Universiti Teknologi Petronas

The Challenges of Human Capital Development

Assalamualaikum Warahmatullahi Wabarakatuh

Salam Sejahtera

Bismillahi Rahmani Rahim

Segala puji milik Allah, Tuhan semesta alam; Tuhan yang Maha Mengetahui lagi Maha Adil lagi Maha Saksama, lalu menyeru supaya para hambaNya melaksanakan keadilan dan sama sekali menjauhi kezaliman. Selawat dan salam ke atas Junjungan Besar, Nabi Muhammad Sallallahu Alaihi Wassalam, ahli keluarga dan para sahabat Baginda, serta para ulama dan para Tabiin; semoga memperoleh ihsan di hari kebangkitan.

Beta bersyukur ke hadrat ILAHI, kerana dengan izin dan rahmat dari Nya juga, Beta dapat berangkat untuk menzahirkan titah di majlis ceramah umum di Universiti Teknologi Petronas pada pagi ini.

1. It is a pleasure for me to be here this morning to address this illustrious gathering of scholars and professionals. What has particularly impressed me about University Teknologi Petronas is the fact that it has gone about the job of cultivating Malaysian scientists, engineers and technologists with quiet confidence and determination over the past decade. There is much to be said about an institution that goes about delivering valued knowledge services without great fanfare and in a serious business-like manner. My congratulations go out to the university, its management, academic staff and students, for the great job they are doing.

Human capital

1. The subject of my address today, the challenges of human capital development, is one that has been covered many times in the past five decades. One of its earliest conceivers was Adam Smith who, in his 1776 book The Wealth of Nations, identified it as one of four types of capital that countries required to create prosperity. Economists have since debated its role down through the centuries but especially after World War II when it was rigorously incorporated into models of economic development and growth. Today, human capital has become a virtual panacea for the economic and social challenges that we face. Thus, the typical answer to a perceived decline in economic competitiveness is human capital development. The standard response to social ills such as unemployment, poverty and income inequality is said to be in raising our human capital.
2. This is not wrong. Too many times, we think that money alone is sufficient to solve our problems. We make the mistake of constructing grand buildings and devising elaborate programmes when what we really need are skillful and hard working professionals. But human capital development is no more than a generic concept. Until we break it down into its meaningful components, it may not be anymore helpful than saying that economic growth reduces poverty. As I have said on many occasions, it is possible to solve just about any problem in abstract terms. Abstraction strips away the troubling realities that often are themselves the real problems. To bring about concrete change requires more than concepts. It requires the right institutions, the right policies and the right mindsets.

Knowledge institutions

1. Human capital development is the upscaling of the knowledge, skills and abilities embodied in human beings, and it comes with its own specific contexts and challenges. Humans are, after all, not inanimate objects. They have volition or ‘free will’. To a large extent, development must be with human consent or it is unlikely to take place. Added to this is the fact that major economic powers, and the ones aspiring to this status, actively compete to attract the world’s best and brightest. This competition is not one in which developing countries have the upper hand. Rich countries are able to offer good income prospects, a high quality of life and wide array of private choices and they can attract many more than they want or need.
2. Educational institutions are the more visible aspects of the quest for competencies. Universities, in particular, have always been regarded as important but, in recent times, they have come to be defined as the critical competitive edge. Industry clusters have grown around the better ones and have resulted in explosive growth. Universities, however, are not alone in this quest. Private corporations are also keen drivers and acquirers of knowledge. Many undertake intensive research and development in the hope of creating valuable intellectual property. Trade associations, non-governmental organisations, religious and community groups all play important roles in the human capital development process. And, of course, governments themselves have a major impact on all aspects of life.
3. Collectively, these may be known as knowledge institutions. The best of these produce highly productive and prized people, ones able to create and innovate in big and small ways. These people can function and add value in both the ‘old’ and ‘new’ economies, producing, for example, not just computer software, biotechnology and nanomaterials, but also works of art, literature and music. They are capable of leading and managing on a large scale and through great diversity and complexity. They do not just wait for things to happen but anticipate them for they are masters of change. And they are extraordinarily well informed about events from the world stage to the things that impact their personal lives.

