Editor’s note: This was contributed by Elliott Zaagman, a trainer, coach, and change management consultant who specializes in aiding Chinese companies as they globalize. He uses a comprehensive 4-dimensional model that enables organizations to take a holistic approach to global readiness, from the inside out. To contact him, check him out on LinkedIn, or scan the QR code at the bottom to connect with him on WeChat.
This is an exciting and fascinating time to be in China, especially in the internet and tech space. As the technical capabilities of internet giants in Beijing, Hangzhou, and Shenzhen now rival those of Silicon Valley’s major names, Chinese firms are playing less of a game of catch-up with the West, and are increasingly battling to see who can innovate faster. Many of these firms are also making substantial inroads into foreign markets, backed by strong government support through initiatives like the Belt and Road. Amidst these trends, the very foundations of businesses and economies in China and all over the world are being transformed through the advent of big data, analytics, and AI.
I believe one central competency will be a powerful determining factor in deciding which Chinese companies succeed and which ones fail: how they manage their people. However, at this point, it is a widespread opinion throughout the HR field that while financial and technological capabilities of Chinese internet and tech firms have grown rapidly over the past decade, progress in people management has struggled to keep pace.
“Chinese internet companies are developing very quickly, and it is very difficult to find creative and appropriate people management solutions to meet these companies’ needs,” a Chinese HR manager told me when conducting research for this piece.
China’s primary strength has long been its people. Whether or not that will continue to be the case hinges on how those people are utilized and empowered.
I believe there are three crucial areas of people management will make or break the success of Chinese businesses over the next decade: shifting from command and control to innovation and collaboration, managing globalization, and incorporating and using people data and analytics.
1. From command and control to innovation and collaboration
For much of the past few decades, blueprints for many aspects of business and economic development in China could be obtained by observing effective practices in more developed overseas markets. Models, practices, and strategies could be taken and implemented by experts and leaders in China. For many challenges, both the problems and the solutions were clear, and it was the job of leaders and managers to make their staff execute those solutions.
Now that many Chinese companies have succeeded to the point that they are now on the cutting edge of their fields, the challenges they face look very different. In many cases, the nature of the problems they face is not even entirely known, much less the solutions. In these cases, it is the role of leaders and managers not to make their people do something, but to inspire them to think in a different way. This approach to leadership is what Harvard Kennedy School professor Ronald Heifetz calls “Adaptive Leadership.”
This shift also necessitates entirely different psychological processes and systems of motivation than are more conventionally used. The rapidly expanding field of positive psychology is showing that while chronic exposure to high levels of stress deactivates the brain’s ability to think creatively, providing individuals with a sense of purpose, empowerment and an environment where they feel trusted maximizes productivity, collaboration, and innovation.
The stereotypical Silicon Valley office with bean bag chairs, bring-your-dog-to-work policies, and weekly town hall meetings is like this for a reason. The most innovative companies know that in order for their employees to think differently about the products they develop, management must think differently about their people. The most successful and innovative Chinese companies of the future will be the ones who can do this as well.
2. Globalization: Attracting, retaining, and empowering a diverse and talented workforce
Globalizing a company culture goes far beyond using more English at work, opening overseas offices, and hiring foreign talent, but requires a fundamental shift in the organization’s DNA. As former IMD business school professor and organizational guru Daniel Denison once told me, “When organizations successfully globalize, the biggest changes occur at the headquarters.”
This requires exhibiting cultural values that resonate with foreign staff, implementing logical, straightforward management systems, developing global executives with flexible leadership styles, and localizing to meet the needs of overseas markets.
While large Chinese firms have had success at attracting high-profile foreign talent in recent years, retention has proved to be a much bigger challenge.
“In most Chinese tech companies, the business leaders focus on recruitment rather than retention and people development…. They tend to exaggerate their company’s benefits when attracting talent, but have a very hard time keeping their promises,” says one Beijing-based HR professional who has spent time at Chinese internet firms as well as for a big-4 HR consulting firm.
When managing foreign talent, the most successful Chinese companies will be able to go beyond simply hiring talent from overseas, but integrating them into their work cultures and decision-making.
“Attracting [foreign staff] is easier now for [Chinese] companies as they have high growth potential and clear opportunities, but the organization must be ready to absorb them and accept that they may challenge some of the cultural norms,” writes Colin Giles, Executive Vice President of Huawei’s Consumer Business Group, in a recent piece published to Linkedin. “Chinese executives need to understand the challenge of true inclusion and proactively work to create an environment for integration in order to embrace the changes they need to make to become truly global.”
3. People Data and Analytics
Data and analytics seem to be transforming every aspect of the way business are done these days. For smart organizations, that includes HR and people management. No one does this more enthusiastically and effectively than Google, who employs a people analytics team of PhDs, technologists, and ex-consultants estimated to number in the dozens.
“All people decisions at Google should be based on data and analytics,” Prasad Setty, their VP of People Analytics, has famously said.
This trend is quickly becoming mainstream among the world’s biggest and most prominent companies. According to Deloitte’s 2017 Global Human Capital Trends report, 71 percent of companies surveyed now consider people analytics to be a high priority. For Chinese companies trying to compete globally, those who do not utilize these tools place themselves at a serious disadvantage.
Shifting to transparent data-based systems is also highly effective not just in increasing efficiency, but in creating an inclusive global workforce and culture. Data provides clear, universal benchmarks by which to make decisions and analyze performance. The fewer decisions that are made based on data, the higher likelihood there is that those decisions will be made based on bias, assumptions, or personal relationships, and when that happens, cultural rifts are likely to arise.
These challenges are not unique to Chinese tech companies, but Chinese tech companies will struggle with them and solve them in uniquely Chinese ways. I personally will be keeping an eye out to see what innovative solutions Chinese organizations implement to overcome them and gain a competitive advantage in the coming years.