Recession 101 for China HR Managers

November 12, 2008 – 10:02 am

HR managers in China who aren’t reading Frank Mulligan’s Talent In China  site  are missing out on an important resource.  His Nov 10 post - Slower Hiring - Window of Opportunity  reads like Recession HR 101, and will be extremely useful for local HR managers who are experiencing their first economic downturn.

“So we can look forward to a continued reduction in demand for staff as the world economy continues to go into decline. This scenario even assumes the Chinese government goes ahead soon with a proposed large scale stimulus program that we are hearing whispers about. Even if it is announced with-immediate-effect, the relief will take time to translate into hiring.

As a result of all this, people working in HR may find themselves with extra time on their hands over the next few months, and very little budget to pursue their ideas. Below are a few simple suggestions as to what you might do; suggestions that require more time and less money. They assume you are not in the process of actually firing people. Most higher tech companies in China have not had to face yet this issue yet”

Frank goes on to give Chinese HR managers a comprehensive to-do list for these slow times.  His highly constructive ideas include surveying top employees and asking them why they accepted the job when they were hired, spending time with line managers to see what behaviors they want to see more of -  and less of, and developing an online newsletter to keep potential candidates interested.  The list goes on - and provides you with a game plan for insuring that YOU are not one of the victims of your company’s downsizing plans.  Read it - before it’s too late!

By Admin | Posted in HR | Comments (0)

China Sales Management - For Non-Salespeople

November 4, 2008 – 11:36 pm

China’s Senior managers and HR professionals have to deal with sales teams all the time.  There was a time when you could divide the Chinese sales landscape into two groups.  Aggressive western-style salesmen who were difficult to deal with, and more passive Chinese-style salesmen who were easy to deal with but didn’t always get the job done.  Now everyone is aggressive and difficult.

As business in China slows, there will be more and more pressure for staff to support line managers — especially in the are of sales and top-line growth.
Sales management for non-sales people starts with these 5 areas. 

1) Managing & goal setting
2) Hiring
3) Training & Coaching
4) Structuring the department
5) Compensation

Managing – Salesmen can be jerks.   Being  aggressive and determined and focused makes them effective salespeople – but lousy colleagues.  Don’t let these people bully you or BS you, as they will try to do.  Salesmen are goal-driven, and sales management is about setting good goals and making sure that they get met.

Hiring – You want to find the middle between 2 extreme sales-type personalities.  Aggressive salesmen will convince you that they have all the answers, but they tend to lie and will probably disrupt your operation.  If you go the other way and hire a friendly “relationship” salesman, you are sure to enjoy their company but you won’t get rich paying them to schmooze all day.  HINT:  Pay a little more and hire someone with a few years of sales experience IN YOUR INDUSTRY.  Develop them to be your sales manager.

Training & Coaching – You do the product training in-house.  Bring in pros to do the sales training.  Your job as a coach is to make sure that the training has an impact.  It’s best if your coaching relationships with your team are warm and cozy and life affirming – but it’s not necessary.  Weekly, scheduled meetings to review performance and set goals is fine.  Delegation is an important part of coaching, but requires regular feedback.

Structuring the department.  Structure develops whether you put it in place or not.  If you organize the sales department according to your own plans, it may be very effective for you.  If you allow your department’s structure to “just evolve organically”, it will be effective for someone else.   In China, you should always know where you want people to rise to.  Have their promotions in mind and be more proactive than you would be in the US.

Compensation.  Commission and performance based compensation plans work well.  But you also have to be ready to fire the under-performers.  When compensating sales teams, make sure that you are identifying and rewarding appropriate behaviors.

By Admin | Posted in HR, Sales HR | Tagged , | Comments (0)

Sales HR is strategic to China business

November 3, 2008 – 2:52 am

China HR professionals have heard the party line already - “People are this company’s most valuable asset”.  This is usually followed by something about how your company takes a strategic approach to sales and marketing HR. 

Just saying Sales HR is strategic to your China business is not enough.  You have to get senior and line managers to step up and act it.  That means getting engaged with a wide range of people and problems at every level of your company’s sales department.  It’s great to see managers and owners pass responsibility down the line – but there is an unfortunate tendency to treat delegation like a “job finished” check mark on a to-do list.  Delegating is good for your operation – but it isn’t a time saver for line managers until much later.  As the HR person in your international firm’s China operation, you have the responsibility to  make sure that your line managers are using delegation to solve problems and not just finding effective ways to hide them.

