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COVER STORY

LHDNM was corporatized on March 1st, 1996, and in line with its new status as a statutory board, various changes have been made to ensure that LHDNM meets its vision as ‘A Leading Tax Administrator that Contributes to Nation Building’. LHDNM plays an important role in nation building as the revenue collected is channeled back into the development of the country – especially in areas of infrastructure, the establishment of public hospitals and schools and provision of welfare to the poor and needy.

Since its corporatization, the amount of revenue collected increased dramatically every year; it is estimated that 50 to 60 per cent of the Government’s revenue is derived from tax collection (with oil-related companies contributing to 30 per cent of the total sum). LHDNM achieved a major milestone in 2011 when the revenue collected exceeded more than RM100 billion (to be exact RM109.67 billion) – a 26.7 per cent increase from the RM86 billion collected in 2010.

This record-breaking feat was achieved when its CEO, Tan Sri Dr Mohd. Shukor Mahfar, with an exemplary service of 36 years with LHDNM, threw the challenge to Hasilians (as LHDNM staff are fondly known) to break the psychological and numerical barriers of RM100 billion. Since then, LHDNM has maintained its three-digit collections, and in 2014, recorded the highest-ever revenue collection of RM133.54 billion!

Numerous initiatives have been implemented to ensure that LHDNM fulfills its role as the country’s number one tax collector such as introducing engagement programmes with taxpayers, providing superior customer service and utilizing ICT to assistin tax filing. e-filing was successfully introduced in 2009; and in 2014, an estimated 3.8 million tax declarations were submitted online. m-filing, which allows individuals to submit their income tax forms through smart phones, was subsequently launched. The ease of filing and quick response by LHDNM on refunds has gained the confidence of taxpayers and helped to increase the amount of revenue collected.

A simple way to assess the success of a nation’s tax collection is to compare the trend of percentage increase in tax collection with the percentage increase in Gross Domestic Product (GDP). This method gives consideration to external economic factors – which can influence the increase and decrease of the amount of tax collected.

Based on LHDNM’s track record over the past five years, the performance of direct taxes collected was consistent with Malaysia’s GDP growth. Having said that however, the percentage of increase in tax collection for 2011 (26.7 per cent) and 2012 (13.9 per cent) were significantly higher than the percentage increase in GDP in 2011 (10.8 per cent) and 2012 (6.4 per cent) respectively.

–EMBRACING A NEW ERA VIA BREAKTHROUGH TAXATION

LembagaHasilDalamNegeri

BY CHEW BEE PENG

LEMBAGA HASIL DALAM NEGERI MALAYSIA (LHDNM) OR THE INLAND REVENUE BOARD OF MALAYSIA (IRBM) IS TASKED WITH THE RESPONSIBILITY OF COLLECTING AND ADMINISTERING THE COUNTRY’S NATIONAL DIRECT TAX BY THE MINISTRY OF FINANCE. ITS MAIN FUNCTION IS HANDLING TAX ADMINISTRATION INCLUDING AUDIT, ASSESSMENT, COLLECTION AND ENFORCEMENT OF PAYMENT OF INCOME TAX, PETROLEUM REVENUE TAX, PROPERTY GAINS TAX, STAMP DUTY AND ANY OTHER RELATED TAXES AS MAY BE AGREED BETWEEN THE GOVERNMENT AND THE BOARD.

Malaysia 2.0

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The success of LHDNM in maintaining its three-digit record collection did not come overnight but through a series of changes that have been implemented since 2011 – when Tan Sri Dr. Mohd. Shukor Mahfar was appointed as its CEO/Director General. Taking over the leadership, Shukor initiated the rebranding of LHDNM and as its brand champion has successfully transformed the performance and perception of LHDNM to a higher level.

The BrandLaureate Business World Review caught up with him to learn more about LHDNM’s successful rebranding and his passion and commitment in transforming the LHDNM brand to become a world class tax administrator. Successfully Answering the Call for Rebranding from an Intrinsic VantageRebranding normally occurs when a brand is not achieving its desired results or when its perception is going downhill. Rebranding is a holistic discipline where constraints faced by the internal and external brands are neededto be addressed and solutions implemented to address them.

