the Japanese retail giant, Sogo. And in October this year, a month after the September terrorist attacks, the company established RISE - the Robinsons Institute for Service Excellence. The objective of the Institute is to develop people for excellence and help the company scale new heights and sustain competitiveness.

To create the special competitive advantage, Robinsons adopts a total approach that develops people for both corporate and personal objectives. All staff have an individual training and career development plan. The company trains all staff extensively. Sales staff are taught not only service skills. But also grooming, etiquette. And how to manage their lives and be happy at work. The company believes that happy staff means happy customers. And while many retailers are lamenting in this downturn, Robinsons is still doing relatively well.

There are many companies like Robinsons, The Raffles Hotel, Glaxo Wellcome Manufacturing and the PSA Corporation, just to name a few. But to sustain our international competitiveness, we need more.

To develop more of these type of companies and help organisations ride the next wave, I am glad to announce that the new focus on PSB’s people development effort will be People Excellence – helping companies to develop their people to excel, to be the best and do their best for customers.

PSB’s target will be to provide new skills to at least 50% of the workforce annually. This will mean creating 1 million training places annually. It will translate to at least 40 million hours of learning a year and an investment of some $80 million per annum.

The board has already developed a suite of eight programmes for companies to tap on – the People Developer Standard, CREST, OJT, Work Redesign, NSRS, the Industry Capability Upgrading Programme and WorkforceOne. More programmes will be added to this suite in the next twelve months. Among them will be programmes to develop managers for business excellence.

The productivity of our people and the success of our companies and country will depend very much on how our managers influence change. Change will be positive if managers are able to encourage their staff to learn new skills and work together to do not only new things but also old things differently.  

Unlike their counterparts in the last decade, today’s manager needs a new set of skills. The Industrial Age required managers to direct subordinates, relay decisions, contain differences and react to change. In the new economy, this directive form of leadership has to give way to interactive team leadership.

To succeed, managers today must be able to unleash the creativity of the people under their charge, try out new ideas and nurture team development. They have to give insurgents in the organisation the freedom to try new ideas [exercise their initiative], without destroying the cohesiveness of the organisation. They need to develop teamwork, facilitate team decisions, expand team capabilities, create team identity, capitalise on differences and facilitate change.

The government will do all it can to provide the infrastructure and financial assistance for companies to develop their people for excellence and sustain competitive advantage. However, companies must play their part. We can be much better than we are. If we succeed, not only will companies benefit but also the whole economy and all our people.

On this note, let me congratulate all the recipients of this year’s People Developer Standard and People Excellence Award. They are excellent models for organisations to emulate. My best wishes for your success.

Thank you

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