from EuroBiz Magazine

May 2009

by Bill Dodson

The European Union Chamber of Commerce in Shanghai recently hosted an insightful talk with the author of The China Price, Alexandra Harney. The American writer spent nearly two years in Guangdong amongst factory workers and their bosses understanding their work and economic environment. Penguin press published the book last year, just after the winter of 2008, when heavy snows, price deflation, buyer exhaustion, as well as salary and commodities inflation struck China all at the same time. Her presentation, “Factories in crisis: The Future of Chinese Manufacturing”, was an update of the material she wrote about, with observations on how the factories of the Pearl River Delta contributed to the global economic downturn, the affects of the downturn on the factories, and China’s future after the the world has moved through the financial crisis.

One of the greatest differences she sees between Western management systems in China and Chinese (and especially Taiwanese and Hong Kongese) is that “Western companies treat labor as assets rather than as liabilities.” This is especially important for a workforce that is increasingly changing its value system: “Experience and skills development in a company that is striving forward is more important to today’s workers [than to their forebears]. Now, they don’t just want to get a salary and then return to their hometown after a few years.”

Her words fit in precisely with my thinking about Learning Organizations as the key to retaining and upgrading staff capabilities for the inevitable upturn in economic activity. Learning Organizations have company cultures that require that employees at every level learn and share new knowledge and skills that improve their own and the company’s service or production capabilities. The aim of all the learning is to reduce the cost of operational overhead and increase the perceived value of the services or products the company provides its customers.

One European company ran the exact opposite of what a learning organization should be. The Taiwanese manager that managed the services company had a strong, authoritarian approach to management that required practically all decisions be made by him. Staff effort was inertial, its knowledge of developments in its field rudimentary; the culture had become one of “follow-the-leader.” After the Taiwanese had relinquished his duties an expat manager who took a personal stake in developing his own capabilities and of sharing what he knew with coworkers took the management mantle. The first thing he did was to assign junior staff to mentors inside the company and encourage knowledge and experience sharing. Support staff began to come to their new manager and offer ways the operation could save money and increase value to colleagues and to customers. Energy and enthusiasm began to return to the environment as staff that stayed on watched colleagues that had had interests in the old culture moved to new jobs, and new coworkers came on board with their own experiences and learnings to share.

One of the aspects of Chinese culture that blocks the spontaneous development of a Learning Organization is a hesitation for Chinese coworkers to share what they know with each other, according to the Chinese HR manager of a Western manufacturing operation in the Suzhou Industrial Park named Robert. Robert told me, “A Chinese person feels that if they share everything they know, they cannot remain competent. They may only feel inclined to share 80% of their knowledge; they’ll keep the other 20% to themselves.” In more autocratic organizations, “employees always hide something – something to protect themselves,” he added.

Robert indicated five fundamental steps he designed in his own organization to encourage a learning environment: first, each manager had to become a facilitator, as in the example above of the company the Taiwanese manager; then, his HR team developed skills’ metrics drawn down from the job descriptions, with a gap analysis performed every quarter; he formalized knowledge that staff had internalized into a library that now has thirty “courses” (and growing) developed by the staff; course “owners” go out to teams throughout the company and share their knowledge and experience; all of which the company follows up with a reward system that shows the organization’s appreciation for the knowledge-sharing effort.

I’ve seen it for myself that companies that build organizations in which employees feel safe enough to share what they know amongst themselves reap the benefits of a highly motivated group of individuals that will ride out nearly any crisis together with a pride and motivation that show themselves in every service and product passed on to customers.

Copyright ©William R. Dodson, 2009