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When Chinese managers meet American workers
July 2, 2009, Thursday
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EDITOR'S note:
During a keynote address at the Wharton Global Alumni Forum held in Beijing this month, Zhang Ruimin, the 60-year-old CEO and chairman of Haier Group, discussed differences in management between Western and Chinese cultures.
Zhang and his team have built Haier Group from its modest roots as a local collective refrigerator factory that opened more than 20 years ago in Qingdao, Shandong Province, into a multinational powerhouse for white goods that posted US$16.2 billion in revenues last year.
The following are excerpts from Zhang's forum speech.
China was once obsessed with MBA education, but the fever has now somewhat abated. The results of hiring MBA graduates have been poorer than expected.
The main reason for this is that MBA case studies are mainly focused on Western companies. There are very few on Chinese companies.
In China, we don't have our own management theories yet. The other issue - and I think it's a big one - is whether MBA graduates can operate well within the Chinese cultural context.
I met Jack Welch (CEO of GE from 1981-2001) in Boston last November, and my first question to him was how, while his company was No. 1 in the world, could every single employee still realize their (individual) value? That's very difficult to do in China.
His answer was that there is a big difference between Chinese and American corporate cultures. "In the US, I can delegate, because the US has a very well established and very complicated financial system, which will help to push the company forward systematically.
"I encourage my employees to be more innovative because they are bound up in that system. GE also has many divisions in China, but employees in China tend to frequently change tack because well-established systems do not exist in China. This is a big difference between the two countries."
Our own experience also shows that Chinese culture is different from American or Japanese culture.
For example, when we built a factory in the US state of South Carolina, our people instructed the American workers how to carry out operations.
A few days later, they told them to alter the procedures, and this drew protests from the American workers: "You told me to do it this way two days ago, and now we have to do it that way. Which way is right? You can't change things just like that."
This shows a different perception about "rules." Chinese workers don't have a strong concept of "rules."
If you ask a Japanese worker to clean a table five times a day, he will do it every day. But if you tell a Chinese to do the same thing, he will clean it five times today, three times tomorrow and maybe zero next time if no one is watching.
Haier model
A global organization with 60,000 employees, Haier now has "big-company-disease," or non-cooperative games that stem from the separate interests of different departments and employees.
So now we are wondering how we can create synergy.
Our first step has been to restructure the organization from a triangle pointing upwards to one pointing down.
You put the clients at the top, and then the line manager, employees and then the top leaders, who are obliged to provide resources to the line managers.
I discussed this issue with Lou Gerstner, the former CEO of IBM, in Florida in April. He said this is a good direction, but he didn't (implement this model) during his time at IBM because he had two concerns.
First, if you ask the line managers to deal with clients directly, they will tend to neglect new opportunities in the market. Second, if the people who back them up can't provide the necessary resources, (the managers) will have to do so themselves. That will not please customers.
Our way to solve these two problems is to give every team an income sheet, which is a kind of contract describing the team's internal commitments. We have done some trials and the results are not bad. It then falls to the top leadership to look for new opportunities in the market.
For example, before restructuring, your sales target might have been US$1 million, and that would be the corporation's asset. Now, it's your asset, and you have to add value up to US$1.1 million or US$1.2 million or more. If you make more, you get more.
Last, I would like to share some personal thoughts about being a CEO for more than 30 years. The most difficult thing for a business leader is to defeat yourself.
You have to be the clock maker. You won't get every decision right, but you can encourage everyone in your organization to realize and create value for the company and themselves.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the article.)
During a keynote address at the Wharton Global Alumni Forum held in Beijing this month, Zhang Ruimin, the 60-year-old CEO and chairman of Haier Group, discussed differences in management between Western and Chinese cultures.
Zhang and his team have built Haier Group from its modest roots as a local collective refrigerator factory that opened more than 20 years ago in Qingdao, Shandong Province, into a multinational powerhouse for white goods that posted US$16.2 billion in revenues last year.
The following are excerpts from Zhang's forum speech.
China was once obsessed with MBA education, but the fever has now somewhat abated. The results of hiring MBA graduates have been poorer than expected.
The main reason for this is that MBA case studies are mainly focused on Western companies. There are very few on Chinese companies.
In China, we don't have our own management theories yet. The other issue - and I think it's a big one - is whether MBA graduates can operate well within the Chinese cultural context.
I met Jack Welch (CEO of GE from 1981-2001) in Boston last November, and my first question to him was how, while his company was No. 1 in the world, could every single employee still realize their (individual) value? That's very difficult to do in China.
His answer was that there is a big difference between Chinese and American corporate cultures. "In the US, I can delegate, because the US has a very well established and very complicated financial system, which will help to push the company forward systematically.
"I encourage my employees to be more innovative because they are bound up in that system. GE also has many divisions in China, but employees in China tend to frequently change tack because well-established systems do not exist in China. This is a big difference between the two countries."
Our own experience also shows that Chinese culture is different from American or Japanese culture.
For example, when we built a factory in the US state of South Carolina, our people instructed the American workers how to carry out operations.
A few days later, they told them to alter the procedures, and this drew protests from the American workers: "You told me to do it this way two days ago, and now we have to do it that way. Which way is right? You can't change things just like that."
This shows a different perception about "rules." Chinese workers don't have a strong concept of "rules."
If you ask a Japanese worker to clean a table five times a day, he will do it every day. But if you tell a Chinese to do the same thing, he will clean it five times today, three times tomorrow and maybe zero next time if no one is watching.
Haier model
A global organization with 60,000 employees, Haier now has "big-company-disease," or non-cooperative games that stem from the separate interests of different departments and employees.
So now we are wondering how we can create synergy.
Our first step has been to restructure the organization from a triangle pointing upwards to one pointing down.
You put the clients at the top, and then the line manager, employees and then the top leaders, who are obliged to provide resources to the line managers.
I discussed this issue with Lou Gerstner, the former CEO of IBM, in Florida in April. He said this is a good direction, but he didn't (implement this model) during his time at IBM because he had two concerns.
First, if you ask the line managers to deal with clients directly, they will tend to neglect new opportunities in the market. Second, if the people who back them up can't provide the necessary resources, (the managers) will have to do so themselves. That will not please customers.
Our way to solve these two problems is to give every team an income sheet, which is a kind of contract describing the team's internal commitments. We have done some trials and the results are not bad. It then falls to the top leadership to look for new opportunities in the market.
For example, before restructuring, your sales target might have been US$1 million, and that would be the corporation's asset. Now, it's your asset, and you have to add value up to US$1.1 million or US$1.2 million or more. If you make more, you get more.
Last, I would like to share some personal thoughts about being a CEO for more than 30 years. The most difficult thing for a business leader is to defeat yourself.
You have to be the clock maker. You won't get every decision right, but you can encourage everyone in your organization to realize and create value for the company and themselves.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the article.)
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