How should you make sure you sales managers are doing the right job in the right way?  Here are 5 key areas to check on:
 
1) Are you recruiting well?
Have a manpower plan that means something.  Update it and make sure it integrates with the rest of your business model. If you want to increase the size of your sales team by 50% in 2009, are you going to hire ore supervisors?  Assistants?  Where will you put them all?  Who will train them?    You’re fighting two business trends right now — HQ wants more sales, but they also want to control costs.  This comes down to YOU, the China HR professional.

 2) Are you training well?
To train well, you need an integrated plan with clear-cut goals, milestones and deliverables.    Don’t delegate this one down the HR rabbit-hole and hope for the best.  Training and staff development is strategic – it requires multi-year planning and close monitoring.   That means you have to defend your training budget at the same time you are raising your payroll.  It’s tough to do, but if you don’t have the means to train well then your new hires may not succeed.

 
3) Promote better
Commit to a structure and a chain-of-command, and then staff up accordingly.  Decide on each job’s target profile and then train from within or recruit from the outside to build the machine you want.  Once you’ve promoted, make sure that your new managers are managing – not just selling at a higher level.  If your sales managers aren’t training, supervising and building the business, you have to bring in other manages to do it.  Don’t live the lie that your new recruits are “learning on the job”.  They are learning to find new jobs.

 4) Orient the new employee.
Have an orientation program.  Test it, update it, go through it yourself.  One of the most overlooked and undervalued of all management activities is orientation training.  It is your first – and may be your only – chance to set the tone of your company’s culture, expectations and values.  This stuff matters.

5) Measure what you can
As your company grows, your ability to measure objectively and analyze the data is going to determine your success or failure.  Use off-the-shelf software and technology to build a reliable battery of standardized tests and feedback systems.  Develop a profile of your ideal candidate for hiring, test and appraise during the selection process, and test to make sure your new assets are operating effectively. Most important of all, have all data immediately flow back to senior managers at HQ.   Developing a good system of checks and measurements – and knowing what to do with the data you collect – is going to be another crucial factor to your long-term success.

By Admin | Posted in HR, Sales HR | Comments (1)

China HR Professionals must fight 2 bear-market myths.

October 22, 2008 – 12:56 am

The second markets turn south, HR managers at big & medium sized companies start hearing a couple of half-truths that get repeated so often that they begin to make sense.   

The first myth is that hiring gets easier when business is slow and companies are having trouble.  True, there is less active demand for talent during a recession.  If you are looking to fill 10 manufacturing or clerical positions, then you’ll find your recruiting will be cheaper and quicker than in the past.  But if you are looking for senior or specialized people then your task isn’t necessarily easier than during boom times.  These are the people that owners and top management are struggling to hold on to — even more now than last year when business was better.   Experienced and competent people know that recessions are bad times to switch jobs, since everyone’s budget is severely constrained and bonuses will be weak.   And when you do find a hot candidate at a price you can afford, be prepared for a lot of internal negotiating as the head office tries to shave costs even more.

The next myth is that training budgets should get cut in the first rounds of expense reductions.  All your ROI concerns suddenly go out the window at the first sign of slowing business — and that would make sense if we knew that the recession was going to be brief.  But we don’t know that.   In fact, things could be slow for a while.   Depending on your requirements, training may be the most cost-effective method of achieving your internal targets.  One thing we know — you probably won’t be making many big hires of experienced professionals in the near future, and your cheap(ish) team with less than 5 years of work history is going to need skills.   (If you have a choice between cutting assessments and cutting training, then you are better off killing the appraisals.  At least that way no one upstairs will know how weak everyone’s skills are becoming!)

Developing smart, effective training programs can solve a lot of problems for medium sized companies in China.  Many corporate training organizations are feeling the pinch of leaner times, so they are in the mood to make deals.  If you include can demonstrate that your training spend is helping to keep a lid on the need for expensive new managers, then you are  boosting your training ROI in China.

By Admin | Posted in HR, Training | Tagged , , , | Comments (0)

China HR Professionals and a Global Hiring Freeze

October 17, 2008 – 12:58 am

China HR has to prepare for global recession

China is not yet feeling the full effects of the global recession, but some HR managers in Shanghai and Shenzhen already are.  As more and more international HQs order hiring freezes - or worse, headcount reductions, HR managers in China are going to feel the pain.

Dr. John Sullivan of ERE.net recently posted an invaluable article on the subject of hiring freezes and recruiting.  

He warns about some obvious - and not so obvious - ramifications of a slowdown in hiring.

