Jul 1, 1997 - Training and Development Practices in the. People's Republic of China. Noel Y M Siu and C P Lau. INTRODUCTION. China's open door policy ...
Training and Development Practices People’s Republic of China
in the
Noel Y M Siu and C P Lau
INTRODUCTION
China’s open door policy in 1979 invited foreign investment to the country through wholly owned operations, joint ventures, licensing, counter-trade, and cooperative development of resources. Joint ventures, cooperative operation and wholly owned foreign enterprise are three major forms of foreign direct investment (FDI) in the PRC.’ The amount of FDI increased from $1.12 billion in 1978-81 to $4.37 billion in 1991, and the total foreign capital inflow increased from less than 11 per cent in 1978-91 to more than 38 per cent in 1991.~ According to Business Report,~ the PRC received the world’s second largest FDI inflow, utilising US $37,736 million in 1995. On the other hand, about three-fourths of the FDI in China is from Hong Kong,4 Taiwan and other overseas Chinese companies.’ As many foreign investors set up company in the PRC, securing quality labour is the first key factor for successful operation. However, despite the abundant pool of labour in China, skilled workers and managers are often in scarce supply and many foreign investors have found it difficult to find the right employees. Added to this are factors such as the low efficiency and productivity in China’s enterprises as well as the relatively poor educational level of Chinese employees.’ All these engender the need for training and development. Besides, many investors claim that given the proper ’
P.S.K. Chi and C. Kao, ’Foreign Investment Review, Vol. 6, No. 1, 1995, pp. 149-55. 2
in China: A New Data
Set’, China Economic
Ibid. The Economist Intelligence Unit, Business Report, China (Hong Kong: The Economist Intelligence Unit, 2nd quarter, 1996). 4 After the handover on 1 July 1997, Hong Kong has become a Special Administrative Region of China. Since the data were collected before July, Hong Kong is still considered as a ’foreign city’ in this study. 5 E. Bouteiller, ’The Emergence of Greater China as an Economic Force’, Long Range Planning, Vol. 28, No. 1, 1995, pp. 54-60. 6 C.J. Zhu and P.J. Dowling, ’The Impact of the Economic System upon Human Resource Management Practices in China’, Human Resource Planning, Vol. 17, No. 4, 1994, pp. 1-21. 3
48
.
knowledge and guidance Chinese workers can be very productive.’ The joint research on ’HRM in Foreign Invested Enterprises in the PRC’ conducted by the Hong Kong Institute of Human Resource Management and International Technology and Economy Institute in 1995-96, has found that training and development is the top HRM issue in the PRC.’ Therefore, this paper attempts to investigate the current practices of training and development among the foreign enterprises in the PRC, which will enable an understanding of the pertinent issues and problems and provide recommendations for further improvement.
THE ROLES OF TRAINING AND DEVELOPMENT IN AN ORGANISATION
°
Training is widely regarded as a process of changing the work behaviour of employees to improve the individual’s ability in performing a present job or organisation role&dquo; and development is defined as both the organisation’s and the individual’s effort to increase a person’s abilities to perform a job in the future. &dquo;’ Training is more job specific or task-based whilst development is future-oriented and broader in scope. The main objective of training and development is to alter the behaviour of employees so that the organisational performance can be improved and organisational goals can be achieved. Systematic training is a sound business investment&dquo; that helps an organisation achieve performance by its employees at all levels. The success of training and development is largely dependent on whether it can fit in well with the organisational strategy.&dquo; Moreover, the training policy needs to be understood and supported by the employees&dquo; in order to ensure their involvement in training. The unification of training strategies and policies is a key factor in improving organisational performance effectively. Training and development is one of the functions usually performed by an organisation’s human resource department. In order to better understand the 7 W.H. Davidson, ’Creating and Managing Joint Ventures in China’, California Management Review, Vol. 29, No. 4, 1987, pp. 77-84. 8 F.Y. Tang, W.K. Lai, L.Z. Cheng and S.Q. Zhang, Human Resource Management Strategies
and Practices in Foreign Invested Enterprises in the People’s Republic of China (Hong Kong: Hong Kong Institute of Human Resource Management, 1996). 9 A.H. Anderson, Successful Training Practices: A Manager’s Guide to Personnel Development (Cambridge, Mass: Blackwell, 1993). See also B.C. Vaught, F. Hoy and W.W. Buchanan, Employee Development Programs: An Organizational Approach (Connecticut: Greenwood Press, 1985). 10 G.T. Milkovich and J.W. Boudreau, Human Resource Management (Burr Ridge, Ill: Irwin, 1994). See also Vaught, Hoy and Buchanan, op. cit. " J. Kenney, E. Donnelly and M. Reid, Manpower Training and Development: An Introduction (London: Institute of Personnel Management, 1979). 12 C.D. Fisher, L.F. Schoenfeldt and J.B. Shaw, Human Resource Management (Boston: Houghton Mifflin Co., 1996). " K.R. Robinson, A Handbook of Training Management (London: Kogan Page, 1988).
