. . . assumptions about organization structure and hierarchy did not necessarily translate well internationally

A previous LinkedIn post by fellow ODF Board member, Stuart Wigham, about challenging one’s own perspective, got me thinking. As Stuart noted, “Perspective is everything, being away from your home country and organization for me provides an exterior viewpoint to look back on, being in a different country speaking to others I learn as much about myself and my own assumptions and what I need as I do about the Country and people that I am visiting.”

This thought really resonated with me as I had recently spent several weeks working in China and had been struck by how US, especially West Coast, high tech, assumptions about organization structure and hierarchy did not necessarily translate well to the situation in China.

The organization where I work prides itself on being relatively non-hierarchical. We believe that good ideas can come from anywhere in the organization and that it is the quality of one’s ideas and contributions that matter, rather than one’s title. This is an implicit assumption that has informed our growth outside the US including China.

As a MNC doing business in China it’s imperative that we understand the market and the landscape of the Chinese government’s priorities. While we’ve expended considerable effort on this, we have, in some cases, failed to consider the importance of hierarchy in China and rather operated under the assumption that what works for the tech industry in the US will work when dealing with Chinese government officials and in the management of our own employees.

So, it was very interesting to hear from a Chinese colleague about the strict protocols surrounding dealings with government officials. Savvy organizations work to understand the party and state agency organization charts and the underlying power structures that they represent. Everything is predicated on one’s rank in the hierarchy. A VP can only meet with officials of a certain level. Meetings with more senior officials require SVP, EVPs, and, at the highest levels, the CEO of the enterprise. These protocols also dictate the frequency of such meetings. Whether an official is State or local also makes a difference. Foreign enterprises that wish to improve their business, relationships and image in China need to take these protocols very seriously.

While the way we think about leadership in the west may have changed radically in recent years with hierarchical structures, centralized decision-making and a “subordinate” workforce viewed as “expiring principles” according to a recent Bersin blog post on leadership, this is not necessarily the case in China.

As Thomas Hout and David Michael note in their September 2014 HBR article, Chinese companies have learned to manage differently reflecting the turbulent environment in which most non-state owned enterprises have grown up. This has resulted in a preference for simple organizational structures with everyone reporting to the top. To enable rapid response to market shifts and the rapid addition of new lines of business, Chinese companies also create organizational structures that provide business units a very high degree of autonomy. As the authors note, “major product lines operate as independent businesses rather than as parts of a matrixed organization” with the notion of synergies across units “largely set aside.”

Nuala Campany
ODF Board Member


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