Final Report: Peter Hanson's PDC Development at Hi-Tech Systems, China

Verified

Added on  2022/11/14

|8
|3038
|350
Report
AI Summary
This report examines the case of Peter Hanson, tasked with establishing a world-class Product Development Centre (PDC) for Hi-Tech Systems in Shanghai, China. The report delves into the significant challenges Hanson encountered, including limitations in compensation policies, adapting Western performance management systems to the local Chinese context, and fostering a positive work environment amidst cultural differences between expatriate and local employees. The report identifies the need for employee retention strategies, addressing the tendency of young employees to leave quickly, and building strong relationships between local and international staff. It proposes solutions such as implementing retention programs, offering competitive benefits, and providing cross-cultural training. Furthermore, it recommends strategies for team building and leadership development to overcome these challenges and create a thriving PDC. The report emphasizes the importance of adapting to the Chinese work environment and leveraging cultural awareness to build a successful and sustainable operation.
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
Executive Summary
This report explore the case of Hi Tech Systems that is four decade old company in Europe
and it has multiple PDCs to take care of its research and development activities. Peter is made
responsible for establishing and developing a PDC in Shanghai and making it a world class
facility in China. The report explores the major challenges that he faced while developing the
PDC centre. It further explores the possibilities of overcoming those challenges and provides
recommendations for Peter. Major challenges before Peter in development of PDCs are
limitations of compensation policies, need for adoption of western system of performance
management with the local Chinese people, creation of a positive environment with
relationships developed and managed between expatriates and local employees. The
recommendations are expected to solve these problems for Hi Tech systems PDC.
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
Contents
Introduction................................................................................................................................3
Problems.....................................................................................................................................3
Solutions and recommendations................................................................................................4
References..................................................................................................................................7
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
Introduction
Employee retention is a major problem in China and the turnover in Chinese companies in its
employees is as high as 38%. While building teams, hiring managers have to face a number
of challenges that contribute to this and if a strong and committed team has to be developed,
the managers would need to address the concerns that make their employees leave. In this
report, a case of Hi Tech systems had been taken that has a plan to establish a Product
Development Centre and make it high class in Shanghai. Peter Hanson has been given the
responsibility and the case discusses various people management challenges that are faced
during the journey.
Hi Tech systems is a Sweden based company that was established in 1976 and is today one
among the three largest companies in Europe. 20% of the company staff is employed in
research and development activities that are managed through multiple product development
centres(PDCs). A fully grown PDC would have up to 500 employees and capabilities to
develop new products. The company has a portfolio of PDCs established all across that
different in standards and technologies they use. PDCs allow Hi-Tech systems to make use of
its human resource for product development even if it is not available in a particular location.
Products can be easily adapted for the local market with PDCs established in specific
locations.
Hi-tech systems has a core PDC that develops major products while peripheral PDCs develop
the variations of the product involving local adaptations. Peter Hanson is responsible for
managing the product development centre (PDC) at Shanghai which is a unit of Hi-tech
systems. The unit has 16 employees working and is in the process of expansion such that
more employees are expected to join. A concern faced by Peter is to ensure that a positive
and healthy working environment is provided to the employees. The aim of Peter is to
developed a world-class PDC for which it needs to recruit good staff, invest in their training
and development and coordinate with other parts of Hi-Tech systems to develop
competencies.
Problems
Peter was given the responsibility of developing a staff for creating a world class PDC in
Shanghai for HiTech systems. However, he had a challenge in selecting and employing teams
from within the company because the company did not have any established policy for
management of people. Also, the company was using a very standard grading systems that
had limitations in expatriate compensation so Peter could not offer exceptional salaries to
PDC employees. He was still able to manage to recruit 8 employees from abroad and 8 were
hired locally.
Job descriptions and grades were defined by PDC set up by Peter and the positions were
announced and marketed by the HR department of Hi Tech Systems. Candidates would be
interviewed by 2 PDC members and assessed by the HR department using “The Space
Shuttle” game that involved putting candidates in a problem solving situation in groups such
that the HR team would observe them to understand how they interacted with each other and
solved problems. While this assessment and selection process has been used in the company
for long, other companies in China are exploring more selection practices that not just
involve evaluation of candidates on the basis of their problem solving capabilities and
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
communication skills but also other skills such as decision making and leadership. The
Shanghai PDC needs to learn to adapt to such new systems of selection (Yang, Huang and
Wu 2011).
Another challenge that Peter faced in selection of employees for recruitment locally was that
local people have a great influence of Confucian- and communis educational system which
