Poaching is big in China, and we're not talking eggs. Although only a few IT managers will admit it, poaching employees from the relatively small pool of Western companies in China is the best way to obtain qualified IT staff. While some companies vow not to prey on their own industries in China, most hire aggressively outside their industry.
In need of an IT manager for a new Quaker Oats plant in Shanghai, Daniel Murray, the plant's deputy general manager of finance and administration, hired a woman with an unheard-of 14 years' IT experience after a vendor provided her name when Murray needed a product reference. Murray, grinning sheepishly, describes how Cindy Cheng gave him a tour of the application deployment at her chemical company and how he promptly hired her. Then he realises his own risk.
"You'd better disguise Cindy's name in your article," Murray says, laughing.
Let us dispense with one misconception about staffing your IT department in China. It is not possible to populate an IT group of any significant size solely with Western expatriates. You will have to hire mostly Chinese nationals. They clearly have the best grasp of the language and culture, which is handy when dealing with local end users, vendors, distributors and bureaucrats who can tie up your IT project in Chinese red tape. But the most compelling reason is cost. To set up a Western expatriate in Beijing or Shanghai with a salary, a multibedroom house complete with purified running water and secured walls, and private English schooling for the kids could cost $US 500,000 per year. Compare that with a Chinese urban professional's annual pay, which might be $US 5,000 for someone just out of school up to perhaps $US 14,500 for a department manager. The relatively low Chinese national salaries are possible in large part because the government provides its citizens with subsidised housing and free medical care. Until recently, even admission prices to museums and attractions such as Beijing's Summer Palace were 200 percent cheaper for Chinese nationals than for foreigners. (Now the gouging of foreigners has been curtailed.)Given the necessity of hiring locally, poaching may be the best way to find IT talent in China, but it's not the only way. As in the West, newspaper ads, word of mouth, trade fairs and referrals from vendors will lure people with at least a few years' experience. Because China is a relative latecomer in technology adoption, an IT professional with experience is a rare and coveted find.
Compared with experienced people, raw recruits out of engineering colleges are as plentiful as tea in China, a sharp contrast to the United States, where university IT programs have been struggling to attract students. The rule for campus recruiting here is the more you put in, the more you get out-and we're talking about money. Motorola (China) Electronics Ltd. has donated significant amounts to Chinese educational institutions over the course of its 11 years of operation here, with the hope that the best students will be directed its way.
In partnership with the Chinese Ministry of Education, IBM Corp. has cultivated relationships with faculty in the technical programs of universities (not to mention contributed $ US 80 million to them in the past three to four years).
"I hope because of this and because of our name, we have a good choice of top students," says Henry Chow, chairman and CEO of the IBM Greater China group and chairman of IBM China Co. Ltd., who was recruited off a campus by IBM 30 years ago.
Once an IT staff is found, CIOs suffer the same problem in China that daunts them worldwide: Their IT staff members, while technically competent, do not understand the business, its processes and its needs. "Local Chinese are quick learners on IT infrastructure, but they need the most help on business practices and disciplines," says Li Tseng, systems director at Ford Motor (China) Ltd. and Ford's top IT manager in the country. In China, this knowledge vacuum is more acute because profit-oriented commerce has been in limited practice here only over the past decade, and IT professionals haven't had time to absorb the concept, nor have they been exposed to Western business practices and models, Tseng explains.
The lack of business knowledge shows up in a number of ways, including problem solving. When Ford's Shanghai Fudian Automotive Electronics Co. Ltd. factory opened earlier this year, the mass bootup of PCs at the start of the day caused a power surge and a protracted system freeze. The local IT staff's inclination was to prevent the freeze rather than find and fix the root of the problem.
Their solution was to phase in users' bootups throughout the early morning to avoid a surge. The expatriate managers prompted them to think more analytically and dig deeper, and eventually the culprit was found-problematic code that was easily fixed.
