Cultural Dimensions of HR

Understanding cultural traits and designing policies and rules that take
them into account can help foreign companies in China address important
human resources issues.

by Min Chen

Culture generally refers to the knowledge, behavior, and belief system that has
permeated the lives of a people for generations. Culture includes a way of thinking,
behavior, and life and takes shape in a particular geographical area under specific
political, economic, and historical conditions.

In the past 200 years or so, the mainstream traditional Chinese culture,
characterized by Confucianism and Taoism, has been diluted by the impact of
Western culture and social upheavals including the Cultural Revolution (1966 76).
Reforms since the late 1970s have also brought tremendous changes to Chinese
culture. Confucianism and other traditional cultural values are no longer dominant,
and Chinese culture is now characterized by a combination of traditional Chinese
and Western values. For example, Chinese are now much less hierarchical and more
individualistic than earlier generations.

Company and national cultures play significant roles in human resources (HR)
practices in multinational corporations (MNCs). Companies that bring their
corporate culture to China without taking local culture into account when
formulating policies, rules, and regulations for their China operations often have
difficulty retaining and motivating Chinese employees. Understanding some of the
cultural traits that shape modern Chinese thinking and behavior can help HR
professionals create strategies to overcome cultural barriers and develop a
corporate culture that maintains core corporate values while adapting to some
aspects of local culture.

Personal, not group, loyalty

Though many writings on Chinese culture emphasize the importance of loyalty to

groups, loyalty to family would be more accurate. Traditional Chinese value filial
piety and cherish their families. Family is the only social group that tends to evoke
feelings of loyalty from its members. Other groups, including the workplace, have
great difficulty cultivating such loyalty.

As a result, a company may find that Chinese employees devote more time and
attention to office politics than employees elsewhere in the world. Many Chinese
institutions, especially government bodies, spend significant time and energy
dealing with internal strife among departments or among small cliques and
individuals. Many foreign companies have found that constructive group spirit is
much harder to build up in China than in the United States, where individualism
dominates the culture.

To foster loyalty to the organization, companies in China should cultivate a familylike atmosphere, especially among key employees. Foreign companies would do well
to try to make employees feel that they really care about them on a personal level.
In this way, employees will feel bound by something more than money. If treated
like family and managed well, Chinese employees often double their efforts and
work longer hours, even without extra payment.

In a Chinese family business, the boss often tries to take care of employees
personal troubles and prepare hongbao (red envelopes containing money) for
employees on special occasions. Hongbao differ from the traditional Western yearend bonus because the year-end bonus represents an institutional reward while the
hongbao implies personal care. Group dinners, outings, and parties can also help
build up a sense of family among employees.

This strategy has to be practiced carefully, however. First, personal attention from a
senior executive can cultivate loyalty to that executive rather than to the company
as a whole. When the senior executive leaves the company, key employees may
leave with him or her. Second, the frequent rotation of top executives in many
Western companies is a major hurdle to cultivating deep trust and loyalty. Third,
even when a foreign manager is in place long enough to build an atmosphere of
trust and loyalty, language barriers and cultural differences make it difficult. A
manager may inadvertently come across as awkward or insincere, leading
employees to suspect that the executive has ulterior motives. Therefore, expatriate
managers who are not confident that they can sincerely create this atmosphere
may be better off not trying to do so.

Corporate HR policies can also play a key role in motivating and retaining
employees. Some MNCs, such as Hewlett Packard Co., Intel Corp., and Johnson &
Johnson, have been particularly successful in this regard (see Successful HR
Practices).

Disregard for rules and regulations

Chinese society has long been characterized by rule of man, not rule of law.
Although various legal systems have existed throughout Chinas history, leaders
have tended to place themselves above the law. Even now, in many Chinese
companies, rules and regulations are for rank-and-file employees, and the bosss
words trump all.

The Chinese disregard for rules is readily apparent on the road. Drivers making a
turn have no patience at intersections, even though they should yield to oncoming
traffic. The rules are bent to such an extent that whoever goes first has the right of
way. Pedestrians walk across streets when the pedestrian light is red and even risk
their lives to walk across expresswaysand sometimes get killed.

The concept of guanxi, or relationships, exacerbates this behavior (see the CBR,
May-June 2004, Guanxi Networks in China). For many Chinese, having guanxi often
places one above the law and allows people to do things that they would not
normally be able to do. For instance, people without guanxi do not receive as good
service or help as those with guanxi, especially in the context of a governmental
institution. Chinese use guanxi to end their kids to a good school, see a good doctor
in a hospital, and even reduce criminal penalties.

