Small & medium sized business owners in China know that finding and retaining Chinese managers and team leaders is a big challenge. For expat-run businesses that have turned the corner from struggling start-up to established profitable enterprise, HR priorities are shifting. We used to fight fire-fighting tactical battle to put ‘bums in seats’, but now we need to device long-term strategies that will build a stable team of core managers.

China HR has to stop focusing on the traditional 18-month manager, and start instituting key-person plans that will retain your top-echelon leaders for 5+ years. It’s time to rethink HR goals and policies.

How do you get your most experienced Chinese (and China-based expat) managers to commit to a serious long-term career with your growing company? Let’s take a look at the hypothetical case of John Chen, VP of sales at Expat Incorporated.

The Shanghai company has been on the ground in China for 4 years. Eddie Expat started the company as a one-man B2B service company in 2004 and has succeeded growing the operation into a profitable 35-person operation with a new branch in Suzhou and plans to expand to Beijing later this year. John Chen joined the company 25 months ago, and rapidly took control of sales department to become second-in-command of the company. Eddie Expat created the VP of Sales position for him 8 months ago, as part of a ‘long-term’ retention package put together after Chen was offered a prestigious position at a famous multinational company. Chen has seen his take-home income (including bonuses and commission) rise by 180% since joining the company.

Now Chen is back in Eddie’s office and talking about leaving for another promising opportunity. He has indicated that a promotion to Senior VP and a significant pay raise will keep him from jumping ship.

What should Eddie do? He knows that Chen will be impossible to replace – and that without him the company’s expansion plans will have to be shelved indefinitely. Eddie can justify a big pay-rise, but he’s concerned that this scenario will play out again and again every year. Furthermore, Eddie wants to delegate more responsibility for day-to-day operations to Chen so that he is free to focus on expansion and new product lines.

Eddie Expat’s Best Option:

Eddie should say ‘yes’ to Chen but with a new structure. Instead of just shoveling cash at Chen and hoping for the best, Eddie needs to make compensation integrate with his expansion and profitability strategy.

Eddie will agree in principle to Chen’s demands but structure a deal that disrupts the viscous cycle of endless negotiation. The company will raise Chen’s cash salary – but only by half the amount he asked for. The other half will be paid out in the form of a high-end family health-care plan and a long-term pension plan that ‘vests’ or becomes permanent over the next few years.

This is a win-win solution that gives both sides what they need most. It’s simply unrealistic for Eddie to think he can hold on to this valuable manager without paying the going rate. But simply dumping cash, bonuses and big commission payouts on star employees isn’t a retention plan – it’s an exit strategy! Once the successful manager gets the lump-sum payment he now has the freedom (and the ego) to pursue a wider range of options. Expat Inc has to pay Chen strategically.

3 arrows in the quiver of China Key Man Retention strategy:

1) High-end health care plans. A really good international plan for a family of 3 will cost your company upwards of $2,500 per year – and is much cheaper for groups than individuals. That means Eddie can give Chen a valuable benefit at a discount (20-40% is common). If your plan has direct-billing then Mrs. Chen will be able to bring their new daughter to Shanghai’s best international hospitals and highest-quality clinics without shelling out cash and dealing with the hassles of applying for reimbursement. The real beauty of this option is that Mrs. Chen will get used to the convenience and prestige in a hurry – and thus become your advocate in the household.

2) Pension plans that vest over 3 – 5 years. There are many ways to structure a company retirement or long-term savings plan, but the key is Vesting. Expat Inc will fund a dedicated savings account for Chen, but he won’t be able to take the money with him if he leaves before an agreed-upon term of employment. The longer he stays, the more portability he will have. Don’t make the vesting period too long or the plan becomes unattractive. But if Chen is free to take the money and run, there’s a good chance he’ll do just that. Typical plans start vesting after a year or two and increase steadily until the employee is ‘fully vested’, or entitled to 100% of the funds.

3) Company ownership and profit sharing. This is the last option because it is really the least valuable. Everyone loves the idea of becoming an owner in a rapidly expanding business, but what happens when your growth slows or even reverses? This is just the time when you really need those experienced, talented managers to help get the company back on track – but it is also the time when his share in the company drops. The worse things get for your struggling business, the more attractive it becomes for your key people to jump ship. Profit sharing only works when profits are rising. Shares in a troubled company drop in value. It’s still a great idea for building long-term loyalty and motivation, but you’ll find it doesn’t help you much when you need help the most.