49
of training and development in the organisation, it would be worthwhile examine how the training function relates to other human resource activities carried out by the human resource department.&dquo; First, job analysis provides information about the duties, skills and knowledge required in performing a job. It serves as the foundation for most training and development programmes. 15 Human resource planning provides an analysis of the skills and number of employees needed in the case of both current and future situations in the organisation. This helps develop training needs to train the required talent for the future in the organisation.&dquo; Staffing can help the organisation to determine nature to
the
trainability of those
hired and promoted employees&dquo; and provide suitable them. Performance appraisal helps to identify the gaps between desired and existing performance, and these gaps often become the targets of training.’8 It serves not only the training needs but also as a basis for evaluating the effectiveness of training programmes. Training and development pays dividends to both the organisation and the employees. From the organisation’s perspective, one of the objectives is to provide opportunities for its employees to optimise their performance in order to meet the organisation’s goals.&dquo; Therefore, a major purpose of training and
training
to
development
is
to remove or
improve
current or
anticipated performance
deficiencies.2° As a result, training and development improves organisation performance as well as increases productivity. Moreover, since organisations incorporate technological change which consequently speeds up employee obsolescence,2’ continuous skills enhancement for the employee resulting from training&dquo; can help both the organisation and employees to acquire the competencies and abilities needed for coping with the change. From the employee’s perspective, training and development can increase employees’ commitment to the organisation. Training and development creates an environment in which the latent potential of employees will be realised and their commitment to the success of the organisation secured.&dquo; Sloman has shown that a well-sustained training programme has a positive effect on the motivation of individuals and their commitment to the organisation.24 Moreover, greater commitment can result in less absenteeism, thus increasing an organisation’s productivity. 14
K.N.
(New
Wexley and G.P. Latham, Developing and Training Human Resources in Organizations York: Harper Collins Publishers Inc., 1991).
Ibid. 15
16 Vaught, Hoy and Buchanan, op. cit. 17 Milkovich and Boudreau, op. cit. 18 Fisher, Schoenfeldt and Shaw, op. cit. 19 Robinson, op. cit. 20 R.S. Schuler, Managing Human Resources (Saint Paul, MN: West Publishing Company, 1993). 21
Ibid.
22
M.
23
E.
Sloman, A Handbook for Training Strategy (England: Gower, 1994). Keep, ’Corporate Training Strategies: The Vital Component?’, in G. Salaman, S. Cameron, H. Hamblin, P. Iles, C. Mabey and K. Thompson (Eds), Human Resource Strategies (London: Sage Publications, published in association with the Open University, 1992), pp. 320-36. 24 Sloman, op. cit.