When ranking the words "law, reason, and emotion" in order of importance (in terms
of human relationships and daily activities), Westerners tend to put law first, while
Chinese generally reverse that order and place "human feelings and guanxi" before
law. Consequently, laws are infrequently observed, and people tend to look for
loopholes in the legal system for their own benefit.

In a business setting, the lack of a rules-based mindset has implications not just for
internal company operations employees who break the law could land their
company in serious legal trouble. Thus, in addition to formulating appropriate rules
and regulations, companies must go several steps further to ensure that employees
understand and observe these rules and regulations. One strategy is to tell Chinese
employees exactly what they should not do so that they do not bend the rules.
Companies should also enforce internal rules strictly and punish violators without
exceptionso that all employees know they will be held accountable.

Evading responsibility

In China, officials and managers often complain that they do not have enough
authority to do their jobs.

Nevertheless, when there is a serious decision to be made, they often hand the
matter to their superiors. Many Chinese managers tend to separate power from
responsibility. They accept the extra money and control over more people that
comes with a promotion but often fail to take an appropriate level of responsibility.
Even top Chinese executives shift responsibility to their subordinates. Finance and
HR departments are often blamed for senior executives decisions. For example,
when an employee asks for higher pay, his boss may simply say "I am willing to give
you a raise, but HR has disagreed." When a senior executive is asked for an
explanation of budget cuts, the answer is often "Our finance department has
rejected it due to overall budget problems." One way to minimize this tendency is to
clearly connect managers responsibilities to the benefits they receive.

This evasion of responsibility is also why matrix management, in which

responsibility is often shared, must be designed with a closely knit web of
responsibilities. To make a matrix successful, companies must clearly define a
shared responsibility so that someone who has more power and responsibility
cannot push responsibilities onto others.

Lack of sincerity

Chinese rarely speak candidly, in part because of the importance of "face" in

Chinese culture. One not only has to keep ones own face but also has to avoid
making superiors, relatives, friends, or other important figures lose face. As a result,
instead of freely telling each other negative thoughts or opinions, people speak
honeyed words when face to face but disparage each other behind their backs.
Thus, Chinese tend to believe only their closest friends and relatives.

Such behavior can harm business organizations. In a Chinese company, one often
hears comments such as: "I cannot say anything about this because I do not want
trouble..." and "he must have said bad things about me in front of my boss...." In
such an atmosphere, simple business issues can turn into complex human
relationship issues, harming morale and distracting employees from their work. This
trait can also become an issue in meetings where Chinese tend to keep quiet or
agree to a certain decision orally. Once the meeting is over, they may complain
privately about company decisions.

This reluctance to speak freely and criticize constructively can be one of the most
serious challenges for foreign companies in China. To minimize problems arising
from these tendencies, companies need to cultivate a culture of open
communication among employees and between employees and management. This

is no small task, but can be achieved with a clear-cut strategy supported by a set of
policies. For example, employees who speak up in meetings should be encouraged
while those who remain silent should feel pressure to contribute. Without an open
culture, too much energy will be consumed in office politics.

Dangers of inequality and jealousy

Rulers throughout Chinese history have heeded a famous Confucian adage: "You
should not fear ruling a poor but equal country; but you should worry about ruling a
country with inequality" ( bu huan gua, er huan bu jun). Material egalitarianism has
long been an ideal in China and was reinforced by Mao Zedongs rule from 1949 to
1976. In fact, the emphasis on egalitarianism helped Mao keep an isolated and poor
society stable.

Economic reform since the late 1970s has fundamentally reduced the importance of
this value in Chinese society. With the slogan "to be rich is glorious," Deng Xiaoping
openly called on people to get rich and advised society to allow some people to do
so first. Subsequently, people began to strive for wealth, with government officials
and even professors "jumping into the sea" (leaving their secure careers behind) to
do business. As a result, income inequality has grown dramatically in the past two
decades.