No successful rebranding can take place at the expense of one segment of the brand. Unfortunately, this is most often the case in many corporate rebranding – where the emphasis is on external branding and neglecting the most important part of the brand – the internal brand.

In most cases, rebranding is often conducted by an external agency that will come up with a blueprint on

how to align the brand to meet the expectations of stakeholders and shareholders. The implementation of initiatives is rarely followed through by consultants as it is normally passed on to the management and staff to handle. Without a committed and dedicated leader and rebranding team, the whole exercise normally falls short of its objectives.

This, unfortunately, is the scenario where rebranding of organizations or businesses are concerned. So, it was quite a refreshing change, when Shukor mentioned that LHDNM’s successful rebranding was all done in-house, with no external consultants involved and he was the brand champion who convinced Hasilians and obtained their buy-in on the need to rebrand LHDNM.

Ushering Holistic Transformation as the ‘Change Champion’When Shukor envisioned the idea of rebranding for LHDNM, he shared it with the management and staff and received both positive and negative feedbacks on the idea; a common reaction as the notion of change often brings about uncertainties and fear.

It was not easy to change the mindset of those who were complacent and in their comfort zones (though the Generation Y Hasilians were more open and accepting to the idea of rebranding). The newer generation wanted a change in work culture and values that reflect their aspirations as well as a more open environment where they could express their thoughts and opportunities in moving up the career path.

Unfazed by sentiments that were against the move, he pushed on with his mission to rebrand LHDNM, “I have to stay focused and not be swayed by negative sentiments towards what I set out to do. I positioned myself as the ‘Change Champion’ and worked with those who understood my vision. LHDNM has 11,000 staff and 36 branches, so to get everyone to be on your side requires time. I was determined to change LHDNM because there is a need to do so – to reinvent the brand and strengthen our foundation. If we want to survive the future, then we need to change. As the CEO, I had to champion the cause and drive it with my leadership.”

“I worked with those who understood my vision and engaged those who did not see the importance of rebranding. I did not push for a paradigm shift – but encouraged Hasilians to do it voluntarily as that would be more effective,” he explained further.

Recalibrating the Ecosystem Within the BrandShukor started by putting the house in order. Noticing that moral and enthusiasm amongst the staff were waning, he held town hall meetings to speak about his vision for LHDNM and their involvement in achieving said vision. Ultimately, inviting Hasilians to be apart of the journey and team to rebrand and transform LHDNM brought back the zeal in them and fired up their enthusiasm towards better performance.

Continuous engagement led to the creation of a ‘feel good factor’ – where Hasilians became more creative and offered suggestions to make a better working environment. The introduction of flexible working hours, half-day leave and a more casual work attire created a more open and happy environment. Shukor firmly believes that happiness amongst the workforce would lead to higher productivity and he is absolutely spot-on.

Instilling loyalty to the organization was also important and he introduced the Corporate Oath and Corporate Song and gave Hasilians a sense of identity with the introduction of the corporate uniform which is worn on Wednesdays, Corporate Batik on Thursdays and special functions. Different divisions within the organization structure wore their own respective coloured lanyards and this gave them a sense of pride and identity. Outstanding performers wear gold-coloured lanyards as reward and recognition for their exceptional performance and this acts as a catalyst to push the rest of the staff to improve their performance and continuously provide better service.

The old and stuffy monthly assemblies changed when Shukor introduced the song, We Will Rock You (by Queen) to start the session. The vibrant beat of the song gave an energetic feel to Hasilians and this literally got them ‘rocking’ to create a better future for themselves and the brand!

I worked with those who understood my vision and engaged those who did

not see the importance of rebranding. I did not push for a paradigm shift but

encouraged Hasilians to do it voluntarily as that would

be more effective

images:Inspirational slogans coined by Hasilians and Shukor

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Out of the title of the song, came one of LHDNM’s slogans – ‘Be with us, or we will rock you’ – a double entendre urging Hasilians to accept and embrace change and come together to take LHDNM to a higher level and for tax payers to fulfill their responsibility or LHDNM will take enforcement measures to act against non-compliance.

