China HR: Your biggest challenge may come from HQ.

August 26, 2008 – 2:01 am

If you are involved with HR or management in China as part of a MNC – or multinational corporation – then your biggest HR challenge is unlikely to be recruiting, training or compensation.  Sure, you’ll have the same problems there as anyone else.  But your biggest HR issue will be your own HQ and the global head of HR. 

 

·        Dealing with HQ is your biggest challenge if you are an MNC  Get used to it.  China HR managers who try to resist the HQ find that they do all the heavy lifting in the first months and then lose out on the big promotions.  The head of HR in NY, London or Singapore isn’t going away and they aren’t going to forget that you’re there.  Deal with them early and often.

 

·        Get guanxi out of your conversation.  Completely.  China has been on the HR radar of 10 years, and you aren’t going to score points trying to pass off half-truths and tired buzzwords.  Big corporations who have been in China for 5 years or more have already been burned on the guanxi hires, the special Chinese methods of team-building and opaque reporting lines.  They know what works for them and will pay you lots and lots of money if you can make it work here. 

 

·        Discuss metrics early.  They like productivity or per-person spends.  You like measuring (and increasing) months on the job.  Get rolling on this early, because it’s going to take a while to convince them that your priorities will work here. 

 

·        It’s hard everywhere.  Don’t start the conversation with phrases like, “you have no idea how bad the situation is here”.  They may – or they may not care.  Things are tough everywhere.  Better to begin with a softer opening, like, “which is tougher for you in your office, retaining or recruiting?”

 

·        Chinese HR has a reputation for being secretive and cliquish.  Be ready to volunteer information at the drop of a hat, and then follow up.  Get off on the wrong foot here and you’ll regret it for a long time.  Being well regarded by your peers only helps if you are looking for a new job – and unless that is your short-term goal than your relationship with HQ will be more productive and profitable. 

By admin | Posted in Management | Comments (0)

The Train-Retain Dilemma – How do you hold on to your best human assets?

August 25, 2008 – 6:01 pm

Every HR manager knows that keeping your best employees is a major challenge.  That bright but inexperienced college graduate you hired 18 months ago has suddenly become a highly skilled, well trained young executive.  You have spent lots of time and money recruiting, training and developing his abilities, and now he is finally starting to contribute to the organization’s bottom line profits.  So you are disappointed and a little upset when he comes in an announces that he is leaving your firm to go work for the competition – at double the salary that you are paying him!

What can you do?  Get into a bidding war with the other company?  Well, there are several problems with that.  You know that your bosses are going to object to the idea, because once you start giving raises it is like an announcement to every employee in the company that the only way to get any respect is to find another job.  And who is most likely to get a new offer?  Your top people, of course.  The other big drawback to “throwing money at the problem” is that it only works for a short time.  After that, your rising star thinks he is worth even more!  If you are willing to pay him 10,000, then he thinks he must be worth 20,000.  And we don’t even have to go into what will happen to company morale and team-spirit.  You want your managers to compete with the other firms in your industry – not with the other executives in their department.

What can you do?  Top multinationals have had great success setting up Management Development Programs.  These are formal (or semi-formal) plans for developing future generations of your company’s top managers.  They combine training, career counseling, promotions and the establishment of structured “career paths”.  In other words, you are telling your bright young managers that they have a good future with your company.  They can move up without moving out (to a competing firm). 

The good news?  MD programs are inexpensive, will retain your best people, and contribute to the stability of your company’s management team.  It also gives the HR department a great bargaining chip – you can offer your best people a win-win solution.  They stay on the team for slightly less money than they could earn elsewhere in exchange for greater security and a better chance at moving up the ladder.

The bad news?  MD programs require a lot of planning, organization and commitment from top management.

