HBO: Human Behaviour in Organizations

By Prof. Enrique Soriano

Human resources are priceless, a quote coming from Dhanin Chearavanont, the senior chairman of conglomerate Charoen Pokphand Group or CP for short. CP is one of the largest animal feed and livestock producers in the world and Thailand’s largest family enterprise dominating the agro-industrial, food, telecom, retail, automotive, and finance industries with annual sales turnover of US$ 63 billion. The group is not only the richest family in Thailand but is also ranked the third richest family in Asia with a combined net worth of $31.7 billion.

The family fortune traces its roots selling seeds in 1921 when Chia Ek Chor fled his typhoon ravaged village in Southern China for Thailand. Together with his brother, they opened a small store and built a seed trading business in the Chinatown district in downtown Bangkok. From 1969 to 2017, the group has been led by Chia’s youngest son, Dhanin, who recently stepped down as Chairman but still occupying the role of non-executive senior chairman. His eldest and youngest sons are now CP’s chairman and CEO respectively.

The succession strategy of CP Group is not only inspiring but also a wonderful case study on how Asian conglomerates (particularly those with roots coming from China) should be run by second and third generation family members. How did the founder in the early stages of CP’s existence cultivated a mindset that recognized human resource as a key business driver for corporate transformation, organizational success and sustainable growth? How did the founder influence his offspring to embrace and trust non-family executives to occupy senior positions all the way up to the level of CEO? I found the answer more than 7 years ago when I was invited to share my experience and prepare an executive masterclass for their executives.

Amazed at how CP grew its workforce to more than 200,000 employees (now 300,000) spread in all corners of the world, I decided to do some researched and stumbled upon an interview of Dhanin by Nikkei Asia that explained why early in the life of CP, professionals were welcomed with open arms, “my father could not speak Thai very well, could not say nothing of English, so how was he able to conduct negotiations with foreign companies? By hiring a Briton by the name of Alexander Campbell. The latter handled all aspects of external negotiations with foreign companies.” Dhanin continued, “in hiring Campbell in the 1940’s and giving him such an important position and a generous salary, my father planted the seed of an important part of our corporate culture: a willingness to employ capable people regardless of their nationality. This is one of the reasons Chia Tai, which started out as a tiny store with only a handful of employees, could quickly join the ranks of international businesses.

I also asked a former MBA student Patt Soyao, the founder and managing partner of the Philippine-based ICON group, a preferred executive search firm operating in the region and he offered some tips for family members, “finding the right professional fit for a senior-level position in a family business is critical but it must be emphasized that as far as human resource is concerned, family firms are different from non-family business organizations. If a founder wants his business to grow and reach greater heights, the fundamental question is how prepared and open is the family willing to share power and confidentiality? If the family business is looking for a senior level position, is the leader and the offspring ready to empower and delegate to non-family executive important responsibilities? What about active family members, are they ready to raise their work standards? And talking about tenured employees, those that have been loyal to the founder and the organization for decades, are they prepared to cooperate with the new hires? In short, recruiting credentialed professionals comes with a price tag but apart from the monetary component, is the family and the decades old culture ready to commit to a dramatic change in mindset? That is why our search protocol for family firms is different, deliberate and customized.”