By then, had already been ushered into the frontiers of his vision and the rationale for LHDNM to shift into higher gear to facilitate growth. The organization’s culture has since changed and new values have been created in line with the aspirations of Hasilians who are now the driving force of the brand.

Shukor acknowledged that, “By slowly changing the culture of old and replacing it with one that is more progressive, caring, trusting, empowering Hasilians and giving them opportunities to excel in their career with prospects of promotion, I managed to convince them of the need for change. Subsequently, they became the agents of change to influence the silent majority.”

No Mountain Too High, No Valley Too DeepHaving won their confidence, Shukor threw the Hasilians the biggest challenge – which was to increase revenue collection from two digits to three digits – from RM86 billion collected in 2010 to achieve a new target of RM100 billion in 2011. The challenge drew much trepidation from some but fired up the imagination of others – inspiring them to meet the target – and the end result was a collection of RM109 billion which far exceeded the original target and was a massive,

welcoming increase from the decline in collection for the years 2009 and 2010.

Since 2011, LHDNM’s collection continues to surpass the RM 100 billion mark with RM124.99 billion collected in 2012, RM128.91 billion in 2013 and RM133.54 billion in 2014. In 2015, the collection was RM121.19 billion (affected by the downturn in oil prices and numerous tax reliefs provided by the Government). However, it was still a positive performance, considering that the price of oil dropped from USD100 a barrel to USD40 during the year.

The collection of RM109.67 billion in 2011 marks a significant milestone in the history of LHDNM. According to Shukor, ”The strong will and desire of Hasilians to achieve this breakthrough is commendable. It was the same resources, same team that achieved the results. It just shows that if there is a buy-in to the mission, we can break barriers and achieve the impossible. During this time, one of the branches came up with the slogan, ‘Nothing is Impossible, Impossible is Nothing’, and this boosted the morale and confidence of all Hasilians.”

It is also important to note that Shukor’s strong leadership and confidence has rubbed off on his staff who are all fired up with the winning spirit and the ‘can do’ attitude.

Breaking the RM100 billion collections signified the beginning of an era which is termed as LHDNM 2.0, an epoch where the combination of Baby Boomer Hasilians, Gen X and Gen Y Hasilians, under Shukor’s

The strong will and desire of Hasilians to achieve this breakthrough is

commendable. It was the same resources, same team that achieved the results. It just shows that if there is a

buy-in to the mission, we can break barriers and achieve the impossible. During this time, one of the branches came up with the slogan, “Nothing is Impossible,

Impossible is Nothing” and this boost the morale and confidence of all Hasilians

transformational leadership, collectively work towards the Brand Vision of becoming ‘A Leading Tax Administrator that Contributes to Nation Building’. Thinking outside the Box: Endearing TacticsWhen asked on the strategy and approach used to achieve the three-digit target, Shukor replied, “Creativity! Creativity is part of problem-solving, and the ability to analyze problems and generate creative solutions to solve issues, will bear positive results.”

In this respect, LHDNM’s manner of assisting taxpayers with creative solutions on how to settle their payments rather than following the strict and rigid rules set forth beforehand has helped LHDNM to increase its annual revenue collection beginning 2011.

He adds, “By engaging them and coming up with solutions to settle their taxes, we then create a win-win situation.”

He further elaborates that, “There is a need to do things differently – especially in the current scenario and LHDNM cannot be too rigid. As it is, the tax department is the most feared department amongst government agencies. We must change that perception and create an image and feeling that LHDNM is their ‘Feel Good Partner’ and this will encourage them to be more tax compliant and pay their annual taxes voluntarily.”

To create a more friendly feel, the Tagline, ‘Feel Good Partner’, was introduced; and LHDNM’s Public Relations Officers were renamed as Customer Care Officers, while the Service Group was renamed Hasil Care Group. These

initiatives lifted the image of the brand and improved its perception as an approachable, caring and concerned organization.

Laying the Road Map to SuccessLHDNM’s Vision to become the ‘Leader in Tax Administration’ was conceptualized in 2009; but it was not widely disseminated at all levels of the organization. As a result, the vision was merely words without commitment and emphasis.

