Managing People in China, Not China in People

An interesting piece of article by Jean Christophe Florenson.

Somewhere between the outdated concept that “Chinese employees want to work for foreign manager to learn Western methods” and recent articles announcing “The end of Western management methods in China” the expectations and characterizations of Chinese nationals are shifting. Also, personal values and motivations are becoming leading factors in the way Chinese people make career decisions. By failing to understand the values and motivations of their Chinese employees, foreign executives risk leaving out a fundamental component of the talent development equation.

Many international managers have noticed that “opportunity to learn and grow” always ranks as top priority in employee retention surveys. They have also heard a lot about cultural differences and therefore push for heavy employee development programs including a cross-cultural module. Yet, these programs seldom convert into higher staff engagement or loyalty.

When it comes to developing and retaining talent in China, foreign executives often face 3 main challenges: 

• First, gaining a sound understanding of the traditional Chinese culture and its impact on the way to do business and manage people.  In her very popular article, Mona Chung (1)  mentioned for example the concept of Guanxi’ 关系 (relationship) as one of first cultural concept foreign executives must become familiar with. In terms of talent development and retention, compared to Western, Chinese employees tend to be less loyal to the organization as an abstract entity and more attached to their connection with their manager at a personal level.
  
• Second, revisiting their initial conclusion and fine-tuning. In China, more than anywhere else, “All I know it that I know nothing”: The country is diverse and its culture is an ever-green concept. When they start segmenting Chinese people into different age categories or geographic zones for instance, foreign executives enter a new stage of understanding the subtleties of Chinese culture, its diversity and its evolving aspect.
  
• Third, distinguishing the culture influence from the individual’s own characteristics and expectations. This is that particular accurate cross-cultural understanding of their Chinese employees’ values and motivations that enables foreign managers to more effectively lead their people, projects and organizations.

The road to hell is paved with good intentions!

Foreign executives assigned to China are often successful business people with impressive track records who arrive in this new marketplace with a strong intention of “getting things done” and think in terms of “best practices”. When it comes to managing Chinese talent, many international leaders let themselves become misguided by some old stereotypes such as ”local employees feel they can learn more from a foreign manager, especially about Western methods of doing business,” and therefore behave like evangelists on a mission to convert Chinese people to Western business practices.

However, opposite theory has emerged in recent months and some articles in the Chinese press have even announced "the end of Western management methods in China.”  Many factors have contributed to this “anti-western” sentiment. I personally find it very interesting to observe how the Chinese government has leveraged events such as the Sichuan earthquake, the 2008 Beijing Olympics and the financial crisis to fuel a growing sense of national pride.  Whatever the reasons, emotional or rational, many Chinese employees have lost interest in making efforts to implement Western management principles and are looking instead towards their own traditional culture  for guidance. For instance, in a recent article, Franck Gallo (2)  briefly described how some Chinese see the current world economic crisis as the result of Western investment bankers taking risks that they should not have. This attitude shift in the Chinese is a possible source of new tension between risk-seeking international managers and their Chinese employees.

This wave of national pride and anti-western sentiment will probably gain momentum with future events such as the 2010 Shanghai World Exposition, but overall I believe that this let's-go-back-to-the-past movement won't last: I have no doubt that in the long-term China will continue its journey towards modernity. It is therefore imperative for foreign managers working in China to pay attention to shifts in the social environment and specifically understand the needs and expectations of the local employees on an individual basis. There is no one-size fits all methodology of how to best manage an entire nation of professional talent.

After all, you are not managing Chinese representative of the national culture, but individuals driven by their own personalities

When it comes to effectively developing people in China, many managers find it a daunting task to separate national culture and individual personality. After all, managing people, in any cultural context, has less to do with handling representatives of the country and its culture than it has to do with inspiring individuals who have distinctive values and personalities. By failing to understand the values and motivations of their Chinese employees, foreign executives risk leaving out a fundamental component of the talent development equation. This concept is applicable all over the world, but especially so in China!

