I’ve been asking international managers about their approaches to China, and their reactions to on-the-ground management issues.

It’s not too surprising that HR was high on everyone’s list. Finding and holding on to good people was the number one issue – but what’s interesting is that practically no one talked about money. Job-switching and high-turnover rates are expensive in China because of the lost opportunities and the expense of the search – high salary costs didn’t come up as a major challenge among ex-pat managers in China.

Managers that have good retention rates for key people are much more concerned about their team’s development and responsibility level than about their compensation. Younger workers and first-time managers are particularly keen to find and hold on to opportunities that let them develop their careers and grow into jobs. Chinese managers and workers consider growth and learning opportunities to be key reasons to stay at a job.

Do you delegate? Do you know how your key people feel about their jobs and their own skill levels? International managers in China need to be more proactive about staff development and career coaching than they would be back home. Just because your Chinese staff isn’t asking about careers doesn’t mean that they don’t have questions.

I’ve noticed 3 commonalities among managers who succeed in holding on to teams.

Responsibility
Senior managers at companies with strong Chinese teams are big on delegation and giving new responsibilities to key staff. This is a major driver for Chinese managers, and can well determine whether or not they accept that new offer from your competitor. Senior managers need to understand how imporant the responsibility issue is, and make sure that their organization has formal and informal systems in place for giving young managers more opportunities. WARNING: Your view on how much you delegate – and how systematically – tends to vary widely from the view of you delagatees, so try to gauge their reactions carefully.

Training & Development.
Constant development reinforced with formal training programs is another effective team-builder. Here is where those Management Development and Mentoring programs come into play, if you were considering one. A big part of this is job design, so work with your people to make sure they understand how their performance now shapes their career. Review basic notions of the ‘career ladder’ and discuss potential promotions.

Smaller teams and young organizations seem to be the best learning environments. Young managers appreciate lots of time and feedback from top managers – and clearly this is easier to pull off in a small shop where you have fewer than 20 people. Beyond that, it gets tough. But senior people need to understand that local staff and teams need to be managed a bit more closely than their western counterparts. It’s easy to miss the personal elements of management when you are going full speed in other areas of business, but good team-building skills will benefit your organization for the long-term.

Have you been considering some kind of sales incentive for your in-house sales or customer service, sales or marketing people? Have no idea how to move forward or get started? What kinds of incentive programs work in China? Do Chinese salespeople want cash, trips, recognition, promotions? Ok, the cash.

Start off with a temporary performance that allows you figure out kind of incentives will have the highest benefit for everyone. Remember the basic rules of short-term performance incentives:

A) People like being paid more.
B) You may not want to pay them more forever.

Enter the “sales contest”. Structure it anyway you want. A group goal. A competition where one person gets a prize – money, a trip, stuff. Or a special bonus for each item sold or contract signed..

Don’t let the name fool you – sales contests are serious business. If they work, they are powerful not only as motivators but also as training tools. But if they flop, you can come off looking like a bad boss. So make sure your sales contest has the following characteristics:

Good, simple goal. Should be chartable. A number or an amount works best. Not too many conditions, exceptions or difficult rules. And you have to run the contest on something possible, or it can hurt you. The contest should be about the job – not some weird, unrelated skill. And a sales contest should be about sales – no outside factors like attendance, punctuality, attitude, etc. Make it about the numbers – and collect good data. Try different things, and keep some kind of records of the outcome – even if it’s just a calendar note.

Time limit. Many short, quick contests work better than one big one – at least at the beginning. 2 weeks, 30 days, until Spring Festival… as long as it’s clear, posted and the same for everyone.

Transparent & Quick. Make these contests as transparent as possible. Post the results if you can – or at least give indicators. You have to balance the risk of hurting people’s feelings against making the contest seem honest. If the monetary value of the contest is significant, you will have to prepare for questions about how winners are decided. The best contests are 100% clear about the terms, the dates and the pay-off. If it is a cash amount, pay it as soon as possible, as nicely as possible and as publicly as possible. Nothing kills sales-floor morale like a contest or incentive program that stiffs someone.

The Sales Contest has 3 goals for your organization.