What is a Management Development Program?
 An MD is a structured approach to establishing clear career paths within your company.  A career path is like a ladder.  It works for every department, but let’s look at a typical example from the Sales Department.   Mr. X enters the company as a junior salesman, and then gets promoted to a full salesman, then to sales manager, then assistant VP of sales, VP, Sr. VP of Marketing, and so on.  We all know that there aren’t enough top positions to go around – and that’s one of the advantages.  You can improve performance by encouraging a little healthy internal competition (for POSITIONS – not SALARY) 

 The key to a successful MD is STRUCTURE.  You have to tell your staff that the program exists, but only top performers are eligible.  When you show a young, ambitious recruit that there is a roadmap to the top and that it is up to him to make the most of the opportunity, it will give him an incentive to stay with the company and improve his performance.

 The components of a MD program are training, counseling, and “soft skills”.  Training is self explanatory – it could be job-related training and seminars, but it may also include other types of programs like off-site language training, trips to seminars and leadership conferences and other “perks” or benefits that not every employee has access to. 
Career counseling is often overlooked, but it can be a vital component of a development program.  Members of the MD program meet with managers and HR staff to discuss how the young employee can best succeed.  You discuss skills, job performance, special tasks, new responsibilities and his individual goals.  It is important that all parties involved in the counseling sessions acknowledge that this is part of a structured program that will lead to a promotion.  The “you’ll get a raise when you start performing and until then you are lucky to even have a job…” attitude is a sure-fire way to get your best young managers to leave the company.  It is better to use a “carrot and stick” or incentive program.  Use training and promotions as incentives to improve performance, and then let your workers know about your plan in the career counseling sessions.

Management Development programs also introduce young managers to “soft skills” which are more difficult to teach.  Soft skills include areas like communications, problem solving, team-building and leadership.  Most MNCs find that the best way for young managers to improve these skills is through delegation, discussion and socialization.  By socialization, we mean that top managers and the younger members of the team take part in social events and outings such as trips, dinners, and formal team-building exercises.  The goal is not just to teach the young managers specific skills, but to develop the “whole person” into a member of the team.  This is where the older managers teach their younger counterparts about the company’s culture, history and best practices.  Not everyone is included in these outings, and those new managers included in the management development program feel privilege and status as a result.

Finally, Management Development programs will lead to promotions, raises and more responsibility.  That is, of course, the goal and purpose of an MD – to train and prepare the next generation of company leaders. 

Companies without this kind of program sometimes have a hard time identifying suitable management candidates from within the organization, and are often forced to hire from the outside.  Although it is sometimes necessary to bring in skills and talent that the company lacks, if you never promote young managers it tends to harm morale and make your staff feel that the only way to move up is to move out to another company.

By admin | Posted in Retention, Training | Comments (0)

China business and training ROI

August 22, 2008 – 11:33 pm

Smart China managers who are looking for the ROI from the their training program may be looking in the wrong place.  Instead of looking for increased sales, maybe the ROI metric in China should be an HR retention number.  Maybe we should measure training effectiveness in China through months on the job instead of money earned - at least in the short term.

The average length of employment in China is still around 18 months.  A training budget can help extend that in the first 2 years — long before many of the bottom-line benefits of training show up.  

China business should view training and profitability through 3 lenses:  

  • 1) Short term skills & operational efficiency (ie: orientation training, software or systems training).  
  • 2)  Employee retention/morale  (extreme example:  paying for a 3 year EMBA course - but regular outside training course can also have a positive, predictable effect).  
  • 3) Long term development, leadership and soft skills.
It’s still a huge challenge to try to put specific numbers on expected returns, but taking this approach China HR and budgeters have a new metric to look at when it comes to training:  months spent on the job.  
By admin | Posted in Management, Training | Comments (1)

Smart China Staffing: More and Better are not the same Start at the Top

August 12, 2008 – 4:44 pm

Staffing used to be a difficult but relatively simple problem in China – fill seats with the highest quality people available.  Standards were uniformly low, and performance ratings were more about attitude and language ability than accomplishments or transactions.  ‘In the kingdom of the blind…’, and all that.

As the new year unfolds, your China HR challenges are far more complex.  Shanghai and other Chinese cities are simply too expensive – and too important – to continue slotting bodies into chairs and hoping for the best. 
 