How does one solve problems? Make decisions? Build trust and communicate with others? Those questions are not easy to address, because they are moving targets. We can adapt our behavior and adjust our attitude; however, what does not change is the individual personality. An individual’s personality drives his or her unique ways of responding to internal and external signals. For instance, does he or she have the empathy needed to understand client needs? The resilience required to bounce back from rejection? The thoroughness needed to execute the plan? Those are the important nuances that can make all the difference as to whether an individual will be happy and successful in his or her job.

Let’s go back to our example of how you can improve risk-taking behavior in your organization. What if, instead of starting with a set program of how the organization will approach risk-taking behavior, we focus instead on the individual employee’s personality traits that guide his or her responses towards taking risks? By understanding how one is comfortable when evaluating various options, thriving under pressure, handling rejection, etc,. we can leverage the individual’s unique set of strengths to facilitate risk taking behavior and drive innovation.

Think with an open mind and act with a compassionate heart

In short, I would always recommend to both foreign and Chinese managers to not try to define big cultural issues and rather focus on better understanding their employees’ values and motivations, especially in China where employees want to see that their manager is interested in them as people, as opposed to workers, and treats them in a caring and friendly manner.

(1)Mona Chung, “The impact of culture difference when entering the Chinese market” April 8th, 2008 by China Business Success Stories 

(2)Franck Gallo, “Risk-Taking Among Chinese Employees” June 10th, 2009 by China Business Success Stories

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Jean-Christophe Florenson is the Director of Business Development at Waterville (www.watervilleinc.com), a high-end HR consultancy, headquartered in Shanghai, leader in success potential analysis and talent capital enhancement. JC also coordinates the publication of brief case studies on www.ManagingPeopleInChina.com, offering practical solutions based on actual experience shared with China-based executives and consultants.

Olympics STUFF for Beijing, Expo 2010 STAFF for Shanghai!

The Beijing Olympics have had a great impact on the city of Beijing, where a large infrastructure refurbishment initiative, fresh developments and a massive English language training campaign have been some of the elements of a drastic change and an amazing source of business opportunities for both local and foreign companies. Shanghai, with its upcoming Universal Exposition in 2010 is going through the same face-list, with the replenishment of the famous bund area, the accelerated infrastructure changes much needed to ease the megalopolis congestion problem and much more. Commercial opportunities are as well rising fast toward the May opening of the Exposition. Opportunities that are being seized by both for local and foreign companies.

I have anticipated a rise in solicitation from pavilion ran countries. Tendering processes are going on in most country having a pavilion presence, and many overseas third parties have, and still are, gotten in touch with me for solutions in search and selection of the pavilion staff, but most importantly staffing, enabling each pavilion to legally employ staff, local Chinese or foreign nationals, without having to establish a legal corporate entity in China. DaCare being fully licensed and resourced for both activities it is of course a solution that we are capable of handling.

However what was not anticipated is the rise in solicitation from overseas SMEs.

Some the challenges faced by SMEs, while trying to seize their share of the tremendous financial and marketing opportunity the Exposition yields, can be briefly summarized as such:

· No local contact / connection in China

· No interest in forking out the additional cost, not to mention the lengthy process, of setting up a corporate legal entity for the limited duration of the Exposition (6 months)

· how to source bilingual and qualified employees locally

· how to legally employ local and eventually foreign national staffs during the Exposition period

· …

The opportunities are there, the challenges as well, but most importantly, solutions exist. Solutions that are legal, hassle free and well… affordable.

When you are operating an overseas SME, with a limited margin for error or financial flexibility, the process of establishing a commercial or operational presence in China can be seen as a daunting task. Entrusting a local business partner becomes therefore a viable solution, as you can stress-free focus on what you do best, that is sell and promote your products/services, while the local partner handles the “Chinese” side of things, like recruitment, employment, payroll, labor law compliance and so on, on your behalf.

Before signing up with a staffing company a few essential points are to be kept in mind:

· Do your research and make sure the firm you are engaging yourself with is LEGALLY LICENSED… that make sense, in the west at least, but I can guarantee you that a casual “sure, I can help” answer, here, is not what you should expect.

