Insight about Human Resources in China

Insight about Human Resources in China featured speakers with decades of experience on the ground in China and offered surprising experiences. The GSB (Booth) International Round Table hosted two Asia and cross-cultural experts 16 February 2006 at Gleacher Center, “Human Resource Challenges for Multinational Corporations in China.” As is my custom, I will summarize the salient facts of the session first, which will be followed by my analysis.

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. Many of the ideas presented corresponded to the ITA Round Table led by Dr. Wolfgang Fürniß (see China: The New Economy).

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 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. Many people do not speak Chinese in favor of local dialects, and their accents can be very strong when speaking Chinese. These trends keep the available labor pool small relative to demand.

All expatriate assignments are challenging and those in China especially so. Experienced local talent is very scarce, which means that the expatriate manager will need to create a productive culture of productivity and accomplishment, working with many Chinese who are not familiar with western business culture or ideas. The expatriate manager may not even be aware that the company’s culture or ideas or approach are “western” at all. The challenge is compounded due to vast differences between Chinese and western approaches and ways of thinking. Mentoring is absolutely critical because it is an approach to transferring highly complex concepts and practices while empowering mentorees.

• Recruitment is of utmost importance, especially of top local managers, and executives should go to the lengths necessary to get top drawer people. They should be picked as potential successors of the manager, in most cases. Select them for interpersonal and mentoring skills at least as much as for business or technical knowledge. They must be effective ambassadors for new ideas and approaches as well as for communicating issues that arise to the management.
• Retention is a challenge. Make sure to learn what employees prize most. In many cases, it will be different from what you assumed! Forging a team environment is critical, as is the practice of mutual respect and sharing.
• The expatriate manager should be selected with utmost care, as most of these assignments fail to meet expectations. Key selection points are cultural awareness (more important than “sensitivity”), curiosity and a strong family and marriage. Creativity and appreciation for the people element of business are crucial.
• Returnees are Chinese who have spent sojourns abroad and who are returning to China to work in a MNC. Notably, they include people from Singapore, Taiwan and Hong Kong. They appear to offer the best of both worlds, but they have unique challenges, too, when compared with western expatriate managers. They must guard against coming across as having a “know it all” attitude. The locals will expect them to act Chinese. Returnees often discover with consternation that they have adopted some foreign attitudes and preferences! In many cases, they have to come to terms with the fact that they are neither Chinese nor western any more, and this is very disconcerting to say the least.

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 and 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 and 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 business person will tell you, business is a mélange 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’s 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):

• Attitude—what 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.
• Care—how 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/Pride—how 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.

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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