Tomorrow’s Talent: Emerging Industrial Roles in the Technological Era

 

The rise of the internet was an enabling tool that had to be adopted by large masses of the population to bring forth the unbeatable value it has today – that of real-time information streaming, sharing and usage. The presence of technology is the enabler, but the actual transformation success depends on people’s ability to integrate and implement it as well as the new business concepts it produces on a mass scale within an organisation. At the moment, all efforts are top-down. However, to enable mass transformation, these top management efforts need to spread vertically—to the very bottom of the organisation—as well as horizontally – to every single function and operation.

 

A study on Digital Innovation Leadership on Industrial Enterprise released earlier this year showed that the priority of organisations for the next two to three years will be the development of employees’ digital skills (1). This will not be possible without thorough review and functional re-design of jobs as well as the emergence of some completely new positions within the industrial manufacturers. However, as one swallow does not make a spring, so a handful of digital talents would be too insufficient to scale up innovation if faced with mindset opposition by the majority of the employees. This mass digital upskilling, however, can be developed through consistent and continuous daily learning opportunities and real-time exchanges between functions in similar industries. It can be facilitated by easy-to-access digital platforms, blended learning formats enabling accountability and innovation adoption incentives.

 

Often times we hear statements from the management of various organizations that they need to transform their culture into highly engaged learning organizations. And yet few of them do really understand or have experienced what is needed to take a workforce of thousands and change their mindset and daily working habits. It requires mass employee approach, high management dedication and reasonable, yet affordable investment comparing to the one organizations pump into new technology scouting and adoption.

 

Until today many organisations continue to allocate budgets every year for learning and development activities that typically benefit a handful of individuals at certain levels, without having a specific strategic development focus aligned to business objectives. Most of the time, there was no actual evaluation of the results. If there was any positive change, it remains with a handful of employees, who will eventually leave and set the organisation knowledge transfer capabilities back to square one.

 

How do we shift the digital learning paradigm to serve organisational needs then?

 

A quick browse through the various recruitment channels finds a number of newly emerging job roles, and new digital functions being attached to more traditional roles, that were completely unknown ten years ago. These are transforming the way business is managed, and revamps the overall business model for traditional industries such as the general goods industry, heavy industry, mobility, life science and others.

 

Let’s review a few digital roles that are emerging or being transformed in the industrial context.

 

Technology Marketing Officer (in some cases simply Technology Brand Officer) instead of Chief Marketing Officer

 

Today when we talk about a marketing role in a manufacturer, we inevitably think of industrial brand positioning, not only to the channel network but eventually to the end-customer. In short, we call this B2B2C marketing; activities that require development of a digital marketing strategy directed by a Technology Marketing Officer leading a tech-savvy digital marketing team comprising of a Digital Content Developer, Data Analytics Manager, B2B2C Social Media Specialist, User Interface (UI) Expert and a Brand Manager.

 

The Data Analytics Manager assesses data from a variety of digital platforms, open data sources or even purchased data, and passes the results to the Digital Marketing Strategist to design ways to reach the end-customer and streamline channel network management. Industrial brands more than ever before care who their end-customer is and better positioning themselves as easy-to-access brands using B2B2C digital platforms to facilitate two-way feedback. The traditional role of the brand distributor is quickly transforming into a highly qualified brand-knowledge specialist who can provide excellent onsite support to end-customers in their territory, earning margins from the quality of after-sales services offered rather than from buying vs. selling prices.

 

Supply Chain Ecosystem Technology Officer replacing Chief Supply Chain Officer

 

Supply chain management has always played a key role for manufacturers in overall productivity, cash levels, delivery performance, profitability and return on investment (2). With the advancement of technology, the specific roles within this function have already witnessed major transformation. Let’s take as an example a traditional mid-size company with a typical linear flow of operations starting with order management, procurement (sourcing, purchasing), production planning, warehouse and logistics management to end-customer delivery. As the order cycles frequency changes and the demand for shorter lead times and faster delivery time grows, supply chain management becomes a non-stop activity that requires highly tech-savvy and business-competent talent capable of managing big data, cloud computing, augmented reality and predictive analytics. Therefore, with our mid-size enterprise example, the supply chain will move towards predictive and even prescriptive analytics on future market behaviours.

 

Revenue Strategy Planning Officer instead of Sales VP

 

In the past, the sales vice president of a manufacturer was a key role, managing the full sales process from qualifying sales leads to closing business deals. His/her activities mainly spread across sales development, managing channel networks and ensuring the right KPIs were in place to engage the sales force. With increasing demand for shorter and shorter lead times, customisation and irregular order cycles, manufacturers can no longer rely on sales forecasts based on historical data. They have to integrate a much more forward-thinking approach using real-time analytics on market demand, performance feedback, efficient channel network management and timely data collection of on-the-field product amortisation to foresee after-sales maintenance and spare parts demand. Thus, the traditional Sales VP role has started to require market performance analytics and revenue strategy planning skills, predictively shifting sales efforts from slowing down to higher performing accounts as well as developing completely new revenue streams based on analytical efforts.

 

Digital Talent & Organisational Development Officer instead of Chief Human Resources Officer

 

Today human resources activities in a foreign-invested mid-size manufacturing enterprise in China are limited mainly to simple generalist operations such as payroll management, re-active recruitment of vacancies and relatively-low skilled labor and admin related jobs. With the advancement of technology however, the usual repetitive operations can be inexpensively outsourced or internally replaced by appropriate software. What would be the future focus and added-value of the human resources officer role then, if most traditional operations become AI-processed tasks?

