Christopher S.

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

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 at http://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 people do 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 and financial 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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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 management skills 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 that compensation 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 live in 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 ideas are 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 foreign chief 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 different from 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 grouporiented 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 assumptions and 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 adopted elements 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 case once 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 does not 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 our sophistication 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 their hopes 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."

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

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