China HR Insight

7/29/2019 China HR Insight

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Christopher S. Rollyson

Pervasive Outsourcing | Strategy | Marketing | Knowledge Transfer | The Global Human Capital Blog

http://www.rollyson.net | [email protected] | +1.312.925.1549 2/19/06/22:19

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China: Insight into Human Resources

Challenges and Opportunities for Multinationals Cited

By Christopher Rollyson

The GSB's International Round Table hosted two Asia and cross-cultural experts 16 February 2006

at Gleacher Center, "Human Resource Challenges for Multinational Corporations in China."

This discussion was led by Deborah Lauer, former VP Global Talent Supply at Motorola who spent

six years in China, and Jeffrey Reed, a 20-year veteran of Asia who headed up Unilever-Best Foods

joint ventures in Pakistan and China. The talk focused on MNCs' (multinational corporations) human

resource challenges in China, both from expatriate and local talent perspectives. Both can be

reached athttp://www.globalconnectionllc.com.

Summary of the GSB International Round Table, 16 February 2006, Chicago, IL USA

The talent market they described was volatile and prone to spikes. MNCs are strong forces in the

employment market, and they typically have a "pile on" mentality with their business initiatives,which drives up demand for Chinese workers suddenly and creates high competition for workers.

Exacerbating the problem, there is little mobility among people in China. Forget not that travel was

forbidden until the Deng reforms, which began loosening restrictions during the 1980s. Many peopledo not speak Chinese in favor of local dialects, and their accents can be very strong when speaking

Chinese. The government does not encourage relocations due to the size of the rural population and

the strained infrastructure of cities already. These trends keep the available labor pool small relative

to demand.

The discussion focused on H.R. challenges in several areas: recruitment, retention, the role of the

expatriate manager and special issues faced by Chinese returnees.

Recruitment

Deborah and Jeffrey represented very different companies in China: Motorola has a longstanding

China investment and is well known throughout elite universities. Best Foods is a relative unknown in

China and had to resort to other tactics.

A strong long-term strategy should include investing in universities. This is a significant time andfinancial investment, but it pays handsome dividends in the long-term. Jobs as MNCs are highly

coveted, and graduates seek out the companies they know. Motorola epitomizes this approach.

Use recruiters selectively, for the top managers. Keep in mind that many Chinese workers will not

understand the culture of the western MNC at first, and many ideas will need to be absorbed over

time. Mentoring is the preferred approach, in terms of skills, work knowledge, attitudes and

management style. This is why it is critical to get the top hires right. Mentoring and leadership are

often more important than technical skills.
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Pervasive Outsourcing | Strategy | Marketing | Knowledge Transfer | The Global Human Capital Blog 2/19/06/22:19

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Employee referrals can be an excellent way to recruit, but keep in mind that they can lead to

nepotism and cronyism, as those recruited are beholden to those who brought them in.

Cross-functional training is an excellent technique in many ways. Basic business and managementskills are often readily transferable in several areas. It also enables workers and managers to

understand the company better.

Internet recruiting and job fairs are staples. Contrary to what many westerners believe, Chinese are

very Internet savvy. At job fairs, be well prepared; people are often very informed and will ask

many questions. When using the Internet, informed and concise writing is critical.

Retention

Keeping in mind that the goal of virtually any MNC in China is to create a superlative team led by

local talent, getting the human resources strategy and practices right is mission-critical.

Poaching employees is commonly practiced, so learning and responding to employees' needs and

wants is critical to avoid the revolving door syndrome. Salespeople are especially vulnerable

because they often have a weaker bond to the company as they are in the field, and they are more

approachable. It is not uncommon for turnover to approach 100% per year.

High turnover is very destructive to morale because Chinese people are group-oriented, and having

constant turmoil prevents the group from gelling. Jeffrey's expatriate team had assumed thatcompensation was the most important thing to top managers at one JV. After some tribulations,

managers found that training/development was the first priority, followed by work environment,

visible career path and compensation! "Work environment" was a combination of respect and

leadership of the manager as well as office space. Space is much appreciated as many people livein cramped apartments.

Facilitating the development of strong peer groups is critical. People are group-oriented, and this is

a strong factor in retention.