1) Team dynamics.
 You have 6 sales people with and average of 3 years experience, and a monthly pay of 7,000 each.  If you’re new hire is a high-potential grad with no experience and a price-tag of 9,000/month, you are going to SERIOUSLY alienate your existing salespeople.  Come June, instead of having a 7 person team, you are down to 4 as your experienced people jump ship and go to the competition.

2)  Less can be more. 
A small, well trained team can bring in and keep much more business than a mob of untrained, poorly organized new grads.  But that may mean changing your approach to training, management and compensation.  You also have to decide if your organization can transition smoothly to a new leaner approach – or if you will have to go through a potentially jarring restructuring process.

3)  Arithmetic vs. Exponential growth.   
When does 4 = 7?  When you hire 4 inexperienced salesmen, and then have to find a new sales supervisor, an assistant and a customer service rep to make the new hires effective.  This is a particularly significant problem in China, where big, bureaucratic staffs are the norm. 

4)   Train and manage more closely for better performance. 
Develop existing staffers into managers who can coach incoming people.  Develop your systems BEFORE you start hiring, and go back to the basics of HR with better job descriptions, training plans and development resources.  Develop in-house train-the-trainer and new-hire orientation programs to make sure that.  Unless you have an effective feedback and performance review system, it simply won’t work – so start there!

5)  Management structures change over time.
 Don’t make another hiring decision before plotting a new org chart.  Who will train and supervise the new hires?  How many people are your existing supervisors already managing?  If your most experienced salesman is responsible for training and managing more than 3 junior salespeople, then he’s going to have to choice between sales activities and management activities.  Have you coached him on your priorities, or are you expecting him to do it all at 110% efficiency?  What will you do when HE jumps ship?  
Many international organizations in China are over the hump when it comes to operations and distribution, but still struggling with structural issues in the sales, marketing and management departments.  There was a time in China when bodies were cheap, expectations low and overseas HQs just wanted to hear that a China branch was on the ground.  Fast forward to NOW and suddenly your CEO wants profits, your competition is breathing down your neck – and suddenly the payroll component of your annual budget is looking a little bloated. 

Where do you start?  A pricey CFO or a sharp SVP of Marketing with overseas experience?  Maybe, but this is a great time to review your own HR department.   They can be heroes of lean, smart organizational development – or the culprits behind a fat, disorganized, demotivated staffing problem. 

Make sure your HR person is supporting your efforts to run a lean, smart team.  Start by working with them to develop good goals.  Include measurement systems that will identify—- and a compensation plan that encourages smart performance from all parts of your company – INCLUDING HR.

By admin | Posted in Management, Training | Comments Off

Smart China Teams are no accident

August 10, 2008 – 12:01 am

In an ideal world, your experienced China hands and talented locals are freely volunteering their time and effort to younger team members to help them become successful.  This world, as we know by now, is far from ideal.  Your bright, shiny new hires may be getting great information and knowledge from their colleagues, or they may be drowning in blather. 

Learning organizations and smarter teams requires a persistent, systematic approach to communications and transparency.  It starts with you.

 

  • Orientation Program.  Here’s a novel suggestion for senior China managers – YOU redesign your company’s orientation training program (or design it for the first time if you don’t have one).  Just the table of contents or the agenda.  Decide on the corporate culture, the goals, and the mission of the company.  What is the common objective for your entire team?  What are the standards?  What makes your company different?  Every new hire should go through a systematic orientation program that teaches them the basic rules and expectations of their new company.

 

  • Critical Success Factors.  If you industry has 5 big buyers and a handful of smaller ones, your company’s CSF is going to be dealing with those 5 giants.  If your industry has thousands of small buyers, your CSF is going to be about finding and filtering leads.  Make sure your new hires AND your veterans all understand – and agree – about how your company views success.  Everyone on your team must have the same goals and agree to the same basic set of rules and standards. 