Upon taking office, Shukor laid out the roadmap for the Vision which is tied to the achievement of Malaysia as a high income nation by 2020 and put in the key drivers of the roadmap. Using the analogy of Formula One (F1) racing, the concepts of driver, vehicle and pit stop are used to describe the passage of LHDNM and every Hasilian is briefed on their roles in the roadmap to achieve the vision. . Shukor also launched a new vision “A Leading Tax Administrator that Contributes to Nation Building” in 2016.

Shukor explained that the concept of the driver in the roadmap refers to LHDNM’s KPI. KPIs function as a measure of LHDNM’s short-term successes and the ability to sustain the short-term success will ensure the long term targets, “The KPIs are based on the fourmain goals of: LHDNM as the main contributor to the nation’s prosperity and welfare of the people, instilling public confidence in the administration of the tax system, an efficient and effective systems and work procedures, and LHDNM as the preferred employer of choice. These goals form the core efforts of LHDNM to become a leading tax

There is a need to do things differently, especially in the current scenario and LHDNM cannot be too rigid. As it is, the tax department

is the most feared department amongst government agencies. We must change that

perception and create an image and feeling that

LHDNM is their “Feel Good Partner” and this will

encourage them to be more tax compliant and pay their

annual taxes voluntarily.

image:With Prime Minister Najib at LHDNM’s Function.

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administrator that contributes to nation building.”

To monitor staff KPIs, a KPI Monitoring Committee is set up to ensure that targets are met and to determine the quantum of annual incentives according to performance. It is also a more transparent manner and mechanism to recognize achievements and create stimulus in ensuring that targets are met.

Another important element of the roadmap is the pit stop. As in a Formula One race, pit stops are important as they allow drivers to stop and check the condition of their cars. At LHDNM, pit stops occur on a monthly and annual basis where the effectiveness of initiatives implemented is checked to determine their success or failure. As in F1 pit stops, the turnaround time has to be fast to enable the driver to catch up with other drivers; hence LHDNM’s pit stops must quickly assess the situation and come up with effective solutions to address issues.

Each pit stop in LHDNM’s road map correlates to a year and a specific theme is assigned to it. Starting with 2011, where the theme was Charting Transformation, it has evolved to Exploring the Blue Ocean Strategy – 3 Digit Tax Collection Zone (2012), Leading & Managing Change (2013), Managing Tax Eco-System For Sustainable Growth (2014), Breaking Barriers, Hitting New High (2015) to the current Synergy Beyond Boundaries (2016).

“These themes and slogans give Hasilians a better guide to what they have to achieve and I am proud to say that most of these themes were formulated by a combination of Hasilians’

ideas and mine.”Building Inclusivity through Savvy Operational StrategiesWith the establishment of LHDNM’s roadmap, there was an urgent need to ensure that KPIs are successfully met and this could only be achieved by building inclusivity and fostering esprit de corps amongst Hasilians.

A few landmark initiatives were introduced by Shukor, which include using the title of CEO instead of Director General. The function and powers of the Director General at LHDNM was geared towards tax matter and did not encompass that of human capital development or oversee the development of the organization as a whole. This created a chasm of staff connectivity and engagement. With the title of CEO, however, Shukor inadvertently became the leader of the entire LHDNM’s workforce and he fostered the ‘closer to staff’ concept and this reflected the element of inclusivity and efforts to build unity and team spirit amongst Hasilians.

The next action taken was to create the posts of Deputy Chief Executive Officer to oversee various taxation and corporate management matters and appointing special officers with diverse backgrounds in the CEO’s office to facilitate its running.

Empowerment through Creativity‘All work and no fun makes Jack a dull boy’ and to bring out the best in his people, Shukor rebranded the monthly assembly and introduced the Creative

Minds Program (Program Kreativiti Minda), now known as Creative Showcase Program, – a platform where Hasilians are given the opportunity to express their ideas and inner creativity.

Held on a monthly basis at LHDNM’s headquarters in Cyberjaya, LHDNM branches nationwide are invited to showcase their creativity through songs, cultural performances, sketches, public speaking and even in-house knowledge and motivational multimedia presentations. Mandates and messages given by the CEO are interpreted and acted out through their performances and this provides a better understanding and meaning of the messages. As corporate leaders from other organizations are invited to the program, Hasilians are encouraged to give their best – showcasing their talents and creativity.