 

Simply put, the effort is shifting towards talent and organizational development to meet the overall business strategy with focus on its people. In the past 15 years, multinational companies have embraced the term ‘HR business partner’, developed by Dave Ulrich and Wayne Brockbank. This upgraded the HR function from merely HR policy and admin operations to strategy-making in support of line leaders and business decision-makers. The role, however, was rarely, if at all, adopted by small or mid-size industrial enterprises. Enabled by technology however, China-based enterprises are becoming more advanced in people management. Thus it is most likely that forward-oriented manufacturers will leapfrog from the well-known HR admin function straight to Talent and Organisational Development officers who use visualised data analytics, employ state-of-the-art people behaviour and talent analytics and develop organisational psychology approaches to engage the workforce. This employee will be well positioned to sit at the business table and advise on people strategy across all functions and levels in the organisation.

 

“As a beginning the existing workforce can get introduced to the transformation of traditional functions and then explore an opportunity to acquire the new skills and competencies towards a higher level of efficiency and advanced execution”

 

It is understandable, however, that to some above described digital roles may sound very futuristic and a bit distant from today’s reality in un industrial setting. There is a valid question of how we can ensure the practicality of developing the skillset and competencies to meet the job transformation demand? What enterprises have to do with the existing workforce that lacks the skills described above? Do they have to plan massive layoffs of outdated labor and replace it with new digital talent? Certainly not, otherwise this whole digitalization and innovation process would become worse than a nightmare and a very costly initiative, if possible at all. Not to mention the limited digital talents available outside. The most practical approach is to look and analyze the situation from within the organisations – in their own shop floors, back offices and among white collar staff. Based on the mid-term business goals they would need to outline first three priorities and implement effective and easily accessible talent upskilling platforms. As a beginning the existing workforce can get introduced to the transformation of traditional functions and then explore an opportunity to acquire the new skills and competencies towards a higher level of efficiency and advanced execution. Selecting on a suitable a well-designed platform is important to enable that first level of mass upskilling. To make it a successful effort further connection of the digital learning platforms to the performance evaluation system will have to provide equal incentives to the workforce along with other on-the-job achievements. Thus enterprises can achieve a mass effect on all levels within their organisations. The consistent top-down as well as bottom-up approach will disperse psychological uncertainty and threads away in favor of excitement from adopting new technologies and advantages they bring in day-to-day operations. Implementation in small, consistent steps on a mass scale over time can add significant value to daily operations in various functions. Once the adoption rate exceeds 10%~15% of the workforce in each function, it will continue spreading quicker leading to the long-anticipated paradigm shift. Without realizing it our organizations’ cultures will be completely transformed through digital embrace on all levels that previously looked so unattainable.

 

A General Manager Journey in the Automotive Industry

Our interview with Dr.- Ing. Rixin Zhang, Vector Automotive Technology (Shanghai)’s General Manager, evolved around two journeys.

The first being the sort of journey that most likely comes to mind to anyone, which is in its geographical or physical sense. We talked about what took him to Germany to complete his studies and, after ten years in Karlsruhe, coming back to China. That journey is there for everyone to see.

The second journey takes place at a more personal, intimate level: it is a journey of professional transformation. From individual contributor roles, starting as a young software development engineer, to a leadership position overseeing a team of 100. And what did it entail for him to move from focusing purely on the technical towards developing a much comprehensive view of the business. He shared with us how did he come to develop a much broader set of skills.

 

You will enjoy this read if…

 

…you are a young leader, or are on your way to senior leadership roles such General Manager or Managing Director of an organization in China and want to learn the first-hand account of someone that has already gone through the same journey you are in now.

…you are C-level executive sitting in the European head-quarter of a small-medium sized business with operations in China and want to know how you could support your regional leadership team to fare better.

 

The German Beginnings

 

JUANJO: I saw on your LinkedIn that you studied in Germany. Maybe you could tell us how did that unravel. So, how come did you find yourself in Germany?

 

RIXIN: I went to Germany in 2003 after a series of circumstances that lead to one of the best decisions I inadvertently ever made. Before going to Germany, I studied Information Engineering at Zhejiang University. During my studies, I started to learn German.

I knew I wanted to travel, to study abroad, and see the world. I initially considered the U.S. but in 2002 to get a visa there was difficult – it was in the aftermath of 9/11. Because I had the language skills and because Germany is well renowned for its engineering expertise that was the second best choice I could think of. And it turned out to be the best decision I made in my life.

 

JUANJO: How did Germany surprise you? How was starting there from zero?

 

RIXIN: It wasn’t exactly starting from zero. I already spoke the language, so that was a valuable asset. The first week was a little harsh, a bit of a cultural shock but I got acquainted with daily routines quite fast.

It was a significant time for me. I was sharing a place and studying with international students including many German. With my roommates we hang out together, we had long conversations, we played together, and we partied together. It was a great time, and I have very fond memories.

Between my studies and work, I ended up spending ten years in Germany. I feel Germany is very close to me. Even my colleagues here in China they often say, half joking, that I am too German!

 

JUANJOWhen you finished your studies in Germany you joined a company in Karlsruhe that later on became a subsidiary of Vector. And you have been with Vector ever since. You landed in the Shanghai office in 2013.

Coming back to China was it something you had planned? Or was it a window of opportunity that opened unexpectedly and you grasped it?

