Home | Subscribe | Index
Special Reports | Order past issues
Table of Contents
|
Home | Subscribe | Index Special Reports | Order past issues Table of Contents |
When establishing training programs, companies in China have a number of options
A.J. Frazer
Despite China's impressive economic opportunities, the lack of adequately trained local employees continues to prevent many Western corporations from reaching their full growth potential. Chinese universities produce fewer than 1,000 MBA graduates per year, though many senior Western managers in China estimate that 20,000 are needed to meet the growing demand of businesses.
Even after years of steady improvement in the skill levels of Chinese job seekers, human resource management in China is still a developing science. Companies need Chinese employees with technical skills who understand Western business. The shortage of qualified Chinese professionals needed to fill positions ranging from support staff to senior management forces corporations to rely on expatriate Western managers who are expensive, hard to recruit, and less effective in China than in their home countries. Realizing that continued growth entails less dependence on expatriate managers, many Western corporations are attempting to increase the reliance on and effectiveness of Chinese managers (see The CBR, May-June 1997, p.30). But because it is no longer possible to recruit enough Chinese managers, either through headhunters or other Asian offices, long-term success in China requires a well-crafted strategy to develop local professionals from within the organization for future management roles.
When building a staff development strategy in China, Western corporations must start with the underlying characteristics of the PRC workforce, particularly the fact that the skills necessary to be successful in a Chinese firm are often at odds with what it takes to be successful in a Western-run company. In Chinese business culture, initiative is associated with company leaders, employees must avoid mistakes at all cost, and relationships are crucial to completing a job. But these principles tend to conflict with those of Western companies. Young Chinese professionals who betray these unwritten rules quickly alienate themselves from their peers and superiors. For large Western companies with Chinese staff ranging from young to old and from laborer to executive, this cultural dichotomy can paralyze staff development. Any effort to improve long-term staff quality and localize senior positions must first address this cultural divide (see The CBR, May-June 1998, p.54). Achieving consistent corporate culture--standard procedures, objectives, and staff attitudes--across multiple offices is almost as daunting as coping with cultural differences. Efforts at consistency can be further complicated in PRC joint ventures, which often have cultures separate from and perhaps even clashing with that of the parent company. Companies with offices spread across the country and staffed by people who speak different dialects may find consistency especially hard to attain.
High staff retention greatly aids in achieving a single corporate culture across all operations. While the movement of Chinese professionals between Western companies is an excellent illustration of the increasingly flexible labor market in China, no company wants to expend resources to develop staff who plan to leave. Companies have learned that to retain staff they must pay prevailing market wages and communicate a clear plan for advancement (see The CBR, May-June 1998, p.50). Committing resources to local staff development is the best way for a company to demonstrate its commitment to its employees. Unable to recruit enough experienced Chinese workers, most companies hire individuals based on their potential and hope they develop through training and work experience. Options that firms operating in China commonly use to develop local talent include sending staff to overseas or local MBA programs, employing independent training companies, creating in-house training programs, and using regional corporate training centers. Many companies choose a combination of these approaches to maximize staff coverage, cost-effectiveness, depth of content, and employee retention. But the solution to bridging age and skill gaps is staff-wide development focusing not just on higher-level individuals with the most potential but also on entry-level staff, factory workers, and older Chinese managers.
Since independent training companies currently cannot satisfy the range of staff development needs, many multinationals offer some form of in-house training, which offers numerous benefits. When integrated into the daily work experience, teaching basic skills can be cost-effective and can yield excellent results. Employee orientation and regular follow-up training can also build a healthy business culture by reinforcing corporate policies and objectives, and contributes to consistency of operations. Developing a quality in-house training program, however, is one of the most difficult tasks for human resource professionals in China. For companies with the resources to establish a training department, the scarcity of good local trainers itself is an obstacle. Finding and recruiting a Chinese trainer who also has business experience is nearly impossible, because such individuals can make more money working in management than in training. Moreover, younger, less-experienced trainers do not command enough respect to be effective in the classroom. Chinese managers would make good trainers, but with qualified Chinese managers already in short supply, companies are reluctant to move their experienced professionals into a ful l-time training role. Most companies end up hiring or promoting young Chinese professionals with solid potential as instructors and hope that they mature into effective trainers. Another option is to have an expatriate serve as a trainer. This can improve quality but significantly increase costs.