makes them obedient in following instructions and not practicing lateral thinking which is
needed for a PDC work. This made training and development very critical for Peter who had
to ensure to train all the expatriates. However, he could not train all of them individually and
thus, needed people from other PDCs of the company to visit.
The global performance management policy of the company stated that all employees are
needed to discuss their performance with superiors. Objectives of individuals have to be
defined clearly and activities required for reaching them have to be enacted on the basis of
which an employee would be evaluated with specific criteria’s defined. In Shanghai PDC,
Peter has 4-5 objectives for performance measured on a 10 point scale. Employees are
evaluated based on this every 6 month. Based on performance, they would be given bonus
between 10% to 20%. This was a western system with which people in China were not
familiarized. To be able to implement and use the western system of performance in a
Chinese environment, a cultural modification was needed which was challenging (Littlechild,
Friedberg and Armstrong 2013).
Young employees in China are used to growing fast and lose interest in jobs within a year if
they did not see themselves learning and growing. Thus, another challenge before Peter was
to ensure that these employees had at least one skill to learn or a competence to develop
every years to keep them motivated to work. Moreover, local employees in China are not
used to taking responsibilities but depend on the hierarchical arrangements where superiors
would guide the juniors into their actions. However, a world class PDC would need them to
be innovative and taking initiative, a culture that Peter had to imbibe which was a big
challenge (Littlechild, Friedberg and Armstrong 2013).
Also, the company had both Chinese people and people from other countries joining in the
company which needed them to interact and coordinate. However, there were cultural
differences between the ways they work and thus, Peter needed to take steps to create and
maintain positive relationships between the two teams. A family like atmosphere was created
and everyone would meet on Monday mornings. Peter was thinking of adopting some more
team building activities to encourage coordination and was even open to exploring the
possibilities of involving families of employees for personal encouragement. What strategies
must he use for team building and relationship management in his teams is a concern that
Peter has to address.
Solutions and recommendations
The major challenges faced by the company are related to HR in the PDC in Shanghai. For
each problem identified, certain solutions can be used for overcoming them. These can be:
Restricted compensation policy: the company has a restricted policy for compensation
which means the company cannot offer high salaries to hire the best employees from the
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
field for PDC. Thus, the employees hired may not be already prepared to deal with complex
problems of research and development. Also, money may not become a major motivation for
them despite the raise of 10 to 20% offered for best performers. Thus, the company should
have other ways to keep the employees engaged to retain top performers. The challenge is
pervasive in the industry in China as leaders tend to feel less motivated to remain in a
company are leaving. They are dissatisfied and less loyal to continue working in their
companies. A study conducted on employees in China revealed a few reasons why employees
leave their companies. These included lack of growth, insufficient compensation, not finding
work interesting, insufficient benefits, poor cultural fitness, lack of personal time, poor
relationships in the company, and unfair treatment or discrimination (Howard, et al. 2007).
Each of these challenges can be addressed to ensure that people do not leave the PDC centre.
A number of measures can be recommended for that such as (Levasseur 2011):
A retention program can be developed that would take care of processes of selection,
development, and growth of employees.
The company can take a behaviour based interview of candidates at the time of
selection such that the cultural fitness of the candidate with the company could be
assessed and only when the candidate is a good cultural fit for Hi tech system, a hiring
takes place. This would ensure that people joining the company do not suffer from the
problem of cultural fitness and thus, do not leave the company for the same reason.
While company cannot increase the salaries, it can offer other benefits in addition of
bonuses such as employee stock option to encourage employees to perform better.
Stock options would give them a sense of ownership and thus, they would assume it
as their responsibilities to ensure that company performs well as it would also help
them earn through stocks.
People in senior roles can be provided a clear path for developmental the company
with defined career path and development programs. International rotational
assignments in PDCs can help senior staff gain lessons on how PDCs operate in other
parts of the company which would not just give them more exposure but also a clarity
on their development goals.
Tendency of young employees to leave: The young employees in China expect fast
development and growth and in the case of the lack of this, the employee would leave within
an year or maximum work for two years. Retaining young employees would need the
company to act fast on development and help them gain skills or growth opportunities within
the year of their joining. Thus, company can have a half yearly program not just for
appraisals or bonuses which it already has but also for other developmental and
encouragement activities. For a long term retention of employees, it is essential for the
company to create a positive working environment and prevent any negative attitudes that
employees may develop over time while working in PDC. A number of difference practices
including relational and transactional approaches can be used for this. Responsive
relationship practices such as performance evaluation and employee empowerment through
bonuses are already used in the company but the company can also add the preventive
relational practices to reduce retention such as career planning and mentoring. In the
transactional processes also, the company is more responsive and uses practices like payment
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