 

RIXIN: I wouldn’t say that was part of a strategy. Over the course of the years in Germany, I had quite a lot of contact with the China business. I traveled several times here during the year to visit clients. Then a possibility came up: the company had to set up a local product line and a small team around it to run it. I was offered to lead that team.

In addition to that my wife is Chinese and she is more prone to live in China, whereas I think I could be anywhere really.

So that was an essential component to factor in. After considering it, we decided it was both a good professional and personal opportunity.

 

JUANJO: What happened next?

 

RIXIN: Things went well for the business, and in 2016 I took over as General Manager. Now we have six product lines here in China and a team of about 100 people.

 

JUANJO: What does this mean for you? What is the difference between the 2013 Rixin Zhang and the one I am talking to today?

 

RIXIN: Back in 2013 I was much more focused on the technical aspects of our products. My concern then was to promote our offering, which required much technical knowledge to address very product-specific questions. I was more focused on the technical aspects of the specific product line I was running.

Today, when it comes to the Chinese market, I have a much broader vision and a better understanding. I am also more detached from the technical stuff now than in the past. I mean, I still need to keep close tabs on it because we sell to engineers and it requires that I understand what is going on from a technical perspective.

However, today I need to be on top of the performance of other areas: strategy, marketing, human resources, finance. So my focus is spread thin across several functions of the business.

Also, I would say that now I am more connected to the global trends of the industry. Shanghai is indeed a much more international hub than Karlsruhe, so here it is easier to develop more connections with international professionals in the industry. As counterintuitive as it might sound from a Chinese returning to China, here I developed a much international, global view.

 

JUANJO: In 2016, when you had to take over the business and as the scope of your responsibilities broadened how you manage to expand your skills?

 

RIXIN: Well, I have to admit the transition period was not easy. The first three months were quite tough.

While in Germany I had taken a Master in Business Administration and Management, so I had some basic, theoretical understanding of some of the subjects. Although I did not have practical experience, that knowledge proved very useful when I took over as General Manager.

However, if I managed to go through the adaptation process was thanks to the team. In each different area of the business, I got the support from staff that had a deeper understanding of the particular subjects I needed to learn more about. The ability to work collaboratively as a team is something that I value enormously, and for a good reason. I also had the support of our head-quarter. They were generous and patient, giving me the time I needed. Of course, it was all very stressful, no doubt about that, but we managed.

I think it is critical to rely on your staff, to develop trust with your team, so you can all bounce ideas. There are always new topics, new challenges popping up. They are complicated issues, and you need the whole collective intelligence of the team to overcome the obstacles in the way. I am myself in a continuous learning mode, and so I want our team to be too.

 

Human Resources at Vector

 

JUANJO: Currently, from a human resources perspective, which areas are you more involved at a strategic level? Would you say it is recruitment, talent development, retention,…?

 

RIXIN: Driven by the quick pace of business development we need the fulfill our running and long-term HR goals. Recruitment is undoubtedly an essential component. We have opened several channels to improve our recruitment both in China and Germany. Besides young engineers who have studied in local universities, we also try to recruit graduates who are going to finish their studies in Germany. To find suitable candidates remains, however, difficult.

On the long run, talent retention and career development are the most strategic elements we are focusing on. We would like to grow with our employees. This long-term commitment is in particular crucial for us not only because to train an employee requires time but also because this is how I believe we will secure sustainable development. Besides a competitive compensation, a good working environment and job security, the underlying “engineering culture” is our answer. Our engineers shall have a lot of fun to work here and enjoy a high degree of freedom.

We consider ourselves a “Hidden champion”, often not well-known by the general public. Compared to bigger companies where they usually have a higher employer brand awareness, small-to-medium sized German companies such as ours might not look that attractive to outsiders at first sight. Many of our employees come recommended by other colleagues. Employee referrals are proving useful to us. We believe that only satisfied employees are willing to recommend someone they know to join the same company. Naturally, successful recommendations will get rewarded but all in all employee referrals save a lot of effort and financial resources.

 

JUANJO: How is your HR team supporting you? What is, in your opinion, the mission of HR at Vector?

 

RIXIN: The ideal support from the HR team comes from their ability to balance short-term and long-term targets. It shall strive for high employee satisfaction and be viewed by employees as a reliable support partner for their growth. If our employees are willing to share their problems/ideas with HR, I will see our HR mission is to a large degree achieved. There is still a gap, we are not there yet but I believe we are on the right path.

 

JUANJO: How would you encapsulate Vector’s Employee Value Proposition?

 

RIXIN: I would synthesize it as follows: Vector is THE ideal company to work for within our domain of expertise.

 

JUANJO: Is there any type of regular alignment in terms of Human Resources with global headquarters? How does communication flow work?

 

RIXIN: The different regional organizations run their own HR, decentralized from global headquarters. But we share the same spirit, where employee satisfaction is among the top priorities.

 

JUANJO: Is there any issue in particular that you find especially challenging when trying to explain it to global headquarter?

 

RIXIN: China is very dynamic, and Shanghai particularly. Changes and rotation in the team are more frequent than at headquarter level. The tension between a highly-dynamic environment and keeping the focus on our long-term mission is likely higher here than in other regions. It is not always easy to convey the whole picture of what is going on here and perhaps this can only be done after coming to Shanghai and experiencing the issue first hand.  Actually, when we compare our company with the average turnover of similar companies in Shanghai, we are doing very well. At the same time, though, keeping a stable team is the most challenging work we face in HR here.