· Make sure they do have experience and references available for their staffing activities…

· Compare prices, as tariffs for staffing solutions can go from a few thousand US Dollars to a few hundred Chinese RMB from a firm to another, per month, for pretty much the same service level…

· Make sure that the firm has the INTERNAL resources to provide you with a pro-active and professional service. Too many firms around will be happy to take your money but will outsource payroll, contracts, ... In China, quality is not always here while dealing with third parties suppliers…

· Foreign staffing firm versus Chinese firm? This is entirely your choice… but bear in mind that a foreign firm does not necessarily have the flexibility a local firm can have in terms of terms of quick fixes and might not be able to provide additional services like last minute lodging, visa and such… In addition, a foreign firm might have larger overheads and as such that might impact the quote you received.

· Finally, trust your guts. If the few emails you exchanged gave you a somewhat dodgy feeling or your primary contact gives of the sense of being “lost in Translation” at every phone conversation … walk away…

…or better, call me!... not only we have the internal resources in both search & selection and Staffing but we are one of the leading firm in the country! http://www.dacare-staffing.com/

Chally Assessment Certification Workshop

I have recently been graciously invited by Shi Bisset, prominent Organizational Development figure in Asia and a delightful lady, to attend the HR Chally Certification workshop. The workshop was exceptionally led by Howard and Sally Stevens, the founders of the system. The experience of being introduced to it by these two exceptional individuals with their immensely vast knowledge of assessment, motivational theory and such, was AMAZING...

I have been in close contact with various assessment systems providers in recent years, from the very marketable MBTI and other DISC's look-a-like to the more globally relied on such as Hogan and Waterville. When addressing the subject of assessment tools, regular topics arise, usually around the themes of stability / reliability, "fakability", construct. I don't want to go into the debate of fakability or reliability in this post and would much prefer to focus on the fact.

HR Chally:

• A PREDICTIVE assessment tool, a opposed to the hogan, for example, with its descriptive nature.
• Not a personality tool but a predictor of "on-the-job effectiveness".
• Actuarial science as opposed to theoretical science: The Chally is a data-based, on-going research based system and as such is continuously being validated against new population samples to be a truly globally applicable tool. Backed up by 35 years of continuous research.
• The questions in the assessment have "no face value", rendering the assessment unfakable.
• A perfect integration with TQM and Six Sigma quality management practices as Chally is level 5 on Six Sigma.
• An "error" tolerance of 3 to 10,000,000 as opposed to other tools with an tolerance of around 5 to 100.
• The only system which has never been proved wrong by a court of justice...because no court has ever dared challenging it....

These are just some of the few elements showing how tough, reliable and credible, the system is.

The Chally based Talent Audit tool is simply amazing, giving you one of the best team-building / HR management dashboard i have seen around. Great tool to use from selection strategy to succession planning via preparing group soft skills training and individual coaching programs....

This workshop was a real eye opener, on the quality/reliability of the various tools around the market, first, and second, on how, without the biased of having to commit to a consultative business model, a research intensive firm can come up with such a mind blowing and undisputed tool.

Not that i am pleased or devastated by my own results, but having gone through over a dozen of assessments, i believe i know myself well, and as such i know perfectly how to find workarounds for my own weaknesses (aggressive? me... who said aggressive!!!...Wooozzzaa....) in a work context. But let me tell you, this is a huge slap on the face for whoever thinks, or hopes, that people change! People get better at working around their dislikes and "disabilities" to achieve a positive result, but ultimately their strengths are constants and so are their "weaknesses"... Well, live with it... we all do!

If you are giving a shot to this awesome tool, which i would recommend to any decision maker, the "Best Match" report is a must do to benchmark yourself against a functional management role, and, while you are at it, it is well worth bracing yourself, if you have a tendency to push "social desirability" a notch too high, because you are in for a moment of blunt truth, and on the HR Chally, there is not much you will be able to hide...!...

Career News

As of March 30th 2009, I am becoming the Director of Operations for DaCare Consulting (China).

After a great and experiences-rich journey with Orion China, its team and its partners Brian & Vincent, i have decided to further my career in Executive Search and embark on a new challenge.

I have therefore joined DaCare Consulting and will lead their already successful Executive Search department (30+ members).