What if Sr. VP Chen turns down your offer and holds out for cash? Now you know that he is may not plan on sticking around for the long-term, but at least you have time to make other arrangements. You may have to take a short-term hit on another big pay-rise, but now you won’t be blindsided when your key-man uses that key to exit your company.

Like many China service businesses, I both hire outsourcers and look for clients to hire me to provide services for them.

On the hiring side, I’ve been noticing that many of the consultants I used to work with are now becoming more difficult to hire. Their customer service skills aren’t the issue – they simply choose to take bigger or more specialized projects. As consultants and outsourcers get more successful they become pickier about the jobs they take on.

On the sales side, I have to admit that I too have become more selective – and to some potential clients, a good deal more difficult. I simply don’t have the time or resources to do exhaustive proposals on spec for clients that may or may not know what they’re doing. I am more interested in longer-term, higher value-added projects that involve more commitment from the client company – and I have been around long enough to have become a little pickier about whom I work with.

What’s the best way to approach a potential business outsourcer in China?

If you are looking for a business consultant or outsourced solution in the China market, you have more choices than ever. But like all competitive markets there is a very wide range of quality - and prices are rising quickly. If you are in the market for services, here are a few ideas that may help.

1. Get your ducks in a row first.
You have to understand your problem before you sit down with an outsourcer – and all your departments have to agree. Most of my projects involve Sales and HR, and at times it can feel as if they are on different planets. If you don’t understand or have a consensus about what lies at the heart of your business problem, then either analyze it yourself in advance or make that part of the consulting mission. Don’t expect to figure it out as you go along, on the consultant’s dime. I no longer take jobs that will end up in failure.

2. Decide if you want the consultant to scope your problem.
In other words, determine what the real BUSINESS problem is and how you want to solve it. If you don’t know, then you have two solutions. 1) Figure it out yourself as preparation for the hiring process. 2) Outsource this part of the problem. Companies that think they can get an outside consultant to analyze and solve business problems as part of his selling proposal are usually disappointed. Good consultants won’t go into much detail – and poor consultants may tell you what you want to hear in order to make the sale.

3. Delegate the hiring process at your own risk.
I once had the final negotiations for a long-term project with a newly hired HR assistant. The big bosses had all met with me and give their informal approval – but then disappeared from the process. I finally gave up dealing with the HR representative after 8 months of delays and a non-stop stream of requests for new proposals and alterations.

4. Time counts.
I once negotiated a repeat job in August, was told we’d be doing the project in November – and then got an email in February saying they wanted to start right away. This doesn’t make your organization look tough – it makes you look dim and chaotic. Rates go up.

5. The good ones are selecting you, too.
Long-term suppliers are constantly telling me that they will do a certain job at a reasonable rate for me because we have a good relationship, but that they don’t usually do that kind of work anymore. Likewise, when someone approaches me to help them I assess my ability to do the job successfully, the efficiency with which I can work with their staff and the odds of me getting paid within a reasonable amount of time. I don’t take every job anymore – nor do I write detailed proposals for every inquiry. There simply isn’t enough time.

If you use a consultant you are in essence making a strategic hire. You may have to do some selling. You may have to do some educating and explaining. And once the hire is made, you need to give him the authority and resources necessary to get the job done.

Business Process Outsourcing and outside consultants are trends that are becoming more important to organizations – and in some cases the ability to find good service suppliers is a major strategic advantage. Make sure that your organization is getting the most from its outsourcers and consultants by hiring them correctly.

You thought you were giving a high-potential young hitter his first big break, but now you have created a monster in your organization. He’s gone from being a hard-working, ambitious young go-getter to an entitled, bossy, mini-tyrant. There is disharmony and strife on your sales-floor – and you’re becoming concerned that it’s just a matter of time before some good people head for the exit.

How do you manage the man-diva in your shop?