 

Your Mission Today

 

JUANJO: At this point what would you say your primary mission is here?

 

RIXIN: Two things. Towards our clients, our mission is to make their work easier. Our end users are engineers at OEMs and Tier 1 Automotive suppliers. So, we need to develop software tools and provide a level of service that allows them to be better at what they do.

The Automotive industry in China is scattered through the country, with plenty of research and development centers all over the place, and it is a very dynamic sector with new OEMs popping up here and there (i.e., electronic vehicles). In the U.S., for example, there may be Detroit and some West coast cities, but in China the industry is much more distributed geographically. There is also an ample range of variation here regarding knowledge and capabilities from an engineering perspective: some players are just lagging a little behind their U.S., German or Japanese competitors, whereas for others the gap is much more significant.

The needs, expectations and technical knowledge of our customers vary and continuously change, posing an organizational challenge to keep up whether it is at the communication level, product development or customer service. With all that in mind, we have to develop solutions that simplify our customer’s engineering work in a way that is sustainable for us as a business. That would be one of my primary missions here.

To be able to do that, and here I come to the second part of my mission, we need a great team. We need people here to feel happy, to feel valued, to know that everyone is working in the same direction, that we are all aligned.

 

JUANJO: How do you inform your thinking about the latest developments, or how do you collect new insights to stay on top of things?

 

RIXIN: I spent a much time talking with our team, maybe half of my time goes to that. I try to be very open, to listen to them, and even find a way that we can meet some of their personal needs. I want to know what do they think and what do they care about, and try to see if together we can find a way to make things even better around here.

About 30% of my time goes to customer related matters, whether it is just talking to them, following up on contracts, and such. Then I probably spend 20% of my time having external conversations. I use external events, like fairs and conferences, to network with both international and Chinese peers to have a better understanding of what is happening in the market. I also travel often to Germany and the U.S. to have a look at what is going on.

 

JUANJO: In these conversations with the team, anything that stood out? Something that you thought: “Oh that is such a good idea!”

 

RIXIN: We talk a lot about business, on how to keep our customers engaged and satisfied. Many ideas are floating, and it is not an easy thing to sort them out. We need to see what makes sense, understand whether they are feasible to implement.

We did come up with some marketing initiatives, like a small gift that we designed, as well as an idea for a social gathering. I mean these two are just small examples. We are looking at step-by-step incremental changes, rather than to introduce dramatic innovations. It is something that we are still working on. I mean incremental changes are always a work in progress.

 

JUANJO: How do you start your day?  Do you have any morning habit or routine that helps you be more productive the rest of the day or remain more focused?

 

RIXIN: I come to the office early, about one hour or so before anyone else comes in. During that hour I can focus systematically on just one topic. It is just me, in my office, thinking by myself. Then, comes 9 am, I can cope with the rest of the day – which I know I won’t be able to have this type of time for myself. That’s why I like intercontinental flights. No phone, no email, just plenty of time – usually eight or nine hours straight – to focus on one or two subjects.

Another thing I use, although this is not a morning habit, is swimming. I do once a week long distance swimming. It helps me stay sharp and keep physically fit. I have two little kids and almost all my downtime goes to the family, but this one thing I keep for myself.

 

JUANJO: What piece of technology or gadget has helped you recently to improve your productivity?

 

RIXIN: Outlook Calendar. Yes! (He laughs). I know, it doesn’t sound very fancy but it is of great help to me. Every day I put at least 15 minutes to take a look at what I need to do today, tomorrow, next week and even within the current quarter.

 

JUANJO: Now, how consistent is that scheduling? Once you set it there, does it remain or do you need to readjust continually? 

 

RIXIN: What I like is what happens when I look at those boxes in the calendar, each representing an appointment – whether it is with sales, human resources, or with someone from the team to discuss a technical subject. As I stare at them I am already thinking, I am already working on the issue and I can reassess its level of priority, and reschedule if need be.

 

“Never forget that technology is for people. Do not ignore the human factor. As an engineer I used to believe that the shortest distance to get from A to B was a straight line. With people this is often not the case”

 

JUANJO: What about books or readings in general? Has there been any reading recently that has had a very positive impact on you whether it’s personally or professionally?

 

RIXIN: I have given up a little bit the reading. Did I mention I have two small kids? Not much free time anymore. When I had the luxury of time it is not that I had a clear theme or topic. Something would pick my interest, and I would further explore it. Well, I do enjoy reading about history and culture. For work, I also need to look at some technical papers now and then. Moreover, I also read about parenting and kids’ education lately.

 

JUANJO: You have been in your current role for a certain while now. What would be your piece of advice to anyone that has to embark on a similar journey? Or what is the main lesson you have derived from your journey that you believe can be helpful to others?

 

RIXIN: I’d say never forget that technology is for people. I mean, never ignore the human factor – emotions, mistakes – when designing technological solutions. There’s nothing like a perfect solution: there is always a certain risk, a certain level of uncertainty and you have to make some compromises. My background is in engineering, and I used to believe that the shortest distance to get from A to B was a straight line. With people, this is often not the case.

 

JUANJO: To finish, what image comes to your mind that best represents what you are doing here at Vector.

 

RIXIN: Well, interesting. I would say something that goes with being a facilitator? Facilitate the professional and personal growth of others. Which in turn allows me to grow as well.

 

JUANJO: Thank you Rixin. Thanks a lot for your time.