Established in 2002, in Shanghai, DaCare is a leading HR Consultancy providing "Top of the Class" executive search, staffing and advisory services to a range of local and multinational Clients. DaCare has extended its regional and international presence through offices in Chengdu, Beijing, Shenzhen as well as San Francisco and Chicago.

For your recruitment related queries in Greater China or Asia, feel free to contact me at patrick.courtois@dacare-group.com.

A little Recruitment Humor....

The 10 dumbest job-interviews moves...

http://money.cnn.com/2007/10/10/news/economy/dumb.moves.fortune/index.htm

Understanding the differences; Acting on the commonalities…

The common practice, when looking at the prospects of selecting the right individual for an overseas assignment, is usually to focus on the individual’s technical/functional skills, with the assumption that it will be sufficient to operate successfully across borders. I recently collaborated with Brian Sun, Managing Partner from Orion China, on a presentation to visiting US EMBA students, from Purdue University (Chicago), aimed at highlighting the characteristics of leaders who can seamlessly navigate across borders. It was interesting to compare the challenges a manager is facing at “home” and overseas.

There is no place like home... On the path to delivering results, a local manager is faced with a set of challenges usually expressed in 2 dimensions. The internal environment, on one hand, requires an individual to decode, adapt and manage communications and interactions patterns with peer employees and business partners, as well as adjust to the headquarters “way of doing things”. On the other hand, the external environment poses the challenges of day-to-day management of the competitive environment, the clients/customers element, as well as complying with the local regulatory environment.

In the local context, assuming we are referring to western economies, such as Western Europe or the US, with consistent and clearly-defined regulatory systems in place and the added value of operating in a “native” environment, where cultural and language barriers do not exist, the challenges are minimal and coping with it is down to an individual’s ability to fit or find his/her place within the system. A “system” within which one has grown up and been educated, where communication patterns and general value basis are shared or, at least, understood.

Apart from the language aspect, a candidate bound to a US expatriation from France or a UK manager on his/her way to Italy for 3 years, will face little challenges adapting to an environment articulated around similar values and common cultural anchors: the commonality of the alphabet or social “landmarks” like a Tesco, Carrefour or Wall-mart, around the corner, for example... In this perspective, the transposition of an individual’s performance and efficiency from a posting location to another can be a smooth and rapid process, yet, with a little effort from the candidate.

Reality check … Things start to get complicated when an individual is assigned to operate within a completely foreign environment. Foreign in all aspects from value system, culture, to language and where one finds him/herself immerse in what can be referred to as an alien setting. The process of adaptation to life and work in a foreign culture, like China, can be difficult. It can roughly be divided into four phases, of very variable lengths: honey moon, cultural shock, reconciliation, adaptation.

During the honey moon phase, everything appears fascinating and new, the individual feels somewhat similar to a tourist. He/she discovers, with curiosity and excitement, a new country and the new lifestyle that can led.

After a short while, however, the more an individual immerses him/herself in day-to-day life, the more differences become apparent: differences with one’s own references, the person’s way of thinking and doing things, in contrast with the ways of the local people. Everyone reacts differently to this situation: anxiety, doubt, frustration … An individual can be tempted by isolation or be prone to adopting a defensive or rejective attitude toward the host country and its inhabitants. This is the phase of “cultural Shock”; a difficult, however important, experience, part of the adaptation process to life and work in a foreign setting.

For most expatriates, the cultural shock comes to an end with the individual’s familiarization to the language and culture: this is the reconciliation phase.

Day by day, the adaptation process goes on. The individual becomes more confident, more sensitive to positive aspects of the new environment. Events and people’s reactions are no longer a surprise, the expatriate has re-established his/her marks, and has gained enough awareness to navigate local codes of conducts and lead a more comfortable life.

The rapidity of the adaptation and integration process in the host country is not bound to any fixed rule. The country, the personality of the individual, the availability of expat communities, his/her marital situation, prior expatriation experiences, …are all elements influencing this, where one’s expatriation experience can be different from another one and where each phases of the adaptation process can sustain its own agenda.

