“The environment in which companies are moving today is getting more complex, unpredictable and fast. In this new complexity human resources will become, more and more, a strategic asset of the company: Personal traits can make the difference; personal uniqueness can make the difference. In order to be ready to navigate this complexity, it will be necessary to rethink the priorities inside the company and the company organization.
Applying Darwin’s Theory of Evolution: those who adapt to the environment and evolve will survive. The increasing global interaction made accessible through telecommunication technologies, is already causing some conflicts inside the most ancient organizations. Employees of all ages holding a stable position in an organization since a long time could put the company in a dangerous position. Resistance to change is a heavy burden for a company that needs to be agile and flexible to adapt to an uncertain and volatile environment.
In this sense, I would like to make some considerations about the recent trend of reducing the number of expats in China. It is happening both by relocating the head quarters in other Asian countries, leaving the leadership of the China unit to local talent and just by substituting the expat management with local talent; as well by choosing a young foreign management with little experience but high level of Chinese. These options can bring evident benefits in the short term – especially in term of costs. In the long term, however, the mass of cumulated costs – and where they come from – can be what actually makes the difference on your China strategy success or failure.
Rising labor cost for the hiring and retention of Chinese talent, which more and more is looking for learning and career opportunities, together with the rising living costs and new social insurance law that affects the package for the expats; not last, the tightening on the rules related to residence Visas for the foreign talent, have caused an important number of expats to leave. This situation is contributed by the concerns of dated expats about environment pollution, food safety and Internet access.
Stated that, there is not such a person who is identical to the other, one of the main element that contribute to our individuality and uniqueness is culture. Not to mention about the education system of each culture. Professor Geert Hoftedes defines culture as “the collective programming of the mind that distinguishes the members of one category of people from another”. Following this definition Richard D. Lewis developed his model for Personal Cultural Profile to be identified between these main three: linear-active (Anglo-Saxon and northern European), multi-active (Latin, Arabian and African) and reactive (Asian). Some cultures, or cultural profiles, can feel closer to each other in the communication patterns while others will have symmetrically opposite paradigms that can easily lead to misunderstanding and conflicts.
It is not my purpose here to make a resume of this insightful analysis by Richard D. Lewis, detailed in its book “When Cultures Collide: Leading across Cultures”. I would like instead to refer to this interesting point of view, using my own personal experience as an Italian born, employed first in the Spanish unit of a French multinational firm and as an expat and, later, entrepreneur in China. When facing challenges in my first employment I was told to “use my common sense”; which I was doing, but in some critical cases, was never the same of my boss. On an inter-cultural perspective, there is nothing less common than common sense since it is based on personal experience which, inevitably, is bounded by the cultural environment where the experience has happened.
Keeping the above in mind, is it really cheaper in the long terms to hire a local Chinese manager, probably with overseas studies? My answer will be: it depends. It depends on many factors since this Chinese talent, especially for SMEs which are the majority of European businesses, are expensive to keep and not easy to satisfy in their carrier ambitions. One of the main evaluations the foreign investor should make is: is it my structure in the HQ international-minded enough to accept, interact and communicate with a Chinese manager? If the answer is yes, the choice of a Chinese manager versus a foreign manager can be a matter of balance of priorities on the candidate itself. If the answer is not, do not doubt a second that you need an expat to run your China unit.
The highest difficulty an Expat manager has in China, especially if experienced in leading a Chinese team, it is actually to interact with the back office employees of his head quarters: accountants, export related staff, administration and, in the worst of cases, some management that hasn’t experienced working with other country colleagues and can get stressed when seeing some Chinese characters on a paper, forgets about time difference or provides technical drawings in a language which is not English nor Chinese.
How much time waste and how many potential mistakes can such a kind of company culture provoke with a Chinese management left alone leading its China unit? Time and mistakes leads obviously to increase in costs or in opportunities losses since “lead time” to complete tasks or actions significantly increases. Not to mention the effects on the company reputation in that market and its industry network. Expats can also bring fresh air at home, provided that the management is change-oriented, not reluctant to change.
In an unpredictable and volatile world such ours is getting now, what do you think will help the company to survive? In a diversified and complex world, diversity and complexity within the corporation should be welcomed, not avoided. Wouldn’t it be more profitable in a long term to make our whole company international, more colorful, than to reduce complexity? This can go in two senses: foreign management – or team – in China and internationally trained team in HQ. Individual preferences will make those resistant to change looking for a new environment that allows them to avoid change.
Your company will be more similar to the environment where it is moving into and will have access to more resources to find creative answers to new and unpredicted situations. A mixed and diversified team increases the openness to innovation and change providing more options through different ideas and focal angles of one problem as well as assures overall balance.
When it comes to brain storming, ideas, how to face the worldwide competition, different national culture will deal with the issue under a different perspective or goal. In the same way, each society has its own core value and belief that, inevitably will affect the leadership model and culture of the organization. Global interactions and cross-cultural exchanges are becoming a “new normal”. Having an international team can become a differentiating factor inside the organization increasing agility and broadening the opportunities.
A company as a social institution is, in the end, a small society. When composing such a team or in case of sending an expat to China as well as interacting with a Chinese manager, we should never forget that each culture has its own models and, in order to improve communication, interaction and, in the end, the company budget, we must know “the world of the others” that will participate to make our organization human environment.
Francis Fukuyama’s concept of “trust society” can be extended to the organization. The way in which the organization structures itself, appoints its leaders, define and provides clear systems to share and access the information at all level, can promote transparency and trust. The degree of knowledge within the organization about its human resources interaction, integration and trust between colleagues and toward the whole organization itself, can make the internationalization of that company part of its own identity. The alternative is a painful road that many times ends up in failure“.
Written by Rosanna Terminio.
If you wish to be advised on my next posts and to receive additional material and updates soon, please leave your email-address here.
FREE EXCLUSIVE REPORT
Discover the Secret Data about the Price War in the CYLINDER BUSINESS.
If you have any comments, input or observations, feel free to share them here. I’d be happy to know your thoughts.