by Stephen Hawley Martin
for Virginia Business
Last year I traveled to China to research a book and sat next to a man who had oversight responsibility of a manufacturing plant in China for a company in the Midwest. He and I chatted about his experience with the Chinese. He said he was frustrated with how resistant Chinese workers were to change. This guy had spent a lot of time in China setting up his company’s operation there.
Initially, the Chinese management team and the workers understood the company’s standard operating procedures and done an excellent job of replicating them. During the initial operations, my seatmate had taken a hands-on role. His company was a lean manufacturer with streamlined operations and state-of-the art equipment that kept labor needs to a minimum. The management team back in the U.S. was proud of the accomplishments it had made in minimizing the use of manual labor.
They wanted to replicate the successful lean approach in China. Labor may relatively be cheap in China now, but because of the rapid growth of Chinese manufacturing and the very real possibility of currency revaluation, it might not be so in the future. The team back home wanted to be prepared because it’s much more difficult to go lean once a company has become bloated than to establish lean practices as a way of life at the outset.
Scheduling and staffing were key components of the company’s lean practices. During the initial operations, the Chinese plants were staffed similarly to the U.S. operations. As soon as intense U.S. management oversight was no longer present, however, management of the Chinese plant significantly altered the staffing setup. In China, employment is a key issue, and there is intense local and even national pressure to put as many people as possible to work.
Government statistics say that the country has 5 percent unemployment, but this is misleading. I’ve read, for example, that as much as 25 percent of the labor force is employed in agricultural jobs that pay what amounts to about a dollar a day. Most of these jobs could easily be replaced by machines. The bottom line is that there is an abundance of labor and the culture is one that fosters full employment — the well-being of the group as a whole being more important in eastern thought than an individual or an individual’s rights.
What happened? The Chinese abandoned the U.S. owners’ staffing model and tripled the staff. All of a sudden, the cost advantages of Chinese labor were offset by the number of employees working in the plant. Cultural pressure and the employment expectations of local officials were overriding the company’s standards. My seatmate was on his way to China because little could be done to control the situation remotely from U.S. headquarters.
I let this man know that if the right technology had been in place, he’d have able to see from the U.S. what was going as soon as changes were made. That way, he’d have been able to nip it in the bud. Even though the plant was halfway around the world, a work-force management system that integrates time and attendance with shift scheduling and daily production output would have shown in real time that the labor to production ratio was getting out of balance.
All he’d have had to do was sit at his desk in Illinois and turn on his computer. The data would have come to him via the Internet — untouched and uncorrupted by human hands. If such a system had been in place, bells and whistles would have gone off and red flags would have been raised in the early stages before rushing to board a jumbo jet to Shanghai became imperative.
One key to running a business successfully is to learn from the mistakes of others. After all, most of us don’t have the time or staying power to make them all ourselves. The lesson here is to put technology in place that makes a remote location’s operation transparent to its management back at headquarters — especially if that location is across a cultural and geographic divide that may resist offsite managerial wishes.
Stephen Hawley Martin is a former principal of The Martin Agency in Richmond and author of more than a half dozen books including his newest, Lead Enterprise Leader: How to Get Things Done Without Doing It All Yourself.
He is editor and publisher of The Oaklea Press, a book publishing business dedicated primarily to helping business executives increase productivity. He can be reached at .Tweet