You have just crossed over into the Third Dimension… While operating in a country like China, a third dimensions needs to be taken into consideration, in terms of the challenges facing a manager. The issues an individual faced in his/her home country, are accentuated by cultural differences, language barriers, differing value systems and, in some cases, obscure regulatory systems. Reactivity of the headquarters is impacted by distance, business ethic takes an entirely different shape, communicating with peers redefines the meaning of lost in translation, and simply trying to settle down, living a comfortable day-to-day life can, as aforementioned, be a frustrating experience. The risks of not managing properly these 3 dimensions are obvious for both the employer and the individual. Selecting the right candidate for expatriation should therefore be done through the careful examination of 3 essential elements.

The essential mix…There is no magic formula to a successful cross border assignment, still, professional qualities, that is, the technical and functional as well as managerial expertise, are key. If an individual does not have this foundation, there is no added value for an employer to “risk” or even justify an expatriation. Having some sort of international experience through language study, travel, and such also helps in forming the necessary aptitudes for an overseas assignment. A second important ingredient is somewhat linked to an individual’s “Global” qualities.

The knowledge and understanding that many routes lead to the same destination, but most importantly, that in different places, people do things in a different way, is an essential part of what can be defined as a multicultural mindset. There is no universal way to do things: trying to introduce a new or foreign perspective when looking at problems is good, attempting to impose a foreign way can lead to poor and even dramatic consequences in some places. Empathy, a strong commitment toward learning, the ability to reassess and realign constantly one’s ways in order to make the most out of the systems and culture in place, are among the few additional signs of sound “Global” qualities.

Lastly, country-specific cultural qualities are also an important element to take into consideration when considering expatriation. Some can be developed on-site, others have to be deeply embedded in an individual’s personality. In China, humility, patience, reactivity, an open-mind, flexibility and guanxi-building talents are among the essential traits an individual must have in order to smoothly settle down, professionally as well as personally.

Times have changed since the opening of China 30 years ago… The era of the “missionary” expat manager is long gone, with a local managerial workforce now having solid and up-to-date technical skills (I am not going, willingly into the Leadership in China debate, in this article). An employer aiming at filling a managerial / leadership role in China needs to look at a much broader picture while considering the necessary requirements for the appointment, of a foreign professional, in order to properly assess the real added value of the foreign appointee, on the long run, as well as minimize the impact on productivity generated by the appointee’s potential cultural shock and length of the adaptation process. Behavioral interviews, peer feedback, or personality assessment, could all be a good start…

No free lunch in China…

I tend to receive a recurring misconception about the Chinese labor market from overseas-based clients. This misunderstanding primarily affects overseas-designed provisional staffing budgets as well as the perceived value of quality of China-based recruitment agencies. In short, agencies are perceived to attempt inflating candidate packages for higher fees. While some rogue agencies do, there is a distinctive trend that the cost of Chinese talent is catching up with international benchmarks.

China is an emerging Dragon, Shanghai, a crouching tiger… China is an emerging and developing economy. At least, it is its official status according to the International Monetary Fund's World Economic Outlook Report, dated April 2008 (1). Taking into consideration the measurement criteria, based on statistical indexes of element like income per capita, GDP, literacy rate and such, are calculated against the sheer size of its population, it can only make sense.

Shanghai is, along with Beijing, Guangzhou and Shenzhen the economy’s locomotive. Having the status of “wealthiest” city in China, with a GDP per capita, above US $7,000 for 2007, it is however still far behind any Major European capital (2). To give you a clearer idea, Shanghai’s GDP per capita is below a city like Istanbul, Turkey (3). Once again, keep in mind the size of Shanghai’s population (over 15 million souls) and you can understand that GDP per capita does not necessary reflect the reality of local white collars, which are far from being the majority.

Another interesting piece of information is the Mercer's 2008 Worldwide Cost of Living survey (4), which gives us an idea on the rising costs of living in Beijing and Shanghai, with both cities present in the Top 25. The results, however not entirely applicable to local nationals, as based on expatriate populations, still gives us an insight on a certain reality of the local economy. That is, the gap in cost of living observed between a modern city like Shanghai and other “emerging” one, in China.