  • The danger of hurting profits by reducing salesmen and other revenue-generating staff.
  • Harming employee morale and burnout
  • Missed chances to hire potential high-performers  
How will this affect us in China?  One thing that Chinese HR managers are acutely aware of is that the US and European recession have not yet hit China full-on, so many industries and corporations are experiencing business as usual.   
   
Another unusual stress for HR departments is the push to localize management.  That process usually requires a degree of redundancy and overlap in the implementation phase.
   
China HR managers and directors had better make sure that they are communicating their concerns, priorities and ideas to the global head of HR in HQ. These people are probably a little stressed right now, but it’s a great time to remind them that when times get tough that they can count on their China HR.
By Admin | Posted in HR, Retention | Tagged , , , , | Comments (1)

China Compensation: Has your payroll suffered a recession cut?

October 16, 2008 – 2:40 am

Variable compensation.  Performance based incentives.  Commissions.  Bonuses.  Profit sharing.  Employee Stock Ownership Plans. 

These all such great ideas — when the markets are booming and business is growing.  But in a depressed market (like ours) those plans turn into cruel jokes.  I remember working for a NY dot-com firm just before the bubble burst.  I received enough stock options to make me very rich is the company just continued along its same growth trajectory.  It didn’t.  The options were under-water for the entire time I worked there, and the further the stock fell below the strike price, the less confidence I had in the ownership. 

Not variable to them

All bosses and HR managers everywhere have to understand a simple but powerful concept.  If 25% of a manager’s total compensation in 2007 came from bonus and performance incentives, then that is the new baseline.  If 2008 total compensation is 25% lower because the company isn’t making money, then your guy feels like he has been cut by 25%.  Bosses feel like the staff has stopped earning an extra benefit or gift.  The staff feels like they have had money taken away from them.

Fall-out from a falling economy

Morale, retention and job performance.  They are all in jeapordy.  Senior management will have to work extra hard to contain the damage and keep spirits high.  But this might also be a great time to revisit your compensation plans and craft a more equitable, realistic system.

By Admin | Posted in Motivation, compensation | Tagged , | Comments (0)

Chinese teams and authority

October 15, 2008 – 1:35 am

Is your organization run by a boss, a technocrat, a leader, or a mentor?  Are they all the same?

If you are from the US, then you may see all of these labels as different facets of a single strong manager.  But Chinese staffers may not see it that way.  

For a look at how Chinese and Westerners view authority and hierarchy, take a look at Frank Mulligan’s ‘Talent in China’ blog — particularly the Oct 8 post about Hierarchy in China .  

One lesson here is that Chinese and Westerners see workplace relationships differently.  Chinese are more comfortable with a BOSS who is above them in the organizational structure.  Westerners are more at ease with managers who are more-or-less equal to other team-members.

This is precisely the kind of cultural disconnect that causes problems for western managers in China - and they probably never understand why.

Flagging this kind of misunderstanding is a great way to add value if you are a Chinese HR professional.

By Admin | Posted in HR, Managing a multi-cultural team | Tagged | Comments (0)

Smart China Organizations have Knowledge Banks

October 14, 2008 – 2:10 am

Every China HR manager knows the direct costs of high turnover.  Recruiting, testing, training — the cost in hours and the loss productivity.  But there’s another, potentially more damaging, threat.  Everytime one of your people quits or gets fired, your company loses their experience, training, connections and abilities.  Your storehouses of knowledge are walking out the door every night.
 
Top Chinese  and expat employees can be expected to give notice and over to a competitor or to start up their own company at any time.  It’s a fact of life here.  Anything you can do about it?

Yes and no.
Some people are going to leave no matter what you do.  There are some  practical steps that MAY help you retain your top people, but there are no sure-fire answers.

But you can minimize the damage if they go.  When they leave, there’s an excellent chance that they will be taking some valuable company information with them.  Some, like client lists and sensitive IP, they have no right to.  But other information, like know-how, contacts, industry knowledge and the like is theirs.
Are they leaving anything like that behind?  If they are competent, diligent, intelligent managers, there’s a good chance they have developed some important intellectual property while they were on the job.  Sales managers have detailed client lists and market knowledge.  Marketing people know about advertising, promotion, distribution channels and new product development.  Accountants know AP people – and often have a wealth of knowledge about creative ways to get people to pay their bills.  Operations people have suppliers, and so on.

This should be part of you company’s <em>institutional knowledge.</em>  You should be able to point to a body of information and ‘best practices’ that are unique to your company.  The problem isn’t that the knowledge isn’t there – the problem is that it walks out the door every night.