Value formation

1. Developing human capital is also very much about the building of character. It is about the subtle moulding of values, beliefs and attitudes that condition behaviour and channel energies in productive ways. These are the real building blocks – the ‘DNA’ if you like – of success. They act as the protocols in the making of decisions and are the motivating force for the actions that transform the potential to the actual. They are also the basis for establishing and maintaining networks of inter-personal relationships. Management books are full of theories and wisdom about how to instill values but it is clear that value formation occurs in the socio-economic and political environment, in homes, schools and workplaces, in the community and at leisure.
2. Educationists often point out that there is only so much that schools and universities can do to impart values. Many individuals acquire enduring beliefs in the home, which is why it so important to have sound and stable families. They also absorb values from their peers. Groups of like-minded individuals, whether they meet face-to-face or in cyberspace, can also play a key role in value transformation. A country’s public leaders, such as monarchs, politicians, government officials, corporate executives and religious leaders are also key role models. Their actions can either strengthen the nilai murni that is taught in classrooms or their actions can weaken them. This is why citizens must insist on the exemplary behaviour of their leaders. This is why the highest degree of transparency and accountability must be demanded of public officials.
3. Human capital development must ultimately lead to positive, confident, resilient and morally strong character. A positive and optimistic outlook is essential to setting worthwhile goals and overcoming the obstacles that may lie in one’s path. Confidence leads to one’s ability to welcome those of different values and belief systems, treating them with dignity, equality and respect. Insecurity of self breeds fear, intolerance, loathing and bigotry. Resilience is the quality of being able to recover or to rebound from adverse circumstances occurring both to self and society. Finally, moral strength is imperative because knowledge, skill and abilities without guideposts and reference points can be destructive and lethal. Human ingenuity has brought about not only great increases in human welfare but also human suffering.

Excellence vs. mediocrity

1. Development of knowledge, skills and abilities on the one hand, and the moulding of values, belief and attitudes on the other, are the two pillars of human capital development. They must go hand-in-hand. The question that can be posed therefore is: ‘What are the factors that contribute towards excellence and what are those that consign us to mediocrity’? This is a highly involved line of inquiry and I will focus on just two that I think are most important. The first is the amount of external control and the second is the degree of achievement orientation.

External control

1. Most governments take a special and active interest in knowledge institutions because they see the opportunity to interject higher goals into value systems such as discipline, patriotism and loyalty. Noble though these objectives may be, it is easy to ‘cross the line’ and turn them into overtly narrow, self-serving tools. We witnessed some rather extreme illiberal examples during the Second World War and in the centrally planned economies during the Cold War. A few remain today but many have reformed themselves.
2. Knowledge institutions flourish best in benign circumstances, without excessive and over-bearing external control and interference. The countries that host the best of these institutions implicitly recognise this and act accordingly. They draw up the boundaries and then give knowledge institutions the critical space to grow and evolve within them. They offer support and encouragement; they do not micromanage. As noted earlier, human capital development is an act that largely requires the assent and active participation of the individuals themselves. This is more likely to be gained where there is little external compulsion and a large measure of independence and trust.
3. Excellence is unlikely to emerge when the integrity and objectivity of knowledge institutions are in doubt. The finest individuals will shun them and this, in turn, impairs how well these institutions can perform. Where these individuals have a choice, and these are mainly confined to the wealthy and privileged, they will opt for higher education abroad. In many cases, they will have a higher standard of education than is available at home. As a result, they become internationally mobile and make careers for themselves in corporations and organisations abroad. Placed in these surroundings, many will absorb the value systems around them. If and when they return from abroad – and this is by no means a certainty – they become elites whose abilities and thinking may be significantly at odds with local culture and realities.
4. Most economic and social transformations originate not within existing knowledge and value systems but when the latter are challenged and infused by foreign ones. This was apparent as far back as Japan’s Meiji Restoration and as recently as in China’s Deng Xiaoping’s Reforms. Deng, in particular, elevated the quality of pragmatism to a political culture with his declaration that, “Black cat or white cat, it’s a good cat if it catches the mouse.” It has largely been on the back of this pragmatism that China’s opening and rapid transformation has been taking place.