Having a visible career path to advancement is important. Remember that western business ideasare new to China, such as the idea that, "If I work hard, I can get ahead." Many people have the

experience that politically connected leaders hold the power, and political connections have been

the traditional means to power, not necessarily high performance.

Deborah found that other strong motivators were the opportunity to travel and meeting foreignchief executives. Keeping in mind that travel was highly restricted for generations, it is easy to

understand that Chinese workers would appreciate it. When chief executives visit, make sure they

mix with the workers because workers feel honored and important to meet the boss.

The Role of the Expatriate Manager

Expatriate assignments are notoriously difficult, expensive and risky for all concerned, and

assignments in China fit the trend. It is important to understand the assignment from the corporate

context and the context of the proposed executive. The corporation may perceive the goal as mostly

financial; they may want to see a certain percentage of growth or productivity in a certain period. The

high performance executive may see the assignment as a notch is the belt before a much more plum

assignment back at headquarters.

The majority of expatriate assignments fail to meet expectations because they are simply differentfrom other corporate jobs. They often demand different types of skills. Deborah and Jeffrey

observed that women are often more successful than men because they listen more and may be more

focused on people issues.

The overarching goal of the expatriate manager is an extremely human one because no other goals

will be met unless the people part is right. S/He needs to create a productive environment in which

local talent can thrive and be productive from the corporate perspective as well as from their own

perspective. The environment must encourage the exchange of cultures in a setting of mutual respect.

The manager's goal is to work him/herself out of a job.


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Expatriate managers must be aware of themselves and their cultural baggage. This is a prerequisite

to understanding another culture. "Awareness" is a more on-point term than "sensitivity."

The U.S. stereotype of a driven high performing executive can be a disaster in China's group-oriented culture, where the individual takes a back seat to the group. Selection of the expatriate

manager is often neglected by MNCs, even though one would think they would know better by

now. It is often easier if the manager's spouse works as well because that will help him/her to engage

with the culture. The support systems to which the manager and spouse are accustomed will not

be available in China. Family issues are a key cause of failed assignments. Long hours are

common, as challenges are many. The spouse/family that is "waiting at home" will get very

frustrated. If the manager's marriage is not strong, the pressure of the assignment will worsen it.

Repatriation is often done poorly. A high percentage of expatriates leave the company after the

assignment.

Curiosity and the ability to listen are critical. Implied was the willingness to question assumptionsand to be creative about doing things differently.

The four stages of expatriate assignments

Oneenthusiasm and excitement. "This is fun and exciting and not as difficult as I had thought."

Typically lasts up to 3 months.

Twodisillusionment. The manager starts to realize that things are much worse under the surface,that there are real problems, that goals were very unrealistic.

Threeadaptation. The manager begins to understand the unique challenges and resources s/he

has and creatively begins to bring these to bear on the situation. This is typically the longest

phase.

Fourbiculturalism. Many expatriate managers never achieve this stage. The manager is truly at

ease in both cultures.

The Advantages and Challenges of Chinese Returnees

Chinese people who leave China and return as business leaders have unique challenges, and surprises

await all concerned. Some go abroad to study while others are born abroad. Another group is

Chinese from Singapore, Hong Kong or Taiwan, who are ethnically Chinese but who have adoptedelements of other cultures. This discussion presupposes that they are fluent with Chinese language

and culture.

The assumption is that they will offer the MNC the best of both worlds because they have a

western degree and fluency in western culture as well as Chinese culture. This can be the caseonce the returnee overcomes some challenges.

Chinese workers will forgive western managers some gaffes and cultural mistakes. They will

understand the western manager's clumsiness. They will not be so understanding of the returnee

because they will hold him/her to their standards.

The returnee may not realize how much s/he has changed during the sojourn abroad. S/He doesnot realize that s/he prefers some western ways of doing things. This will lead to surprising

conflicts. S/He will often feel like a foreigner in China, and this is always surprising and puzzling. Locals will expect the returnee to conform to Chinese standards, even when these are

"counterproductive" in the returnee's (and the company's) eyes. The locals may not be aware of

the complexity of the situation.

Probably the strongest element of success is creating and applying strong powers of perception,patience and listening. Locals may see the returnee as a "know it all" who wants to "tell them how

to do it right." This can destroy the person's effectiveness.