 

RIXIN: Thank you.

 

 

Wanted: A Headquarter Listening

Imagine the following conversation in a workshop:

Question: “Who knows your regional market better: you as regional Organization or your global Headquarter (HQ)?”
Regional Team: “We!!”
Question: “What does the global HQ think: who knows your regional market better?”
Regional Team: “The global HQ!”

Sounds funny, but it is not.

An article from Harvard Business Review in April 2015, based on research by CEB & Russell Reynolds Associates, supports the implications of the previous conversation. Research stated that only 5% of surveyed CEOs in China felt their voice was being heard by HQ and 75% of China-based CEOs and executives indicated their HQ did not consult them to define the regional strategy, which basically means HQs believe they know better the Chinese market than their regional leadership teams.

You might think that was a 2015 thing. Well, not at all. In our regular Organizational Development Programs (ODP) with international companies in China – the latest as recent as January 2018 – we put together a mixture of Chinese and non-Chinese executives. There we experience first hand how often Chinese managers respond in a similar vein, in varying proportions that go from 50% to 100%. Non-Chinese executives are always surprised about this, and only when they get to hear their local peers they realize how well reasoned their arguments are. This serves as signal and inspiration to think about the global mindset (or lack there of) in their respective organizations, with discussions in the workshops evolving around the potential causes.


What could be the root cause?

Here are some of the aspects that usually come out:

  • Despite a global presence many organizations still have a HQ-centered way of looking at the world. Why is this happening? For starters putting HQ results first may be due to public listings, tax optimization or others; it is also due to a traditional way of thinking in which HQ sees itself as the “we-are-the-origin” and so it truly believes it knows better; finally, there is a certain fear from HQ that other regions, China in particular, will outgrow them as a result of a faster pace of development and challenge the status quo (i.e. taking over jobs). 
  • Intercultural unawareness or lack of prioritization for intercultural aspects. There is not a clear understanding about the impact in collaboration that things like cultural differences, communication styles, work styles and educational background may have.
  • Other times regional specifications might not be accounted for as circumstances that can actually influence outcomes (i.e. different business environments, technical capabilities,…).
  • And finally, the leadership and collaboration culture as a whole does not reflect the global mindset that is required to run daily international operations.

Of course, the above is not an exhaustive list. The aspects mentioned might be the most common ones but, sure, there are others. If an organization could develop the ability to start questioning itself, to reflect on what needs to be adjusted, or to look at things from a different perspective (i.e. culturally), that would be already a great source of inspiration and a good starting point.

Now, this will pose a big internal challenge for it will disrupt long standing conceptions and imply changes that might move the HQ team out of its comfort zone. As the adage goes “change yourself before you will be changed”, so your organization can be in the driver’s seat.

By stimulating a shift towards change and more agile attitudes at the core of the organization, leadership can turn this approach into a competitive advantage, both in terms of market share and in the labor market.

 

Are you acting and thinking globally?

An easy way to check if your organization has a global and open mindset is to answer the following question: “When was the last time you adapted globally an idea or thought coming from a subsidiary?”

If you can answer this question with some important – small or big, but important – changes in your HQ processes, or across the whole organization, then you might be on the right track. Just be honest with yourself.

In another approach to address this topic you can also use tools like the Global Mindset Inventory (GMI), developed by the renowned Thunderbird School of Management. This tool is especially designed for this purpose, although there are other assessments in the market that serve the same purpose.

 

How does it impact your Organization?

Consequences can be a lack of stickiness or problems with the retention of good talent in your subsidiaries. People who feel respected and recognized are much more likely to stay with the organization. Making the effort of identifying and recognizing their contribution is less costly than having to replace talent, and it benefits the organization as a whole for these contributions can be applied globally. In a nutshell, by listening more carefully, acknowledging contributions and deploying them across the board both the business as well as the commitment of talent improves – making it less likely for talent to take off or for competitors to poach from your organization.

Other possible consequence is the delay in taking important decisions in a fast developing and changing market environment. If the issue is not well understood, and perceived only as local matter, the necessary decisions to address it risk to be postponed forever. You might be inadvertently creating an advantage for your competitors.

Resistance to truly collaborate and share knowledge transparently to find a common solution. This is often the case with China. But what is the alternative? If you want to participate in a market today you have to be a real participant in all meanings. Lack of engagement and poor identification with the company very often have consequences.

To avoid all of that it is important to support and demand a collaborative attitude from all the team in your HQ or home-based factories, across several layers of the company. Many of the issues happen in the day-to-day work between front-line managers or engineers. They need role models with clearly set expectations.

Whoever wants to work in an international company has to have an international mindset and proper language skills. A clear, simple and important message to communicate to staff and new hires.

 

How do Personality Traits Matter in Change Management?

Bob is a highly paid Finance Manager at a WFOE in the outer skirts of Shanghai. He, like other new members of the management team, was employed in the ramp up of a Change Project, which was initiated by the European headquarter to address a slow but steady erosion of profits of the Chinese subsidiary.

Bob accrues lots of professional experience, loves to squeeze figures and is well recognized among his peers due to his excellent ability to analyze complex matters. He is a more reactive and a bit introverted person, good at listening, being reluctant to fall into early conclusions, waiting patiently at the side line for the right moment.