1) Morale: Should boost it. Spreading money around is one of the best possible morale-boosters there can be. Warning – don’t just target unhappy departments with incentives and contests, because all employees will learn to act unhappy to attract the cash.
2) Performance incentives. These contests are designed to be specific, so look for immediate reactions in behavior and performance. If sales aren’t jumping, you may be paying too little as an incentive or have other problems.
3) Research data. Make your contests scientific. Get very specific metrics about who does better, and what kinds of products move. You can also use in conjunction with sales training or new IT systems to test their effectiveness. Test group/team incentives with individual performance rewards.

Turnover is high and morale is sinking? Time for some team-building exercises to boost everyone’s spirit and promote harmonious cooperation! But who has the time and budget for expensive professionally run over-night programs at big-name resorts? If you blow all the company’s funds on team-building and staff retention activities, how will you afford those hefty head-hunter fees to replace the managers who quit? With a little creativity (yours) and a few sacrifices (the staff’s), you’ll be able to put together a great team-building program that is cheap, effective-ish, and will wrap-up in time for tee-off on Saturday morning! If that doesn’t demonstrate what a caring, multi-cultural boss you are and satisfy those whiney little bastards, nothing will!

ChinaSolved once again rides to the rescue with an exciting and challenging weekday-long schedule of fun & easy team-builders guaranteed to make the smallest possible impact on your budget and schedule. Everyone is encouraged to have a great time! Let the morale boosting begin:

Rush-hour Road Trip. Nothing builds camaraderie like a leisurely road trip to an exotic location, but who has the time? Well, Shanghai traffic can make your team-building dreams a reality. By carefully timing your journey during normal “rush hour”, a simple trip from Xujiahui to Pudong’s famous Jinqiao Expat-Land (Green Sports & Leisure Centre) can take 3 hours or more! See the sights when you are there (be sure to check out the new Simply Thai — ooh, exotic). Have pictures taken in Strip-Mall World, see the exotic foreign families in their mini-vans (careful – never get between a western mother and her cubs) and see who can collect the most matchbooks from sports-bars!

Century Park Camp out – roughing it, Shanghai style. Wilderness hikes, campfires and overnights in a tent are an old standby for teambuilding throughout the world (California). But the nearest wilderness to most Chinese business centers involves at least 2 plane-changes and possibly a border-crossing. What to do? While it’s not exactly uncharted territory, Pudong’s Century Park can provide plenty of wilderness excitement if you handle it right! Hint – the further you go from the subway stops the more rugged the terrain gets, so make sure those cell phones are fully charged! You’ll have to hunt for your own food from the concession stands around the boat rental building. See how long you can walk on the grass before the guards start blowing their whistles! Go to the nature trail and see how many different types of ayis you can spot with western children.

Portman Paintball. One of the best ways to cement team spirit and foster harmony is to split up into teams and try to kill each other. In simpler days of old, you could head down to Zhongshan Park for a few hours of good-natured fun – but the wheels of development crushed every last vestige of outdoor entertainment years ago. Fortunately, the driveway complex at the Portman Ritz Carleton provides a perfect all-weather mock-battleground. Nanjing Xi Lu is out of bounds. One team gets Starbucks as home base, the other gets Element Fresh. The hotel lobby is a NO FIRE zone!! No shooting at tour groups (but ex-pat businessmen are ok in the BONUS ROUND ONLY).

Xin tian di scavenger hunt. Start at the Starbucks and split up into teams. You each have 2 hours to find as many of these items as possible:
A lone Japanese tourist
A sub-rmb50 lunch
An actual Shanghaise person (who is not accompanying a client / visitor)
A sober ex-pat businessman (after dark).
10 photos taken with visitors of different ethnicity.
Bonus – How many foreign babies can your team touch on the face?

Games & Exercises: No teambuilding is complete without dignity-impairing interactive exercises. If they don’t make you feel foolish, then you’re not really trying:

Hot potato

A red ball, representing a routine business decision, gets passed around and up the hierarchy until time runs out. Don’t get stuck with the hot potato!

Musical chairs

7 chairs for every 5 people. Everybody wins. Extra points for changing places after the music stops.

Justification

Each team is given a basic office task to perform. Whichever team comes up with the most creative reason for not completing the task wins. For extra points, find reasons A) not to start B) not to finish and C) to finish a different job.