It happens in a lot of sales organizations. You’ve jumped your own queue to promote someone without seniority or paid out a huge commission check. Now your golden-boy has bought into his own hype and is channeling Gordon Gecko in short, shrill bursts.

1) Did you make a mistake?
This is the toughest question that a lot of senior managers never ask themselves. Maybe the potential you saw was wishful thinking on your part. Maybe he’s just not mature enough to handle the responsibility consistently. Young hot-shots may be smart – but that doesn’t make them leaders. If your bold management decision has turned out to be a bust, you have to fix it quickly.

2) Does he have a point?
There’s a chance your boy is right on the money. Maybe he really is right and the rest of the team is wrong. Complacency kills, and it’s a disease that has spread through many China-based sales organizations. If your team has gotten lazy, self-satisfied and complacent, then maybe your golden-boy is doing exactly what he’s supposed to be doing by shaking things up a bit.

3) Who is he pissing off?
Who is doing the grumbling here? Is it the receptionist who botched an important message and the telemarketing staffer who spends more time on MSN than on cold-calls? Or is he poaching leads from your big hitters? Never underestimate the size of a successful salesman’s ego – your top earners fully believe that they can earn more across the street, even if it means starting over. And don’t be surprised if once the exodus starts it keeps right on rolling until it’s just you and the problem (assuming of course that he hasn’t jumped ship by now as well). This happens a lot – and Shanghai can be the perfect storm for this sort of thing. Don’t force the hand of your best earners.

4) Is he producing?
This is the key question. If your man is ruffling a few feathers but delivering the goods, then maybe this is a problem worth solving. But if it turns out that he was all talk and no sales, then you will have to make an adjustment sooner rather than later. Remember how hard it was to answer question 1 about whether or not you made a mistake? Well, now you have your answer.

5) Can it be saved or turned around?
Is he nervous or insecure? Making a few silly mistakes on his first big job? Or is he really a socio-pathic asshole? Insecurity can be handled with an outside training course and a couple of nights of team drinks at The Spot or Blue Frog. Crazy & mean just never gets better.

The most important thing is to be in control of the situation. This is exactly the type of situation that alienates lots of senior managers from their front line organization. If you appear unaware of the situation – or worse, seem to side with the attitude problem – then you are going to drive a wedge between yourself and the very people you need to help you succeed.

Damage control for a bad promotion can be extremely difficult. Sometimes these things work themselves out on their own – but you’ve got to be ready in case tough action needs to be taken.

Successful entrepreneurs in China will tell you that success took longer than they had originally planned. Ex-pat owners of businesses in China who have been slugging away for 5+ years can suddenly find themselves on a steep growth curve. Many of these ‘overnight success stories’ that were years in the making end up leaving their owners hostages to the business. The founders are cash-poor while the business gets bigger and richer.

What can successful China entrepreneurs do to boost their household finances without destroying the company balance sheet?

Over the years you’ve tweaked the business model, found the right marketing & sales mix and were ready when demand caught up with your offering. What happens when your 5 year old business becomes an overnight success?

1) A sudden uptick in business activity may leave you with lots of money and lots of spare time. Probably not, though. It’s more likely that you’ll find yourself in a period of hyper-growth and hypo-cashflow. Don’t panic. Most small businesses grow at an uneven pace – particularly in China. Be prepared for a significant lag between higher sales and higher retained earnings.

2) Asset rich – household poor. Entrepreneurs are notorious for putting everything they have into their business – and that’s great. But as the business grows you will need a plan for transferring some wealth from the company accounts to your own portfolio.

3) Your business is not an ATM. Pay yourself a predictable salary. Big annual bonuses are fine – as long as you have some sense of how much you are earning. Someone bootstrapping a brand-new business probably doesn’t have a clear idea of how much he will earn in 2008 – but if you’ve been around for a few years and have a steady flow of business, you should be able to give a ballpark estimate of how much you’ll pay yourself.

4) IPOs and M&A grab the headlines, but successful entrepreneurs need a Plan B for cashing out. Leaving ALL your assets in the company can be risky. China business is famous for stories of successful entrepreneurs who ended up running into trouble with partners, bureaucrats, suppliers, key clients – and changes in regulations. Make sure you have a cushion in case the business suffers a major shock.

