The Pied Piper of Tianjin

It was early Saturday morning and the light was just beginning to permeate through my curtains. As it was the weekend, I was looking forward to rolling over and enjoying two or three more hours of blissful slumber. Unfortunately, my plans were wrecked by a rasping voice piercing the silence from outside. In a vain effort to escape the awful din, I pulled my pillow up over my head to block out the noise. Alas, it was to no avail. So, crotchety and bleary eyed I shuffled across my bedroom floor to my window. I pulled the curtains back to see what was going on.

Beneath my apartment block is a large hair salon.Considering I lost my hair at 20, this place normally has no impact on my life whatsoever. However, on this particular Saturday, things were different. The manager was standing in the doorway of the salon holding a megaphone, screaming at his employees. The situation made me chuckle. The manager was clearly irked about something, and was making his feelings known. Unfortunately for him, his employees seemed oblivious. I could tell by their blank stares and vacant expressions that absolutely nothing was sinking in.

This leadership style is one that I have seen countless times in northern China. It is one in which managers and supervisors do not look to stimulate or motivate their teams to help generate new ideas and better performance. Instead they just expect them to blindly follow instructions. This reminded me of the old children's tale the Pied Piper of Hamlin. In this story a town in Germany is infested with rats and is desperate to remove them. So, the mayor hires a piper to play beautiful music to make the rats follow him. The piper does this and leads the rats to the river where they are all drowned. Everyone in the town was delighted. However, when the mayor refused to pay the piper, he used his music to lead all the children in the town away, just as he did with the rats.

The manager of the salon was trying to emulate the piper. Unfortunately for him, he did not have a magic flute and his staff were certainly not following him.
This is an all too common scenario in China. Too many managers believe leadership is simply about making others follow their lead. Sadly, because of this, their employees grow increasingly de-motivated. Here are a couple of examples that I have encountered:

1. My first example came when I was training staff at a major multinational in Tianjin about meeting skills. I asked how useful - on a scale of 1 to 10 - they thought their meetings were. To my surprise, I heard lots of 2s and 3s. "Why, so low?" I asked. "Our managers" they replied. "They talk, we listen. And, then, they make the decision .... We do not even need to be there."
2. The second example was a little different because the manager in question actually realised there was a problem. She was the sales manager for the DongBei office of a major multinational and was frustrated because her staff were reluctant to offer ideas and simply wanted to follow her lead - whether she was heading in the right direction or not. There were two reasons behind this (i) her predecessors followed the pied piper school of leadership and expected obedience rather than ideas from the staff, and (ii) the sales manager was imposing both in physique and personality and, as a consequence, scared her subordinates. The problem was that even though she recognised the problem, she did know how to solve it.

It took me a little time to grasp the relevance of the manager who woke me that Saturday morning - I was still pretty sleepy after all. As I am sure you will have read in my previous entries, top-quality talent is in desperately short supply here in China. The area where this shortage is most acute is in qualified managers. There is a McKinsey report that I have quoted several times in Network HR that illustrates this clearly. It found that by 2015, China would need 75,000 MBA qualified managers to ensure its continued growth. However, in 2005, it had less than 5,000. To make up this shortfall, most organisations still look away from mainland China for their managerial talent. By simply importing managerial talent, China is handicapping itself - it needs to develop homegrown talent to plug the leadership gap. China needs to put down the megaphone and major organisations need to invest in training to help develop leadership talent.

Customer Service Conundrums

So, it was Sunday and my girlfriend and I were out shopping on Binjiang Dao - Tianjin's major retail area. We were not looking for anything in particular, rather we were just browsing. As we ambled around the Nike store, I noticed a rather nice Olympic T-Shirt with 'Great Britain' written across the front. After my native country's surprisingly competent performance in Beijing, I thought the shirt may be a nice memento. And, better still, it was 33% off.