 

  • Culture of Transparency.  This starts with you.  Secretive, suspicious people make lousy colleagues and trainers.  If you want to build smarter team, you need to encourage an open, trusting atmosphere.  You may not know it, but you set the tone here.  If you are secretive or private about your plans for the company or deals you are working on, then your team will judge that to be the norm.   A great place to tackle this issue is at regular sales meetings.  Get very specific in your discussions about the past week – who they spoke to at which company, where, for how long.  Don’t make it an interrogation, but drill down to real specifics.  If your team is keeping secrets from you, they are probably doing the same with others.

 

  • Lots of talking doesn’t mean lots of teaching.  They’re in a big room speaking Shanghai-ese all day.  You want to believe they are discussing the finer points of customer service or the latest industry development.  You fear they are saying unpleasant things about you.  It’s a tough call to make, but there’s a very real chance that they are NOT engaged in high-quality coaching and mentoring.  Staff development is one area where things are best left to themselves.  You have to be proactive and persistent when it comes to making sure that new hires are being properly trained and developed.

 

Smarter teams are a great defense against high turnover and rising compensation packages.  If everyone on your team shares knowledge and information, it raises the quality of your team and makes your earnings more consistent.

By admin | Posted in Development, Management, Training | Comments (0)

Manpower Planning and Compensation Plans for China

August 9, 2008 – 11:59 pm

Chinese HR managers will face a tougher situation no matter what happens to the Chinese economy.  If the Chinese economy keeps booming, then they are going to face a continuing wage spiral and shortages of key middle-managers.  If the economy slows down then they are going to be pressured to cut costs and hold on to their most effective workers.

Managers in China truly are between a rock and a hard place.  On the one hand, there is more and more pressure on the HR department to fill middle-management and senior professional level vacancies and deal with their companies’ rapid growth.  On the other hand, they are seeing their budget plans get destroyed by ever-rising salary demands from potential employees.  HR managers are caught in an impossible situation – they are being asked to accomplish more and more with dwindling resources.

 The Bad news –

China’s attrition rate among managers is among the highest in the world.  Job-hopping is rampant, and salaries are escalating beyond reason.  Even mediocre managers have learned that the fastest way to a big raise is to quit their jobs and head for greener pastures.  The “50% Bump”, or raise in salary, may be more hype then reality – but it has definitely become every Shanghai manager’s favorite misconception.

 The Worse news –

The trend shows no sign of abating any time soon.  Using HK salaries as a benchmark, it used to be a safe ‘rule of thumb’ to offer a Shanghai manager 30% of his HK counterpart’s salary.  That will get you nothing but a disdainful sneer these days.  Now the general negotiation seems to start at 50% and salaries for many upper-level managerial posts are approaching 1:1 with HK.   As long as new MNCs keep piling into Shanghai, the pressure on wages is going to continue.

 

The even WORSE news-

Higher salaries are NOT necessarily resulting in higher levels of skills or professionalism.  Yes, many managers with 3 or 4 years of experience are outstanding performers.  But the headlong rush to grow departments and expand companies means that many sub-par managers have been swept along and promoted as a result of just showing up for work most days during the last 6 months.  BUT your corporate HR offices have noted that your salary budgets are approaching other developed markets like HK, Taipei and Singapore, and now the big bosses at your company are starting to expect similar levels of productivity.  In other words, your corporate HQ will only be willing to pay top renmenbi for top-level performance.  That’s when YOUR office starts feeling the heat.

 What can the Chinese HR manager do?

           In the short term, your only option is to continue shelling out big RMB for whatever overpaid MBA you can get to fill the immediate vacancies.   The company is growing, and present managers are leaving at an average rate of 16% annually.  That means it’s a very competitive market, and your only option in the short term is pay market rates.  You may have seen the job-hopping activity at your company slow down in recent weeks, but that is just the calm before the storm.  After Chinese New Year bonuses get paid, you can expect to see the resumes flying and the managerial chairs emptying. 

