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China's latest match: Finding good managers
2011-Apr-1 16:59:09

China's latest match: Finding good managers

China's latest match: Finding good managers

BEIJING -Right across the country, State-owned enterprises, private companies and foreign multinationals desperately need more managers.

According to specialist management recruitment website lietou.com, there were 30,000 management vacancies in China the month after the recent Chinese New Year holiday.

The shortage is putting pressure on wages with managers seeking new jobs expecting up to a 40 percent increase in salary.

China might have some of the top management schools in the world, including China Europe International Business School (CEIBS) in Shanghai and the Guanghua School of Management at Peking University but it is beyond their capacity to churn out the quantity of managers needed.

The management gap was also highlighted in global employment services company Manpower's 2010 talent shortage list.

In the top 10 labor needs, there was an acute shortage of senior management (ranked third) and sales managers (ranked tenth).

In Europe in the same survey, which interviewed 35,000 employers in 36 countries, management did not feature among any of the top 10 most urgent needs. The demand there was mainly for lower skilled operatives.

Lucy Qiao, general manager of Beijing-based Qeewoo executive search, which recruits managers for major companies such as Bayer, Alstom and Intel in China, said hiring management talent has become a real problem.

"The demand is huge, very very big, indeed. China simply can't supply enough managers," she said.

According to Qeewoo data, the average salary of a manager has increased by between 30 and 50 percent over the past five years, depending on the sector.

"One of the main problems we have when working for foreign companies is in finding managers with technical backgrounds who speak good English. People don't tend to have both."

A report in last November's McKinsey Quarterly, published by international management consultants McKinsey &Co, highlighted China's need for 4 million middle managers, 30,000 senior managers and a further 100 managers capable of leading Global 500 companies.

"There is still a very long road for China to go to achieve such a goal," said Michael Wang, head of McKinsey &Co's Shanghai office.

"State-owned enterprises, in particular, need talented senior managers, including people who have experience in international business and financial operations through working and studying overseas in related fields."

Foreign multinationals often find it difficult to find managers to head their operations.

Li Ge, who is in charge of recruitment at the human resources department of Mercedes-Benz in China from her Beijing office, said it is difficult getting the right people to take the business forward.

"There is a shortage of both middle managers and top level management talent. We follow a policy of bringing people in from our German headquarters, we also headhunt people in the local market and we also try and produce our own management talent internally through our own people development program," she said.

Qiao at Qeewoo executive search said foreign companies often have difficulty hiring good managers from State-owned enterprises, in particular, because they simply don't want to move from their cozy environment.

"Managers in State-owned enterprises, particularly if they are around 40, are often very comfortable. They have a job for life. It is difficult to attract them with money because they might have other benefits from their employer such as subsidized housing," she said.

"They know if they move to a foreign company and down the line it wants to lay off a group of people, they could be out of a job. So there is this inertia in this market."

Bernhard Hartmann, managing director for international management consultants AT Kearney Greater China, based in Shanghai, said the shortage of managers in China is not just a "numbers game".

"I think that is too simplistic. It is not a headcount issue. Chinese companies have a broad platform of people underneath but they don't know how to develop the management talent they have," he said

"In the State-owned enterprises, the leadership is often politically aligned. Managers are often moved around without thinking whether they have the right abilities for a particular job. In Western companies, managers have a clearly defined development path, very individualized and very long term."

Hartmann said State-owned enterprises have a culture similar to a German university.

"If you carry the bag of the professor long enough, you will get some credit for it, which means it is not the person with highest academic abilities who gets ahead but the guy who carries the bag the best," he said.

In recognition of the need to produce more world-class managers, the Chinese government has placed considerable emphasis on management education.

The first MBA degrees were offered in the 1980s when the State University of New York at Buffalo ran a pilot program in Dalian in Liaoning province.

The Ministry of Education then established MBA courses at 10 mainly technical and engineering colleges in 1991.

China's business schools such as CEIBS in Shanghai now rank among the top business schools in the world.

Eric Thun, lecturer in Chinese business studies at the Said Business School at Oxford University, said it is possible to argue the provision of management education in China is better than at most Western universities.

"I think the environment has changed a lot over the last 10 to 15 years. There was an assumption you had to go to the West to learn about business but that is no longer the case. There are some absolute top-notch programs in China. There are some business schools much more highly ranked than us in the global rankings," he said.

A major question is whether there is quality in depth in the provision of management education in China.

Some Executive MBA courses at lesser universities have been attacked for being places for business people to network with people who might open doors for them rather than get educated, something which in China is termed guanxi.

"They are basically friendship clubs where you get to know government officials also enrolled on the course. You pay your fee and you are guaranteed your degree. It has little to do with studying at all but more about networking and advancement," said a professor at a leading Chinese university who didn't want to be named.

Some argue that part of the management gap in China is that the quality of the existing management is not as good as in European and other foreign companies.

Mike Bastin, a visiting professor at both China Agriculture University and Tsinghua University and who has delivered management training in both Europe and China, said the culture of many Chinese companies is not a good breeding ground for talented managers.

"Chinese companies are almost exclusively male dominated with the power very much at the top," he said.

"You advance in a company through your connections or guanxi and not through any concept of meritocracy. It is difficult for good managers to demonstrate their worth."

Bastin added that people within the management chain are not encouraged to make any personal contribution.

"One step inside a typical Chinese company is usually enough in order to gain some insight into the organization's culture. For example, desks of employees are usually divided from each other almost forbidding any discussion among colleagues throughout the working day. Meeting rooms are a rarity within Chinese firms, too," he said.

Wu Changqi, associate dean and professor of strategic management at the Guanghua School of Management at Peking University, said it is possible to place too much emphasis on European and other Western companies having more advanced management systems.

"It can actually make them very reliant on management method and best practice and as a result they are often not as instinctive as some of the more modern Chinese companies," he said.

Wu said the rapid development of the Chinese economy means that a lot of the chief executives and senior managers of Chinese companies are a lot younger than their Western equivalents.

"They are often around 40, whereas the heads of European companies typically are in their 50s. As a result they are often more willing to take risks and are more entrepreneurial. In my experience they are also willing to learn modern management skills."

Management training expert Bastin, however, said the picture in a lot of Chinese companies is that young management talent is not sufficiently rewarded.

"Middle managers often earn only 10 percent of what an equivalent manager in a European company would earn," he said.

"This is not true of senior management and the guys at the top who are often paid 15 to 20 times more than what someone would get in a European company. This can be seen by the conspicuous material possessions they often have."

Thun at Said Business School said too much can be made of cultural differences when assessing China's management gap.

"I would argue it is less about the cultural difference between a Chinese manager and his Western equivalent than the structures of the organizations they are operating in," he said.

"If you put a young Chinese manager in a Western corporation he would learn very quickly the operating procedures of that organization and operate in many respects like a Western manager."

Many believe the lack of high quality management in China is holding back the economy.

Chen Weidong, chief researcher at China National Offshore Oil Corporation (CNOOC), said the management gap is one of the reasons why Chinese companies have failed to establish a presence abroad.

"Despite what is a favorable environment, Chinese enterprises are struggling in their effort to establish recognized international brands. One of the main reasons for this is the severe shortage of managers and business executives who can handle international mergers and acquisitions and trans-national management," he said.

China Daily

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