Managing the Chinese workers (Part 1)
There are many articles written on China in various aspects; but few on how to manage the Chinese workers. Many foreign companies have implemented their home corporate human resource policies and guidelines in China but do not get the same results as in the home country.
Most foreign companies pay more on wages than most local private and state owned enterprises. As such they are able to attract better caliber and competent workers. The workers also enjoy better employee benefits, welfare and employee development program. Moreover the foreign companies also adhere fully to the provident fund policies and procedures. Thus they are most sought after companies to work for.
Many companies are satisfied with their costing when compared with their home country. The higher wages paid to the Chinese workers are easily offset by the higher productivity and yield as against the local competitors. The foreign companies could further enhance their profit if their expatriate managers understand well the local business environment and the management of the Chinese workers. Without both acumens, the company would spend more on waste.
Just like any other countries, there is no difference in the attitude and behavior of the Chinese workers. You can easily find some workers very hardworking while others are plain lazy. Some workers are proactive and conscientious while some are lethargic and trouble-makers. Most motivational schemes work well to certain degree and generally the morale and work quality of the workers are better off in these foreign companies than the local enterprises. I find many mid-level executives and administrative staffs more hardworking, proactive, dedicated and competent in their jobs compare to the senior executives and production operators. And this is probably due to the job satisfaction, rewards and recognitions from the bosses.
Managing the Chinese workers is unlike those in the western countries and largely due to the cultural instincts, language barrier and China still has not fully transformed into a developed industrial nation that we are accustomed to. As a matter of fact, I do not believe China will become like US or any European country. She is developing into a unique industrial state with her own characters which the West is not familiar with. Thus it is time now for the West to understand how China is developing and her workers behave in work so as to remove anxiety, misunderstanding and acrimony. Attempt to force China to operate exactly the way things are done in Western countries is not only fruitless but also exasperating. We need to coach the expatriate managers on how to manage the Chinese workers before they get worn out with frustration.
1. Pilferage, cheat and corruption
Sadly to say I find pilferage and corruption more rampant in foreign companies than the locals. The local bosses understand fully well how the employees pilfer and cheat the company. For small enterprise, it is common to find the purchasing and financial managers are next of kin to the owner. They scrutinize the purchasing process, receipts, employee travels and all other expenses like a hawk; while the expatriate would entrust the process to the staffs once they feel comfortable with. “Too much work”, “I could not do it”, “I could not understand the process”, etc are reasons often given by the expatriate managers on the lax control.
Many times the employees could not resist the temptation on pilfering and cheating the company where is no strict control. One good example is the slack security control whereby the employees help themselves to pilfer the company properties. Many Chinese workers and staffs are honest with integrity. The problem is not all of them are so. When you have one worker stealing from the company with ease, soon others will follow. There is an old saying “Do not place the fish in front of a cat if you do not want the cat to eat the fish”. However I do not condone the practice of some Asian companies on installing window grilles in the dormitory to prevent theft. These grilles were death trap for the workers when there is a fire.
The standard operation procedures from the home corporate are not adequate to prevent theft and cheating in the company as these procedures are made to improve productivity and process optimization. Not enough measures are devised to counter cheating and fraud. Following are some examples I usually share with my foreign friends.
A. Warehouse
Frequent physical inventory (PI) count is not sufficient to counter the theft. The count is either surprising “correct” or with big variance that the company has no choice but to write off. In the former case, the PI is usually conducted by the same people managing the warehouse. There is no check and balance. While in the latter case, the management will find some scapegoats or suspects to terminate to appease the corporate.
I had visited one US factory in Guangzhou and the expatriate general manger bragged about getting the factory ready for first production in a very short time. When I checked with him on some operation cost and control, he could not answer me. He called his local operation manager to answer my questions. Later I found out that his chauffeur is also the supervisor of the security guards and I found this strange. His reason was that he had liked the driver and gave him the added responsibility to supervise the security guards. Thus I am not surprising that his product cost is higher than his competitors.