“With the hosting of the creative showcase, I noticed that Hasilians are more confident in expressing their thoughts and new ideas generated. It has also created a more open environment of co-operation amongst each other (unity in diversity), breaking down barriers and bringing the team together in a stronger manner through creativity.”

The platform allows the CEO to express his views on current issues, share and update latest developments in LHDNM with Hasilians and acknowledge outstanding performers. The two-hour event can also be watched live via streaming by all Hasilians nationwide. The online streaming facility is provided so that every Hasilian gets an opportunity to enjoy the event wherever they may be

With the hosting of the creative showcase, I noticed that Hasilians are more confident in expressing their thoughts and new ideas generated. It has also created a more open environment of co-operation amongst each

other, breaking down barriers and bringing the team together in a stronger manner through creativity

As in a Formula One race, pit stops are important as they allow drivers to stop and check the condition of their cars. At LHDNM,

pit stops occur on a monthly and annual basis where the effectiveness of initiatives implemented is checked to determine their

success or failure

images :1) LHDNM’s roadmap based on the F1 anology

2) Participating in CSR activity

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02

images :Hasilians performing at their monthly Creative Show Case event.

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and stay in touch with the latest development.Indeed, creativity is the essence of LHDNM’s successful branding and it is Shukor’s wish that the Creative Showcase Program will ultimately promote the culture of accountability and spirit of excellence in the organization. Impactful Icon and Role ModelHaving been involved in rebranding campaigns, I must say that LHDNM’s rebranding is exceptional – all because of the drive and commitment of the Brand Champion, Tan Sri Dr. Mohd. Shukor Mahfar. Seldom in any organization does the CEO personally drive the rebranding exercise; it is normally delegated to Corporate Communication or Branding Departments – and that is where the difference in result comes in.

Shukor is a passionate and committed leader, the prime mover and great motivator in transforming LHDNM to a new era – one that is aligned to the new environment and is able to make the leap to the next level as it has the capacity to do so. It is fuelled by the zeal, enthusiasm and strong desire of 11,000 Hasilians that believe ‘Nothing is Impossible, Impossible is Nothing’.

In conversation with him, you will be drawn to his leadership, which is strong and firm. He exudes dynamism and charisma, yet has an easy going style which attracts and draws people to him. In return, he gives you his attention and acknowledges your presence with great sincerity.

His love for LHDNM is obvious – having spent the best days of his career with the organization and he continues to raise the bar, spurring his staff to achieve the unthinkable. He has a strong desire and interest to

touch base with all Hasilians, and according to his staff, is the first CEO to emphasize on HR matters especially on the development of Hasilian, balancing the corporate governance together with the human governance. This has definitely endeared him to Hasilians who view him as a role model and icon.

It is interesting to note that during LHDNM’s rebranding, Shukor underwent his own personal rebranding. He took on the role of a celebrity, an icon, in order to draw Hasilians to him – and the end result was that he became the Hasilians’ idol and role model (and this created a further buy-in to what he had set out to do).

Having been invited to LHDNM’s Directors’ Conference and Creative Showcase Program, I can feel the respect that they have for him; and in return, he extends his wishes and mingles with all. It is a close family that heralds well for the future.

Shukor is a people’s leader and this is reflected in his leadership that puts the interest of the organization above himself. Ever willing to give his subordinates an opportunity to excel, he set up the CEO’s Incubator to groom a pool of candidates that will eventually helm the leadership.

“We must prepare and equip them for the position and it is my wish that every young Hasilian has the ambition to be a CEO and think like a CEO,” are the resounding words of a true motivator.

Shukor adds, “What matters is not the time when a leader comes or goes, but how a leader uses his time to drive the organisation towards excellence.”

