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Despite concerns about the global economic outlook, Sri Lankan businesses seem confident that the local economy and their own businesses will perform even better in 2012. However, there are some underlying concerns with regards to FDI, Inflation, Balance of Payment, Interest Rates and Governance. This is the essence of the 2012 CEO Business Outlook Survey conducted by MTI Market Research (www.mtimarketresearch.com) . The survey covered over 100 Sri Lankan CEOs from diverse sectors.

Global Worries
75% of the respondents feel that in 2012 the global economy will either remain depressed (66%) or further slide (9%).  The Euro Zone and North America, which together represents 58% of the global economy still represents 46% of Sri Lanka’s exports, therefore reduced consumption levels in these markets is likely to impact Sri Lanka. In this regards, Sri Lanka’s strategy of export diversification to Asia and other emerging markets is a prudent move, but requires significant market development to convert the intent to export earnings. The fact that even the BRICS have started to downward revise their growth rates and resorted to devaluation is certainly a concern for emerging markets like Sri Lanka.
 
Tea, which is Sri Lanka’s second highest export earner (US$ 1.4billion) depends significantly on the Middle East, Russia and the neighboring former Soviet States. Most of these markets are likely to see a continuation of the socio-political challenges, the only consolation being that tea is an integral part of the staple diet.
Above all, another 2008 style global financial crisis remains the biggest short term threat to the global economy

Top 6 Challenges to the Sri Lankan Economy

Sri Lanka will march on!
By contrast, almost 90% of the respondents feel that the Sri Lankan economy will either stabilize (65%) or even accelerate (24%). This certainly is an encouraging sign of optimism and comes on the back of 2 ½ years of exceptionally high economic growth, the tangible results of this has been experienced across most sectors.

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75% expect the global economy to remain depressed 
yet 90% feel that the Sri Lankan economy will stabilize or  accelerate

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The fact that 75% expect the global economy to remain depressed or slide further, yet almost 90% feel that the Sri Lankan economy will stabilize or accelerate, is an interesting paradox! While the optimism of the local business community (even in the face of global challenges) needs to be commended, we should not lose touch with global ‘ground reality’.
 
The silver lining for Sri Lanka would be the strength of our apparel industry (that caters to some of the world’s top brands, while making remarkable progress in moving further on the value chain) and the tourism industry that benefits from the end of the war, the relatively undiscovered product (in Sri Lanka) and relatively low expectations from the first time traveler to the Island
 
Sri Lankan businesses expect an even better 2012
Interestingly, 58% expect their business to do better in 2012 compared to their performance in 2011, while another 31% expect the same level of performance as in 2011. Only a minority of 11% expect a slide in 2012.

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58% of Sri Lankan businesses expect 2012 to be better than 2011 31% expect it to be the same as 2011

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Business Challenges

HR retention is viewed as the single most weighing issue with a consideration of 17.5% of the respondents reflecting HR related matters as their main business challenge. High utility costs (14.6%) and Expansion (13.6%) are also considered as a challenge to businesses in the next 12 months. At the same time, adding on to the bottom line worries of the decision makers is the challenge of profit generation (12.6%).

In 2012, the main Business Challenge will be

Ground Reality – verbatim response from some of the CEOs

•       To recruit the right caliber of employees to cater to our expansion plans.
•       Retain customers, staff and innovate our business.
•       To manage costs to ensure good margins.
•       Rising interest rates, volatile commodity prices and increasing electricity tariffs.
•       Financial stability in the Middle East and Europe.
•       Depressed economies resulting in less buying power.
•       Strengthen the fundamentals and take off to next level.
•       Cost of borrowings to remain at present levels.
•       Ability to respond  fast to changing needs in the market

 Laugfs Sun-Up which has been in operation since 2001, has just completed a staff and consumer research across the entire 25 branch outlets with the help of MTI Market Research, which is a subsidiary of MTI Consulting, an international strategy consultancy with over 400 client-specific assignments across 40 countries and extensive experience in research based strategy and brand consulting & advisory.

With the growth of the services sector, the human element within organizations has received importance. This may be a reason for many practitioners as well as academics to believe that human resource is the most valuable asset for an organization. However, is the human element treated as the most valuable resource within organizations?

This is why MTI questions “when was the time that you last measured the pulse of your people?” How sure are you that your employees are the ones who contribute most towards the value of your organization? To what extent are they physically, cognitively and emotionally intertwined with their role, their job and the organization? These are a few questions to which the senior management of organizations should pay heed to.There is mounting interest shown in management concepts that bring about positive outcomes for organizations. A clear evidence of this is the increase in the studies on positive psychology and mental wellbeing. Fields of Positive Organizational Behaviour (POB) and Positive Organizational Scholarship (POS) have emerged in this context. Organizations as well as scholars have identified the importance of recognizing the positive side of employees and work. Therefore, lately, business organizations are interested in creating engaged workforces.