50
SYSTEMATIC APPROACH OF TRAINING AND DEVELOPMENT
Training and development involves a considerable number of components, procedures and processes. An appropriate training and development programme needs to include three major stages: identifying, designing and implementing, as well as evaluating. First, the training needs and objectives must be identified. This is followed by designing and implementing the programmes. The last phase involves evaluating the effectiveness of the training activities. IDENTIFYING TRAINING NEEDS AND OBJECTIVES
It is
important for an organisation to determine its training needs since accuracy in this area results in meaningful programme objective, method and evaluation. In the need assessment phase, analysis of the organisation’s needs, the task’s needs, and the person’s needs&dquo; should be conducted. After the training needs are determined training objectives can be developed. Organisational Analysis A successful organisational analysis demands an examination of the short-term and long-term goals of the organisation26 and the organisational climate and culture. This can ensure a meaningful input in the needs assessment process. 27 Task
Analysis
Task
is done by analysing the job performed organisation.11 For task analysis, job descriptions and
analysis
by the trainee in the job specifications are
required so that information (namely, knowledge, skills and attitudes [KSAs]) can be provided. By comparing the requirements of the job with the KSAs of the employees, training needs can be identified. Person
Analysis
Person analysis focuses on individuals and how they perform their jobs. Although it is related to the KSAs which require the employee to perform, the emphasis is on how well the employees actually demonstrate the KSAs required by the
25
I.L.
Goldstein, Training
in
Organizations: Needs Assessment, Development,
and Evaluation
(Pacific Grove, CA: Brooks/Cole Publishing Company, 1993). 26
Ibid. B.N. O’Connor, M. Bronner and C. Educational Publishing, 1996). 27
28
Goldstein, op.
cit.
Delaney, Training for Organizations (Southwestern
51 use of performance appraisal data in analysing training needs is the most common approach.’&dquo; Another way to assess programme individual training needs is by interviewing employees. This can give managers insight into what the employees believe their problems are and what actions they recommend.
job.29 Hence, the
Training Objectives
_
Objectives can be developed once the training needs have been identified. These objectives provide the input for the design of the training programme&dquo; the standard against which individual performance and training be evaluated. A successful objective should state the desired programme criterion and the conditions under which it occurs. 12 performance and
serve as
can
DESIGNING AND IMPLEMENTING TRAINING PROGRAMMES
After needs and objectives have been determined and trainees and trainers have been selected, the training programme can be implemented. This includes choosing the content of the training programme and training methods. A successful implementation of training programmes will depend mainly on selecting the right programmes for the right people with the right needs.&dquo; Therefore, the programme content and training methods have a great impact on the training result. Programme Content of the programme is shaped by the needs assessment and the training objectives. The needs assessment outlines what the trainee must learn, and the training objectives may specify the KSAs for the trainees. Werther and Davis have pointed out that regardless of the programme content, the programme must meet the needs of the organisation and the participants.&dquo;
The
content
Training Methods There are many methods for employee training and development. Typically, the training methods can be categorised under two distinct approaches: on-thejob- and off-the-job training. Both on-the-jub training and off-the-job training 29 30 31
Goldstein, op. cit. Sloman, op. cit. Goldstein, op. cit.
R.F. Mager, Preparing Instructional Objectives (Belmont, CA: Pitman Management and Training, 1984). 33 Schuler, op. cit. 34 W.B. Werther and K. Davis, Human Resources and Personnel Management (Singapore: McGrawHill, 1993). 32
.
52
.
have their pwn roles in employee training and development, depending upon the objective and costs of the training programme.3’ On-the-job training provides a real work situation for the trainee to learn where an experienced supervisor or co-worker acts as the instructor to demonstrate the job. It offers an opportunity for line managers or supervisors to be aware of the importance of training since they are involved in delivering on-thejob training.’6 Also, it not only reduces the transferability of the trainee’s learning, but also makes special facilities and staff unnecessary.&dquo; Off-the-job training methods include lectures, case study, role playing, discussion, games and ’in-basket’ exercises. These training methods are most often implemented by professional trainers, with the latest motivational and teaching strategies.&dquo; Since this training is conducted away from the work situation, few interruptions occur and less pressure is faced by the trainee, leaving the trainee ample time and attention to learn. However, lack of relevance and time factor could be a potential problem for an organisation.