Developing a systematic method for accumulating, storing and disseminating institutional knowledge is a key step for owners and managers of growing China businesses.  Let’s look at what’s involved in the process:

Step 1 – Your wish list

 What information and knowledge is key to your operation?  Try this – Imagine that Monday morning every single member of your sales team quits without giving you any notice.    What will you have to do to get the new staf You’ve just described a body of information and methods that make up the Institutional Knowledge for your sales department.  Now do the same for all the other key departments in your company.  How would you go about replacing the operations department, the accountants, the marketers, etc. 

 While you are at it, determine where there are gaps or weaknesses in your operation, and describe what kind of training, knowledge or systems are needed to plug the holes and smooth out the kinks.f up to speed?  That list will include clients, training material, product knowledge, operating procedures, etc.  Your company also has a bunch of special methods, tricks and shortcuts it uses to differentiate itself from the competition.  You as the owner or manager may have put your own stamp on the department.  

Step 2 – The audit

 Now that you have your goal for an ideal company, determine what your situation is really like.  No, I said REALLY like.  You may have had a trainer come in 8 months ago and worked with the customer service people for half a day, but that doesn’t mean that your company has great customer service.  Determine what your company operations are really like.  There are plenty of outside consultants who do this, but you can get a pretty good start by just having a chat with key people.  Find out what your own company is really doing – and then look at your suppliers, competitors, customers, distributors, and so on. 

Step 3 – Standards

At this point you are probably noticing some variance between where you want to be and where you are.  You are also finding that a lot of your key information isn’t recorded anywhere within the company.  Your sales team is supposed to enter all the client’s information into a database – but your audit revealed that the centralized files are woefully out of date or incomplete. 

Maybe your manufacturing facility is being kept alive by one guy who knows where to bang on the side of a machine.  Or your AR manager went to school with the CFO of your top customer, and that’s the only reason you are getting paid.  Nothing is particularly wrong with any of that – except you can’t reproduce it in a systematic way.

Maybe you have standards for recording vital company knowledge and procedures and they are not being followed, or maybe you are just “winging it”.  But now is a great time to put into place a system of organized procedures and finding a way to enforce them.  That way you will build up a body of institutional knowledge that you can refer to and make use of in the all-too-likely event that your key people leave.

Step 4 – Storing & Distributing

Now that you have your book or file of company knowledge and unique best practices, what are you going to do with it?  Are you going to make it public, give access only to key people, or keep it confidential?

 The choice is yours, but in all likelihood you are going to want to codify this institutional knowledge and find a way to A) incorporate it into your company’s training routine, and B) add to it in a systematic way.  You may find that once all of this information about your company comes to light, you may want to start all over again and change some of the basic assumptions you had about your business model or growth plans.

 Much of this information may be sensitive, but it also contributes to your company’s competitive advantages and unique corporate culture.  The fastest and most effective means of transferring this body of knowledge is to build it into your orientation training and your company’s SOP (standard operating procedures).

Developing a sound record of your company’s institutional knowledge may not prevent your key people from leaving you, but it will minimize the damage caused by employee turnover.   An added benefit is that it gives you a more organized perspective for viewing your own operations.

By Admin | Posted in Management | Tagged | Comments (1)

Sample Business Case: China expansion plans.

October 6, 2008 – 1:48 am

The China-based service business wants to expand.  How should it proceed? 

Bob Jones is the expat owner of a 20 person travel-related service business in Shanghai.  He and his marketing team decide to develop the middle-class Chinese market for overnight business travelers.  Reaction to his initial promotion was unsatisfactory.  What should he do next?

  1. 1) Focus on the ex-pat SME market, where he is stronger. Let the new campaign fizzle out on its own.
  2. 2) Invest more energy and resources to the new campaign – at the expense of his existing business.
  3. 3) Conduct a series of meeting with insiders and paid consultants to analyze whey the campaign failed, and create a new plan based on the outcome.

Which would you advice Bob to do? Which would you do yourself?

Many of us would recommend that Bob do #3. I can’t speak for all of you, but there’s a very good chance I’d end up doing 1 to protect my existing business. It seems safest — but is it really?

In fact, none of them are necessarily WRONG. But each has strengths and weaknesses in a Chinese business environment.

Option 1 – Cut losses. Bob tried and failed. No harm, no foul. He picks himself up and returns to safer ground – to build up resources, study the environment and live to fight another day. Cutting options is safer – but only if Bob realizes that he’s searching for niche markets that may disappear as quickly as they open up. There’s nothing wrong with testing new markets in China, but Bob is competing head-to-head with swarms of Chinese businesses that act the same way. He’s not building a market – he’s trying to discover one. The odds are he won’t be able to hold onto it when he finds one.