What is Employee Engagement (EE)

There exist various definitions and explanations on Employee Engagement (EE). Many imply and refer to involvement, commitment, passion, enthusiasm, absorption, focused effort and energy when speaking of Engagement.
When reviewing the practitioner and the academic literature, it can be seen that EE is something that goes beyond all the above concepts. However, they do have a few commonalities, such as, they are all desirable conditions, they have an organization purpose and that it constitute both attitudinal and behavioural components. It can be concluded that EE is multidimensional in nature and that the concepts of extra role behavior/extra voluntary effort, personal initiative, job involvement, job satisfaction and workaholism are closely related to EE. However, it is believed that EE has added value over and above such related concepts.
Thereby, EE can be broadly seen as the voluntary, physical, emotional and cognitive attachment of employees to their jobs, roles and organizations.
Antecedents of EEThe antecedents of EE can by and large be broadly categorized into two areas, as organizational factors and personal factors. Some of the more obvious organizational factors are job resources; support from co-workers and from one’s superior; performance feedback; coaching, job control; task variety and training facilities. All these are positively associated with EE. The more obvious personal factors that determine the levels of EE have been recognized as age, gender, marital status, tenure at organization, job status, and the skills/resources possessed.

Consequences of EE

EE is a positive state which paves way for positive outcomes within an organization. It has been researched and found that the values of engaged employees are often in line with those of the organization that they work for. Engaged employees have increased levels of mobility. They have the ability to respond to changes, surroundings and activities quickly. They also make a strong strategic asset which brings about sustained competitive advantage to any organization. EE leads to in role performance and also extra role performance. Further, engagement leads or builds up positive emotions within an individual which increases the amount of personal resources possessed. This enables him or her to accomplish his or her tasks in a more efficient and effective manner. Engaged employees are better able to mobilize their job and personal resources which in turn lead to enhanced future engagement of such employees.
Disengagement
Research has shown that EE levels are on the drop and that there is deepening disengagement among employees at present. It is stated that roughly all Americans in the workforce are not fully engaged which has resulted in an engagement gap, leading to a loss of productivity and thereby around US$ 300 billion a year. Disengaged employees uncouple themselves from work roles and withdraw cognitively and emotionally. When employees are disengaged it leads to incomplete role performances and their task behaviours become effortless, automatic or robotic.

The Role of HR

Jack Welch says “If you’re running a business, whether it’s a corner store or a multi-product multinational, there are three key indicators that really work: employee engagement, customer satisfaction, and cash flow.”
It is also believed that EE can make or break the bottom line of a business.Therefore, it is vital that the Human Resource Management function within an organization plays a pivotal role in enhancing the engagement level of its employees. However, it is not merely the responsibility of the HR function and its managers. Many studies have pointed out that practices such as work life balance programs, telecommunications, compressed workweeks, reward programs, and performance management systems can have an impact on EE. Further, participation, freedom and trust within the organization, looking into employee wellbeing, the formulation of appropriate compensation management strategies, developing the careers of employees etc. will also make employees feel obliged to repay the organization. It will make them engaged in their work and also with the organization. It is clear that the responsibility of ensuring that the above is in place lies with the HR Department and other strategic personnel of an organization.
Therefore, it is crucial that organizations are aware of the level of engagement of its employees and that they have it measured. Thereby, they can make sure that the human element is in fact a strategic resource that they believe it to be, which is physically, cognitively and emotionally attached with their role, job and the organization. If the case is not so, what would have been the root causes of disengagement? What would enable the organization to fuel up the levels of engagement of its employees? and what necessary further steps will have to be taken?

How MTI can help you?

MTI HRM Solutions provides a customized engagement survey which can assist organizations in assessing the level of engagement of employees. The survey will also assess the employees’ perceptions on their work environment which is a key factor that determines the level of engagement of employees.  The key advantage of allowing MTI assess the level of EE within your organization is that, MTI will bring its expertise on conducting employee surveys; it will reduce the dependence and reliance on managerial instinct; encourage open and true communication of employees by ensuring employee anonymity; unbiased evaluations and the reduced time and effort of internal employees on such a project.

MTI HRM Solutions (www.mtihrmsolutions.com) is a subsidiary of MTI Consulting www.mtiworldwide.com.
Acknowledgement to Ms. Dharshani Thennakoon of MTI HRM Solutions for her thought leadership in spearheading this paper.