Desert Island

Each team is stranded on a desert island, and must decide which 99 absolutely critical possessions, appliances, accessories to bring for the team to survive 24 hours. NOTE: Each article of doggie wardrobe counts as a separate item!

Directions

One team member is sitting 5 feet from a destination. Team members have 45 minutes to give him directions from his chair to the location. No blindfolds, hiding places or obstructions. Very advanced.

Let’s talk about working about working with consultants and outsourcers. (There are a number of special due diligence issues when hiring consultants in China – go here for details: http://www.diligencechina.com/blog/?p=75 ). Working with BPOs (business process outsourcing) has 3 rationales:

1—It is cheaper to pay them than do it yourself (i.e.: Payroll functions)
2—You need a specific, one-time solution (i.e.: Business registration, head-hunters)
3 – They provide expert, strategic knowledge that you couldn’t access any other way. (i.e.:Lawyers, Recruitment Process Outsourcers)

THESE ARE ALL DIFFERENT, NON-INTERCHANGEABLE DECISION-MAKING FACTORS!

Rule #1 – Be careful about pushing the decision to use a consultant or BPO too far down the command chain or you can end up paying International Management Consulting prices for Business English Teacher services.

How should senior managers in China be using BPOs most effectively? The first step is to decide what problems you NEED to deal with, and what problems you WANT to deal with.

NEED are the fires, emergencies, empty chairs and crisis.
WANT are the strategic issues pertaining to long term growth, asset allocation and competitive advantage.

Successful managers find ways of controlling the strategic planning of their companies. Once you know where you want to be, you have to decide on the best way to get there. Consultants and BPOs can help you with either challenge, but they are not the same function. You may understand the subtle differences, but often the HR or operations managers making your hiring decisions are less clear.

Let’s look at a concrete example that all China-based managers are wrestling with – staff development.

There are plenty of agencies and outsourcers who can help your company fill chairs and find managers. There are headhunters, employment agencies, RPOs (recruitment process outsourcers ), testing agencies, etc. And there are also lots of consultants and training companies that can help develop your new hires.

The question is – what part of this is process is strategic what is tactical?

For senior managers in China, developing new managers should be a strategic issue since it goes directly to the issue of competitive advantage. China has – and will continue to have – a critical shortage of top decision-makers for the foreseeable future. Therefore, you company’s future hinges on your ability to develop top managers.

Developing a set of job-descriptions and a management development program are key strategic issues that should be undertaken in-house, and at a high management level.

Recruiting and training are tactical, and can be outsourced to qualified professionals consultants who understand your strategic goals.

Management development and succession planning should be kept in-house and closely managed by YOU and other top managers.

A growing trend in China is to devote top-level managerial efforts to “fire-fighting” activities like recruiting and hiring, while truly strategic issues like development and succession planning get delegated down to the operational level (usually through neglect or by default).

There are plenty of high-quality BPOs and consultants available in China, but they tend to be expensive and specialized. When you tell your HR manager to search for a recruiter or consultant, you have to monitor the situation very carefully to make sure that the assignment doesn’t get oversimplified. High-priced consultants will swap stories about being paid top-dollar to perform low-level functions. They consider the situation hilarious.

You shouldn’t.

The restaurant was nice. Simple, friendly, unassuming. Then I saw the bill. My girlfriend does love those expensive little fruit drinks, but still – this was a bit pricey. I did the math. Yup, it added up. Ok, no harm done. A little shy of rmb 100 for a nice lunch.

As we were waiting for the bill, the owner came over to chat and find out how everything was. He was a nice guy – young, bright, friendly, recently moved here from Singapore. As we talked, I asked about his target market. The ‘business crowd’, he told me.

Ah, yes. The elusive ‘business crowd’. That mythical herd of big budget grazers browsing the Shanghai savanna in a never-ending search for high-priced nibbles. I hope there are a lot of these noble beasts to go around, because more and more restaurants, clubs, cafes and bistros are setting up shop all over town offering nice fare for high-end pricing. And that leads to today’s big question:

Do you and your clients have the same idea about your target market?

Are you shooting at high end clients with mid-market ammunition? Or do you think you’re fishing in middle class waters with premium-priced bait? In other words, would your clients agree with you about their spending habits and demographics?

