Tuesday, February 16, 2010

Year of the Tiger – HR Shift

In Chinese zodiac, the year of the Tiger is traditionally associated with massive changes. To remain ahead of the game, here are a few ways that companies in Mainland China should consider:

1. Make a call for HR contribution to the organization’s productivity and capabilities. For most management teams, putting more emphasis on HR means realizing tangible and monetary deliverables. Reduction of recruitment costs seems to be the next and most relevant frontier. Building strong in-house recruitment arm with their own high caliber headhunters is financially sound, especially as recruitment fees to external recruiters have skyrocketed as talent is scare in China. However, this strategy does not solve the long term issue of developing talent and making it more effective. Net net, retention could be much cheaper than recruitment.

2. Shift focus on building talent. Long-term workforce planning involves identifying and nurturing junior talent particularly fresh out of college. The ‘big four’ and even some local Chinese companies realize the importance of an aggressive approach and surpass other people businesses in this respect. Each year in November these organizations put the senior students to a series of interviews and tests. Once this process concludes, employment contracts are signed and the "workforce newbies" are expected to start after their graduation in May of the following year.

3. Fill in your teamwork approach with substance. Pulling together as a team is a central element of motivational speeches by many companies’ leaders. However, bonuses tend to be based on individual performance and enormous discrepancies in pay tend to prevail. Both of them prevent employees from believing that everybody is "in the same boat". For all employees to feel valuable and more valued, status, pay, perks, and other privileges should be reviewed and according to Jeffrey Pfeiffer (1998, The human equation: building profits by putting people first) reduced. As an example, Whole Foods Market introduced a policy limiting executive compensation to ten times the average full-time salary of all team members; disruptive?

Culturally speaking, the concept of teamwork must also be reviewed critically in Mainland China. Surprisingly, current experimental research suggests that Chinese tend to avoid team-based performance measures and self-sacrifices in favor of the team. This goes to show that collectivism of Chinese culture does not automatically translate into cooperation and teamwork in the workplace.

4. Decentralize decision-making. The words “empowerment” and “to empower” are often misused. For example, companies believe that by having a suggestion box, employees will feel more empowered to put their ideas forward. Leaders also tend to believe that making the company’s proprietary tools available to employees and offering training so that employees can do their daily work constitutes empowerment. Well, empowerment is first and foremost about enabling non-managerial staff to make autonomous decisions without consulting their supervisor.

The best examples for empowering staff arise from the hospitality industry. Hampton Inn Hotel instituted a 100 percent satisfaction guarantee and thereby permitted employees to do whatever was required to make their guests happy (for example, giving money back for the cost of one night’s stay at the hotel should guests find shortcomings in service). At the Ritz-Carlton Hotel, employees have the discretion to spend up to US$ 2,500 without any approval in order to respond to guest complaints. (Pfeiffer, 1998)

For those in "people" businesses in China, the question is what the scope of the decisions is and whether or not employees have the skills and knowledge to make those decisions.

Tuesday, February 2, 2010

Talent Challenges in China

Once the hiring test is passed, working with Chinese employees presents other challenges.

Fragile Egos. Ba Ling Hou (the generation born in the 1980s) is the first Chinese generation after the introduction of the one-child policy. Growing up as the center of their family, these so-called “little emperors” are generally more self-centered and more individualistic than their parents. They tend to be less political than the older generation of employees and less receptive to hierarchy. However, this generation is more receptive and adaptive to Western style management. Those who gain a foothold in MNCs have oftentimes exceeded their peers in academic achievements and hence expect to win the race for higher pay, position, and title. These young Chinese employees are also smart, outgoing, and want to be independent. However, they did not necessarily learn how to cope with failures, exercise judgment, make decisions, and be a part of the team.

Unrealistic Expectations. Frequently, Chinese employees have high expectations and exhibit an attitude of “I disserve it” without reflection about their skills and abilities. Employees believe that they should be entrusted with interesting and challenging tasks, promoted, and offered better compensation and benefits packages at least on an annual basis. These high expectations are often fueled by open discussion and comparisons of their packages with colleagues, college peers, and friends. However, since status is very important in Chinese circles, a promotion or even a change in title without a change in duties can satisfy Chinese employees more than any other perk. But keep in mind that such promotions can backfire too. As a real life example, a 22 year old employee refused to report to a 25-year old manager with the argument that the manager was too young and did not know much more than the employee. The employee did not see how she could be successfully trained and mentored by a person from the same age group.

Weak Loyalty. In the US, the average length of time an employee stays in a job used to be five to six years. In China, it is two years. It is worst among Western trained and English fluent Chinese professionals who make "hopping around" from one international company to another a sport. Employees view employers as stepping stones to become more marketable in the future. As one applicant explained to me, referring to the question “How long do you envision yourself staying in this company?”,“The relationship between me and the company is give and take, if it works well for both of us, I’ll stay. If the company falls short, then I will need to leave”.

The Glass Ceiling. As much as employees desire to work for international companies, they perceive a glass ceiling in these organizations. Only a talent localization strategy can help eliminate employees’ fear of the “glass ceiling”. To execute it properly, coach-type Expatriates must be hired with the brief to share knowledge and mentor local staff.

What Vacation? The culture of a taking a vacation by Chinese employees is developing but is not there yet. Chinese prefer to take one day or even half-day annual leave on short notice with little consideration to work schedules, deadlines, and priorities as opposed to a vacation well planned in advance (as traditionally done in the West). Interestingly, annual leave is oftentimes used for interviewing at another employer. During my early consulting days, I was told that whenever an HP employee took leave on Tuesday morning; that meant they were interviewing at Microsoft.