Several months after his enrollment it turns out that he has not achieved the expected impact in instilling change. Observing his daily work behavior, despite his very good knowledge of the numbers and their relevance to the operational performance, he keeps relatively quiet during the weekly management meetings, shows one or two charts on critical developments without emphasizing their importance, and briefs the General Manager just one or two times a month. On the other side he is quite vocal in complaining during idle talks with other colleagues about the fact that the company is not really changing.

Mary is a rather below average pay staff at the same company, where she is kept far behind her potential. She is working in the Administration Department, in charge of building affairs, such as overseeing office, factory and warehouse cleanliness. With her open personality, always talkative and energetic, she is well regarded and acknowledged by all the staff, for she is always there whenever something needs to be fixed. For the past few weeks she has become a kind of mild but constant nuisance. Not only for her supervisor, but for the whole management team up to the General Manager. Every time she has an opportunity she shares with anyone – she even rushed in the GM’s office once – about her perception that there is something wrong in the way the finished goods are being expedited. Since the company started using a new, and very bulky, cleaning machine a few weeks ago she recognized that several areas of the warehouse couldn’t actually be cleaned, because the machine was not able to operate between the isles of stored pallets of finished goods on the ground. In some areas pallets were removed and replaced regularly and there was always a time window to clean that part. In other areas however, there was never any movement. This concerned her a lot, since she was aware that shelf life for these goods was limited.

She wasn’t taken seriously at the beginning but after many approaches the GM finally picks up on the matter. He then asks to see the inventory numbers but doesn’t find any unusual movements or overstock. When looking closer at the production dates he finds out that first-in-first-out rule (FIFO) is not followed and as a result a considerable amount of inventory has been stuck at the warehouse for quite some time. After further digging and enquiring it turns out that since the last update of the IT system the production date has not been displayed on the labels of the outer boxes anymore, but only in the labels on the inside. Warehouse operators, unable to see the dates, chose to reach for pallets based on convenience and accessibility and not FIFO. After spotting the root cause the GM immediately acts: IT is instructed to make the necessary adjustments in the labeling, the warehouse staff is informed, and procedures adjusted. It was all thanks to Mary, ignoring all hierarchical reporting lines and being relentless until she had her voice heard, that a massive loss from obsolete inventory was prevented.

Cautionary Tales from an Interim Manager in China


You will Enjoy this if You Are…

…or aspire to be a General Manager or Managing Director of a business in China.

…a C-Level executive who has responsibilities over your organization’s regional subsidiary in China, whether you are or not in China. In fact, if you are not in China this piece is specially relevant to you.

…involved in any capacity in the management of human resources in China of an operation of about 50 to 250 people.


Feeling the Pain & Management as a Craft

 

JUANJO: Frank, what is it that normally takes a company to consider an Interim Manager in China?


FRANK
: Although case by case is different, normally companies just think about interim management as one option of change when there’s something there that hurts a lot. And it really has to hurt a lot, for example if the local general manager is terminated without prior notice or left the company from one day to another. Only then they pick up the phone. But even when the call comes in – I only get inquiries through my network – they are still wondering whether to do it externally, with an interim manager, or internally. At this stage there is still very likely that a company decides to tackle that pain internally.

Now, if externally when you start an interim manager project you need to bear in mind that often you are thrown into the assignment without much of a warm-up. You might not know the industry very well; you may even do not know the company at all. So it’s really like jumping into cold water.

The first thing you need to do once you get there is to guarantee that operations keep ongoing. A second step: you need to find out what are the difficulties in the organization. What is it that didn’t go well in the past that led the current situation? The answer is very often unprofessional management. It may sound very simple, but you really need to go step by step, while restructuring whatever is necessary to bring back the organization on a level that it can function effectively and efficiently, to try to find out the real root causes: Why things happened the way they did?


JUANJO
: When you say unprofessional management, what are you referring to exactly? Because It could encompass a lot of things: the inability to manage teams; the inability to have a good understanding of the cash flows; lack of processes, etc.

 

FRANK: It may cover all the issues you just mentioned. When I talk about management (or lack of thereof) I’m talking about management as a craft. Management is not rocket science, something taught at Ivory Tower universities or MBA schools. No, management is a craft that can be learnt regardless of your talent, which may contribute to just 10% of your management skills. The other 90% can be taught, can be learnt.

Coming back to the organizations, if I had to pick out essential weaknesses in terms of managing organizations in China I would say: HR management effectiveness and headquarters’ supervision. For the most part, whatever small and medium enterprise (SME) you go here in China – I’m a guy for SMEs, I’m not talking about the big guys here – you will find big weaknesses in HR structures, in HR efficiency, in HR policies. This may not apply of course to all cases, but I found it’s very, very common.

Another common issue that I see in almost all cases is the lack of supervision from the German or foreign headquarter. This is a dominant factor. A lack of supervision from headquarters paired with too much trust in the top leadership of the organization here, whether he or she is Chinese or expatriate.

And this is very curious, for what is the strength of European or, especially, German SMEs? Their strengths are their products, their production technology, and their processes. That’s how they got to where they are today in terms of market share and why these SMEs could successfully develop in the past 50 or 100 years.

 

“One common issue is the lack of supervision from the German or foreign headquarter, paired with too much trust in the top leadership of the local organization”

 

When they open an entity here in China they transfer technical knowledge; they send equipment; they teach the sales people about the products; teach production people about the processes, about how to use the equipment and about their quality systems. So all of that is nicely done, but very often nobody is teaching or nobody’s critically validating the competency of local top management, especially of the general manager. It will be neither critically asked nor will it be monitored, appropriately supervised or trained. Again, that’s an impression from my own experience. There might be cases where there is actually a focus on management skills, but usually it’s not. Which is understandable, because headquarter became successful in Europe for its strong emphasis on product, technology, and innovation. They are still very much focused on these success factors of the past.