EVALUATING TRAINING AND DEVELOPMENT
Since an organisation invests a considerable sum of money and human effort in the training activities, it is essential for the organisation to measure and assess the effectiveness of the training. The organisation should ensure whether it conducts the right programme for the right purpose, and the feedback is used to improve the programme for the future.&dquo; Evaluation Levels
meaningful evaluation, Kirkpatrick40 has identified four steps by which can be evaluated: reaction, learning, behaviour and results. First, organisations evaluate the reaction of the trainees to the programme by conducting interviews or administering questionnaires. This is followed by giving the trainees a test in order to evaluate how well they have learned. The third step includes an evaluation of the effectiveness of training on-job performance through interviewing trainees, their co-workers and supervisors as well as through observation of job performance. The last step includes an evaluation of the results by measuring the extent to which the organisational objectives have been achieved. Results such as productivity, turnover sales and For
a
training
35 36
Vaught, Hoy and Buchanan, Sloman, op. cit.
37
Sloman,
38
Vaught, Hoy and Buchanan,
op. cit.
op. cit.
op. cit. Milkovich and Bouderau, op. cit. 40 D.L. Kirkpatrick, ’Evaluation’, in R.L. Craig (Ed.), Training and Development Handbook: A Guide to Human Resource Development (3rd ed.), (New York: McGraw-Hill, 1987), pp. 301-19. 39
53
which can be evaluated by comparing records before and after training. The next section examines the current environment in the People’s Republic of China which must be based on an understanding of Chinese culture, essential for training managers in the PRC. This can help design programmes that fit the unique Chinese cultural values.
costs are more concrete
LABOUR CULTURE IN THE PRC
Egalitarianism and guaranteed employment were part of the communist labour policies expressed in the saying that people hold an ’iron rice bowl’ in their hands.4‘ The ’iron rice bowl’ assured that the worker has a job and an income throughout his or her working career,’2 regardless of whether his or her labour attitude was good or bad, or whether his or her labour contribution was large small. Moreover, every individual’s basic survival needs were taken care of the state ’41 and the great majority of employees in state-owned enterprises spent their entire working lives in the work unit that they were first assigned. 44 Besides, factors such as higher status, more responsibility and opportunity for growth, were not necessarily attractive as rewards; the Chinese workers may not be willing to take initiative in devising new products or new ways of doing things and therefore care less about job training and promotion. Moreover, the Chinese generally believe that the way to improve labour productivity is to teach everyone to do one task well and the best way to teach workers is by telling them just how to do it.45 As a result, some foreign investors pointed out that equipment transfer is easy in the PRC, but the most difficult thing is to transfer managerial and technical skills .46 Shore, Eagle and Jedel47 comment that management training techniques might not be effective in the Chinese system unless there is more consideration of both Chinese culture and the business structure in designing management training programmes. or
by
41 B.E. Becker and G. Yang, ’The Chinese Urban Labor System: Prospects for Reform’, Journal of Labor Research, Vol. 10, No. 4, 1989, pp. 411-28. 42 R.H. Holton, ’Human Resource Management in the People’s Republic of China’, Management International Review, Vol. 30, Special Issue, 1990, pp. 121-36. 43 C.H. Hui and K.T. Chen, ’Employee Motivation and Attitudes in the Chinese Workforce’, in M.H. Bond (Ed.), The Handbook of Chinese Psychology (Hong Kong/New York: Oxford University Press, 1996), pp. 364-78. 44 Holton, op. cit. 45 J.A. Nelson and J.A. Reeder, ’Labor Relations in China’, California Management Review, Vol. 27, No. 4, 1985, pp. 11-33. 46 J.R. Engen, ’Training Chinese Workers’, China Business Review, September 1994, pp. 70-83. 47 L.M. Shore, B.W. Eagle and M.J. Jedel, ’China-United States Joint Ventures: A Topological Model of Goal Congruence and Cultural Understanding and Their Importance for Effective Human Resource Management’, The International Journal of Human Resource Management,
February 1993,
pp. 67-83.