There are a lot of currents and trends in the Chinese economy right now – and not all of them point straight up. Expat salaries aren’t all headed north. The vast majority of regular office workers are bringing home well under rmb 10,000 per month. Yet every new shop, restaurant and café seems to be targeting super-premium clientele. There are two problems with this approach.

1) High end is not just about attitude. If you are charging more, you have to deliver more.
2) There is a growing hole in the middle of the market that is simply not being served.

Your impression of the market has to match that of your target customer. If you think you are mid-market, you can’t charge premium prices. Now here’s the important part – your client’s judge what constitutes a premium price, not your competition. 5 trendy restaurants on the same block that all sit empty 95% of the time don’t set the price level – the customers going somewhere else do!

You have to survey both clients and competitors to get a good picture of where market pricing really lies. Ideally, you’ll be providing slightly more value than your competition. There seems to be a trend for new China-based businesses to bunch up at the top end of the market and price themselves out of the running. Lot’s of trendy bistros and boutiques are sitting empty much of the time.

Take a good hard look at your own target market and compare it with your prices. People in Shanghai and Shenzhen like to talk rich – but they don’t always spend that way. If you are looking for a premium market – go for it! Offer distinctive products and outstanding service, and charge appropriate prices for it. But be aware that while rmb 50 for lunch is cheap in NY or Singapore — it really isn’t within the regular daily spending range of most office workers in China (i.e.: your business crowd).

Never stop surveying your market to make sure that your impressions match on-the-ground realities.

An associate in the US recently asked me about the localization of Chinese business. Is management in China localizing? I didn’t know what to tell him. My philosophy about business advice is that if your explanation is going to raise more questions than it answers, then you should probably shut up. Localization is one area where I usually shut up… until now, that is.

I’m a westerner based in Shanghai. Most of my clients are MNCs or expat-run service businesses. I come into contact with a lot of local Chinese, overseas Chinese, HK Chinese, Taiwan Chinese, long-term expats, etc. You get the picture. Commercial Shanghai has always flourished from transplanted roots, and that trend isn’t showing any sign of abating. Hell, even the Mainland Chinese population of Shanghai is now over 50% out-of-towners. Many of the young local kids don’t speak decent Shanghai-ese now.

What does this mean to international managers in China? Well, there’s good news and bad news.

There’s the Good News.

You have more HR options than ever.

Local locals (Mainland Chinese who have never been overseas) have better skills and experience than ever. Ex-pats with useful skills are getting cheaper (relatively) as the “hardship” premium in major Chinese cities disappears. Returnees and FBCs (Foreign Born Chinese – apparently the new PC term. H/T 8 Days) are available and ready to try non-MNC options.

New markets are opening.

International business isn’t just for huge MNCs anymore – and they’re not just overseas either. Entrepreneurialism and start-ups are hotter than ever, and all of those little money-mills need professional services. As standards rise, so do the market opportunities for B2B suppliers – particularly for services providers.

New high-end opportunities

China’s boom is fundamentally different from other countries’ economic development in that the immigrant opportunity-seekers tend to fly business class and carry designer luggage. They’re not yearning to be free – they’re whining to be feted, pampered and consulted-to. And these aren’t your parent’s ex-pats, anymore. Euro-trash have to make room at the over-priced fashionable bars for Asia-trash – the bratty, ambitious, privileged second & third generation of hard-working, hard-headed business leaders of years past. They are willing to splash out on the best of the best – be it for personal pleasure or business start-ups.

Some HR Prices are falling.

Expats, FBC and returnees are plentiful and experienced – but many are already growing tired of the MNC routine. They are willing to look at other opportunities. Smaller shops can now afford to hire from demographic groups that wouldn’t give no-name boutique service providers a second look in years past. And enough internationalized Chinese and expats have set up their own consultancies that prices are coming down enough for just about anyone to outsource projects or tasks.

And the Bad News:

Standards are rising.

There was a time that any business that answered the phone in reasonable English passed international due diligence muster. Nowadays, everyone wants NY and London standards at Anhui pricing. The whole “but this is China” line is starting to wear pretty thin – particularly as prices go up. “Yeah, I know what country this is – now fix the running machine and get the funny smell out of the sauna or I’m finding a new gym.” International managers are learning that some of their own standards may have slipped during those tough pioneering days of ‘naught 4’. Make sure that your systems, processes and service level hasn’t suddenly gone all lagging-edge on you.

