Tag Archives: Loyalty

How Do You Set Up an Office in China? Seven Suggestions

Situation: A company has an opportunity to build an office in China. Their principal objective is to reduce their cost of providing services. A partner company has offered them space in its existing office in China. What is your experience working with Chinese culture? How do you set up an office in China?

Advice from the CEOs:

  • Hire someone in your US office with an engineering background who is fluent both in Mandarin and in the subtleties of Chinese language and culture. Fluency in Chinese language and culture is particularly critical when you are dealing with difficult process issues.
    • Investigate local organizations such as the Silicon Valley Chinese Engineers Association. Through these organizations you may find candidates for this role who are also excellent engineers and additions to your team.
  • Employee loyalty issues in China will be more challenging than in the US. Chinese employees want to build their resumes as quickly as possible and perceive that job-hopping will facilitate this, just as was the case during the dot.com boom in Silicon Valley.
  • Offer a significant carrot to Chinese employees – after X years of work for us in China, you get Y months of work, at our expense, in our US office. This is a much sought-after experience for Chinese employees.
    • Be prepared to deal with departure soon after return to China, or employees declining to return to China at the end of their US stint.
  • Build a stronger process documentation system than you need in the US to assure both that work is done to your standards, and so that you can easily replace talent lost to turnover.
  • Have a recruiting program based in China to fill your personnel needs.
  • You will experience a culture clash when it comes to the value placed on equity and in understanding the meaning of a contract. For China in its current state of development, neither term is well-established by US standards.
  • Time tracking is not clean cut in China and vacation time needs differ. An example is the month of February for Chinese New Year.

Is It Wrong to Hire Family Members? Six Considerations

Situation: A small but very profitable business was founded and has been run for two generations as a family-owned and operated business. To boost performance, the CEO hired a general manager with a good background who is not a family member. The general manager has told the CEO that he feels that there are too many family members in the business. The CEO likes hiring people she trusts, particularly friends and family that she has known for a long time. Is it wrong to hire family members?

Advice from the CEOs:

  • Don’t try to change what you’ve already done – plan for the future.
  • Acknowledge the GM’s idea. Tell him that you appreciate his suggestions. Suggest that he test hiring more non-family members to cover one of your low risk market segments. Measure the performance of this team versus the other teams within the business.
  • The challenge with family members is accountability and objectivity. The question for the family owners is whether they have the freedom to act in the interests of the company. Can they put family ties aside when someone is not serving the interests of the company?
  • The essential question for the family that owns the business is – what do you want to maximize? If it’s loyalty and longevity – keeping the family together, employed and in harmony – they can be good. If it’s profits and performance – family and friends can be difficult if emotional ties cloud business objectivity.
  • The upside to family is loyalty and trust. That said, family and extended family friends are different. The latter don’t have the same ties or sense of loyalty.
  • Can you keep employees for too long? Yes. Make sure that you evaluate all employees every year. Establish job and performance standards and make sure that all employees – family and non-family – are held to the same performance expectations.

Can Bonus Plans Differ Between Departments? Four Thoughts

Situation: A CEO wants to build a new bonus program for the company’s professional services team. He wants to include a customer satisfaction component, because the group is historically weak in this area. Does it make sense to have a different bonus plan for professional services personnel and managers than for product development personnel and managers? Can bonus plans differ between departments?

Advice from the CEOs:

  • Many companies have different bonus structures for different departments. This is natural because different departments have different functions. For example, Sales may evaluated for bonuses based on a combination of revenue and gross margin achievement, while Finance is evaluated on profitability and Product Development is evaluated on hitting product launch schedules and new product sales.
  • Changing bonus structures can be a sensitive matter. If the team impacted is not included in the process of drafting the new plan, changes may be perceived as negative. If this is the case, it’s better to frame the new program so that you limit your commitment to it to just one year, and let the team know that this may change this next year.
  • How do you go about including customer satisfaction surveys as a component of bonus calculation?
    • If you want to use customer satisfaction as part of the plan, benchmark customer service satisfaction before you launch the plan. If you don’t benchmark, how do you know whether performance improves?
    • Survey response rates will be an issue – you won’t get 100% and may get a survey response rate of 10% or worse. Be prepared for this and make sure that data with a low response rate will support your objectives.
    • A survey is a lagging metric. If you can find a measurable leading metric to use as well this is better.
    • Be careful of how the survey is drafted and who conducts it. Both can bias results.
  • As an alternative to making customer satisfaction part of a bonus plan, consider starting a customer satisfaction or loyalty program. The most important question to ask will be: would you recommend us to your peers?  Any low response guarantees a follow-up call from the company.