Despite all these, Shanghai can still be considered as a “cheap” city, with low business operations related costs, minimal salaries requirements, and reasonable living costs below those of similar sized cities in US or Europe.

The “Made in China” picture of low wages is still relevant today. Compared to wages in the EU or US, employing local nationals is indeed an affordable option. Looking at the table 1 comparison of the median US, UK and Chinese total packages (salary + bonus and benefits) on some common positions, the point is made. At first glance, it quickly illustrates the cost-effectiveness of employing local nationals, considering we are talking about the “median” or average population, of course.  It quickly demonstrates that employing the “average” local candidate can still be regarded as a cost-effective solution.

If you pay peanuts, you get monkeys… No offence to anyone in particular, as this applies to pretty much anywhere around the world… But, If you take a closer look at this “average” labor market, as it is the one providing input for most official statistics, surveys and other reports that one can easily find online and, incidentally, the segment on which a lot of people base a provisional recruitment budget upon, you get a rather interesting picture... Simply put, by a fellow recruitment specialist, “the average employee in China does not speak English, he does not work in a foreign firm, he does not think outside the box, understand western reporting structures, go to a top university, or have a chance of getting hired into your firm…”(5).

The average candidate has also the shortest retention potential, following a simple logic of job hopping for ever shinier titles and bigger financial packages, thus leaving a city like shanghai with a dramatic employee turnover at around 18 months and a managerial workforce with somewhat arguable overall managerial skills.

If you are the decision maker of one of these multinationals, which are slowly initiating a shift toward management localization by cutting off expatriates’ budget plans, would you really consider handing over the keys to your financial, commercial or product development operations to an average candidate whom, however nice of a person, would most likely fail to properly relate to, understand or even communicate on basic day to day issues?

No money, no honey… On the other hand, you have the candidates which are at the center of what is now known as the “Talent War” (6). These are candidates with bilingual English abilities, 5 to 10 years of solid people and projects management experience, strong overseas exposure, the ability to think in a systemic way, whom are fully acquainted with western reporting systems, can deal with foreign clients with the highest level of service quality, have graduated from top Western universities and can leverage on the added-value of their biculturalism. These are the candidates companies are fighting over for in Shanghai, Beijing or other tier 1 cities, with packages narrowing closer to those in the US or Europe, and sometimes going well beyond.

 

Figure 2 sheds some light on a more relevant picture of the Shanghai employment market (for top candidates), with key functions such as Finance, HR or Sales clearly aligning themselves on EU/US levels. This “headhunter’s” dream can quickly turn into an employer’s nightmare, if the latter does not properly understand the realities applying to the local market: An overall talented, self-motivated, creative, and experienced manager is a scarce resource in China, and a 28 years old sales manager making above RMB 1 million (EUR 100,000) is common. 

Assignments, completed by Orion China, regularly cover positions for Financial Controllers around the RMB 500,000 (EUR 58,000) figure, HRDs in the vicinity of RMB 700,000 (EUR 80,000) and many others, with financial packages often giving a new meaning to the common image of China as the land of cheap labor. You need to face the facts, if you want to buy yourself the next superstar everyone else wants, you will most likely have to fork out a substantial amount for it, at least, more than your competitors.

Money can’t buy happiness…but you can definitely get yourself a top senior HR or Finance candidate, in China, for the right price… Sure, there are no comparisons possible between a Shanghai or Guangdong based factory worker and his counterpart in Europe, the US or Japan. China has and will continue to retain its image of “world’s factory” for years to come, with affordable labor costs and ever increasing quality standards. Nonetheless, good management, talented leaders and high potential profiles come with a high price tag, just like it would, in “Developed” economies.

Companies that will successfully implement localization strategies, in the upcoming years, and leverage on the amazing opportunities this rapidly growing market yields; are the ones currently understanding that quality, experience and skills come at a certain price, in particular in the Chinese economic capital Shanghai is. A solid and ethical executive search firm, with deep networks, up-to-date market knowledge, and experienced consultants, is therefore a partner of choice to prevent your next hiring from becoming a time bomb, in your company’s development plan, or a pricey mishap that may not look great during your next board meeting.