Development and Learning in Organizations: An International Journal

Transforming China's business practices: Adopting Western organizational development in Chinese SOEs
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To cite this document:
, (2010),"Transforming China's business practices", Development and Learning in Organizations: An International J ournal, Vol. 24 Iss 6 pp.
29 - 31
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http://dx.doi.org/10.1108/14777281011084757
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J ia Wang, (2010),"Applying western organization development in China: lessons from a case of success", J ournal of European Industrial
Training, Vol. 34 Iss 1 pp. 54-69
J ianmin Sun, (2000),"Organization development and change in Chinese state#owned enterprises: a human resource perspective",
Leadership & Organization Development J ournal, Vol. 21 Iss 8 pp. 379-389
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Transforming Chinas business practices
Adopting Western organizational development in Chinese SOEs
A
s part of its transformation into a global economic superpower, China has faced
many hard truths about how to conduct business in order to compete in international
markets. Chinese cultural working practices have been stied through Chinas
political framework over the decades, but the opening of Chinas borders to international
business has led to much needed change in management practices, especially internal
mechanisms that deal with employee motivation.
Jia Wangs article Applying Western organization development in China: lessons froma case
of success is a case study of one Chinese corporation that has successfully adapted to
western standard business practices in order to enhance success (Wang, 2010). The
organization, named simply BT in this article, is used as an example of a Chinese state-owned
enterprise (SOE) that has successfully adopted western organizational development and
change (OD/C), thanks in most part to the drive and vision of its general manager (GM).
SOEs and the need for change
The transformation of Chinas consumer and industrial markets over the last two decades
has put SOEs under great pressure. The move away from a Communist to a capitalist
business model illuminated glaring inefciencies in many SOEs, which traditionally were run
by state appointed GMs in an authoritative manner. Increased exposure to, and competition
with, western markets put SOEs under pressure to reduce workforce and improve
productivity. The only solution was to begin to embrace western OD, dened broadly here as
appreciative inquiry, work design, survey feedback, and leadership development.
In the context of Chinese SOEs, there were several enabling factors for OD:
B the change of Chinas economic and regulatory systems;
B the change of value systems and cultural assumptions;
B the adoption of capitalist business practices;
B the promotion of management education and training; and
B the inuence of international competition.
Obversely, inhibiting factors included the following:
B traditional Chinese culture that emphasizes high-power distance and low individualism;
B leaders lack of motivation for change;
B inadequate management knowledge and training; and
B lack of qualied OD trainers in China.
DOI 10.1108/14777281011084757 VOL. 24 NO. 6 2010, pp. 29-31, Q Emerald Group Publishing Limited, ISSN 1477-7282
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DEVELOPMENT AND LEARNING IN ORGANIZATIONS
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PAGE 29
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The success of BT was in part due to the willingness of the current GM to embrace and
encourage change, which allowed all the other inhibiting factors to be overcome.
OD and cross-culture knowledge transfer
Wang denes OD as a system-wide application and transfer of behavioral science
knowledge to the planned development, improvement, and reinforcement of the strategies,
structures, and processes that lead to organization effectiveness and health. There are
three main approaches to successful OD, depending on the company and/or situation:
1. Information driven strategies (rational-empirical) this builds upon the assumption that
people are rational human beings and independent thinkers, capable of accepting and
facilitating change independently.
2. Values-driven strategies (normative re-educative) this approach addresses peoples
needs to feel satised, and to shift perceptions of what it means to be satised at work.
3. Power-driven strategies (normative-coercive) this emphasizes a top-down approach of
the use of political initiatives.
The problem with merely adopting a set of strategies from a different country is that these
strategies might conict with long-held cultural philosophies, beliefs and working
practices that have existed for generations. This is an obstacle that many SOEs are trying
to overcome. Therefore, any adoption of OD by BT had to be critical and selective in its
approach.
BT
Research on BT was conducted during a one month visit through interviews, archival
records, on-site observation and the company web site. In the case of BT, OD was adopted
in three main areas: vision creation, human resource management (HRM) and budgetary
and cost control. These changes were driven by the willingness of BTs latest GM, who
demonstrated more openness to new ideas and change than his two predecessors had.
Under his watch, BT has managed to achieve the following:
B create a shared vision and value system for the company and its employees so that
everyone in the organization was aware of, and pushing for, the same goals;
B establish a performance-based HRM system that emphasized fairness, merit-based
remuneration, and incentives for good employees; and
B formalize budget and cost control procedures so that budget gures were no longer
arbitrary but established according to western principles of prudent nancial planning.
Many of the changes that were implemented under these strategies were not congruent with
traditional Chinese hierarchical organizational culture, and therefore encountered some
resistance. This required a transformational change within the organization, so that
employees would accept the changes as necessary and benecial to each individual. With
this in mind, BTs OD can be dened as power-driven and trust-driven. In other words,
change initially had to be almost forced on employees in a top-down approach through
Chinese cultural working practices have been stied through
its political framework over the decades, but the opening of
Chinas borders to international business has led to much
needed change in management practices, especially internal
mechanisms that deal with employee motivation.
PAGE 30
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strong leadership; simultaneously, management would engender trust through frequent
dialogue, communication and corporate education.
Lessons learned
Wang distills the information learned from BTs OD into ve distinct lessons:
1. To effect change, SOEs must nd strategies which are culturally compatible.
2. To be an effective change agent, an SOE leader must embrace change and be visionary,
persistent, and committed to long learning.
3. Formalized management systems and procedures enhance an SOEs efciency and
effectiveness.
4. Key to the successful implementation of OD in an SOE is the availability of well trained
employees with an understanding of western management principles.
5. More accurate translation of knowledge can be facilitated by partnerships with OD
practitioners.
There are, therefore, many things to be learned from successful OD, and SOEs can
transform their traditional structures and cultures to the benet of their employees and their
consumers. However, as Wang points out, there are implications for the transfer of
knowledge across cultures. OD in Chinese SOEs is only likely to work through the ability of
organizational leaders to grasp the western ideas they adopt fully.
This study has shown that the power and trust-driven approaches to OD are the most
effective in producing change. Further research such as this would help international
business to establish how open Chinese markets are to international involvement and
investment. Successful OD would not only benet China as it looks to capitalize on its
massive economic potential, but also multinational corporations interested in joint ventures
with Chinese businesses.
Keywords:
Organizational development,
Organizational change,
Cross-cultural management,
China
Reference
Wang, J. (2010), Applying Western organization development in China: lessons from a case of
success, Journal of European Industrial Training, Vol. 34 No. 1, pp. 54-69, ISSN 0309-0590.
The problem with merely adopting a set of strategies from a
different country is that these strategies might conict with
long-held cultural philosophies, beliefs and working practices
that have existed for generations. This is an obstacle that
many SOEs are trying to overcome.
VOL. 24 NO. 6 2010
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DEVELOPMENT AND LEARNING IN ORGANIZATIONS
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PAGE 31
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