Case Synopsis Key Issues
“Longxiang Building Material co., Ltd” is a construction company that provides a wide plethora of construction materials to customers all across China. It is known in the region for the good quality of its merchandise. The company retains good positions in the region and wishes to expand its reach to the foreign markets to increase its profits. However, in order to do so, it has to overcome the internal problems that are holding it down and diminish its potential.
This consulting report addresses and identifies three key issues the company is struggling with at the moment. These are:
- The high staff turnover rates among managers.
- High levels of corruption among the company managers.
- The inability to replace corrupt elements by finding new and skilled personnel.
The purpose of this paper is to analyze the present problems and provide effective and coherent instructions compatible with the company’s 5-year plan. During this period, Longxiang is expected to deal with its internal problems and improve its production rates to expand to the foreign markets.
Methods
The primary method of data collection for this study is the interview. After receiving the company’s approval, it was made possible to conduct numerous interviews with the employees. Initially, the respondents were reluctant to share any information, fearing punishment, and retribution for saying too much. However, after having been promised anonymity, many showed the desire to participate in the study. Over 300 employees were interviewed in the process, which allows us to claim that the results of the study hold a high degree of credibility. The participants were asked four questions and were encouraged to elaborate on the answers as much as possible. These questions were:
- What do you dislike about the company?
- What factors, in your opinion, are holding down the company’s development?
- What is your opinion of the mid- and high executive managerial personnel?
- What should be done to improve the company?
The answers to the first question generally addressed personal grudges and did not provide any relevant data. The second and the third question, however, provided the basis for analysis, as the answers were impersonal and impartial. They addressed the actual underlying issues of the company. The ideas for improvement given by the employees were diverse and numerous, perhaps too much to provide anything finite and conclusive.
In addition, this study made use of dedicated literature in order to study the national specifics of business practices in China and identify any recommended ways of solving problems that were mentioned at the beginning of this report.
Analysis of the Situation
The rationale for a change within “Longxiang Building Material Co., Ltd” is simple and obvious – it has to deal with the three underlying issues in order to live up to its full potential and to have a competitive chance in the external markets. The improvements would also assist in maintaining the company’s current leading positions within the Chinese segment. Corruption and lack of fresh blood erode the company from the inside, and the skeleton crew that is holding it together would eventually give way. Once that happens, Longxiang will be no more. Serious changes are necessary to prevent that from happening.
The structural and human resource frame should be sufficiently sturdy to support the recommended changes. As it was mentioned in the case study, a skeleton crew of dedicated individuals is what holds the company together. This proactive group of employees could be used to advance change, as they would be interested in promoting it and would keep the company afloat during the transition period. These people are intimately aware of the company’s flaws and shortcomings, and they have a personal interest in seeing the company change for the better.
The main obstacle in the path for positive changes would be the Chinese corporate culture. As it stands, the situation with “Longxiang Building Material co., Ltd” is not that much different from other companies operating in the country. The corruption and corporate theft are widespread in China, to the point of becoming a tradition, of sorts. According to Leigh (2013), Chinese companies are known for “refusing to produce paperwork concerning investigations into accounting fraud” (p. 212).
These practices cause great expenses for the companies and prevent them from reaching higher rates of economic growth. In order to overcome the corrupt traditions of national business, the company needs to change from top to bottom.
The leadership team seems to be sufficiently motivated to study the problems of the company and promote the necessary changes. The recent appointment of Steven as the new general manager, as well as the formulation of an export strategy, indicates that the company leaders want Longxiang to grow larger and are willing to make changes and sacrifices in order to achieve these goals. They were very forthcoming in allowing us to study the company processes and extensively interview its employees.
Recommendations and solutions
The recommendations section will address three main issues detected during the analysis of “Longxiang Building Material co., Ltd”. The first issue is the high turnover rate among managers. The managers play a very important role in the company, as they facilitate the connection between the workers and the CEOs and make sure that orders are completed in time. As it stands, the probation period for the junior managers is far too long and half-wages are often viewed as dissatisfactory.
Instead of spending a year on probation, it is recommended to reduce that period to three months. However, in order to make up for the time, the probation period must be made extremely intense, in order to bring new managers into the fold. Raising the wages during the probation period to 75% of the standard wage would be a good motivator for the newly-recruited employees to stay. Bolman and Deal (2008) support financial motivation, saying that “employees, in turn, are more productive, innovative, and willing to go out of their way to get the job done” (p. 141).
Combating the issue of corporate corruption is going to be much difficult and require a lot more time and resources. First, the system must be purged completely in order to remove the corrupt individuals who not only steal corporate property but also influence others to do the same by showing an example. Once the managerial apparatus has been cleaned, a system must be introduced that would make managers accountable for the expenses by filing in additional paperwork.
A transition period will be required for the managers to get used to the new system. Once it is done, the process would become a lot smoother. Also, a wage increase should keep them content and leave no reason to engage incorporate. However, one should not expect quick results – corruption is a deep-seated tradition within the Chinese business sector, and it would take time and patience to get rid of it completely.
In order to improve the recruitment strategy, a three-step plan must be adopted. During the first step, while the company’s top specialists and managers are rare, it is recommended to hire foreign specialists in order to train your own. Hiring foreign talent is expensive, but these measures are meant to be temporary. Once the company has its staff prepared and ready, the need for their services would diminish. The second step would involve finding talents among the current employees and promoting them to high-ranking positions.
Learning the ropes would take time, but in the end, the company will get a good number of dedicated mid-class specialists who have exceptional knowledge of the workplace and all the processes involved, as well as good guanxi. According to Hope (2014), “having good “guanxi” – a wide network of mutually beneficial relationships”, is very important in Chinese business and management practices. Lastly, a foundation must be laid for future development. Cooperating with the local colleges and institutes will ensure a steady flow of interns, which might be employed by the company in the future.
Conclusion
In order to be successful in the ever-increasing competitive free market environment, the companies should worry not only about the outside competitors but also about the potential setbacks and malpractices coming from within. This set of recommendations should provide “Longxiang Building Material co., Ltd” the knowledge about its current weaknesses, as well as a framework for a long-term change project, in order to remove these weaknesses and strengthen the company’s financial and production, might through improving the quality and spirit of its employees.
References
Bolman, L.G., & Deal, T.E. (2008). Reframing organizations: artistry, choice, and leadership. San Francisco, CA: Jossey-Bass.
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.
Appendix A
Company Statement from “Longxiang Building Material co., Ltd”.
I, Li Ming Zhao, the company director of “Longxiang Building Material co., Ltd”, hereby confirm my full knowledge of the company research done by the consulting group on my behalf, as well as my willing participation in this study project.
Signed:
Date:.