I had learned about the conspiracy between buyers and storekeepers in my early years in China. The buyer would release a PO to a supplier and the quantity delivered is far less than quantity printed on the delivery order (DO). Thus I had the staging area holding the in-coming goods for ad hoc inspection. I had my managers and supervisors, including myself, that if we passed by the in-coming store, we would randomly pick an item to count. And if there is a variance on the physical count with the DO, the storekeeper better have a good reason to explain. All measuring scales in the warehouse are periodically calibrated and casing sealed to prevent tempering. And I held the warehouse manager fully responsible on the upkeep of the scales and no excuse for the scales not being used. Candidly I often use the weighing scale in the receiving area to check my weight. This is not for my personal interest but to ensure the scale is accurate to my bathroom scale which I also often use. This is a signal to my storekeepers that I am watching the scale and they better not temper with it.
As for the production line, all moving materials, except C items, are accountable for between shift changes. There is a weekly PI on some items randomly selected by the computer system. Even with all these measures, I still had 1% of inventory unaccountable for in the quarterly and annual PI.
B. Receipts
There are many fake receipts that you can buy on the street or the establishments willing to fill up fictitious amount on a receipt for you. Another common ploy is to use some body receipts to claim reimbursement from the company. I have come across some ladies collecting receipts from their personal expense and gave them to their husbands to make falsified claim from the company. These fake receipts and fraudulent claims are the most sever and common fraud and corruption and there is no effective counter measures.
Though the scrutiny of the expense claim and vouching the receipts are arduous and time consuming, I would recommend the managers to do it. Even under the hard press of time, the least we could do is to randomly select some of the expense claim for scrutiny. It is important that the selection of the expense claim is not targeting at some employees but apply across the board so that there is fairness and every employees are aware that their boss could be scrutinizing the expense claim thoroughly to prevent abuse in a fair manner.
I had a purchasing manager occasionally submitted expense claim on having dinner with suppliers. This is perfectly alright as I often told my staffs we need to return favor by paying the dinner when suppliers visiting us. My suspicion arises as the guests were company owners who usually do not let the customers pay for the dinner. I made phone call to them and confirmed that they never had dinner with my purchasing manager on those dates. The taxi receipts also showed fare taken almost at the same time on the same day. You could not possibly travel on two taxis at the same time. Of course the manager was immediately terminated though he was well like by all of us. I felt pity for him as he was drawing a very high salary and lost his job on some petty cheat.
C. Cookhouse
We had a big cookhouse preparing meals for about 1,800 workers. The chief cook came to me one day and complained about the poor quality of vegetables and oil delivered from some suppliers. I had checked the food and question the buyer who did not offer any satisfactory answer. The buyer was switched and there was no complaint from the cook. After some time, I began to sense something amiss. I went to the cookhouse and checked the in-coming food and found the same poor quality if not worse. Apparently the suppliers were now offering bribes to the buyer and the cook. The chief cook probably did not receive his share of the bribe from the earlier buyer. Henceforth the suppliers, buyer and the cook were all terminated.
After sourcing the new suppliers, I had the cook randomly selected from the group at no specific interval to take charge on the inspection of in-coming food delivery. When the supplier deliver the food at the cookhouse, the cook will give a call to the operation manager who will then randomly select one production operator and an administrative staff to go to the cookhouse to check on the quality and quantity of the food together with the cook. They also had to ensure the type and brandname of the food was the same as shown on the DO. The employees were happy with the arrangement as they felt more assured on the quality of food they were eating.
The above examples demonstrated the need on check and balance. You can never outwit the Chinese on cheating and fraud. I am always amazed how intelligent they are and the extent they would do to cheat on the company. And I have never stop learning. The rule of thumb is never gives the same person the opportunity to control and manage at the same time. The show of your interest to check on details and fraud will dampen their lure to commit cheat.
One common weakness I find in some managers is that they feel reluctant to terminate the staff found in cheating the company. This is especially so if the staff is a star performer or a key contributor. They either ignore the evidence or just handle out a reprimand or warning letter. Once this is done, it is very difficult to take action on other employees found with similar crime. Punishment must be fair and apply to all personnel; otherwise the command and control of the company will just tumble.
Nov 4 2009