Markets are getting finicky

The top of the consumer market is fragmenting in some pretty unexpected ways. Most of us have adjusted to the different buying habits of westerners and Chinese, but now we’re seeing new divisions emerge. Young Chinese are splitting off from the nebulous Chinese Middle Class. Singaporeans, Taiwanese, and HK are also developing more distinct spending patterns as their critical mass develops. The French have always had their own haunts ( fill in your own joke here ), but now we’re starting to see other ex-pat communities clumping up as well. And what about those FPCs? Do they have their own hangouts too? Anyway, marketers are going to have to fine-tune their approach and decide who to give up on. Shanghai clubs have known this for years – you can’t satisfy westerners and Shanghaiese with the same room. Unfortunately, that logic may carry over to other types of goods and services.

New types of competitors.

High-end B2B service markets are also getting crowded as ambitious returnees hang out their shingles and bring US MBA skills back to Mother China. International managers have to reckon on a new class of competitor. The new guns in town went to the same schools that you did, had the same first jobs you did — and now they’re looking to take YOUR customers away.

Some HR Prices are rising.

And lest we forget about those hyper-ambitious local – local managers… There was a time when English speaking local Chinese with no overseas education or experience could be expected to quietly do all the heavy lifting for a tiny fraction of their returnee counterparts. Not any more. Prices for competent local managers with serious experience are skyrocketing. They are responsible for most of the job-hopping in the major markets, and they have learned that it works. Returnees grab the headlines – local locals are walking away with the paychecks. These managers are much more skilled and competent than the 40+ crowd, and they expect to be paid for it.

A recent conversation with a Shanghai recruiting professional revealed that the average Chinese manager changes jobs every 18 months. I was surprised to hear it was that long — but I work with sales teams, and their turnover rates tend to be quicker.

If you are managing a sales team in China, you should have 3 goals.

1. Field a functional sales team that is competent at finding and closing business.
2. Train quickly and efficiently — to manage both growth and turnover
3. Find sales managers who can make your expansion plans a reality.

Rapid staff turnover makes #1 difficult, #2 an absolute necessity and #3 a near impossibility.

What can a China sales manager do to improve the effectiveness of his sales team?

ChinaSolved recommends you start structuring your sales teams differently to reconcile your business needs with market realities. One way that may help is to stress management development and rapid promotions as a means of training and retaining the best human assets you can acquire in China.

This may, however, require some new approaches to the way you handle your sales team.

First of all, you’re going to acknowledge that you have high turnover. Pull you head out of the sand and accept that what works back in NY and LA isn’t cutting it here. Next, start looking for potential – not proof. You will have to promote faster and manage closer in China. Back in the west, you can be patient with a new recruit and give him a few months to get the lay of the land. In China, he’ll probably have resumes circulating before he gets his sales patter down. What can you do?

Have a plan:

Chinese may be ambitious, but they are not necessarily familiar with the concept of career planning. Promotions based on performance just aren’t a big part of the China’s corporate culture. No one in China has seen their neighbor’s dad buy a boat or take the family to Hawaii on his annual bonus or sales commission. You can’t make assumptions that your Chinese salesmen understand the “brass ring” concept as it applies to honest job performance.

The solution? Build a career ladder that involves many short, sharp climbs – but is highly structured. This is particularly true if you hire new graduates. Here’s a sample:

Sales associate
Senior sales representative
Sales specialist
Sales Supervisor
Assistant sales manager
Sales manager

Promote often

You should probably plan on giving your new hires a bump every 4 – 5 months. I realize that’s a good deal faster than you would promote someone in the US, but that’s part of the new reality of China we’re talking about. But these aren’t empty titles and nonsense promotions. We’re talking about improved compensation, more authority and more responsibility.

Clearly define responsibilities and duties

Each promotion should be accompanied by a clearly defined set of responsibilities and duties. Now here’s the crazy part: you should take the time to actually write these down and maybe even share the information with new recruits. It’s called ‘transparency’. But what if your prospective team-member doesn’t plan on hanging around for one whole year therefore doesn’t find the career plan idea attractive? THEN THIS IS NOT THE RIGHT GUY FOR YOU AND YOU SHOULDN’T HIRE HIM. I’ll give you a second to think that one over.

