Chapter 6 Case study: “TexCo”
6.2 A hybrid control structure
6.4.3 HR-oriented management
In contrast to the professional managing hierarchy in ElectriCo, HR-oriented management practices are much looser in TexCo. In spite of the fact that the term “HRM” appears in a wide range of documents, including the guidelines issued by headquarters, there is little evidence that a hierarchical managing system with HR elements is actually functioning throughout the business group. TexCo’s business
155
corporations have unevenly deployed a system that is outside the cadre managing one, which is aimed at controlling three major aspects: wages, performance assessment and performance-based bonuses. Apart from being used for workforce development, HR-oriented ideas and practices have had a quite limited influence on the key decisions regarding the group’s strategic planning, as well as the selection of the managing/administrative personnel. In fact, the old measures in relation to CCP-led personnel management are still sovereign in all aspects, such as promotion, selection of reserved cadres and evaluating leading officials. Like many other new approaches that SOEs are experimenting with, developing “HRM” into a “modern personnel managing system” is regarded as part of TexCo’s long-term project of business transition, as aforementioned, from a corporatised state-owned group comprising textile producers to a multi-national corporation specialising in “high-tech products and fashion design”. For this reason, TexCo’s fashion industry related OBMs, the group’s “future businesses”, have been given priority in terms of deploying HR-oriented management. Specifically, the Business Corporation C, which also includes some of the TexCo’s old garment brands, was chosen to be the piloting unit of “HRM”. The present HR professionals who work in the “head office”, its subordinating “limited company” to be specific, have all been promoted from this particular business corporation, and now work for the cadre officials who are in charge of supervising the group’s high-end fibre and fashion business.Decisions on workforce planning are highly centralised by this personnel office at headquarters. It has issued guidelines to all TexCo units about setting targets for controlling and selecting workers. All branch personnel offices in the TexCo business corporations are supposed to align with such a framework, which has the purpose of overall workforce shaping. Meanwhile, the business corporations have been given autonomy in certain managing practices for meeting their own business needs, such as payroll and benefit policies. Lacking HRM professionals, the “HR” departments in TexCo subsidiaries are largely administrative units, rather than a new form of strategic managing body. Thus it would appear that installation of HR-oriented techniques in these managing bodies has not
156
fundamentally changed these units’ ways of controlling labour management. The ongoing agenda of labour management in TexCo’s transformation in relation to redeploying off-post workers and replacing an inefficient workforce, is still the top priority of these personnel managing units. With the exception of the leading cadres at headquarters, none of managers or HR-related cadres in TexCo’s business corporations or their subsidiaries is involved in strategic decision making.How is TexCo’s “HRM” influential? An example from the experience of
“Competitiveness Model” building
TexCo’s “HRM” department at headquarters is led by three personnel managing cadres, who at the same time are professionally trained managers. Being responsible training and performance assessment, workforce planning and old workforce redeployment, they represent the voices of personnel management for a set of decision making occasions, where both professional managers and party cadres are involved.
Inside the “HR department” at head office, there is another personnel managing unit called the “HRM office”. Before TexCo’s restructuring in 2004, it used to be the personnel managing office running basic technical functions, such as issuing payrolls and benefits. Nowadays, in accordance with the group leadership’s idea of integrating labour managing forces into one single supreme body at headquarters, the office has been designed for management and supervision by the three, aforementioned, main cadre leaders. However, the real relation between these three and the office is rather distant in that they are not really intensively involved in the office’s day-to-day work. Instead, their work is largely about communicating between the HQ Party committee and the managers who have HR professional backgrounds, with the aim being to devise new labour management plans for their own areas of responsibility in the form of party-oriented guidelines. In the mean time, the “HR” office has continued to play the identical role it had before 2004. The cadres in the HR office, in addition to workforce development,
157
have been given the power to harmonise the workforce and negotiate with it in an informal way.In spite of it mainly performing a consultation role, the HRM unit’s voice is still taken seriously into consideration by the three leading cadres. On occasion, it has even been given full authority in relation to decision making and implementation on such matters as designing a new index for evaluating office workers’ performance. As quoted by one of the leading cadres in relation to their role regarding the group’s piloting unit, one task was to “instill HR ideas and values” in the group’s party-led decision making process. Despite this, the extent of the HRM unit’s actual involvement in key decisions is still governed by leading cadres’ rather arbitrary manner of injecting HR elements into various labour managing aspects. To start with, they were merely asked to design a framework for recruiting highly skilled workers who would be assigned to work in the group’s newly formed high-end fibre corporation. Subsequently, they were tasked with building a performance assessment system for all the business corporations. In addition, during the “Twelfth Five-Year Plan”, one assigned task by the leading cadres is to design a “competence model” to be used for the purpose of selecting capable managers and cadre leaders for forming TexCo’s new leadership in its emerging hi-tech and fashion-related businesses (it is also the entry point of my inquiry in TexCo’s HRM unit).