benefits and contextual performance evaluation through interviews with superiors. Preventive
transactional practices like job tailoring, feedback, and realistic job reviews can help
company retain young employees in the company for longer time (Rinne 2013).
Building relationships between local and international employees: The company is facing
challenges in building relationships between the expatriates and local employees from China
because of these differences in their cultures. A cultural awareness in employees can help
them understand how other work or think. Also, if they are trained on how to take care of the
cultural differences understand each other and maintain good relationships with people from
different cultures can help them be in better position to respond to conflicting situations.
Cross-cultural awareness and training programs can be used for this. A number of
recommendations can be made for cross-cultural workforce development such as:
The people in the leadership positions should be thoroughly trained on cross-cultural
aspects and made to use the collective leadership strategy to overcome global
workplace challenges. For this leaders may be made to travel across different
locations to attend programs and seminars on cultural leadership to learn and
experience different cultures. This would prepare them to understand how people of
different cultures work and what motivates them which can help them develop
strategies for their own workforce management (Nelson 2013).
Training programs can be developed led by trainers for the workforce through which
the employees can be trained on cross-cultural ideas and challenges such as
stereotypes, expectations, social etiquettes, negotiation approaches and meeting
handling. Understanding this would prepare them to better deal with their fellow
employees from other countries and avoid any conflicts from happening.
American and Chinese people have differences in languages and with these
differences also come subtle differences in connotations of what they speak even if
they are using one language to communicate. These differences are pivotal to
understand if conflicts have to be avoided between them. Thus, the employees may be
provided training on linguistics as well as semantics to understand the differences and
ensure that they do not speak in a language that is not acceptable for a person from
another culture.
Hofstede model can be used as a base for the development of cross-cultural
understanding in PDC as it can reveal major differences that people may carry
because of their belonging to different countries. The model identifies differences in
six dimensions that include power distance, individualism, masculinity, uncertainty
avoidance, orientation and indulgence. Significant differences exist between Chinese
and American people as per this model. While Chinese are more long term oriented,
Americans are not which means that Chinese people would have more of long term
planning than their counterparts. Power distance in USA is small but large in China
which suggested that Chinese people respect authority more and follow orders unlike
Americans who believe more on autonomy and flat structures. Individualist is very
high in USA but very low in China which suggests that while individual performance
measures would appeal well to people from USA, the company would need to use
more of collective encouragement to satisfy employees from China (Purohit 2015).
Having understood the major differences in the way two groups of employees work,
the company can have different strategies defined for different groups defining
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
different ways they can be handled. This has to be done at the personal level of
leadership by Peter as otherwise the difference in treatments could become more
visible which would not encourage others. Peter should train himself through global
programs on how to deal with people from different cultural and keep them motivated
to work.
Structural Challenges: While Chinese people believe in following hierarchy , Americans
want more of independence in decision making. This can lead to conflicts between them.
Thus, organization may use flat structure instead of a hierarchical structure to dilute these
differences. This would help American employees feel at home while Chinese employees
would not have to learn to not depend on superiors but learn to take decisions on their own
(Fapohunda 2013).
Team Building: the company would need to create teams and build relationships between
them which is possible by adding a few team building activities to the unit. These can include
Corporate games that brought employees to work together can be useful way of
building relationships
Company can also involve families in the teams by arranging programs for outing and
recreation giving employees a feeling of home and bringing them together
Training programs can be conducted on team building and team work which could
help employees develop their capacities to work better in teams (Gibbison 2009).
References
Howard, Ann, Louis Liu, Richard S. Wellins, Steve Williams, and Steve Williams. 2007.
EMPLOYEE RETENTION IN CHINA 2007: THE FLIGHT OF HUMAN TALENT.
DDI.
Rinne, Tuua. 2013. Managing Employee Turnover in China. Thesis, Aalto University.
Nelson, Christina. 2013. Leading a Cross-Cultural Workplace. Periodical, China Business
Review.
Fapohunda, Tinuke. M. 2013. “Towards Effective Team Building in the Workplace.”
International Journal of Education and Research 1 (4): 1-12.
Gibbison, Duncan. 2009. How can teambuilding make professional teams in the construction
industry more efficient? University of Pretoria.
Levasseur, Robert E. 2011. “People Skills: Optimizing Team Development and
Performance.” Interfaces 41 (2): 204-208.
Littlechild, Kevin, Lauren Friedberg, and Lauri Armstrong. 2013. Performance and Goals:
Project Team Orientation. SAP.
Purohit, Bhaskar. 2015. A case study on processes in team building and performance
improvement at Government Health Centers in Rajasthan, India. Indian Institute of
Public Health .
tabler-icon-diamond-filled.svg

Paraphrase This Document

Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
Document Page
Peter Hanson: Building a World Class Product Development Centre for Hi-Tech Systems in China
Yang, L. R., C.F Huang, and K.S. Wu. 2011. “The Association AMong Project Manager's
Leadership Style, Teamwork, and Project Success.” International Journal of Project
Management 29 (3): 258-267.
chevron_up_icon
1 out of 8
circle_padding
hide_on_mobile
zoom_out_icon
[object Object]