The company “Longxiang Building Material Co., Ltd” was established in 1990 in Linfen City, Shanxi province, China. Its registered capital equates a sum of circa 60 million renminbi. The company is a family-owned business in China, with a great reputation in the building materials industry. The company’s goal is to provide the best service, superior values, and quality materials to the customer. The products include wood, brick, natural stone, travertine, slate, concrete blocks, and more.
As the company is looking to expand and reach out to the markets outside of China within the next 5 years, it subsequently faces a challenge that every Chinese company has to face – the problem of human resources. It sounds strange, for a company in a country with 1.3 billion people, to be short on people. However, it is true – right now China has a vast and abundant pool of unskilled laborers without formal education, while professionals with experience in the field remain few and far between.
To expand, the company would require skilled operators, sequence engineers, overseers, managers, and the like to facilitate the function of the company branch producing materials for export. As the general manager of Longxiang Building Material Company, Steven is expected to find a solution to this problem. He must provide a strategy for the next five years that would supply the company with the necessary professionals and keep them within its ranks. Also, he must address and revise the company’s Human Resources management strategy to stop the current employees from leaving the company.
Steven has been employed by Longxiang Building Material Company for several years now and was recently appointed as a general manager. During his time as a middle manager, he noticed the negative trends present within the company. One of them is the staff turnover rate among the managers. They are often employed without much experience or even a proper education and are put on a lengthy probation period while being paid half the wage. During this time, they are expected to shoulder tasks and responsibilities of a full-fledged manager, without being given any adequate instructions. This results in 3 out of 4 managers dropping out before the end of the probation period. Lin, the last middle manager that left the company, had expressed her disdain with how little she earned for a full day’s work during her probation. Another downside of this strategy is that it seriously affects the quality of the managing process and often results in work being overdue. Levels of corruption among the middle and even high-ranking managers are high. Practices of company property theft and money laundering are a frequent occurrence.
The company’s recruitment policies leave much to be desired. Aside from scouting for talents through the HR agencies, the local newspapers, and the Internet, there was no effort made towards the growth and promotion of existing company talents. The company did not cooperate with any Engineering and Management universities. The company did not hire any foreign specialists until recently, with Steven being among the few ones employed. Now, after obtaining the position of general manager, he has the power and authority to change things for the better.
Several strategies could be considered when dealing with the problems found in the company. The issue that needs to be addressed first is the high turnover rate of managers and specialists. It is pointless to recruit new talent until it is resolved. As it stands, the current strategy involves significant probation times at half-wage with low-intensity training programs. Lowering the probation period and increasing the intensity of training and shaping the new employee to fit the company’s needs, in addition to increasing the wages earned during it, should significantly decrease the turnover rate. The employees would not feel cheated and would be more inclined to stay.
Another way of keeping employees on probation without drastically changing the system would be with promises of a much larger paycheck at the end of it. Some employees might be motivated by the prospects of larger pay. However, not everybody is ready to wait for a year before starting to receive a full salary.
The high levels of corruption among managers is a common trend in most Chinese companies. The corruption stems from feelings of insecurity – the employees feel they could be fired at any time and that their employment contracts do little to protect them. This is closely related to the turnover issue, as the employees and managers would rather go for short-term personal gain rather than the good of the company. The weakness of legal and management systems is a pressing matter in China. Leigh (2013) reports that Chinese companies are often accused of “refusing to produce paperwork concerning investigations into accounting fraud” (p. 212). Longxiang Building Material Company does not require its managers to submit expense receipts with claims for reimbursement, which is why there are ways of exploiting these loopholes to spend company money for personal gain.
There are several approaches to combating this issue. One of them involves increasing the accountability of the managers by increasing the amount of paperwork they need to fill to perform monetary transactions. However, this method would decrease the speed and efficiency of the company’s bureaucracy. It is also vulnerable to forgery.
The other possible solution to this would be through increasing the interest in the company’s well-being. As it stands, many managers and specialists do not feel like committing to their work because the company does not care for them. By making the employees feel that their position is safe and that they would not be fired for no good reason, the company would make them invested in its future. Bolman and Deal (2008) claim that “employees, in turn, are more productive, innovative, and willing to go out of their way to get the job done” (p. 141). At the same time, a policy of zero tolerance for corruption should be introduced to prevent any future cases of property theft.
The last issue is the issue of finding new and skilled personnel. While the Chinese government is making an effort to provide greater standards of education for the populace, it would take decades before the market is full of experienced and educated professionals. In her article dedicated to the issue, Winter Nie (2015) remarks that “the expression “war for talent” is getting popular” (para. 2).
Several strategies could be implemented in this situation. The easiest and swiftest path is to hire professionals from other countries. However, this poses certain challenges. A foreign manager or specialist would require exceptional payment and benefits to motivate him or her to stay and work in China. A language barrier might also become a problem.
Another way of finding skilled and dedicated people for important positions is through the promotion of the company’s employees. While additional training would be required to fit the employee into a new role, the person in question should possess a greater understanding of how the company works and have plenty of connections or guanxi. According to Hope (2014), “having good “guanxi” – a wide network of mutually beneficial relationships developed outside the formal work setting, for instance at evening meals or over drinks – is often the secret to securing a business deal” (para. 8). However, this method is not without flaws – the employees might not possess the competencies and traits necessary for the position.
Active partnership with educational facilities of the region is a more long-term strategy. David Francis (2016) reports that “tuition assistance programs appear to allow firms to hire better quality, more educated, more productive employees“ (para. 2). Since Longxiang Building Material Company is planning to expand in the next 5 years, there is plenty of time to re-establish contacts with the regional universities and scout for talented students interested in a future place of work. To make sure the prospective specialists would have some working experience after receiving their degrees, they could be invited to partake in internship programs within the company. The downside of this strategy is that it might take some time to accomplish and the results are harder to predict.
As it stands, the company is retaining its position only due to a skeleton crew of managers, workers, and specialists that are making ends meet, with the rest of the contingent shifting back and forth. This crew is adequate for maintaining current positions in the market at this time. However, if Longxiang Building Material Company wishes to keep its leading positions and its reputation and wants to expand its production rates to be able to export materials to the markets abroad, the managerial branch and the HR recruitment strategy would require a serious overhaul.
References
Bolman, L.G., & Deal, T.E. (2008). Reframing organizations: artistry, choice, and leadership. San Francisco, CA: Jossey-Bass.
Francis, D. (2016). Why companies pay for college?The National Bureau Of Economic Research. Web.
Hope, K. (2014). Doing business the Chinese way. BBC News. Web.
Leigh, A. (2013). Ethical leadership: Creating and sustaining an ethical business culture. London, England: Kongo Page Publishers.
Winter, N. (2015). HR Challenges: why one-size-fits-all doesn’t work in China. Forbes. Web.