As an observing participant in this research (I was given the title of “temporary post”, similar to being an “external advisor” in ElectriCo), I discovered that TexCo’s HRM unit at headquarter’s role under the guidance of the leading cadres have been influencing different levels of management across the corporation in the following somewhat limited ways.
The HRM unit has directly engaged with the group’s agenda of providing skills training to managers and cadre leaders since the very first day of its formation. Working with the Communist Youth League (CYL) branch committees in the newly formed corporations, the HRM unit was initially concentrating on arranging a series of skills training courses for young cadre leaders, who were newly transferred to the managing posts in the newly formed Business Corporation C.
158
The contents of those courses ranged from basic IT skills training to knowledge relating to the high-end textile industry and management science. At first, the majority of the HRM unit’s staff were also CYL cadre officials, just having finished their internship in the personnel offices of their original working units and then having been transferred to the piloting HRM unit.“They were carefully selected vanguard cadres who have excellent traits in both political quality and professional knowledge. HRM is a project concerning our group’s future - such a task should be handed to young capable talents.”42
Comprising three CYL cadre leaders and six staff members, who had working experience in both CYL administration and personnel management in TexCo’s garment enterprises, the HRM unit took charge of designing and arranging all training sessions for the newly formed Business Corporation C during its first three years. “They were like our course organisers. We had plenty of courses, taught by external experts on a variety of things ”43. Given Business Corporation C’s new role as TexCo’s OBM in the consumer-oriented market, the HRM unit was encouraged to arrange more training sessions related to brand strategy and brand marketing. Moreover, the head of the unit was told that they were shouldering the responsibility of shifting managers’ old mentality of expecting financial help from headquarters.
“Back then, many managers (in Business Corporation C) were newly transferred from those old prestigious (having famous brands in pre- reform age) enterprises. Lots of them didn’t truly understand the reason behind such a move of merging and restructuring…… some of them strongly believed that headquarters was merely integrating assets to stop further losses. As long as they sat in a new secured post and saw no more bleeding from their units’ revenue, they didn’t think they needed to make any changes…… you see, the problems lay with their ideas. That’s what we
42 Interview with LM cadre A
159
aimed to change – building a new mentality of strategic managing with HR means.”
Designing a performance assessment framework was another task that the newly formed HRM unit was initially given. With the hope of universally measuring workers’ performance throughout the entire TexCo hierarchy, regardless of whether the workers were contract-based or had core (or “formal”) status, the labour managing cadre leaders gave the HRM unit full authority to design and apply the assessing framework they had worked out for Business Corporation C. As with other similar frameworks widely applied among capitalist corporations, the TexCo version of performance assessment includes a set of indices as well as measuring means, such as questionnaires, observation reports and peer- evaluating worksheets. They were required to match with “universally applied rules” in order to make sure that workers would be assessed only according to their performance and actual output44.
However, designing a framework that excludes non-performance related factors from the assessing standards is one thing, putting such a framework into effect is another matter. According to the HRM unit’s manager, headquarters had never actually seriously considered treating the new assessment framework as the group’s only standard in making decisions regarding personnel arrangements.
