Human resource development to the fore

Central Retail Corporation (CRC), Thailand’s leading retail conglomerate owned by the Chirathivat family, is conducting a major restructuring to enhance human-resource development.

This is in line with the group’s policy to enter a new chapter of overseas expansion, especially in Southeast Asia, to cash in on the Asean Economic Community (AEC), which will be fully effective in 2015. The new restructuring will serve the golden age of Asean in the next 10-20 years, said Tos Chirathivat, CRC chief executive officer.

After its success in opening department stores in Italy and Denmark, CRC will open two new retail complexes, including its branded stores, such as Supersports, in Hanoi and Jakarta next year. 

However, the group will slow down its investment in China because of an oversupply in the retail industry and a significant decline in consumer spending as Chinese people are concerned about a slowing economy.

“We have already passed the era of growth and expansion. We have successfully set up a good system in our retail organisation, to be professionally managed. With the reshuffle, we will highlight personnel development for the future. This will be conducted at all levels, from top executives to division staff and store managers,” Tos said.

Speaking at a Nation Exclusive Insights for CEOs forum on “Central Retail and Globalisation of Retail Trade: Challenges and Opportunities”, he said that nowadays, CRC’s retail organisation was bigger and broader. Its people need to change to fit in.

“Our people will be ready to work as expatriates in other countries. With the tendency towards a borderless community in accordance with the AEC, we will support our people to  [work within] Asean.” 

He added that about 60 managers had committed themselves to working in Vietnam and Indonesia as CRC plans to open malls in those countries next year.

He said the company had already gone through several reshuffles of its retail organisation over the past 20 years and the major changes in each took about three years. The aim is to make a transition from a family-owned organisation to a professional-run company. The system at CRC, especially in career paths and development, was successfully initiated and set up by Viroj Phutrakul, a national icon for modern business and professional management as well as ex-chairman of Unilever’s operation in Thailand; he died in 2003.

Tos said CRC’s executive committee had 10 members. Only two of them are members of the Chirathivat family, and the rest are outside professionals. The company also has a separate board to consider and evaluate any new investment worth more than Bt100 million.

He said CRC was transitioning into an international player. The group has about 38 foreign executives from 13 countries, including Britain, the United States, Australia, China, Japan, Singapore and Russia. 

“The strong point of our Chirathivat family is that we have family members of every generation, who will be able to support one another, especially in new, innovative ideas.” 

Tos said CRC wanted to create a system that sought the best people, whether they were family members or outside professionals. 

Family members themselves need to make a clear separation between the role of shareholder and the company’s management. As a shareholder, all family members have already benefited in terms of dividends and wealth. So if any family member cannot contribute to the best results and performance of the company, then they should step back and allow the business to be run by the best people, even outside professionals. 

This model has been successful in Europe and applied by many family-owned companies such as BMW, L’Oreal, Heineken and Estee Lauder, which have been able to make their family businesses sustainable from generation to generation in the long term. The key is to make the business not too dependent on only one or a few owners or family members. 

The Chirathivat family has focused its core businesses in five major areas: retail, hotels, mall development, restaurants, and branded marketing.