Achievement orientation

1. Perhaps one of the most contentious issues for knowledge institutions is the emphasis to be given to achievement. As elitist education systems of the past transform to the mass education systems of the present, many have experienced a lowering of quality in a process commonly referred to as ‘dumbing down’. This is a dilemma for many democratic societies. In these societies, each citizen who wants a solid educational foundation should have the ability to get one. Indeed, education most greatly benefits those who are the least able and gradually creates a more equitable society. Many times, however, this is pursued in a way that is incompatible with the broad pursuit of educational excellence and distinction.
2. This is why it is crucial to place a high priority on performance and achievement. For private corporations, achievement-orientation is built into their systems. This is represented by profits earned, market value, goodwill, the amount of intellectual property owned, and so forth. This may be supplemented from time to time by industry awards and other forms of public recognition. For non-governmental and community organisations, achievements can be measured by the number of issues championed, projects undertaken and policy changes affected. For educational establishments, the emphasis must be on teaching, research and publications. In each of these cases, there must be a clear linkage between advancement and achievement. Where this link is broken or unclear, the result is apathy and mediocrity.
3. A laser focus on achievement can mean the difference between excellence and mediocrity, between survival and being declared unviable. In an increasingly competitive and uncertain world, the dangers of economic marginalisation are ever present. Businesses need to be very quick on their feet and up on their toes. Failures are often not the result of a total lack of achievement but of insufficient achievement. Bureaucracy, whether in the public or private sector, is proving to be lethal. Leaders of every stripe and type are being tested and must be able to deliver substantive content and strong performance.
4. Achievements must be inextricably linked to reward. This is not just an organisational theory but also a hardwired human response. We must either be prepared to reward people in terms of pay and perks or risk losing them to those who are. We must be prepared to unshackle and empower knowledge institutions or suffer the consequences. Evidence from abroad shows that these can be quite brutal. In the advanced countries, personnel recruitment is moving away from qualifications and towards demonstrated competencies, personal attributes and experience. The only exceptions are those from prestigious universities. Everywhere else, an increasing number of university graduates are experiencing difficulties in securing careers that make full use of their potential, even as employers complain that they are unable to hire highly competent professionals.

Malaysia’s agenda

1. My message today is simple. If nations wish to prevent accentuation of social differences, and to develop and retain much-needed human capital, they must raise their sights and standards. As a matter of urgency, they must seek to close the gap between public knowledge institutions in their countries and those abroad, and it cannot be through the process of dumbing down. I hesitate to put it in such stark terms but I see that they virtually have no choice in the matter. Knowledge institutions cannot afford to turn out ever-increasing numbers of under-equipped and over-expectant people.
2. Knowledge has also to be defined more widely than what is merely functionally expedient. It must be viewed in the most inclusive terms possible. We cannot continue to look on with indifference at the systematic ‘Closing of the Malaysian Mind’ for we will surely be consigning ourselves to a new Dark Age if we do. To close the best-practice gap requires more than increasing the number of institutions of higher learning without regard to what and how well students are taught. It is more than boosting the number of PhD holders and research and development expenditure, important though these are. Indeed, it is doubtful if any single programmatic approach is sufficient. What then must we do? I would like to suggest that we aim to achieve three goals.