Despite great improvements in Chinas overall standard of living, people harbor

deep-rooted prejudice against the rich. In a business organization, someone who
receives a higher salary and bonuses can easily become the target of attack by the
rest. In China, it is hard to keep compensation information secret, because sharing
personal information is a common way to build up relationship. The one who is
rewarded can easily become a target, and colleagues could try to hurt his or her
performance by refusing to provide help or setting up artificial barriers. This kind of
jealousy poses a severe challenge to HR professionals who must motivate people to
work better while maintaining harmony in the company. A strict policy of
confidentiality on such information can help a great deal.

Widespread contempt for others

Looking down upon others is a common habit in China. For example, in restaurants
waiters and waitresses are poorly treated, simply because customers look down on
them. Beijingers look down upon outsiders; urban people snub farmers; Southerners
make light of Northerners; rich people show disdain for the poor; those driving cars
scorn those riding bicycles and taking busesthe list is endless.

Such contempt can also be found within a company. A boss looks down on his
assistant; managers belittle lower-ranking employees; technical people scorn
marketing and sales people whereas marketing and sales people tend not to trust
their technical support; even among blue-collar workers, such mutual contempt
exists. This trait, if not controlled, can form a serious barrier to mutual learning and
other group activities, as employees may be reluctant to acknowledge that they
have something to learn from others.

Contempt for others often reflects a lack of confidence in oneself and of trust in
others. This habit is an entrenched social problem, but companies can adopt
measures to minimize it, including team building activities, inter-departmental
cooperation, and cross-functional training.

Working with the local culture

Despite all of the negative traits discussed above, Chinese people also have many
positive cultural traits. They are known for being hard working, thrifty, polite,
sympathetic, low-key, and patient. While Chinese may be superstitious about many
things, they are not highly religious and are relatively tolerant of different cultural
and religious traditions.

Nevertheless, it is important for Western executives, especially senior HR

executives, to adopt strategies that minimize negative aspects of the Chinese
culture while encouraging the positive ones to create a progressive corporate
culture in their business operations in China. Simply transferring the corporate
culture from the parent company may not work well, but allowing the Chinese
culture to dominate can also have serious adverse effects. Creating a new and
effective corporate culture in China operations is not only possible but has already
been done in many Western operations. The most important thing companies can
do is to introduce a fair, open, transparent, and caring HR system that also accounts
for Chinese cultural factors.

Successful HR Practices

Several US companies have succeeded in implementing human resources (HR)

policies in their China operations that reduce conflict among their staff, promote
retention, and improve performance.

Constructive confrontation, open communication, and risk taking

Intel Corp. has a policy of encouraging constructive confrontation, in which

employees are exhorted to criticize their colleagues and managers ideas. The aim
of the policy is to resolve problems constructively rather than allowing employees to
undermine each other when they disagree. If employees oppose a particular
decision, they should prepare sufficient data and discuss their differences to resolve
problems before the scheduled implementation date. Constructive confrontation, of
course, cannot resolve all problems and is therefore supplemented by a mechanism
of implementing decisions even though disagreement remains. Employees who
have been overruled are usually more willing to implement the decision, as they
have had an opportunity to voice their views, and they may prevail in the future.

Intel also encourages one-on-one meetings between management and employees,

in which employees have a chance to air their opinions to senior managers
privately. This practice suits the Chinese culture well because Chinese generally feel
much more comfortable speaking their minds on a one-on-one basis. Because Intel
is an innovation-oriented company, it also encourages its employees to take risks
for new ideas and allows them to make mistakes without fear of punishment.

Grooming talent and fostering loyalty

Johnson & Johnson has a mentoring system that assigns a mentor to every manager.
Employees recognized as having high potential also receive special training. The
companys international development program, aimed mainly at the development
of managers outside the United States, sends candidates to the United States for
one year of intensive training. If a manager has the potential to become a general
manager, the HR department will arrange for the manager to attend trainings in
sales, finance, and general management and to be rotated to different posts in the
company. Though several big multinational corporations have such programs, few in
China have such a thorough system.

HR as competitive strategy

Hewlett Packard Co. (HP) has raised HR management to a strategic level. In China,
HPs training system emphasizes not only technical training but also cultivates the
values and behavior that are part of the companys worldwide corporate culture. HP
trains its employees to fully understand the companys overall strategy and how
they should use the strategy to guide their day-to-day work.

HP China also has its own business school, which is often called the information
technology (IT) industrys Huangpu Academy (the Chinese military academy that
trained many twentieth-century Chinese political and military leaders) because it
provides rigorous and comprehensive training and teaches the importance of vision
to leaders in the IT business.