Leadership on the Brink
Leadership on the Brink
Copyright 2006 Progress-U Ltd.
THE PROBLEM SITUATION
Imagine you are the chief operating officer (COO) of a
mid-sized corporation, say with 2,000 employees. Your
company manufactures commodities like cables for cars. It’s
headquartered in Hong Kong, but has factories in two
different provinces in China, one in Southern China (Guang
Dong) and the other in Northern China near Beijing.
As COO, you are responsible for operations, i.e.
administration including HR, Finance and Controlling, as
well as for Manufacturing. The chief executive officer
(CEO) holds functional responsibility for Sales & Marketing
and R&D.
Both factories in China were previously state-owned
enterprises (SOE’s). Factory A in Southern China, acquired
by your company three years ago, is highly productive. On
the other hand, you keep struggling with Factory B in
Northern China near Beijing, which was acquired five years
ago.
What’s the problem with Factory B? You notice high staff
turnover, especially among the executives where in the past
six months over 25% of them left. This makes the annualized
turnover rate a whopping 50%. Also, there seem to be major
difficulties between the Hong Kong managers you delegated
to that factory and the local managers.
In the past, you had additional difficulties with what you
call “a lazy workforce.†You somewhat fixed that problem by
firing people who were caught reading newspapers during
working hours or hiding in some dark corner sleeping. This
doesn’t happen anymore, but productivity levels are still
rather low.
You wonder if this is a cultural problem since you used the
same approach for both factories after acquisition. Or
perhaps it could be a language problem. The people in
Factory A speak Cantonese, which is the mother tongue for
most of your Hong Kong managers. The people in Factory B
speak Putonghua. While all your managers are fluent in
Putonghua, the people in Factory B still notice a Cantonese
accent.
This is actually a real story of one of our clients. Of
course, I modified a few details to keep confidentiality
intact.
When this COO walked me through the past events, I again
realized the strong limitation of models when it comes to
working with human beings. I’m not saying that models are
useless when working with people. I’m saying that we need
to be very careful and highly sensitive in cases where
models need to be adjusted depending on the human dynamics
we encounter.
I could see that this COO was highly frustrated that all
the hard work of the past five years still did not yield a
satisfactory situation at Factory B whereas Factory A
thrived after only three years. He was in a real dilemma.
The CEO and shareholders were demanding higher profits,
which were curbed by the losses from Factory B. So what
were his options?
• Option A: Close down Factory B. This would result in a
huge loss of face plus all the millions of dollars spent in
the past years would be wasted. Additionally, closing down
a factory doesn’t come free of charge.
• Option B: Sell Factory B. But who would buy a factory
with low productivity levels and a considerable debt
burden? Any buyer would probably ask to receive rather than
to pay money to take over Factory B. Not an attractive
option either.
• Option C: Make Factory B profitable. This would be the
best solution, of course. But how to do it? Didn’t the COO
already try everything he could to make it work?
The COO thought that upgrading the intercultural
competencies of both the Hong Kong and the local managers
at Factory B would improve the situation. That’s why we
were invited to talk with him.
BAND-AID OR SURGERY?
At first glance, this made sense to us. However, the longer
I listened to the COO, the more I got the impression that
an intercultural training program would be a small band-aid
which would have only a minor positive effect on this
heavily injured body. If things were to improve
considerably, a band-aid wouldn’t do the job. Surgery would
be required to save the patient.
As it is so often the case, one of the root causes of this
problem was the COO himself.
I noticed that at first he talked about how tough he acted
with the people at Factory B to weed out the lazy attitude.
Later he talked about how he takes great interest in his
people, that he cared about their backgrounds and surprised
them with knowledge of details like that someone’s wife was
in hospital, etc. Then again he talked about how the local
Chinese managers don’t seem to understand what his company
wants. Then he complained that the Hong Kong managers
frequently lose their temper and are not sensitive enough
with the local managers.
THE ISSUE OF COMPLAINING
In my experience, people who complain heavily about others
actually complain about themselves. Let me explain. When we
complain about someone, we state that we disagree with that
person’s behavior (what they do or say). But complaining is
more than that. It’s a strong judgment that such behavior
is wrong.
We make judgments based on our own experience and
knowledge, which may be different from the experience and
knowledge of the other person. Making a critical judgment
therefore means that we don’t want to accept the other
person’s way of thinking even though it is their current
truth.
Psychologists have found that people have difficulties
accepting other people’s way of thinking only when they
have difficulties accepting their own way of thinking. Once
they fully accept the way they think and their own
opinions, they will be more in a position to also fully
accept the way other people think. Accepting in this case
does not mean agreeing. It just means that we accept the
other person as he or she is and then work from there.
Back to our COO. To enable him to make Option C work, I had
to first help him understand that unless he was ready to
change himself, it would be difficult to make real and
lasting positive change at Factory B. Luckily, given his
desperate situation, he was very willing to look at pretty
much anything that could help.
EXECUTING SURGERY
Looking at himself was painful at first. We used Harrison
Assessments and personal feedback from his CEO and selected
managers of Factory B (both local and from Hong Kong) to
provide the COO with a clearer picture of his strengths and
important areas for improvement.
We then went on a two-day retreat with the COO and the key
local and Hong Kong managers at Factory B, seven people in
all plus myself. During the first day we worked out a
direction for Factory B following a process based on the
GAP model. It included finding a clear understanding of
where the factory should be in two years time and possible
ways to achieve that. Moreover, it called for participants
to outline a desired corporate success culture for Factory
B, including core values and required leadership
competencies that would support this culture.
During Day 2 we worked on an action plan to implement the
findings of Day 1, including a communication strategy and
required development through group training and individual
coaching. Intercultural training was one of the measures;
this time, however, it was an integral part of the
‘surgery’.
The positive side effects of this two-day retreat were an
immense increase in trust among all participants and a very
positive outlook. The completion of the ’surgery’ followed
by ‘rehabilitation’ lead to a turn-around in a timeframe of
6 months.
CONCLUSION: The COO did a good job in creating the
structures, regulations and processes for Factory B. The
results, however, were not satisfactory because the human
dynamics at Factory B did not support his objectives. To
turn around the situation, the COO had to first change
himself and then work pro-actively with his management team
to develop the desired direction and culture for Factory B.
Creating mutual acceptance and trust was a precondition for
success.
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Charlie Lang is a professional Executive Coach, Trainer,
Keynote Speaker and Author of articles related to
leadership, coaching, change management and sales. He is
the founder of Progress-U Ltd., a company assisting
successful people and organizations to become even better.
More info on:
http://www.progressu.com