            Looking out to the future you should start 2006 with a strong training and management development program that will insure you an adequate supply of home-grown managerial talent in the years to come.  That’s not a quick process, however, and in meantime you have to start CONTROLING EXPECTATIONS.  See to it that your bosses understand the situation, and make sure you have some constructive, proactive ideas for dealing with it.  Here are three tried & true HR strategies for dealing with a tough talent market.

 

1) Manpower plans.

That expat manager running your company is going to notice that salaries have gone up by 50 – 100% in the last 3 years.  That’s precisely the kind thing he gets paid to notice. 

 Here’s the situation:  There’s an excellent chance that he suspects that you are to blame for the hefty increase in salaries.   But, if you make the right kind of proactive moves, he will blame the young overpaid, job-hopping MBAs. 

 Over the years, HR managers have developed a special technique for telling senior managers that burgeoning salary budgets are not their fault.  It’s called the Manpower Plan.

A manpower plan indicates what kind and what quantity of positions you will need to fill over the next 3 years.  Difficult?  Oh, hell yeah.  But if you put the salary requirements down in black and white, you stand a much better chance of getting support from your bosses when you start offering mediocre managers HK level salaries in 2006.

Think of the manpower plan as a formal document that says, “Hey, it’s not MY fault.  I told you the market prices were going up.”

 2) Have a Plan B.

   Build your own management team.  You don’t always have to buy experienced managers in the marketplace.  You can build your own from scratch.  Two successful methods are:

  1. Management Development Plans
  2. Training Programs

The great thing about MD and Training programs are, they buy you a little time (2-4 years for MD, a bit less for Training programs),  and actually expand your range of responsibilities (i.e.: POWER and BUDGET).   Doesn’t that mean more work?  Not necessarily.  Try including a few new HR assistants in the Manpower Plan.  Ah?  Yeah – that’s thinking like a manager!

  

3) Performance Based Pay and Incentive Plans

  If you’re paying HK salaries, someone is going to expect HK level performance.  When it comes to managers, you will have a lot more success using the carrot of financial reward, rather than the stick of threatened termination.  Two effective ways of bribing your managers to perform well are Bonuses and Variable Pay programs.

 

Bonuses.

Bonuses used to be a reward for a job well done, or recognition of special effort.  Nowadays, bonuses are a simple, effective way to control your attrition rate.  In other words, you only get the big bucks if you hang around until next year.  Since most bonuses aren’t negotiated in advance it gives you and your managers a little more control over quality.

           

Variable Pay for Specific performance.

The bad news – it’s very hard to figure out what the desired performance should be.  (Everyone wants “good” employees, but what does that really mean?  High sales, new deals, cost reduction?)   Variable pay and financial incentives only work if the criteria for success are very specific and measurable.  These incentive programs fit in well with the appraisal system that you probably already have in place.

 The Good news – if you are the first to suggest the idea, you can try to push the responsibility to determine the criteria and standards onto the line managers.  Your corporate bosses are happy that you are linking performance to pay, and your line managers are doing your work for you.  

By admin | Posted in Development, Management, Training | Comments Off

What is ‘Managerial Thinking’?

July 26, 2008 – 12:51 am

“Managerial Thinking” is one of those fashionable terms we hear a lot, but sometimes the meaning isn’t really clear. What is “managerial thinking”, and what does it mean to China’s professional managers?

 

We defines managerial thinking as “being willing to take responsibility for EVERYTHING that happens in your department or company”. When we say “take responsibility”, we don’t mean that factors like the weather and the economy are your FAULT.  But you are responsible for having a PLAN for dealing with EVERY possibility (or contingency).

 

If your company uses petroleum, then you must have a plan for how to deal with a price rise or a shortage. If your department has only one or two main clients, you have to be prepared in case those clients disappear.

 

Managerial thinking has two main requirements.

  1. You must know what factors are critical to your goals, and
  2. You must have alternatives prepared.

Put another way: Managerial Thinking means ….’ALWAYS HAVE A PLAN B!’

 

By admin | Posted in Development, Management, Motivation, Training | Comments (0)