Once a company solves the trainer dilemma, it must develop the curriculum and materials for the training program. Because even stellar trainers are not necessarily good program developers, many companies simply opt to use pre-fabricated materials obtained from other corporate offices or other providers. This approach reduces the benefits of training locally, however, since such materials generally do not reflect local conditions in their entirety. Other companies develop materials (in the company's native language) and make them more relevant by incorporating local case studies and tailoring content to their needs. Some curriculum development companies are beginning to offer material in Chinese, but they tend to be translations of pre-existing English manuals and the quality can be poor.
The best in-house programs have been developed at considerable cost. They typically employ expatriates, with Chinese trainers serving as apprentices. In some cases, the Chinese trainers are sent abroad to study with human resource professionals at the home office, while materials are developed by consultants or corporate professionals in the head office.
An emerging trend among multinationals is the establishment of regional training centers in places such as Singapore and the Philippines. A relatively new option, these centers are among the best tools for large companies to educate Chinese staff about their corporate culture and train high-level Chinese employees. They are often used as a high-prestige training tool--companies are selective in the staff they send, and most Chinese employees consider the opportunity to travel a perk. Regional facilities thus bring together the best staff from a corporation's offices throughout the region, providing a venue for top corporate leaders to implement unified strategies among managers in the region.
Nonetheless, regional training centers have some drawbacks. The centers do not always have permanent facilities and often depend on a corporation's regional resources. Some managers of multinationals with such centers find it easier to channel budget funds into the regional center than to local training programs, even if local companies are effective and have distinct advantages.
US companies are increasingly outsourcing training as they try to return to core business areas. As a result, a wide variety of foreign training companies now operating in China cater to US clients. They provide a range of services, from basic staff development, which includes t eam-building and communications, to instruction in languages and clerical skills. These companies offer certain advantages over in-house programs. For example, they can be a good resource for teaching core skills. They can also be a suitable compromise for the many small-to medium-sized companies that cannot afford the high cost of establishing dedicated training departments and are poorly equipped for the particular demands of training in China.
But Western managers of larger companies should evaluate carefully whether these training companies are appropriate for their company, as the sophistication of these services tends to lag behind what is available in the United States. And because they are based in China their ability to address US corporate culture and procedures tends to be limited. Companies that can provide culturally specific material and qualified trainers who can teach in the local dialect are not easy to find. Like in-house training programs, training companies have trouble hiring qualified trainers. In contrast, Western-based training companies with offices in Singapore, Taiwan, Hong Kong, or other cities in the region are able to import trainers who speak Mandarin and are experienced in Western business practices.
Cost is also an issue for companies exploring local training options. Foreign companies are increasingly demanding localized price scales for outsourced training programs. In the United States, a company generally is prepared to pay the equivalent of half of a month's salary to train a profe ssional--for example, $1,250 for a training seminar for an employee earning $2,500 per month. That same seminar might only cost $600 in China, but the Chinese professional likely makes only $400-$500 per month. Thus, many training companies are forced to cut costs--and quality--or lose business. Until all costs become localized, the dollar will continue to drive overhead spending. But if this trend continues, foreign companies will soon begin to suffer from a lack of high-quality training options. Western companies with diverse staff located in China's major cities benefit greatly from the influx of international training companies. The broad range of offerings and consistency of delivery make outsourcing training an excellent option for companies with multiple offices in China. But as training needs become more specialized and office locations become more remote, independent training companies become less attractive. Because most training companies are still focused on the major business markets in China, including Beijing, Guangzhou, Shanghai, and Tianjin, companies that have offices throughout China must fly staff to a major city for training. Though some companies may use travel as a perk, this can significantly increase training costs.
While in-country training programs can be effective, overseas work and study programs remain the premier solution for developing high-potential sta ff. Immersion in Western culture is the most effective way to build an understanding of the attitudes and habits that form Western business practices. In addition to the obvious benefits of education and cultural understanding, such training can confer status on a Chinese manager. In a society where leadership is not achieved easily, this added status can tremendously boost a new manager's effectiveness.