5) Incremental cash-out options. While living off your expense account is a bad idea, retiring on the company may be a winning strategy. Entrepreneurs and owners should consider setting up in-house pension plans, education funds and health insurance programs that preserve your business’ capital structure but still provide for the owners’ long-term financial health.

For more ideas about incremental business cash-outs, take a look at www.ChinaFinancialPlanning.com.

The New Year is upon us. Happy Year of the Rat. Now let’s all get settled back in and back to work, thank you. The commission-earning segment of the Chinese economy is ready to get back to business.

In the world of Academia it’s the start of a different kind of year. A new semester is beginning – bringing a new class of international scholars to learn about the joys of China.

Welcome NYU Spring 2008 interns. Don’t worry. It gets warmer.

A couple of fresh-faced interns running around your shop can be a great morale booster. They’re young, clever and amusing as hell – if they’re happy. And they can generally be counted on to do a lot of the more mundane, monotonous and awkward tasks.

Unless you’re in the fashion industry, you can pretty much forget about sending them out for coffee and running errands. You can both do better. It all comes down to finding the right jobs to delegate to them - but that can be tricky. Aim too high and you’re sure to end up disappointed. Aim too low and they’ll lose interest and drift off.

5 Rules for a positive intern experience.

1) Projects are good — especially those involving research. I like having them help with things like competitive analysis and collecting data on potential new markets. Make the projects chunky – break them down into 2 or 3 week segments. You might be surprised at the quality of their work.

2) Explain the big picture. Teach them about your industry – and China business. They are here to learn and they may be very into hearing what you have to say. Or then again, they may not. If your firm has a standard orientation presentation, then by all means use it.

3) Keep expectations reasonable. Yes, they have high IQs. And I agree that they really are sharp as tacks. But they have absolutely no experience. They’re like 20 years old or something. They don’t want responsibility, and you don’t want to give it to them.

4) Interns love marketing. It’s immediate and quick and exciting. They get to go online a lot — and that’s what they do and how they live. If you need any market research or data collected, this is your chance. They’re also great at updating PPTs, orientation & sales presentations and anything else media related. And they make great impromptu focus groups or for on-the-street-pollers.

5) Their schedules are likely to be very flexible. Extremely flexible. They have homework and field trips. Plan accordingly.

Just before Chinese New Year, I was in a Shanghai sales meeting where the owner of a European company was discussing post-holiday sales projections. The talk was all “new, innovative, out of the box”, but the walk was all about doing the same old thing only bigger and/or cheaper. I’ve been to this rodeo before. Some of the expensive new marketing initiatives put into place 6 months ago were about to whither and die.

If you are a straight-arrow manager trying some “out of the box” thinking in China you are going to need a strategy for gauging and recognizing success in the early stages. Most of all you need to avoid squandering your investment by pulling the plug too early.

Here are some ideas that might help:

I’m not one of those “innovate or die” guys. I like figuring out what works and doing it more - better, cheaper - faster. Sometimes that means reinventing and cleaning house. Sometimes it means refining and removing bottlenecks.

But let’s assume you went off and tried something new. A compensation plan. An advertising campaign. An operating structure. A product. A brand. You get the idea.

5 innovative ideas for 1,000,000 bottom-line managers:

Out-of-the-box thinking is expensive, risky and uneven. You have to manage and budget accordingly. Top managers aren’t going to innovate and develop new operating procedures on their lunch hour or weekends. It’s an investment. That means risk and return. You have to strike a rational balance and live with the choices you make. Innovation ain’t for wussies.

People resent the barrier-breaker and will try to make his efforts fail. First, make sure that YOU are not this guy. (Lot’s of interesting ideas get squashed on impulse by managers JUST LIKE YOU.) Then, prepare to intervene and use the force of your soft power as well as policy to give your innovation time to work. Informal support is almost as important as budget and manpower.

Exceptions have to made – budgeting, expenses, quotas, standard operating procedures. This is messy, and can definitely lead to resentment and internal combat — especially when one team is following a different business model. Hard-ass managers hate exceptions. Tough. If you don’t get messy, you’ll never build anything new.