54
The Cultural Revolution (1966-76) contributed to severe setbacks in the educational system. During that period, colleges and schools were closed down48 and around 1.1 billion people lost out on education.19 Education was given less priority and the economy provided no incentives for people to study. As a result, there is a generation of Chinese who lack good education and therefore are unable to keep up with the requirements of modernisation while the older generation’s acquired knowledge and skills are outmoded.5° Therefore, one of China’s most urgent needs is to educate and upgrade its workforce and managers in both technical knowledge and skills.
TRAINING AND DEVELOPMENT ISSUES IN THE PRC
Training and development
were seen as
the
key factors
in the
country’s
development with the onset of the 1979 economic reforms. The provision of compulsory training courses for all top managers was organised nationally, and a national network of Cadre Training Institutes was established.5’ By 1981, it was reported that 50 per cent of China’s state enterprises had set up training schools and attention was also being paid to the training of industrial managerial staff.52 The Chinese State Economic Commission has collaborated with organUS, the UK, EEC and Japan to organise management education programmes.&dquo; Most of the Chinese enterprises now offer both on-the-job and off-the-job training. This includes orientation, training in skills, and training in professional or higher level technical skills54 and these enterprises usually spend 2 per cent of their budget on training.55 For foreign companies, special training courses are regularly held based on the labour law and the new vocational education law.’6 Training is compulsory isations in the
48
R. Lansbury and S.H. Ng, ’Human Resources Development in China and Hong Kong: A Comparative Perspective’, in E.K.Y. Chen, R, Lansbury, S.H. Ng and S. Stewart (Eds), Labour Management Relations in the Asia-Pacific Region (Hong Kong: The University of Hong Kong,
1992), pp. 161-88. 49 J. Fukuda, ’China’s Management: Tradition and Reform’, Management Decision, Vol. 27, No. 3, 1990, pp. 45-49. 50 Nelson and Reeder, op. cit. 51 O. Laaksonen, Management in China during and after Mao (Berlin: de Gruyter, 1988). See also M. Warner, ’Labour Management Relations in the PRC: The Role of Trade Union’, International Journal of Human Resource Management, Vol. 2, No. 2, 1991, pp. 205-20. 52 Lansbury and Ng, op. cit. 53 D.J. Cyr and P.J. Frost, ’Practice in China: A Future Perspective’, Human Resource Management, Vol. 30, No. 2, 1991, pp. 199-215. 54 I.H.S. Chow, ’The Emerging Patterns of Human Resource Management Practices in the People’s Republic of China’, International Journal of Management, Vol. 8, No. 1, 1991, pp. 491-98. 55 M. Warner, ’Managing Human Resources in China: An Empirical Study’, Organization Studies, Vol. 78, No. 4, 1986, pp. 353-66. 56 Asia Law & Practice Ltd, ’Training to be Compulsory for FIE Recruits’, China Staff, Vol. 2, No. 9, 1996, p. 2.