Project management is another skill that is still developing in the East. Even IBM, with its American IT cachet, has positions for project leaders it can't fill. "We have to find people with the ability to manage projects on time and within budget, and that's not something they teach in the university or in a lot of the government-owned enterprises in China," says Chow. Training your own staff in such disciplines is one way to fill the knowledge gap, Chow says, but he worries that this takes time and could delay IT and business initiatives.
Motorola spends as much as 200 hours a year training each IT employee in China-that's a month in workweeks. In comparison, line workers and office support employees are required to receive only 40 hours of training. For its Chinese IT staffers, the company's Motorola University training program can include trips to Singapore, Australia and sometimes the United States, a strong recruiting incentive. The downside of such incentives is that a company risks government displeasure if it sways from established guidelines for training employees abroad. "The key is to play by the rules," advises Shelagh Lester-Smith, vice president and director of corporate communications for Motorola in the Asia-Pacific region. "We make sure [our trainees] go where they are going, and we make sure they will come back." But such devotion to training can backfire. Other companies recognise Motorola as the "MIT grad school" of China-a ripe source for top IT talent.
Pepsi, too, has found that hanging on to desirable employees can be a challenge. It lost one recently when its main competitor came calling. "We had invested 10 months of training in him," moans Andrew M. Lee, IT director for Pepsi-Cola International's China and Asia-Pacific business units. Another company offered the person a full-time assignment in Singapore, which has a considerably higher standard of living than do cities in China. "We could not compete with that," Lee says.
Bringing Chinese grads up to speed requires more than giving them practice with C++ and Java. Training in China can be a little like business boot camp. The new systems supervisor at UPS Parcel Delivery Co. in Beijing, for example, was hired fresh out of college. He took one look at the handheld bar-code scanner that had served UPS in North America so well for so many years and scorned it as "simple stuff," basic technology that even a child could use. "Oh really?" was the reaction from his boss, Managing Director Richard Loi. "Then why don't you go out with a driver and start using it tomorrow yourself? Let the driver wait in the car and you make the deliveries."The next day, the young supervisor ruefully reported that he had failed to finish the day's deliveries. "I said to him, 'I know it's a piece of cake, but what happened?'" says Loi, who also required this recruit and others he hires off campuses to spend their first two months on the job doing data entry, which they consider "boring." Loi may sound like a Marine drill sergeant, but he insists on taking a hard line to educate the recent graduates he must hire to fill his needs. "Otherwise they take things for granted; they don't experiment," Loi says. "If he is to be a leader, and he doesn't understand these processes, he can never pass that knowledge down and he cannot trouble-shoot the problems."Cut Your LossesAs for retention, most of the lessons haven't been written yet. Many Western joint ventures are so new and so small that the wicked winds of turnover have yet to blow. But established companies have felt some gusts and report that staff have been offered double and triple their salaries to change companies.
And you thought you had it bad in Westchester County and Silicon Valley.
Perhaps the best advice for retaining staff is what not to do. Don't hoard all the top assignments for your expats or a select few Chinese. That's a lesson hard learned at Fudian Automotive, which over the past couple of years suffered 100 percent turnover of its small IT staff. Like their American counterparts, the Chinese want to work on the sophisticated stuff-setting up local area networks and plant-floor enterprise resource planning systems, says Scott Barnes, general manager of the joint venture. "You can't turn IT professionals into just trouble-shooters, or they will quit," he says. "If it gets to the point where they are clearing printer jams, they won't be happy." Fudian Automotive now equitably parcels out both the meaty and the mundane tasks to each of its IT staff members, all of whom are Chinese nationals.
To keep interest levels and loyalties high, DuPont Co. assigns its Chinese IT staff to projects involving such leading-edge business disciplines as integrated supply chain and Internet commerce. The company has also demonstrated a strong commitment to hiring and developing local talent. DuPont has reduced its percentage of expat staff in its Asia-Pacific territory from 15 percent to 2 or 3 percent. The company has accelerated managerial skill development of the local staff, making it clear that the manager career track is being built for nationals, not for expats, says Phuong Tram, the Singapore-based director of information systems, continuous business improvement and venture support for DuPont Asia-Pacific. DuPont now has only one expat IT manager in the entire region and has achieved an IT turnover rate of 7 percent-compared with 28 percent for the industry across Asia-Pacific, Tram says.
