Optimism is great, but now is the time to face facts. The global recession is affecting business in China unevenly - but it is definitely going to start having a bigger impact on all expat managers in China. Some of you are already feeling the pain of collapsing orders, are struggling to keep a recent start-up afloat, or are just starting to notice a deceleration in your earnings growth.

A certain type of manager - particularly those from the US and UK - think that their job is to encourage high performance by maintaining an upbeat, business-as-usual demeanor. Great. Keeping morale strong is one of the most important thing a manager can do.

But just make sure you don’t cross the line from OPTIMISTIC to CRAZY & CLUELESS.

How do you talk to your staff about hard times ahead?

Senior managers don’t like admitting that they don’t know what’s going to happen next — especially expat managers of multi-cultural teams in China. You have 3 ways to handle management-staff dialogue when it comes to a sustained economic problem.

1) Denial. Ignore the problem. Say nothing. Don’t let them say anything. What recession? What downturn? If orders are down, it means the sales and marketing teams aren’t doing their jobs properly. Get back to work and stop bothering me with all of this crybaby stuff.

2) Deathbed Confession. Orders are falling - expenses are not. Your reserves are gone. Your best people are assessing other options. Confronted with the pressures of a ravaging recession, the desperate and despairing boss calls all of his people together and tells them what they already know — the train is off the rails. (This technique works best if you have spent the last week holed up in your office with one or two key people and act emotionally unstable and manic-depressive when you do emerge from your fortress-office.) These boss-staff meetings work best if you bring in a chart or visual aid demonstrating just how bad things are — and have been for the last 6 months. Then ask if they have any ideas for turning around the company’s fortunes. Ridiculing and deriding the first staff suggestion insures that the meeting will be a quick one.

3) Information policy. Use every formal and informal medium you have to calmly, honestly explain the situation. Highlight the good news, but be as honest as you reasonably can about the bad news. Incorporate a regular update on the economy and the impact of recession on China and your business. Write a brief column or letter in the company newsletter. This transparent policy has three effects:

* Your bad news might not be as bad as what they think the bad news is.
* Head off and neutralize morale-killing rumors that will make your best people leave
* Make it boring. Yeah — make the recession boring. Talk it to death. Stop the whispers and the rumors by taking the secrecy and intrigue out of the equation.

If expat managers in China decide to go with Option 3 (intelligent transparency) will find that they have the most support from the people they need the most in the event that we start to feel the full force of a recession in China.

This entry was posted on Friday, October 17th, 2008 at 9:44 am and is filed under Managing in China, Bear wrestling. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.