What is interesting is that headquarter leadership do have good management skills in the craft sense I was referring to before. Top management in headquarter, to a big extent, has it. They have the mindset, they have the cultural context, the experience, but they don’t talk much about it or don’t focus too much on it. Maybe local top managers have attended headquarters’ leadership programs but it’s not in the way that I mean it and, when finally left to its own devices, the local organization here in China starts to develop in a way that leads to an increasing gap between the respective management techniques and styles.

 

JUANJO: If I understand correctly what you mean is that, back to headquarter, management as a craft is a success factor that is well embedded in the culture of the organization but it is not put as a tangible, it is not put down in paper so to speak. So when they come here to China this asset is left behind or is believed to be embodied, somehow, in some of the other assets (processes, trainings) or that with just with a few meetings with headquarter or a one-month stay in Germany by the management team would suffice. Is that it?

 

FRANK: That’s right. And then they just let it go. They hire a general manager here in China and, of course, they have their requirements. But these often do not really refer to that craftsmanship: they do not include some checkpoints for evaluations based on management competencies. And then, little by little, since there is no tight supervision – note that I am not talking about control, I am talking about supervision, about guidance from headquarter – then the gap starts to widen.

Consequently the organization here does not develop in an optimal way. This does not prevent it from being successful. No, it might create success, which was easy in the past. But since the pie is getting smaller here in China organizations have to become more effective and efficient, and I imagine there will be more and more cases where this gap finally comes to the surface, for it becomes too obvious. And as an Interim Manager that’s when you jump in, that’s when you get the call.


Stages of an Interim Management Assignment

 

JUANJO: How long, on average, does an assignment usually take?

 

FRANK: In case of emergency assignments somewhere from 3 to 12 months and depending on the scope sometimes longer, for C-level positions. Everything we are saying here refers to C-level positions and, again, for organizations of a size of 50 to 250 employees. Then of course there are different change projects or interims assignments and the length may vary.

 

JUANJO: Once you are into an assignment, can you break down the different phases you go through? How does your routine look like once you are deployed on site?

 

FRANK: Let’s say that after you receive the call the assignment goes through. There will be a briefing from headquarters’ CEO or the executive in charge, and some internal documentation and figures will be shared. Usually I have to take over within a very few days and, in the most extreme case, even the next day. Remember, it hurts already very much. So understandably there’s not that much time for formal preparations.

The first month is needed to get into the organization, to align with the organization in the sense that you can run it. Because the activity needs to continue, it cannot be interrupted and it has to be conducted in a way that does not lead to negative interactions with customers.

Then usually it takes another two months to collect as much information as possible, to build trust with the team, select the staff that will have the capability to carry out the necessary changes. Of course you start doing that from day one, but only after you have ensured normal operations you can start to focus on the root causes that put the organization in the situation that landed you there.

Only after two or three months you get a grip on the organization and now you need to align with headquarter. You have done your diagnosis, you have identified what are the root causes and you have a proposal on how to deal with them. This is an important stage and here awaits another challenge: What I was initially told by headquarter about the situation and the assumed root cause for I which I had to jump in is not the only reason, or is not the most important one. The client is often surprised when after those few weeks I put totally different things on the table than those it originally asked me for. Sometimes they don’t believe it: “No, no, this cannot be. We checked that before and this is not possible”. Especially when it comes to internal organization and management related issues. This links with what we mentioned earlier, about the lack of supervision.

Now, with a more accurate diagnosis and more detailed corrective actions on the table decisions need to be made, also in terms of costs. Because change costs money, a fact that is often underestimated! You need the okay for certain expenses, for certain write-offs, for additional resources that might be necessary as well as the need to move some people to other responsibilities or terminate them. Here the organization, the client, has to make the final decision. Your role as an experienced and trusted China manager is to put all the facts in the table, as shocking as they might be. Then the client finally decides, for example, to execute change without firing anyone; to write off certain values from the inventory or assets list; or, in extreme cases, understands that it is necessary to consider relocation, because the root cause is in the region.

All that refers to the “How”: How to implement changes. That is the hardest part, not only because of economic reasons, but also because headquarter is confronted with a new reality – different from what it knew – and involves a process of recalibration to the new circumstances.

After that I don’t want to say it becomes easier, but now you have a new set of objectives, an action plan and the resources to go ahead. You draw a picture of how things are supposed to be, maybe by some KPI’s, maybe by just other indicators – they might refer more to business processes, whether it’s purchasing, production, or IT systems. At the end of the assignment, once change is carried out, I will deliver a set of indicators to the client to check that specific actions and changes have been executed. These indicators also serve as a good starting point for the new appointed Managing Director or General Manager.

Once you start executing, at this point in time, team building becomes essential. Because there has been a readjustment in the objectives not necessarily everybody is contributing as part of a team anymore. So you guide the team towards the new way of doing things; you set up certain structures to select who is going to do what; you are able to see who identifies with the new objectives. And for those who don’t it’s important to have a clear-cut. You have to be prepared: depending on the scope of change somewhere between 10 to 30% of the people will not follow, sometimes even more. This is again a budget issue: you may have people who worked 10 years with the company and all of a sudden they are regarded as unusable assets. Again, headquarter has to be made aware of. Oftentimes it might counter “We can still keep them, we train them”. But in this case as an Interim Manager you have to be assertive. You are there to strengthen the team and to let it grow organically, like a plant, in a healthy way.