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Conclusion

This discussion highlighted some of the key challenges to cross-cultural collaboration. There is

significant art involved in succeeding in these situations, for leaders must be creative, open and

appreciative to others' points of view. This is often an attitude that leaders have or not. Specifically

regarding China, relationships have many levels of complexity. Many "western" assumptions,

approaches and techniques assume capitalism, and China is still technically a Communist country.They also assume ways of thinking that manifested within the industrial economy, and many Chinese

have strong agrarian roots. These are things about which western and Chinese people are largely

unaware in many cases. For example, local managers will need mentoring about the concept of

"human resources," "marketing" and "organization" that westerners take for granted. Just think,

"marketing" as practiced by MNCs, is completely foreign to people in a Communist country.

Also fascinating was how slowly things change. Twenty years ago, I conducted significant research

into MNCs' expatriate practices, and the main issues remain unchanged, according to the speakers'

experience. As any seasoned businessperson will tell you, business is a mlange of art and science

that reflects human beings. During the past twenty years, we have made tremendous advances with

respect to the science element:

IT puts increasingly granular information in our hands, and analytical tools have increased oursophistication with crunching the data, from lowly spreadsheets to advanced algorithms.

Management practices have been intensely studied and tested in a productive interplay between

MBA programs and business. MBA graduates represent a living laboratory of the best

management theory that can be learned and taught.

Quantitative, analytical methods are tangible, explicit knowledge, which is far easier to recognize,

communicate and learn than implicit knowledge.

Implicit Knowledge

Ah, but what of art? We have not made so much progress here. Art in this context is intrinsically

implicit, which is to say unnoticed and therefore unstated. Yesterday's apprenticeship and today's

mentoring are proven ways to transfer explicit and implicit knowledge from the "master" to the pupil

in a practical, hands-on setting because this is where we can notice the impact of implicit knowledge.Psychology is an attempt to put method and analytical structure around interpersonal relations, but it

is very dry and not very practical as a main approach to cross-cultural relationships.

Here I will hazard some examples of implicit knowledge to illustrate the point. Implicit knowledge

drastically affects the success of cross-cultural relationships and is difficult to teach in the same way

as other elements of business (hence the speakers' emphasis on mentoring):

Attitudewhat is the personal motivation and attitude of the parties? If the expatriate assignment

is a "notch in the belt" proposition, this will limit the manager's effectiveness significantly because

these assignments challenge expatriate managers personally as well as professionally. I believe

that a certain level of reservation or suspicion is fairly normal for foreign concepts and people. If

one is happy with how one lives, one is confronted with oneself in cross-cultural relations because

the others live differently. Carehow quickly can the parties bond and develop trust? Are their smiles forced or genuine? If

the parties care for each other, success is far more assured because they are then emotionally

committed and will go the extra mile.

Fear/Pridehow openly can the parties admit their incertitudes and anxieties as well as theirhopes and ambitions? Generalizing, Chinese and western people have completely different ways

for approaching these elements within themselves and for communicating about them with other

people.


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The Organizational Context

We can apply these elements to the MNC itself. How much does the company care about the

expatriate manager or the local Chinese team? How far is the company willing to go to accept that

things may differ from the plan, and how willing is it to make changes? This rubric is relevant to the

company's approach to creating and filling the expatriate spot. Carelessness may indicate a lack of

care or a fixation on "the numbers" to the exclusion of other things.

These challenges represent significant opportunities to those who get it right because they are barriers

to competitors. For the expatriate managers, these assignments signify unique opportunities to engage

their creativity and initiative. Success demands an unprecedented level of their interpersonal and

intellectual attention.

I hypothesize that the art of business will increasingly separate winners from losers on the global

stage. Increased interaction among the world's peoples will bring cross-cultural interaction to the fore.

People universally respond to those people who care about them and show that care and consideration

through their behavior. Cross-cultural interaction takes many people out of their comfort zones, but it

can be approached in a vastly different way: expatriate assignments are most difficult when those

involved expect that these posts represent another job. In fact, these are "life assignments" that are

challenging at every level of the person's life. They are tremendous growth opportunities.

Although not known for their expertise in cross-cultural interaction, the U.S. Marine Corps may

crystallize the expatriate assignment best:"It's not a job, it's an adventure."

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