Scheduling has to be flexible. Similar to #3, but oh, so much more difficult. China is notorious for scheduling and timeline nightmares. It always seems that 3 wheels are ripping at the pavement while one is stuck in reverse. I’ve tried yelling, “Just fix it!” in a variety of tones, volumes and speed. Doesn’t work. Also, beware of calling a job finished at the 75% mark. If you take your eyes off the ball too soon you might have problems.

It needs to be ramped up if it works. This can be the trickiest part. Let’s say your new sales approach or product development is a success. Now what? Some of you are in industries that demand constant change – but others of us tend to get paid well for doing what works well. It’s that second group that needs this last warning: if ANY new innovation works, it’s just a matter of time before it becomes industry standard. If you figured something out early then that’s a competitive advantage. If you react too late – that’s a competitive weakness. Have a plan for success.

In house, my client’s sales team won’t use their own website. It’s too slow, cumbersome and lacks basic functionality.

But the company’s advertising and brochures all talk about how great the site is. It is a cornerstone of their sales effort. Every client automatically gets an account and login instructions – and are encouraged to use the site as a primary access point for the company’s customer service.

When I asked the sales team about the contradiction, I got a long explanation that laid the blame squarely at the feet of the HK head office. It reminded me of the classic Chinese customer non-service line from the old days: “mei you ban fa– nothing can be done”.

Are you burning prospects and helping the competition because your HQ doesn’t know or care about your China issues?

5 tips for handling a non-cooperative HQ

1) Know what the competition and market is providing. Have examples. Find out how clients feel about your offering vs. the other guys. HQ may not care about YOU, but they care about the sales and profits you produce. Client comments will carry weight – but make sure that they can be supported and backed up.

2) Look at the big numbers on your calendar. That’s the year. The 2 at the front tells you that this is the 21st century. If you site takes forever to load or lacks basic functionality then it is going to make you look bad to clients. Don’t try to soft-pedal or minimize the problems with your site or technology. If you say, “no one else has complained” you will alienate your prospects. If you say, “yes, I’m sorry about the problem but they are taking care of it. I just wish it wasn’t taking so long. In the meantime, here’s a disk with all the information, product descriptions and prices”, then you can get the conversation back on track quickly.

3) If you site isn’t accessible, doesn’t work, or is unstable then it is YOUR problem, not your clients. I’ve taken sites offline and paid lots of money to have sites fixed. A bad site is like having the wrong phone number on your business card – it tells the prospect a little more about your organization than you might have planned. Just because aren’t calling to complain doesn’t mean they are happy. They may be too busy calling your competitors to open an account.

4) Don’t highlight your own weaknesses. Yes, it stinks to have to tell a prospect that your site has problems, doesn’t include useful China info, or is too slow to be used effectively. But it’s much, much worse to tell a prospect that your company has a great technology when you know it doesn’t. The first thing they’ll do to check you out is to visit the site, and when it doesn’t work properly the only three choices are: 1) that you were mistaken about your own company, 2) your judgment is really poor or 3) you are dishonest. None are great. If you tell them your site doesn’t work well in China – but you have a simple and effective work-around, then you are moving the conversation quickly past the potholes and towards smoother territory.

5) Everyone hates a whiner, but they love a winner. If you have been living with a problem for a while and your HQ doesn’t seem to have the time or resources to fix it – do a little legwork and come up with an effective solution. Is it your job? Maybe not. But negotiating with your own senior management is trickier than negotiating with clients. You are going to have to work harder, be more creative — and keep your mouth shut when your boss’ boss takes credit for your solution.

If your company can’t run a website, print a document or keep an email system afloat, then you have a big problem. But letting that drag your business down is even worse. Find solutions and don’t dwell on your company’s problems. A bad website isn’t the end of your career – but allowing it to poison your attitude could be.

My big Shanghai client’s Big Boss ordered all 7 of his senior salesmen to develop & present an internal business plan for 2008. The idea was to force everyone to think like owners and take responsibility for their own results.

Fantastic idea, though the outcome was mixed. Some people shot too low – just recounting last year’s action and slapping an extra 15% on sales targets for ’08. Others were wildly ambitious, involving restructuring the company from the Chairman’s office down to the receptionist.