Learning culture

1. First, what we need is to look at ways to instil values and beliefs that promote learning among Malaysians. As with many things, we have tended to reduce this to its minimal aspects such as reading, writing and examinations. A true learning culture, however, is much broader. It is spurred by an over-riding sense of curiosity, one that actively hunts out information rather than passively responds to it. It is encouraged by a welcoming of different perspectives and openness to new and different ideas. It is one that is willing to engage, to exchange and to actively debate all kinds of subjects. Instilling a learning culture is therefore one of the primary antidotes to countering small-mindedness, intolerance and fanaticism of all kinds.
2. It accepts that learning leads to change and that change leads to learning in a continuous cycle. This is essential if the country is to quickly and efficiently adapt to the new realities. It is therefore not committed to preserving entrenched interests or the status quo at all costs. It understands that once knowledge is acquired, it will motivate people to take action. Fully fledged, it strives to anticipate developments on the horizon and beyond, and attempts to respond to them. A great deal of time and effort is spent thinking about how to improve the present and how to make the future better.

Analytical culture

1. Second, along with a learning culture, Malaysians need also to develop an analytical culture. We need to be vastly more reflective and to understand the ‘what’, the ‘how’ and the ‘why’ of the things we do. Without an analytical culture, decisions will be made more by one’s predispositions and prejudices than logic and reason. To be analytical is to finely hone one’s critical faculties and to consider matters with objectivity and rationality. It is to be able to examine issues in depth and detail, to process and combine information, to draw logical conclusions and to suggest consistent courses of action.
2. Obviously, an analytical culture is only possible in an information-rich environment where openness and transparency are the norm. After all, for information to be transformed into knowledge, it must first be available and in plentiful supply. Integral also to the analytical culture are the necessary practices of review, debate and criticism as means to ensure improvements and stimulate progress. It accepts that no institution or body has a monopoly over knowledge or the methods to acquire it and it welcomes rigorous evaluation as the only way to minimise weaknesses and errors.

Intellectual culture

1. Third, we need to develop an intellectual culture. Intellectuals are no longer highly regarded in most societies and even many rich countries are seemingly reluctant to support their work. Without intellectuals, however, it is difficult, if not virtually impossible, to conceive how a great blossoming of knowledge is to occur. Much of what we know is the result of philosophers and theoreticians who often pursued lines of inquiry not because they were always known to be useful, but because they were thought to be interesting.
2. We have today adopted a highly utilitarian approach to knowledge, one that places great emphasis on the commoditisation and commercialisation of knowledge. Knowledge creation, however, comes from those who are ready to push beyond past boundaries and limits. If we are to develop our human capital, I would posit that we must seek to develop vibrant communities of practice whose most important job is to question, challenge and think. It is out of a sense of wonder or doubt with the conventional wisdom that new paths of knowledge emerge.

Closing remarks

1. The need for constancy and stability is a very human attribute, which is probably why the imperative of the status quo is deeply entrenched. Among other things, this gives rise to a belief that life will proceed in a straight line. Thus, the Malaysia that ‘was’ and ‘is’, is the Malaysia that is assumed ‘will be’ in the future. In the coming months and years, it is this assumption that will almost certainly be challenged. With talk of an imminent recession coming on the back of spiraling food and energy prices, currency and financial jolts, a major discontinuity may be expected. As this is being played out, there is a high risk that the affairs of nations will be dictated in an even larger way by power rather than principles, and by interests more than ideals. Again, a break from the past may be in the offing.
2. The ability to think through issues strategically and tactically will be of great value. Human capital development at every level can prove to be the deciding factor on whether we roll with the punches or are knocked out by them. I have suggested this morning that the challenges of human capital development lie in enhancing knowledge, skills and abilities and in imbibing sound values, beliefs and attitudes. In order to do so, we must give our knowledge institutions the critically needed space to work. The process of human capital development works best where policies are strongly encouraging and supportive and not dispiriting and coercive.
3. We must also be strongly oriented towards achievement. It is imperative that its linkage with advancement be an unshakable one. When we have these in place, we can then go about the task of instilling a true learning, analytical and intellectual culture in Malaysia. These will ensure that Malaysians will be developed to their fullest capacities and be of benefit to their country and the world at large.

Thank you.

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