Here’s an example of what your new job descriptions might look like:

Salesmen / Sales Associate / Generalist
Trainee position.

Specialist
Specializes in a particular type of Product, Client or Territory.
Given a sales target or commission
Full commission on his sales..

Supervisor
Key accounts / house accounts
Some training & supervisory responsibilities

Assistant Sales Manager
His own team
Training & supervisory duties.
Commission override on his team

Sales Manager
Able to budget, make sales projections, hire and train new sales teams.

Compensate accordingly

Sales compensation should be performance based!!! Targets should be reasonable, and must be accompanied by immediate (or at least regular) cash bonuses. You might also consider higher commission pay-outs and overrides for long-timers (if turnover is a particular concern of yours). Remember – you WANT high-paid salesmen, because you’re going to structure your compensation plan so that they are only getting paid for the behaviors you want them to perform. If you care about repeat business, pay them for that. If you want them to manage or train, pay them for that!

What’s an ‘over-ride’?

After your new hire has been on the job for 12 – 15 months, he may be training or managing new hires. Assume that your average salesman is getting a 5% commission on sales.
Your new salesmen are only going to get a 4% commission – and their sales supervisor or team leader is getting the extra 1% on everything THEY sell.

This does two things for you: 1) it encourages your experienced team members (and yes, in China 15 months makes you ‘experienced’) to take an active role in the training and supervising of their younger colleagues, and 2) it gives your younger guys a target to shoot for.

Have a goal in mind

After a year, your new sales supervisors and assistant managers should be able to execute your sales strategy, solve routine problems and train & manage new recruits. You need to hire, train, promote and compensate in such a way that your sales staff becomes 5 times as valuable to you after 18 months – and you are paying them at least 3 times as much as their starting pay. I know that sounds like a big bump, but if you structure it the right way you should be coming out way ahead.

Many of you THINK you are already doing this – but you have to be honest with yourself. Are staff development, performance-based compensation and promotion the RULE or the EXCEPTION in your company? Do your new hires know what is expected of them – and what they should expect from you? If you decide at the beginning WHO YOU WANT TO HIRE and where you want him to be 18 months from now, you’ll probably find that your turnover problems become a lot less serious – and your sales are both higher and more predictable.

Thames Town – the carefully planned community that is intended to replicate the experience of tradition British life (http://www.time.com/time/asia/magazine/article/0,13673,501050214-1025219,00.html ) – looks set to be a roaring success. And there’s a German town in development as well. Progress on the ‘Tokyo on the Yangtze’ project has hit some kind of technical or administrative snag (?) , but plans for a French, Italian and Nordic themed village are said to be moving ahead briskly.

What about Americaville? Well, I’m sure that there is some kind of project up on the drawing boards of the appropriate Shanghai ministry – they’re probably just keeping a low profile until all of those Euro-projects get completed. That must be it.

One of the problems is likely to be the overwhelming range of options that the designers will have to choose from. Well, always on lookout for chance to be helpful, so we’ve put together a few ideas to pitch to the developers. Contact us for details.

Disneyland? No. NO! This is NOT representative of American values or aesthetics. Though to be honest, villas in the Shanghai Disney theme-park would be a huge hit. You could put a McDonalds on every corner. Wal-Mart in the town square. Hmm. How would you brand it? Disneyland-land. DisneyTown? OrlandoVille? Anyway, HK has the only Disney franchise in China, so it will never happen. NEXT! >>

ManhattanTown – This one works because it will give Shanghai yuppies (Shuppies?) a new reason to look down on others. Residents will be encouraged to act snobbish, shallow and money-driven. In ManhattanTown it doesn’t matter what kind of person you are or what you’ve accomplished – it’s about how much you earn and how much you spend! Real estate prices are astronomical, services are minimal, people are rude and the quality of life is unhealthy. It features cultural events no one appreciates, galleries with art that no one likes, and boutiques with ridiculous fashions at outlandish prices. Restaurants close every Wednesday afternoon, and are replaced by new ones ready to open by Friday night. What a minute…ok, never mind. We’ve already got a bunch of those neighborhoods in Shanghai now.