What kind of guidelines could you offer your team performing the same type of exercise?

Keys to developing an ‘internal’ business plan.

1) Goal-Setting. This is the beginning and the end – the alpha and omega. If your plan isn’t centered on specific goals then you are driving fast with no destination in mind. Good salesmen develop good targets. Sales managers need to beware of potential ‘sand-baggers’ – guys who set their own projections too low so that they can avoid pressure and still finish with dramatic target-busting performance.

2) New approaches & methods. Innovation is good. When you hire salesmen, you are really empowering them to represent your business. If they are not bringing their own ideas, experience and intellect to the mix, then you are getting cheated. Encourage your team to come up with new ideas that push the envelop and try new ways to attack your market.

3) Feedback & measurement. Make sure that your guys aren’t spinning ‘blue-sky’ tales that won’t work in the real world. The biggest problem? Lack of feedback and measurement procedures that demonstrate what is working – and what isn’t. Most salesmen use final sales as their CSF – Critical Success Factor. That’s great – but booked revenue is a backwards-looking metric. If you want to monitor and maybe even anticipate future results, you’ll need to identify metrics that lead your market.

4) Costs, limits and realities. Big Boss from HK could barely suppress a smile when the newest sales guy proposed that HQ increase both commission payouts and expense spending. A business plan that doesn’t differentiate between normal expenses and extraordinary business restructuring isn’t really a plan. Yes, innovation and new ideas are great. But every organization has limits – and if your plan run counter to company rules or practices then you had better plan on explaining exactly how and why your approach is superior.

5) Ambitious – but realistic. The best plans push the system without breaking it. Big Boss told me that he uses these annual biz plan presentations to spot those with management potential. Usually that refers to guys who can produce more with less. Young salesmen tend to propose sweeping – but unrealistic- changes that could bankrupt the company and alienate existing clients. Successful salesmen tend to propose exactly the same methods and tactics that worked for them before. Your real stars will come up with new ideas that take into consideration shifts in the marketplace, competition and new technology.

I left the meeting feeling like the company was nearing bankruptcy. We were all miserable, lazy, incompetent and stupid.

Well, not really. The guy sitting across from me was earning US$70,000 this quarter. The guy next to him was doing almost as well. The company was setting sales records and desperately looking around for more office space in Shanghai and new markets in other parts of China.

So why did everything seem so bleak?

Senior management was very sensitive to what was happening on the front lines of the company. A recent spate of organizational restructuring and promotion and had seen 2 of the 15 salesmen move up in the ranks quite suddenly — and now we had the beginnings of a morale problem in the sales department.

To their credit, the top guys in the company were very proactive about attacking this problem. Unfortunately they were so focused on this specific situation that they threatened to undermine the morale of their biggest (and happiest) earners.

When you get wind of a morale problem you should have a plan for dealing with it quickly and effectively. Here are a few ideas that may help:

1) Who is saying what? Some people tend to see any unpleasant new development as a management blunder. Are your front-line staff feeling exploited and mistreated – or is your product simply becoming less competitive in the marketplace? Assess actual damage and potential problems in terms of both depth and breadth. Find out who is unhappy, what the root causes of the problem are, and how the affected individuals view the situation. Don’t steer your company based on hearsay and second-hand complaints.

2) Limit disucssion to real problems and real solutions. If you want to open up a company issue for discussion among top managers then be sure to scope the situation and impose parameters. Limit the conversation to specific problems and answers. Don’t let a compensation or training issue morph into a full-on ‘bitch-session’ about everything the company is involved in. Keep all conversations grounded in reality. Don’t tolerate vague or stream-of-consciousness speculation like, ‘maybe they are angry about…’ Make conversations with the affected individuals part of your action plan. If there is a huge disconnect between the front lines and management, you probably need to pay attention to how you are getting your data. Go to the horse’s mouth before making big changes.

3) Keep solutions simple and practical. One of the worst things you can do is to redesign your compensation plan or organizational structure on an impulse. If the current problem reveals deep cracks in the foundation of your operation, then by all means commence with the big fix – and don’t waste time. But don’t pull down the ceiling to change a light bulb. Make your solutions practical, highly targeted and flexible. Consider starting with temporary or limited solutions that can serve as the basis for a more permanent change. (I.e.: If compensation is the issue, try a temporary sales contest or test a new commission schedule with only a few people.) If your big, sweeping changes to SOP (standard operating procedure) cause new problems or fail to fix the old ones then you are in much worse shape than you were in the first place.

