Risk Reduction Starts With Internal Negotiation
If you are not training your senior managers and mid-level supervisors to negotiate relationships internally, you are exposing your China operation to unnecessary risk. To quote from the book – The Fragile Bridge: “Conflict in Chinese business comes on without notice. By the time you know something is wrong, it’s probably too late to fix the situation…”
Success in China business is all about HR.
Managers in the West don’t generally consider HR something that has to be negotiated. Senior managers in the US have gotten used to high levels of unemployment, having multiple qualified applicants for every job and being surrounded by experienced managers living in mortal fear of losing their position. In China the situation is different. If you are looking to hire unskilled factory hands in Chengdu or inexperienced grads in Shanghai, you still have the pick of the litter. But experienced managers who can function in an international business are in short supply – and they know it. You’ll spend more time, money and effort in China negotiating for things that aren’t even up for discussion back home.
Now as always, success in China is all about the HR. Whether you are local Chinese, a front line manager for an international MNC or a partner in a JV – HR negotiation is something you don’t want to get wrong in China.
HR Traps that Western Managers Face in China
You can try some of these at home – but don’t try them in China. Here are the biggest problems to avoid.
1. Outsourcing the entire HR function. Don’t fall into the trap of delegating the entire HR process. HR is one of the first functions that western managers try pass off to local experts. While you definitely can and should have a local supporting and executing your day-to-day HR issues, make sure you stay on top of the overall HR process. HR is a strategic function in China — not an operational detail. You need a high-level policy for obtaining, training and retaining top talent. If you try delegating the whole function you will end up ceding too much control of your operation. As we will see, the void will quickly be filled by people who may not have your interests at heart.
2. Beware the Phantom Menace. Remember the Chip Starnes headlines from a few months ago? His team was more loyal to someone with their own agenda than they were to him or the company. China is famous for networks and webs of guanxi connections — unfortunately that can often work against you. Informal leaders often emerge, and if you are the last to know about them then they will undermine your leadership and destroy your company. You may not be held hostage in your own office – but you will pay for this mistake in some way.
3. Playing by US rules on a Chinese court. Everything about China management is different — and you should be particularly worried when they appear similar. That is certainly the case with HR. The job titles, degrees, functions and even resumes will appear quite familiar — but it’s an illusion. If you use US best practices to manage Chinese white collar workers, you will spend all of your time and money replacing team members who quit after 18 months. Western workers want to do their jobs, get paid and go home. Chinese workers want to be part of an elaborate extended family, get paid, and go out to eat and drink. In Chinese management there is always emotional content and an interpersonal back-story in the making.
4. Don’t believe the hype about Chinese labor being cheap, hard-working and subservient. If you want to hire unskilled laborers in the countryside or inexperienced graduates in Shanghai, you can still find some bargains. Otherwise, China is not a particularly cheap place to hire. In fact, if you want internationally educated, experienced middle managers or finance people, you can expect to pay a premium. And it’s not just base salary that will cost you. Once you factor in benefits, bonuses, insurance and government required programs and holidays, you’ll see why HR is such a big concern. It’s expensive to hire, expensive to train and expensive to hold on to the people you want to keep.
5. Not asking questions (the right way, in time). In the West your expensive, newly minted MBA knows everything about everything and is eager to let you know just how smart he is at every conceivable opportunity. In China that’s simply not standard operating procedure. It is your job to draw them out and persuade them to share — even if the matter at hand is their job and they are recognized experts in the field. Be prepared to spend some time playing a modified version of 20 questions — but you’ll have to ask the same questions 3 or 4 times and be ready to disregard the first few tries.
All risk in China starts as a relationship issue. You either trusted someone you shouldn’t have or didn’t trust someone you should have. In China, all negotiation is personal.
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