CollegeTown – An idealized version of the US college experience that Chinese people prepare their children for from birth–but this one doesn’t drive you to contemplate suicide. CollegeTown is a little like Boston – but without the Indians. In Shanghai’s CollegeTown, the streets are lined with cozy cafes where you can read comic books and play computer games, where you won’t get beaten up for ordering fruit tea in the bars, and the libraries never, ever close! But in this CollegeTown you can actually have friends — though you still probably won’t get into a fraternity. Sorry. To give it that authentic feel, applications must be submitted 18-24 months in advance, and will require a TOEFL score.

Mayberry PRC – A friendly, idyllic version of America that never really existed for 99% of the country. Everyone knows one another and has time to stop and chat on the street. Imagine coming home after a hard day in your sterile Shanghai office tower and just ‘settin’ for a spell’ at Floyd’s barbershop or heading over to MaryLou’s Diner for pie and hot-pot. Mayberry PRC will still have plenty of down-home Chinese flavor, though. Pajamas will be the dress-code, and blaring loud-speakers will be installed on every corner. Lights out at 8:30. No actual small-town or country people allowed.

TrailerWorld / Redneck Row – Yeah, now we’re talking. You can fill in your own crude analogy to White Trash – but we all know it’ll work. You’ve been slaving away in your uncomfortable suit at that MNC all day, and now it’s time to kick back and relax – Arkansas Style. Strip down to your boxers & graying undershirt, spit for while, smoke in the elevator, and throw some trash in the hallway. You’re home. If it itches – scratch it! All units are decorated with tacky lawn-ornaments, used auto-parts, and folding plastic furniture. Convenience stores, strip-malls and China’s largest Wal-mart provide all your shopping needs. Oh, yeah. TrailerWorld is the kind of international living that finally makes sense.

I had a very informative lunch yesterday with Frank Mulligan, the founder and CEO of Shanghai based RPO (recruitment process outsource) firm Talent Software ( http://www.talent-software.com/private/online_hiring_china/061018 profile pending). He shared many interesting ideas, but one that I want to discuss right now is his view on hiring in Shanghai.

Frank’s take on the highly volatile Chinese labor situation: ‘Don’t hire people who already possess 100% of the skills and abilities of the job.’ Chinese staffers put a premium on learning new skills and increasing their range of professional activities. Money is just one reason to switch companies – but job satisfaction also plays a huge role. Frank has had great success retaining staff by emphasizing continuous training, personal responsibility and professional growth for his team. He confounded the high-turnover trend and held his original staff together for 4 years – which he calls “phenomenal” by local standards. It is refreshing to encounter an expert in management recruitment and screening who actually ‘walks the walk’ and has results to back up his own advice.

How about your team? Are you really hiring someone else’s training & development mistakes when you hire experienced workers? Here are a few ideas for putting Frank’s ideas into practice:

1) Shoot for 70% of the necessary skill level – not 100%. Sure, you will have to spend more time and effort on training and development, but that’s not necessarily a bad thing. Not only will you insure you are teaching your new hire to do things the right way (ie: your way), but you will also find that they have a higher level of job satisfaction. The new skills and techniques they learn on the job may be more important than a pay rise to your young managers. “When they can do 100% of a job, you have to move them up or they’ll leave,” Frank warns. Make sure your managers are challenged, but not overwhelmed. Training is important you young Chinese professionals.

2) Don’t be so quick to hire from the competition. You can lure people away with a higher pay packages, but you won’t necessarily hold on to them. There has to be more to the job than just salary. If you do go to the competition for new HR, be careful about how they fit in with the rest of the team. They guy who gets a 35% pay rise to join your team may be teaching the rest of your staff that the grass really is greener on the other side! When you hire newcomers, you have to make sure that you aren’t muddying the waters in your own pond.

3) Move them up the ladder faster. Western managers want to see performance first, then respond with additional responsibility and better pay. Chinese workers tend to expect the promotion and compensation package first, and will adjust their performance after. Make the process more transparent by meeting with workers and spelling out your expectations and goals. If you want to hold on to high-potential staffers, be ready to bump their salary and job-titles faster than you would back home.