Experience living overseas, combined with university education or work at corporate headquarters, can completely transform a Chinese professional. Unfortunately, sometimes the transformation is so complete that the individual chooses not to return to China or, immediately after returning, leaves the company for a substantial pay increase offered by another firm. Generally speaking, a Chinese professional with a Western degree has numerous opportunities in China, and thus can be hard to retain. Many companies that once offered excellent overseas education opportunities have discontinued the programs because of low staff retention rates. Other companies, meanwhile, still believe this is the best way to develop talent and have effectively integrated overseas education into their corporate development strategy by choosing staff with histories of longstanding, high-quality service to their organization. These companies also establish a clear vision for how the degree will help the Chinese professional advance within the compa ny, including a briefing of the financial benefits associated with higher-level positions. In conjunction with overseas training, some companies also use bond and employment agreements to guarantee staff retention. Such packages can further convince employees of the company's commitment to them. Bond and employment agreements, however, are risky if used alone. The enforceability of a multi-year employment contract is questionable at best, and the value of the bonds tends to be much less than the actual cost of the education. A prospective employer can simply pay the bond and tell the professional to ignore the agreement.
Another option for foreign companies is to enroll employees in an MBA program in China. When combined with work experience, these programs can sharpen the skills of staff with high potential. This also demonstrates the company's long-term commitment to an individual without removing him or her from the workplace for the two years required for an MBA in the United States. The quality of these programs varies, however. While great efforts have been made to improve business education in China, progress has been slow, even after 10 years of cooperation between Chinese and foreign universities. Chinese universities still produce few graduates relative to the size of the economy. Though many of the young professors teaching in Chinese MBA programs have studied in the West, t he majority of the faculty do not speak English and have never worked with Western companies. Thus, many graduates grasp basic Western business standards only after years of working experience. Teaching methodology is also cited as a problem in Chinese education at all levels. The traditional style of instruction in China reinforces many of the cultural attitudes that make it difficult for Chinese professionals to adapt to Western business practices. Unlike their US counterparts, many Chinese MBA programs lack the hands-on class assignments, internships with companies, and joint research initiatives with industry that provide students with valuable experience.
The best hope for Chinese MBA programs lies in tight alliances with foreign educational institutions. This, however, is proving to be a slow and difficult process. The notoriously conservative Ministry of Education has maintained strict controls over which institutions can offer degrees in China, the curriculum of such programs, and the composition of all education-related joint ventures. Beijing also requires that Western educational organizations operate in China on a non-profit basis, limiting development opportunities and resulting in significant operational losses.
Despite political obstacles, some foreign institutions have established successful business education programs in China. For example, China Europe International Business School (CEIBS), a Sino- European joint venture, offers international business management courses at the graduate level. CEIBS features faculty from business schools in Asia, Europe, and North America. US-based Webster University also offers an MBA program at its satellite branch on the campus of Shanghai University of Finance and Economics. The program offers in-depth study of accounting, information systems, finance, operations, management, economics, organizational behavior, and leadership. Other Western universities probably would consider a joint venture with a Chinese university if they didn't have to foot the entire bill.
Successful companies often choose a combination of development options to maximize the number of staff trained, cost-effectiveness, depth of content, and employee retention. In-house training and local training companies are presently the most popular options for general staff development. Local training companies provide a low-cost and ready-made solution, while in-house training is the most cost-effective way to reach a broad number of staff. As the price for local training falls, many companies will choose to outsource more. Companies will increasingly enroll staff with high potential in local MBA programs for advanced training. A growing pool of quality local MBA graduates should reduce the need for costly expatriates. Meanwhile, regional training centers can offer high-caliber and cost-effective training for large numbers of staff, but the set-up costs of the centers, and the high training volume required to support them, make this an option feasible only for large multinational companies. Though each option may have its drawbacks, foreign companies in China now have the opportunity to tailor training programs to meet their needs.
A.J. Frazer is a business development specialist with experience in the United States and China. His most recent overseas assignment was as China general manager for Aquila International, a US-based performance consulting company.
Last Updated: 2-Nov-98