Option 2 – Dig in and fight. If option one is a butterfly flitting from place to place, then #2 is more like a bulldog who sinks his teach in and doesn’t let go. There’s nothing wrong with this – if you understand the costs involved and have analyzed the potential benefits. This is the market-building option – and it requires investment, energy and planning. The payoff is that Bob can end up controlling a lucrative market and enjoying a hard-won competitive advantage. Chinese companies tend to avoid this strategy, so Bob will have less of a competitive threat. The downside? Threefold. First, there is no guarantee that all of Bob’s hared work and investment will pay off. It may continue to flop. The second danger is that of opportunity cost. This option is time and energy intensive – not to mention expensive. Bob won’t be able to pursue more than 1 or 2 new opportunities at the same time without stretching himself too thin. But the third possibility is the one we have to watch out for in China – which Bob will educate a market, develop a product and create a need that low-cost Chinese competitors can rush in and exploit. You don’t get points for being first – unless you have a bullet-proof method of building a long-term competitive advantage.

Option 3 is the MBA answer. It sounds great and rational – but carries a hidden downside. What could possibly be wrong with option 3? Well, it has some of the weaknesses of option 2 and some of the weaknesses from option 3. It’s expensive in terms of time and effort – and if you do end up with an outside consultant it’s probably not going to be cheap. Instead of just taking up just your time, it’s monopolizing your entire operation. It only works if you have excellent people on your team – and even then it’s not a sure thing. Option 3 has two possible outcomes – you end up dropping your new product, or you pursue it. If you bail on it, your costs have just gone up dramatically. If you end up pursuing it you have significantly raised the hurdle on profitability. Still, it’s always good to get outside assistance if you need it – but its only help if it helps. Beware of consultants and experts who make mountains out of molehills and then bill you for Everest.

Option 3 carries with it hidden costs – time to find a consultant, time to direct the research effort in-house, the more importance you put on this project, the more “vested” you will feel and the higher the chances of you making an unsound decision. There are times, however, when you have no choice if you want to succeed.

By Admin | Posted in Management | Tagged | Comments (0)

Welcome to the 4th Quarter in China. Read this fast.

October 3, 2008 – 2:14 am

Welcome to the 4th Quarter.  If you’re a service business in China, you’ll probably notice that the people around you are a bit frantic – assuming that you’re not too busy to catch it.  More than at any time before, there’s now a sense of urgency among managers that this quarter is ‘do or die’.  They may be right – but these sudden bursts of activity between holidays can lead to problems and setback.

We’ve found a few minutes to offer a little constructive advice for successful international entrepreneurs and managers in China. Read fast.

Tips for the overscheduled China manager:

  • Stop biting off more than you can chew. Don’t look for business you can’t service properly and maintain. You are getting more leads and referrals now that you’ve built up a name for yourself, but that doesn’t mean you have to chase every one. If a real ‘lay-up’ comes along, go for it. Otherwise pass. ?
  • Identify your core business and 2-3 business areas that you can reasonably expand into. Growth is still vital to your business, but while a new start-up can afford to let the market direct its growth, more established firms have to make sure that everything they do fits into a long term strategy.?
  • Go with what works. Get a system that is effective for you and stick with it. Don’t always be trading up or starting over. Sometimes marketing or management strategies take months to kick in. If you keep starting new policies, strategies and methodologies, both your internal team and outside clients are going to lose faith in a hurry.?
  • Know the value of time. When you were starting your business from scratch or setting up your company’s operation, steep learning curves made even failures and setbacks were valuable experiences. Now your time is simply too valuable. That 2 hour flight to HK is going to eat up close to 6 hours by the time you figure door-to-door travel time. Is it worth it? ?
  • Delegate smart. Sometimes you are better off doing it yourself or paying a lot to get jobs done. A three-thousand rmb/month receptionist can be expected to know where the nearest subway station is - not how to translate a real estate contract.

China still offers more opportunities than a single business can take advantage of – but human resources and infrastructure make US-style delegation very difficult. As you get more successful and well-known, you are going to have to let your ‘B’ opportunities slide. Otherwise you’ll alienate your staff, disappoint clients and find yourself back in the bad-old-days when you had too much time on your hands.

Ed. Note: Our sister site has started a new series for time-challenged China expats called “The No Time To Plan Financial Planner”. 10 short, sharp posts that will help China-based households understand the mechanics and goals of personal financial planning. It’s still a work in progress, but check out the first few installments at www.ChinaExpatFinance.com.

By Admin | Posted in Uncategorized | Comments (0)