 

JUANJO: At this stage I imagine that your assignment is coming to an end, for you have a functioning team. How does this combine with the appointment of a new General Manager or Leadership Team? I would like to understand how this transition takes place and what your involvement is.


FRANK
: In the best possible scenario, which is not always the case, the team has already picked up on the new objectives, the ideas, the spirit and the mindset. So when the new General Manager or Managing Director comes in the momentum is so strong that the new leadership is just taking off with it. Of course, he or she will always introduce new changes, but those will go in the direction of the changes that have been introduced in the past six, eight or twelve months. It would be a risk for the China organization if the new leadership were to go on a totally different direction.

Your target as Interim Manager should be to make sure that the team is empowered in a way that, whatever leadership comes after, they can perform.

Based on my learning I would extremely recommend that there is another period of three to six months where the Interim Manager offers guidance or mentoring to the new General Manager, since the former has carried out this change in a difficult time and has set out the basis for the team. This goes beyond the traditional concept of interim management. I’m talking in a frame of continuous partnership with the client here. However I don’t mean full time: it might be just a few days per month.


On Gaining Trust


JUANJO
: I would like to go back a little, and ask whether you could elaborate more about your routine once you have been deployed on site, after you have ensured that operations keep running. Do you have a toolkit or a roadmap that you follow to uncover the – at that time – still unknown issues?

 

FRANK: There are three things. The first one, and most essential, is to talk with the people: local managers and some of the staff. You might ask how important Chinese language skills are. I would say for management maybe not that much, but a great advantage to talk with staff at all levels. Talk not only in groups, but also individually: groups may have their own hidden intentions and power structures. When talking to different individuals and asking the same or similar questions you see how things come together. Sometimes the understanding of those individuals with regards a particular issue is quite different. There is something from these different views that give you an angle from where to start approaching things. For example, the finance manager says the inventory is very well organized, and it’s definitely correct; then you talk to the warehouse guys and they say this is totally a mess here. So, talk to people individually: this is very important.

The second thing I can recommend is to keep your eyes open and look around. If you have already experience in operations just by looking at the physical status of the warehouse, production, or incoming inspection you will be able to see something already and pick up some additional clues.

And the third part is in the figures and reports, of course. Getting financial figures, HR figures and whatever is available.

With these three elements you will be able to put a first picture. When you compare that with the information that first was provided to you by headquarters you will notice already that some issues may be different.

 

“When there is suffering in the organization it means there is also suffering in people”

 

JUANJO: When having these discussions with the staff how do you go about gaining their trust? The circumstances in which you land into a company, from what we have been discussing, are already not ideal. So how do you navigate through these nuances to get them to open up?

 

FRANK: When there is suffering in the organization it means there is also suffering in people. That’s why I prefer to talk to them individually, because after a period of building mutual trust some people will stand up as their frustrations come out. They will see a possibility that finally, for whatever they fought professionally in the past, there’s a chance that they will be heard. This is a great source to get information, and to get to the real status of the organization. Moreover, these people may become the first agents for change.

There are cases where you feel right from the beginning that nobody is really talking openly. It happens. Here in China there are usually two reasons behind that. One is compliance: they know something is wrong in the organization and they are trying to hide it. The other reason is that another local top manager has advised them not to open up.

In the second case, experience shows that this person can be identified relatively easy and once that manager is put aside the openness accelerates. Yes, you will have still some people reluctant to talk for they are afraid to lose whatever advantages they enjoyed in the past but, then again, you need to find out those who had suffered and get to talk with them.

In the case of compliance issues, like people getting paid second salaries, taking advantage from sales or purchasing activities among others, is more complicated. If the whole organization holds tight together you might get lost. And headquarter might not like to talk about it, even when confronted with the facts. So, I would say the same principles apply when it comes to talking to staff individually but it will just take more time and you need to be extremely meticulous.


Rapid Fire Questions

 

JUANJO: Next question I borrowed it from someone else’s: Tim Ferriss. I don’t know if you know him. Anyway, here’s the question: Let’s imagine you have the budget to put a gigantic billboard with your cautionary tale, your recommendations after all these years for those small and medium companies operating here in China when it comes to change; when it comes to management; when it comes to keep track of how they are doing here. What would that message look like?

 

FRANK: To put something in a few words is not easy but basically, going back to what we talk about at the beginning of the interview, as a reminder to these organizations I would say: “Trust is good, but can’t replace supervision”.

 

JUANJO: Supervision, not just blind trust.

 

FRANK: That’s right. And for a change manager I would also have a few words: “Prepare for surprises and embrace the unknown”.

 

JUANJO: All right, that sounds like good material for a billboard. What about a book recommendation that is relevant to the topic of discussion? Do you have any you want to share with the readers?

 

FRANK: There is a book I always like to bring up when talking about management. It’s not new, but helps a lot to be reminded about the basics: “Managing Performing Living: Effective Management for a New Era” (“Führen Leisten Leben: Wirksames Management für eine neue Welt”, is the original version’s title) by Fredmund Malik. What I like specially from that book is the idea of management as a craft, not as a science. That’s why I would recommend it to anyone.

 

JUANJO: Now I think that it’s a good note to put an end to the conversation, so thanks a lot Frank for all the sharing.

 

FRANK: Thank you.