Smart China Organization

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.