Up until this point, my story is relatively mundane, right? Certainly. However, the events that followed certainly were a break from the norm. One of the sales assistants and approached me. I was expecting her to follow the standard procedure of offering a "ni hau" before standing awkwardly next to me and thrusting products I did not want under my nose. Yet, to my complete surprise she did nothing of the sort. Instead, the remarkable following conversation ensued.

"Can I help you sir?"
"Oh, yes, I am looking at these 'Great Britain t-shirts. Do you have an XL?"
"Let me see ... I don't think so. Because they are on sale. We have 'USA' in XL, would that be ok?"
"Not really. I want the other one because I am British."
"Ha ha, ok I see. Let me see, we have XXL, but it is a Chinese size, so it might not be too big. Why don't you try it. The fitting rooms are over there."

The shirt fit and I purchased it. Even though it looked great on me, I left the store thinking more about the great service I received. The sad is that high-quality customer service employees are a rare bread in China, so much so that when you do encounter good service, it leaves you pleasantly surprised.

Now, let me contrast my experience at Nike with the travails I encountered at Starbucks a few minutes later. My girlfriend was in need of a Green Tea Frappuccino and quite fancied a latte. Both of these products require milk. Something you would expect a major coffee chain to have in abundance. However, apparently, this was not the case. I visited three different stores along Binjiang Dao, and in each, I was told, "No Milk - Only Soy". In the first two outlets, when I asked why, I was met with only an embarassed stare and a repetition of "No Milk".

It was only at the third store that I got any form of explanation.
"Because there are problems with milk in China at the moment, we are only using soy milk."
This was quite a rational explanation - certainly one I would have no qualms with after the recent scandals regarding milk in China. However, I was not satisfied. I had wasted my time trapsing around three different locations, and still I had no coffee. Why couldn't they have told me at the first store and saved my time and energy? Let me tell you why. Because customer service talent is so scarce here in China, many organisations are forced to settle for less. However, the key issue is a lack of training, particularly in communications.

The sales assistant at Nike was such a surprise because she was happy to talk to her customer. When she didn't have the size I wanted, she was able to offer me alternatives, one of which brought the sale. Starbucks, on the other hand failed to effectively communicate that they had no milk. They could easily have put a large poster in the window explaining the problem. Had they done so, my girlfriend and I may have chosen a different product. However, after visiting three stores without success, I was so frustrated we simply went elsewhere - presenting Starbucks with a loss of 60rmb!

Calling a Ceasefire

So, turnover in China is spiralling seemingly out of control. Why is this? Why has a full-scale talent war broken out? In previous blogs, I touched on two of the major reasons.

China's pool of talented, skilled and experienced employees is far too shallow. Since the days of Deng Xiaoping, China has been growing, and growing fast - in each of the past six years it has enjoyed double-digit growth. On face value, this is great news. China is developing faster than any other nation in history and, as a consequence, Chinese people are enjoying far greater economic freedom. However, dig a little deeper and things get a little more complicated. Much of this growth may have been built on Chinese manpower, but talent and expertise imported from elsewhere. Even now, two decades after China first began to seriously open to foreign investment, too many multinational organisations look away from the mainland for managers and highly-skilled staff.

So - even after the economic miracle we have seen in China - why is there still a dearth of Chinese talent? This brings us to the one of the major reasons behind the war for talent. Even with talent so scarce, organisations are not doing enough to develop their existing employees. To continue our military metaphor, many organisations are developing a 'siege mentality'. They are charging into the job market with all their guns blazing to fight it out over the scraps of talent that are available. Their weapons of choice - salary, benefits and promotion.

The problem with the tactics most organisations are employing is that, ultimately, they are self-defeating. Even if they bring victory in the short-term, they serve only to prolong the conflict. For example, if an organisation manages to lure in a skilled and experienced new hire with the promise of a lofty position and bump in salary, they satisfy their immediate needs, but sew the seeds for problems further down the line. Each salary increase they offer sets a precedent for both employers and employees. The employee sees that their talents are saleable assets, they can auction off to the highest bidder. The organisation learns that if it wants talented employees, it needs to open its wallets.