Methodically Groomed for LeadershipShukor’s career with LHDNM began when he received a letter of offer from the Public Service Department (PSD) to join LHDNM (it was then known as Jabatan Hasil Dalam Negeri or Inland Revenue Department). He was already working with a bank then, but curiosity got the better of him, so he went to PSD to check out on the offer. After enquiring about the position offered, an Assessment Officer, his next question was, “What is the highest position that he could achieve if he joined the organization?” The officer told him that it was the position of Director General – and with that he left the bank and joined LHDNM.

His first posting as an Assessment Officer was in Melaka, his hometown, and three years later, was promoted to Floor Manager (equivalent position to head of several units). Showing great talent and leadership, Shukor was sent by LHDNM for further studies in Computer Science as the organization was in a process of moving into Information Technology. Upon his return, he led the organization’s computerization process and its implementation.

Realizing that opportunities for promotion was greater at LHDNM’s headquarters in Kuala Lumpur, he requested for a transfer from Melaka. At LHDNM’s HQ, he had the opportunity to be involved in decision making and was later sent to Golden Gate University, USA, to do his Master’s Degree of Science in Taxation and later his PhD in Public Administration. Shukor was groomed to take over the Malaysian Tax Academy and they wanted someone with credentials to helm it.

It was during his studies in USA that he was exposed to various leadership theories which gave him new perspectives on how to apply it in relation to matters on tax compliance and engagement with tax payers.

The leadership qualities in Shukor shone through and he was appointed to senior positions in LHDNM and was part of a ‘cross-fertilization program’ with Guinness

Anchor Berhad – which further increased his exposure to organizational methods. He also helmed various initiatives that built LHDNM to be a reputable and strong agency, responsible for the administering and collection of the nation’s direct tax.

Now, as the CEO of LHDNM, he continues to ensure that LHDNM’s operations adhere to international standards set by the Organisation for Economic Co-operation and Development (OECD) and works towards becoming a world-class tax administrator. In this respect, the KPIs set forth in LHDNM’s roadmap play a pivotal role in ensuring that these standards are met to maintain its leadership position.

On matters of leadership, Shukor views it as an art and a good leader is one who knows how to maneuvera situation by working via the ‘three alphabet rule’ – A, B and C: A stands for Attitude, B for Behavior and C for Culture. If the workforce has the right attitude, then good behavior will follow suit and this will set the environment for good organization culture.

Shukor stresses that a good leader is one that is courageous to take risks and innovate for the good of the organization. He must be firm and focused and not be swayed by those who are not in-line with his mission.

Having a good mix of IQ and EQ, and good interpersonal relations with colleagues is crucial as that would facilitate and simplify matters. A good leader is also one that appreciates his staff and addresses their concerns with sincerity and stays with them through rain or shine.The visionary and transformational leader who has re-energized LHDNM has received many accolades and awards through the years. He dedicates these awards and honours to all Hasilians who have made him great and successful.

Having served the country and LHDNM for 36 years, admirably and with sterling service, Shukor’s service was extended for another year after his mandatory retirement by the Prime Minister of Malaysia.

Shukor is a people’s leader and this is reflected in his leadership that puts the

interest of the organisation above himself. Ever willing to give his subordinates an opportunity to excel, he set up the CEO’s incubator to

groom a pool of candidates that will eventually helm

the leadership.

01

02

“He is a great CEO! Has good ideas, approachable and treat us as his

counterpart. He is very different as he stresses on human relationship and

treat ‘Hasilians’ of all levels as friends.He gives us a sense of belonging and

makes us feel close to each other”

“He is the first CEO to emphasise on HR matters and develop people talent. These initiatives make employees feel

appreciated and recognized.”

“He is firm and fair! He rationalizes and justifies his actions and he is open to

ideas from us all.”

“A Great Motivator and Visionary Leader. His Vision is very clear.”

“He is a WISE GUY, role model and walks the talk.”

“It has been a wonderful journey for the past five years, where he

has incorporated and motivated us throughout the journey. We were given

an opportunity to be up-close-and-personal with him.”

What Hasilians Say about Him...

images :01) Shukor was conferred The BrandLaureate Most Eminent ICON Award 2014 by the Asia Pacific Brands Foundation.02) At the Directors Conference in Ipoh with YB Dato Seri Dr. Zambry Abdul Kadir, Chief Minister of Perak.