4) Know your options. Maybe your morale problem needs to be fired. Maybe they’re pissed off or upset about something completely different. Maybe the team is too large and there isn’t enough commission to go around. Maybe a simple pay-raise will do the job, or maybe you have to restructure your entire compensation plan. Make sure your middle managers are giving you the widest possible range of choices and potential solutions.

5) Don’t get played. When putting out HR fires make sure your front-line people don’t see this as their moment in the spotlight. If the only time you pay attention to your sales floor is when there is a crisis, then you should schedule time for LOTS more crises in the future.

China Issue: When you have a morale problem or your sales team is unhappy and demotivated – your goal is to find ways to lift the weakest players to the level of the highest. Beware of solutions that create a more equitable situation by making everyone equally miserable.

‘Will there or won’t there be?’ The small clump of young European & Asian salesmen breaks from their huddle and puts the question to me. They try to look relaxed, but clearly they’re concerned. The entire sales department has been watching the economies of the US and Europe losing momentum and asking themselves the same question:

Will there be an influx of talent from the North America and Europe into China? Will Shanghai become the new post-grad landing-pad for casual resume builders and hard-playing English teachers? Or will serious, experienced business-people decide that this is the perfect time to establish their China-presence?

It’s a great question for senior managers with HR responsibility.

Let’s assume that the US is heading for a significant economic slowdown while China continues to grow in the 8 – 11% range. Unemployment in the West spikes, while China continues to pay higher and higher wages for experienced managers.

3 Kinds of Talent

New branches or offices. If China is still firing on all cylinders while the US is stalled on the side of the road, we may very well see SMEs (small & medium sized enterprises) accelerate their plans to set up shop in China. Large MNCs probably won’t change their roll-out plans unless things get significantly worse.

HR upshot: A few senior people and specialists from Stateside – but these people will be BIG net hirers. Admin and technical-minded locals will be first on their wish-list, followed quickly by department heads, sales management and finally the front-line staff.

Probably will not have huge impact on the HR situation.

Top and middle managers looking for jobs. Victims of bankruptcies, lay-offs and downsizing may very well end go on a mysterious Chinese treasure hunt. Distance, language and general weirdness will keep the numbers low at first – and a high crash & burn rate will probably keep a lid on this trend. What about overseas Chinese managers? If John Q Chen gets laid off from Citicorp he may very decide to look up his Mom’s distant relations in China and come home to lao-jia. But for the most part, this demographic has already had a good look at the China option and the overseas Chinese who wanted to roll the dice here have probably already done so.

HR Impact? Those with 7+ years of western experience will probably not drive a noticeable influx into the Chinese job market, but those that do make the trip and survive the first year could have an out-sized impact on business in the big cities.

Recent grads. Yes. This is the group that is going to start swarming to the Middle Kingdom – and there are signs that is already happening. The tricky bit here is that there are probably not enough English-teaching/acting/modeling/hostessing jobs around to support a large population of relatively unskilled 20-somethings. But China’s relatively low rents & expenses and cultural attractions (pretty mountains, cheap beer, sex) will keep them hanging around – and possible incubating some interesting new business ideas. A few will stay for the long term, but most will drift back home after a year or two.

Impact on HR – Very high if are an English teacher or a Maoming Lu bar girl. Sharp sales managers will keep an eye out for nice kids with lots of potential to do special projects or develop specific markets, but these are the goldfish of the working world- they’ll go belly-up if you look at them funny. The better their skills, the harder it will be to hold on.

So will a downturn in the US have any impact on hiring in China? Well, if you have an international team it gives you extra Bluster & Threat bonus points as you reinforce the myth that you have a stack of Ivy League resumes in your office. But if you think that your middle management gaps can be patched with refugees from the bear market, you may want to reconsider. Unless the US goes into a loooong recession that somehow misses China completely, the probably won’t be a significant influx of new senior managers.