To use one final ‘talent war’ metaphor, organisations need an olive branch. They need to make peace. Rather than fighting it our for one or two talented individuals, they need to develop the talent within their own team.

Escalating Turnover

With the recent earthquake in Sichuan having such a massive impact on China, I am sure many of us failed to notice when a minor tornado ripped through the small town of Wuchuan in Guangdong province in early June injuring 16 people. That, I suppose, is unsurprising. There is, however, another tornado currently ravaging China. This one is the problem of spiralling employee turnover.

In my previous entry, I discussed the two very different pools of talent that organizations based here in China can drink from. The one containing talented, experienced and available employees is close to running. This means that organisations across the country are desperate to get their hands on the finite talent that is available to them, and they are prepared to do almost anything to do so.

The most common way of trying to entice talented employees is by offering them better positions and more money. A survey by Mercer in 2006 revealed that these two were the weapons of choice for the majority recruiters - 23% preferring more money and 19% opting for promotion. Clearly, throwing money and better positions at employees will work in the short term. However, this tactic creates something of a vicious circle. If an employee is attracted to an organization by money, it is also likely they may be attracted away from an organisation by money.

This is where we see turnover spiralling out of control. As soon as one organisation begins to offer more money, then others follow suit. This has lead to some worrying statistics. In many major cities, turnover has now topped the 10% mark and is in no danger of declining. Mercer also revealed that the average Chinese employee between the ages of 25 and 35 is now likely to stay with their organisation is now likely to stay in their current role for less than two years - a figure which has decreased dramatically in the past five years.

Drinking from China's Talent Pools

I first came to China in the autumn of 2005, just in time for the National Day celebrations. However, being new to the Middle Kingdom, I had no idea just what the Golden Weeks were like for travel. I had planned to leisurely travel around the country enjoying the fine weather and discovering a fascinating blend of culture. However, as I am sure you can imagine, I found traveling a particularly difficult prospect. The trains were packed to the rafters and air tickets were being hawked at premium prices. Therefore, I spent most of my time stranded in Beijing, before eventually snaring a bus ticket to Shanghai.

My brief stay just over three years ago may have been ultimately disappointing, but it whetted my appetite for China - I knew I would soon be back. And, so it was. Fast forward a few months and I landed in a cold foggy Beijing just in time for Spring Festival. This time though, everything was planned out like a well-oiled machine. My friend Ossie and I were to stay in Beijing for the fireworks and holiday fun, before spreading our wings and exploring the country on a wider scale. We tramped our way around several fantastic cities. However, one I remember with greatest clarity is Hangzhou. We stayed there for two misty, drizzly days admiring the West Lake and the ancient buildings that surround it.

I certainly have fond memories of Hanzghou because of the wonderful traveling memories it provided. However, having worked in the HR field here in China for the past two years, my memories of Hangzhou now also affect me in a different way. The job-market in China right now is a little like Hangzhou – imagine it as a city built around a lake. Actually, imagine it as a city built around two lakes. Or rather, a country built on two talent pools.

The first of these pools is full of fresh graduates in the first year or first few months in the job-market. This pool is deep and overflowing. To give you a practical example of this, statistics in Beijing released in 2007 estimated that over 200,000 would graduate that year. However, just 87,000 could expect to find jobs requiring university degrees. The other pool though, is almost dry. Employees with strong qualifications and – crucially – rich experience are thin on the ground (sorry for mixing my metaphors a little there). A McKinsey Global Institute survey in 2006 estimate that in the upcoming 10 years China will need 75,000 MBA qualified managers, of which – at the time – it possessed just 5,000.

These two frighteningly dissimilar pools are the reason why today organisations in China are fighting one of the fiercest talent wars the world has ever seen. Over my next few blog entries, I will focus on just this – war for talent.