Another retention killer to avoid: Don't be so frightened by the spectre of Chinese intellectual property theft that you assign all the advanced systems work to expats. Copyright protection has been lax in China, though stiffer protection laws are increasingly being written and enforced (see "Inside Line" at www.cio.com/archive/091598_liu.html). But some Chinese still have a lighter regard for intellectual property rights than do their counterparts in other nations. However, as with the whiz-kid hackers in the West, security breaches in China may stem more from curiosity than mercenary intent, says Charles Hooi, general manager of Quaker Oats' joint venture plant, Shanghai Guan Sheng Yuan Quaker Oats Co. Ltd. "Even if the people can't do anything with the information, they just want to get at it," he says. Hooi segregates sensitive product recipe information from more easily accessed data. Whether you are making cereal or jumbo jets, Hooi and other managers in China advise taking care of the threat the way you would anywhere else-password protection, firewalls, careful explanation of policy and the Big Ax for anyone who transgresses. Beyond that, if you want your Chinese staff to be happy and loyal, develop mutual trust and work with them in a way that transfers skills.
They just may stick around for a while.
So Much with So Little
DuPont supports many IT projects in China with very few people. What's the company's secret?In Asia, DuPont Co. has 16 strategic business units (SBUs), two major global information technology projects and 50 joint ventures (with eight more in the implementation stage). The company has invested $US 300 million in China alone, with three wholly owned manufacturing plants and eight joint ventures. And still DuPont manages to execute its IT strategy with only 108 IT people for the whole continent. To find out how, we asked Singapore-based Phuong Tram, director of information systems, continuous business improvement and venture support for DuPont Asia-Pacific.
CIO: How do you support so many IT shops and projects throughout Asia with a relatively small staff?Phuong Tram: Until five years ago we had a country focus, with each of our groups having its own budget, systems and infrastructure. We have moved away from that, and now for IT we are both part of DuPont's global IT capability and have established regional competency centres that set up systems and consult with our joint ventures across a given region. My competency centres are in Sydney, Singapore, Hong Kong and Tokyo. Some members of the teams are experts in a business discipline, such as security, e-commerce and supply chain. In most of these business disciplines you can share competency. That's why we can provide so much with so few resources. If we distributed everyone [to the individual businesses], our costs would be very high, and the competency would not be as great because the people wouldn't get together to share best practices.
CIO: With that kind of system, is it difficult for the IT people to get to know the various DuPont businesses and understand their unique needs?Tram: Even with few people, we can designate a person to be responsible for one, two or three SBU projects. Most of the time these people feel they belong to the site. Each of my IT leaders has to be a member of the business leadership team to not only understand the business requirements but to help lead. Yet they are very much part of our [regional IT staff] network in which we manage their career path development and make sure their skills are up to date.
Take Winferd Tsai in China. He's my IT manager for Greater China, but he also has an SBU to which he's accountable. He understands the specific requirements of that SBU, which is our Dacron business, and he brings that knowledge back to the core IT team. He is also our expert in security for Asia-Pacific.
CIO: How do the executives of the SBUs and joint ventures react to this organisation?Tram: It's been a major challenge to change the mind-set of [our executives] that this is a better thing for DuPont. But the result will speak for itself because instead of duplication of effort, no sharing of systems and paying more for technology, we are now delivering more with less. So once they see the results, they are for it.
CIO: Can a regional competency centre, even with individuals semidedicated to specific businesses, work with a mammoth project like a worldwide SAP rollout?Tram: For SAP R/3, we have 10 local SAP experts who are part of a global DuPont R/3 design team. They go to the United States [to learn SAP], come back, and work on the project with the local companies. So when we design the system, we understand the specific business requirements in Asia-Pacific and ensure the design meets those needs. If you design the system only from a global perspective, you will miss all that
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