Human Resources | Ed Zhang and Huang Ying

It is time for a reshuffle - not of people, but of the ways people are being managed.

Multinational corporations can no longer base their human resources policies in China just on competitive wages - as general wage levels at Chinese companies are rising above the level of many other developing economies.

Nor can Chinese companies investing abroad from North America to Africa expect to apply their practices at home to workers in their overseas operations.

Corporate leaders typically complain about lacking the right talent in a time of uncertainty and rapid change. Where can they find them? How can they keep them? They are posting ads everywhere and calling for solutions at every business forum.

But as Han Jian, associate professor of management at China Europe International Business School, would tell them, "sorry", there is not a ready answer to their questions.

The talent that they need will not come that easily or, if company leaders manage themselves poorly, they simply won't perform as expected.

Hiring just one or a few highly creative people will not help a company's performance unless its leaders know how to align them with the team and the company's strategic goals.

There are a few things that company leaders need to do simultaneously: prioritize tasks in their corporate value chain, build teams, match tasks and people, and last but not least, develop a working mindset suitable for leading innovative teams.

Only after a framework of people strategy is established can a set of initiatives begin in recruitment, training, and in staff's career planning.

"How do you know what kind of people are most suitable if you don't have a clear idea about the value of the tasks in a company's entire value chain?" Answering that question is now crucial for the many Chinese companies facing different strategic options.

Some companies may desire to phase out low-skilled operations and move up the value chain by venturing into high-skilled operations. Others may seek to branch out in related services.

In their overseas ventures, some may attempt to build factories in Southeast Asia and Africa. Others may desire to take over companies with technological strength or branding assets in North America and Western Europe.

Different approaches to talent management should be developed to suit different strategies. Sometimes, even companies with similar strategies would need to develop different people management practices, because they have different "DNA" or mixes of leadership, corporate culture, and development path.

Companies seeking innovation may not need high-caliber, innovative new blood all the time. Innovation is also a social process. Nowadays, it is more often achieved through a team effort. Rather than recruiting a renowned scientist or inventor, innovation can be achieved through good teamwork, or making improvements to the management of team processes.

Innovation requires highly creative talent as well as service-oriented supporters and operational talents to implement the ideas. Companies need to "explore the power of organization, rather than rely on a few heroes", she said.

Nor does talent management always require "new" ways of management. In cases of rapid market changes, the old command-and-control type of management may still work if a prompt reaction is needed, even though it has attracted many critics. The key is that the leaders are consistent and the rewards are fair. Building trust between managers and employees could be more useful than many of the "best practices" in fashionable management books. A trust-based employment relationship is nothing new, it simply needs time to develop and the leaders' gut instinct to deliver, Han said.

But many companies are still struggling in the dark. They have the processes to make their usual products, not the processes to organize their talent and to let them cooperate in productive ways, she said.

Take innovation again. Nowadays a team is often the basic unit of innovation, and research shows that the team's capability for internal management and cross-team communication "has a decisive role to play in innovation", Han said.

The team will have to find a way to bond with internal social capital on the one hand, and to bridge with external social capital on the other. Han said she has chosen this topic for one of her research papers.

Bonding social capital, she said, requires extensive in-group communication, in which all members exchange ideas with each other. No single person will know the final conclusion at the beginning of an innovation project.

Bridging social capital requires communication with parallel groups and the company's senior executives. But the reality is discouraging at times, in multinational as well as domestic companies. Due to improper and shortsighted performance evaluation methods, relations among different groups can be more of a competition or there is no relationship, and quite often coordination and cooperation are not systematically organized but occur arbitrarily, Han said.

After all, talent management is ultimately a leadership challenge.

One problem, Han mentioned, is that China's rapid changes in the past three decades have not allowed time for its many corporate executives to have substantial training in human resources and talent management. Leaders get promoted primarily for their technical expertise and sales numbers, not their experience and expertise in developing teams and fostering cooperation. Even worse, in many cases, "poorly managed HR systems drive talents away", Han noted.

One recommendation that Han makes to team leaders is to pursue shared leadership, which requires most members to get involved in team goal-setting and goal-adapting. Shared leadership also works by providing emotional support to teammates, especially when a team faces difficulties. It also promotes team members' participation in important decisions such as division of labor, forms of cooperation, and resource allocation throughout the whole process.

Shared leadership may sound inefficient to many Chinese managers who are used to the command-and-control style, which has been applauded for its efficiency. However, for Chinese companies who want to build their presence in new industries or new markets, while facing a new generation of employees with diverse backgrounds, some of them may find that shared leadership is effective if both the leaders and the employees work to change their mindsets.

Many Chinese companies have been expanding overseas while facing talent challenges in both their headquarters and foreign subsidiaries. One suggestion is to learn from history, Han noted.

"Western multinational corporations already have decades of stories of success and failure, when they were trying to expand from their home countries to the developing world. Chinese companies should look at where they stumbled and how. Why should they repeat the same mistakes when they can actually avoid them?"

Contact the writers at edzhang@chinadaily.com.cn and huangying@chinadaily.com.cn

(China Daily 04/02/2013 page17)