Monday, August 31, 2009

Are Your China Managers Feeling Stuck?

“The problem is,” said the China country president for a large German industrial company during a recent visit to our Shanghai office, “Workforce localization is a real issue. I would like to return to what I was formerly doing at this company - managing a business. The bottleneck is finding qualified people to replace me. We are working to develop talent but my management feels they need to see the right emotional link to the company along with the right qualifications. They want to feel that the employee understands our corporate culture.”

A seemingly high number of senior expatriate China managers tell us they feel trapped in their current jobs. Many foreign companies have been sending expatriates home to reduce costs. But while mid level managers get sent home, the senior level managers often stay put.

Often the senior-level executives are deeply trusted because they had long careers at their employers for many years before coming to China. These individuals may have bottom-line responsibility for managing business growth here. They may have significant responsibilities for managing customer relationships as well as relationships with government entities and suppliers. Now, because they are so well established in China, these executives feel they are not considered seriously when new senior roles open up at their companies. They complain that they have hit a wall in their careers. They seek our advice about how to get back on an upward career track.

Meanwhile growing Asian companies are in increasingly better positions to compete for talent in China. While Western companies, starved by the financial crisis, put investment projects on hold, many Asian companies still have cash. Executives with management experience in China are intrigued with the possibility of working for a Singaporean or Hong Kong company that is investing in China.

How can Western companies hang on to their most experienced and senior executives?

Re-deploy your executives to drive top line growth: New trends in the China economy are providing opportunities for companies to develop challenging new roles for senior executives to transition into roles where their China experience is crucial and valuable.

Companies like Black & Decker are starting to realize that now is the time to drive revenues in China. This requires managers with knowledge of strategic market development, product commercialization, and marketing. “Our hand tools are too expensive and the hand grips are too large for the China consumer,” said Qin Zou, Vice President, Asia Operations at Black and Decker, “Our management is now debating how much investment Black and Decker should make in the China market.”

Senior managers with knowledge of Asia are highly qualified to drive your corporate strategies. This may be the opportunity to move away from geographic assignments towards corporate development assignments that compliment your company’s strategic product and regional growth initiatives.

Succession Planning: The slowdown in China’s torrid growth is benefitting employers by improving employee retention. The economic slowdown means that people are less likely to be hired away. Employers are having more success retaining and developing their new hires. This gives them more breathing room to develop meaningful succession plans for China that include long term employee development and the opportunity to localize their management organizations.

GE has led the way in making succession planning an integral part of its corporate culture. CJ Chang, Vice President Human Resources at GE, said that it’s important to take a long term view when conducting succession planning. “It’s a parallel process,” Ms. Chang said, “You need to plan your human resources to align to 3 – 5 year growth objectives. You also need to look at where the talent is. Who can do which jobs in which countries? The second part of the process is to ask who can step into jobs that become open.”

Mentoring: Finding ways on an ongoing basis for corporate management to get to know the local management will help build trust. A 2008 McKinsey study noted that companies in China must tailor their policies and programs to the mind-set of a highly willing but often relatively low-skilled talent pool that nonetheless expects a fast track to senior levels and substantial responsibility.

Ideas to help you develop your China leadership can include:

  • Clear development paths that may include a series of intermediate levels to build confidence and commitment.

  • Work assignments in the headquarters country.

  • Formal training to develop technical, teambuilding and leadership skills.

  • Mentoring to shape employee growth and development.

  • Coaching/feedback on specific outcomes or set of problems

Western companies may need to re-think how they are handling their most senior experienced managers is Asia because those managers may feel trapped in their roles as country managers. Giving your senior China executives the opportunity to lead new corporate strategic initiatives, tailoring a China-specific succession plan and developing ways for your local China employees to develop trusting relationships with company leaders are three ways that companies can free up the talent bottleneck.

Salary Benchmarking: China Trends -

Recently the Chinese government published a statistic claiming that wages had risen 13% in the last quarter. This number is at odds with other reports which say that wages may have dropped as much as 40% in the first half. It all depends on how you measure it. Salaries for managers at DHR International client companies appear to be flat and we are not seeing any noticeable acceleration despite a pickup in economic growth and hiring.

One interesting trend is that senior managers are increasingly open to considering reduced compensation packages for more challenging roles and the opportunity to stay in China. Managers who were originally from the region may prefer to remain close to their extended families. This might mean that they are willing to forgo benefits like housing and hardship allowances if they can keep their Western level salaries and bonuses.

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