“…I would say (in answering my question on the range and effect of the implementation of the personnel assessment framework) the contract- based workers who were recruited after 2004 are fully subject to the personnel assessment framework. The changes of bonus and promotion are made according to the ‘more pay for more work’ principle. As for the rest (TexCo’s formal workforce), there are of course more factors taken into consideration, because of our complex history of transition - we try our best to balance fairness and flexibility.” 45
44 Interview with HRM manager A 45 Interview with LM cadre B
160
During my visit to one of the subsidiary enterprises of Business Corporation C (as part of the “competency model” design, I was involved, as an observer, in a team that was dispatched to the subsidiary workplaces to learn about the managers’ jobs and achievements), but the manager I questioned was confused regarding my inquiry about the performance records of their formal workforce. According to him, the assessment was just about evaluating the enterprise’s agency workers’ performance and not the permanent members of staff. Whilst he did report that they did have the core workers’ performance records, these files were confidential and could not be reviewed for the current research.6.5 Summary of the case study
The TexCo group is the result of years of “grasping bigs, and letting smalls go” policy in Shanghai’s state textile industry. From a state-run industry that had over 500,000 permanently employed state-workers to the present business group of only 20,000 contracted employees, Shanghai’s state-owned textile industry has undergone a radically downsizing course driven by the CCP’s local development goals. Today’s TexCo group integrates the most valued assets that were once governed by the state-run bureau of the textile industry. Since the radical downsizing reform in early 1990s, TexCo now has completely quit from massive- scaled yarn manufacturing, Shanghai’s most important state-run production in the pre-reform era. The group, today, has a diverse line-up of businesses, ranging from traditional apparel and fibre products manufacturing to fashion designing. The trading sector has been TexCo’s powerhouse of revenue since the business group’s foundation, while the emerging “future sectors”, at present, remain small in terms of size as well as profitability.
As an entity that involves promoting the group’s business interests as well as those of the local CCP in relation to maintaining the state-owned industry, the TexCo headquarters has deployed hybrid forms of labour managing approaches for rebuilding a state workforce. Since the foundation of the current group, all TexCo subsidiaries have been given full autonomy in relation to marketing and sales, but the nominations for key management posts are largely collective decisions made
161
in accordance with the CCP’s internal personnel politics. In terms of labour relations, management and firm-level ACFTUs are required to organise consultation in order to make collective agreements on the rules regarding working conditions, such as wages, working hours and bonuses. Additionally, the managing cadres and the group’s supreme ACFTU official have to sign a collective contract of general provisions for applying to all TexCo units, by which managers and ACFTU officials at all levels of the group receive the same specific rules and somewhat vague political directions. Given there is lack of rules or protocol on organising collective consultation at the headquarters level, the process of collective consultation is predominantly driven by party politics. ACFTUs are not just enforcers of labour laws and provisions, for they also avidly cooperate with other party apparatuses in relation to various types of political campaigns aimed at strengthening the business oriented skills of all types of workers without damaging the harmony within the overall TexCo workforce.With regard to workforce reconfiguration, TexCo has a preference for training its own workers and managing personnel for meeting the emerging needs of the group’s new market strategy. As aforementioned, the original unskilled state workforce was largely replaced through multiple party-controlled channels, which included lay-offs, early retirement and “long-term vacations”. The vacancies left by such coercive measures were quickly filled with a temporary workforce, especially agency workers. In recent years, in the wake of the state’s project of regulating temporary labour, the proportion of agency workers has reportedly been constantly falling since the beginning of “the Twelfth Five-Year Plan”. There have been some measures to regulate and accommodate agency workers, such as offering ACFTU membership and raising wages. At the same time, the group has issued guidelines aimed at limiting agency workers to the unskilled jobs, which enables management to replace them easily.
HRM staff appear to have limited influence in the rule making process. Whilst headquarters encourages subsidiary corporations to deploy HR-oriented practices for training and selecting capable talent, professional HRM is only treated as an experimental project deployed in the group’s rising fashion business.