4) All experience is not created equal. Mulligan said something surprising for an HR professional – when it comes to experience, sometimes less is more. He would prefer a staffer with 4 years of industry experience over one with 7 in certain cases. Why? Flexibility and the desire to learn are simply more important to him. If you want your people to stick around, they need to have room to grow into the new position. It’s great to hire someone who can make an immediate impact on your top-line sales, but you are hiring more than just a client list or network of contacts. If your new hire won’t fit into your organization and make a positive contribution, you are going to have to repeat the recruitment process again in a matter of months.

5) Career development is a huge competitive advantage in the talent market. Companies in China still aren’t recognizing performance or helping young people develop their own careers. A little mentoring and coaching can go a long way, but make it systematic. Scheduling time with key people to discuss career tracks and growth opportunities every month may seem time consuming – but it is a lot more cost-effective than recruiting new managers all the time.

When manufacturers worry about acquiring raw materials and processed components, they are referring to their “supply chain” — and they spend a lot of time worrying about how to make it more efficient and reliable.

Those of us in the service sector tend not to think about it as much – and maybe that’s a mistake. If you aren’t a construction or manufacturing company, there’s a good chance that the lion’s share of your non-rent expenses are HR-related charges. It is not uncommon for them to eat up anywhere from 25% to 50% of your earnings – or more.

Every CEO or MD I speak with refers to HR issues in general -and turnover rates in particular- as key problems in China. I think that part of the problem is the way in which western managers view their relationship with staffers. Stop thinking of human assets as capital expenses that get amortized over 15 or 20 years, and start thinking of them as short-term supplies that have to be replaced often. Ok, I realize that it sounds terrible, but just go with me here. It will lead to much better decision-making and organizational performance in China.

HR is the purchasing agent of the service economy. They supply the service industry with a never-ending stream of raw materials in the form of staff, workers and managers. The problem is that YOU are probably giving you HR department the wrong orders, little training and no effective oversight. Even a 20 year veteran in industrial purchasing gets guidance and has to justify his buying decision.

Not so with many HR managers. If there are butts in seats, then the MD doesn’t scream. If the MD doesn’t scream, the HR department is happy. HR creates hiring criteria and work processes that are designed to hold on to the highest possible number of workers. Because of China labor market conditions and poor hiring procedures, you are paying more and more for weak, job-hopping staffers.

Senior management – Your staffing standards have slid so far so fast that your HR policy has been reduced to counting bodies. Stop throwing up your hands and sighing! You’re sending the wrong message. Get creative. Get effective. If your sales department under-performed you would take action. Stop giving HR permission to hire lame candidates.

Get them to move to the deep-end of the talent pool – out-of-towners and women. Your HR managers have a tendency to recycle the same group of candidates that their friends in other companies have seen. Figure out a quick, effective way of polishing the rough diamonds out there and start hiring from Shandong and Qingdao.

If your line people aren’t cooperating with HR, you are asking for trouble. (And the next time one of your department managers says they are too busy too update a job description or meet with HR about a new hire, tell him you are going to hire him an assistant manager to help him deal with his workload. That should free up some time on his schedule – one way or another.)

Line managers – Are you so busy bitchin’ about the quality of hires that you don’t have time to get involved with hiring better people. I speak to HR managers all the time and they feel a closer relationship with their competition than with line managers. Get involved in the process from the beginning. And if you feel that HR is trying to wear you down with an endless stream of weak candidates, have a sit-down with the boss and suggest bringing in an outside consultant to take some of the pressure off your beleaguered HR manager. See if that doesn’t help.

HR managers – There’s an ancient book of managerial wisdom that all western managers learn at an early age – it’s called Goldilocks and the 3Bears. You may know it. It’s the ‘too hot, too cold, just right’ story. Well, you are Goldilocks, but instead of tasting the food you are hiring the staff.

Too hot: People are our #1 asset. Every candidate must meet our standards of excellence. Best schools, best experience, best compensation package.

Too cold: We need to fill 5 seats this month. 2 of the seats are in sales, 1 is in marketing 1 in admin and 1 in accounting. Fire up the help-wanted ads and start rolling applicants through. We need 10 buttocks by the 31st.

Just right. This new hire will spend the next 18 months selling product X or managing relationship Y. We are going to find someone who: A) knows how to do that right now, or B) can be trained to do that in 6 weeks.