Embracing Change Enhanced corporate governance pays dividends by Charles Mak Some manufacturers have a knack for spotting market trends and keeping ahead of the competition, and these abilities have helped Karrie International Holdings Limited to stand tall during 25 years of change. The company started operations in 1980 making casings for videocassettes and, in the next 10 years, expanded into the production of office automation goods including computer casings, paper cassettes, and many metal and plastic parts. "We built a solid position within the OEM industry, to the point of being a recognised market leader," says executive director S K Lee. This allowed the company to list on the Hong Kong Stock Exchange in December 1996, but with the Asian financial crisis just around the corner, liquidity problems meant that major expansion plans had to be put on hold. However, things were firmly back on track by 2001, allowing Karrie to get into the electronic manufacturing services (EMS) which now constitute 60 per cent of total business. Mr Lee notes, "We now have a strong niche market position, but still need to be quick to respond to market changes." Even so, this has helped to add almost HK$3 billion in turnover in the last six years. Extra capacity While maintaining its corporate headquarters in Hong Kong, the company has two manufacturing plants at Fenggang and Yantien in Dongguan, and a third, at Yuquan, started production in September. The extra capacity was needed to supply an impressive list of multinationals including Konica Minolta, Canon, NEC, HP, Sagem, Siemens and IBM. "Most of our customers have been strategic business partners for over 10 years now," says Mr Lee. Foreseeing the requirement for good corporate governance, Karrie set up an executive committee in 2001. The aim was to incorporate western management philosophies into the previous "family" style of running the business and to ensure that compliance issues got the necessary consideration. By adhering to strict corporate governance policies, it was possible to make business processes more transparent and achieve better financial results. "Investors have great faith in us, which is one of the reasons we are growing at such phenomenal speed," Mr Lee explains. Common goals Among other changes, the executive committee recommended replacing the guaranteed 13th month payment with a system of discretionary bonuses in 2002. It was accepted that high performers would earn more and that some employees would leave. Also, under a new policy, stock options have been granted to over 120 members of staff. "In 1999, only a dozen staff enjoyed the privilege," Silvia Chan, Karrie's assistant administration director recalls. "By extending the scheme, we want to show commitment and build loyalty." This theme has been central to the efforts made to develop a stronger corporate culture. Last year, there was an internal "nothing is impossible" campaign to boost morale and, more recently, employees have been asked to show "heartfelt dedication in all details". Going a step further, the company has focused more on showing social responsibility and has taken the initiative to create joint programmes with charities and non-profit organisations. "Teams of volunteers now participate in a range of activities which help the community and create harmony within the company," Ms Chan says. She adds that Karrie has made an increasing investment in staff training and development in order to provide them with all-round skills. Young managers with leadership potential are assigned two mentors — to help with soft and hard skills, respectively — and special attention has been given to retention and succession plans. "Every business faces external influences but, from an HR perspective, the goal must be to consolidate the strengths of all staff and make sure they are ready for the future," Ms Chan remarks. Taken from Career Times 6 October 2006 Your comments are welcome at [email protected]