AS MARKETS DIVERSIFY and competitors upgrade, few businesses can rely on the same old systems and processes to deliver results. The demand for ever better performance creates a constant challenge to find more effective ways to manage human resource (HR) processes. However, it is often difficult to define exactly what processes would deliver the required results. Chantal Free, human capital group practice leader for Watson Wyatt Hong Kong, said it helped to watch what other people had done and learn from their mistakes and successes. 'Things are moving so fast these days that it is easy to run out of ideas for improvement. This is why sharing best practice ideas is important,' she said. Adopting proven best practice techniques can certainly help to build competitive advantage. Last year, the Watson Wyatt Asia Pacific Human Capital Index (HCI) survey demonstrated clear links between good human capital practices and superior returns for shareholders. The study describes how companies that incorporate best practice in categories such as 'Clear Rewards and Accountability', 'Excellence in Recruitment and Retention', 'Focused HR Technology', and 'Communications Integrity', have increased shareholder value by up to 21 per cent for each category of best practice. Local human resources professionals and executives had a chance to share their own success stories at a seminar on Tuesday entitled 'HR management in Greater China - best practices in talent attraction and retention', organised by the South China Morning Post and Watson Wyatt. Ms Free moderated a session on best HR practices in multinational and local companies. 'We invited a multinational, a family-owned company and a Hong Kong conglomerate to participate. There was some lively discussion, with insights arising from different perspectives.' One of the most popular of current concepts is the use of competencies in recruitment. 'It is a luxury to recruit new staff these days,' Ms Free said. 'You simply have to find the right person. Multinationals and local companies both use sophisticated methods, such as psychometrics and panel interviews, to find out more about personality, competencies and culture fit.' Other companies were using new methods to attract applicants. By applying the principles of product branding to the total employment experience, firms could build an employment brand to attract and retain the ideal employees, she said. 'It is still a new idea, but a lot of companies in Greater China are trying it,' Ms Free said. Pay-for-performance has a long-standing tradition in multinationals, whereas local businesses generally reward employees for loyalty. However, this is beginning to change as remuneration budgets tighten. 'Companies are recognising that if you reward everyone equally, no one receives very much. But if you reward individual contribution, you can increase performance,' Ms Free said. 'It is not just the multinationals that are driving best practice. Some Chinese companies, especially those in manufacturing, are coming up with innovative ways to reward staff, and multinationals seeking to expand in China are taking note. One example is the development of immediate performance rewards. 'An annual bonus is not always that motivating because it is too far out of sight, so companies are offering piece rates, or team rewards, to encourage productivity,' Ms Free said. Retention is another area where Chinese firms might lead the way. 'We are seeing a lot of discussion on how to keep the best people in the mainland. Companies are experimenting with a variety of compensation packages and other techniques.' As ideas gain momentum, it is tempting to think of best practice as a shortcut to success. However, it is important to maintain realistic expectations and establish long-term plans to effect change. 'We have clients who come to us with the express goal of developing global best practice. However, they want immediate results,' Ms Free said. 'Companies should recognise that they are starting from point A and aiming for point B. There are many steps in between. If a traditional family-style company wants to develop a competency-based model, they should do it in stages. They might start by developing a job-based system, and then move to a role-based system. Eventually, they can adopt a competency-based model, but it could take 10 years. It is impossible to just jump from one style to another.' Organisations should also recognise that there is no universally applied best practice. What works for one company might not work for another. 'Lots of companies are rewarding innovation at the moment. But it might not be such a good idea to reward innovation on your assembly line,' Ms Free said. 'Don't just copy what others are doing; instead, try to adapt methods to your own business.' Some ideas are transferred more easily than others; 360-degree performance appraisal systems have been used effectively in many western companies but are notoriously difficult to implement in Asian contexts. 'It is difficult to differentiate performance of staff in a culture where staff have traditionally been seen as equitable. Face can also be an issue,' Ms Free said. Some companies, however, are successfully adapting best practice to their own culture. The Haier Group, a Chinese electronics manufacturer, has achieved global success by combining traditional Chinese culture with advanced western management concepts. The results are impressive. Haier was placed first on the Financial Times list of most respected global companies in 2002. 'Haier is considered to have the best HR practice in China,' Ms Free said. 'They have developed leading-edge development and compensation programmes. Everyone wants to work for them.' MULTIPLE GAINS There is a clear link between good human capital practices and superior returns to shareholders. Best practices offer valuable ideas for improving performance. Sharing these ideas is necessary for continuous improvement. Apply ideas with care; understand your business needs first. Set realistic goals and plan for long-term change. Adapt ideas to your particular business requirements.