55
for the recruits of all foreign companies, even if the company is a representative office. At present, some foreign companies provide training to their local Chinese employees, from clerks to managers, while others only train their managers who then provide on-the-job training to their subordinates.57 Many companies have developed regional training centres and seek opportunities for cooperative programmes with universities.&dquo; Others have formed training consortia in order to reduce the training cost.59 Since the demand for training and development is great as well as urgent, private training companies and consultants are multiplying rapidly, such as, I-Will Not Complain and Mercer Human Resources Consulting. A recent survey found that most foreign companies had developed a training and development policy and determined their own train-
ing budget.60 SHORTAGE OF SKILLED LABOUR AND HIGH TURNOVER RATE
The shortage of skilled labour and a high turnover rate still remain a great human resource problems for foreign companies. As China’s workforce has long been educationally underqualified, China faces a shortage of skilled labour. The major reason for the lack of highly skilled labour is inadequate investment in labour development. Only 3 per cent of the nation’s total output is allocated to education.61 Up to 70 per cent of the workers in most industries have only seven to eight years of schooling.62 Recent research indicates that only 2.6 per cent have received higher than college level education Another survey of forty-seven foreign companies in the PRC suggested that human resources was the second most important factor in contributing to profitability in the PRC.&dquo; Therefore, it is important for human resource managers to recruit and train the best staff as well as retain them. An increase in the mobility of Chinese workers under the labour contract system has provided foreign investors more options in hiring; however, it has also contributed to growing staff turnover rates. In recent years, the turnover rates among foreign companies have varied from 10 to 70 per cent.65 Another 57
S. Melvin, ’Training the Troops’, China Business Review, East Asian Executive Reports, ’Options in Guangzhou for ment Training’, Vol. 7, No. 8, August 1995, pp. 8-10. 58
Mar-April 1996, pp. 22-28. Employee Recruiting and Manage-
59
Melvin, op. cit. 60 Tang, Lai and Cheng and Zhang, op. cit. 61 Tang, Lai and Cheng, op. cit. 62 J. Henze, ’The Technical Education Challenge’, China
Business
Review, Jul-Aug 1988, pp.
38-39. 63
Tang, Lai, Cheng and Zhang, op. cit. The Economist Intelligence Unit, ’Yes, Emphatically Yes’, Business China, Vol. 21, No. 19, 18 September 1995, pp. 1-2. 65 J.S. Sensenbrenner and J. Sensenbrenner, ’Personnel Priorities’, The China Business Review, Vol. 21, No. 6, 1994, pp. 40-45. 64
.
56
by WyattM reported that the turnover rates of wholly foreignowned enterprises, joint ventures and representative offices in different locations and regions ranged from 7.5 per cent to 23 per cent. In view of such high turnover rates, foreign companies do not want to provide extensive training and many believe that such investment would be a waste because of high labour turnover. There are some foreign companies which organise training programmes for their employees but force them to sign an agreement. They need to serve the company for a certain period, otherwise they are penalised or have to reimburse the cost of training.’&dquo; Some even offer training which is limited to a single skill or task according to each workshop’s requirement in the production.69 In order to develop and retain skilled and competent labour, companies need to take into consideration factors affecting training and development in the PRC. survey conducted
RESEARCH METHODOLOGY
.
This paper investigates the current training and development practices for the indigenous Chinese employees of foreign companies in the PRC. Since no prior research has been done on a similar topic, interviews were conducted with four personnel or human resource managers in the PRC. The aim was to develop pertinent items for the questionnaire. The questionnaire was also adapted from various sources including Kirkbride and Tang,’o Kane, Abraham and Crawford,&dquo; Chow and Shenkar,’Z and Sloman.&dquo; The content of the questionnaire included the background information of the participating companies, the strategy of implementation of training and development, training needs assessment, training delivery, the training areas and the training evaluation activities, and the challenges in organising training and development in the PRC. The Wyatt Company (H.K.) Ltd, 1995 China Personnel Practices: Local Chinese National’s Remuneration—joint-Venture Equity/Cooperatives (Hong Kong: Author, 1995). See also The Wyatt Company (H.K.) Ltd, 1995 China Personnel Practices: Local Chinese National’s Remuneration—Representative Offices (Hong Kong: Author, 1995). See also The Wyatt Company (H.K.) Ltd, 1995 China Personnel Practices: Local Chinese National’s Remuneration— Wholly Foreignowned Enterprises (Hong Kong: Author, 1995). 66
67
Sensenbrenner and Sensenbrenner, op. cit. E.W.K. Tsang, ’Human Resource Management Problems in Sino-Foreign International Journal of Manpower, Vol. 15, No. 9/10, 1994, pp. 4-21. 68
69
Joint Ventures’,
Warner, 1986, op. cit.
70
P.S. Kirkbride and W.F. Tang, The Present State of Personnel, Management in Hong Kong (Hong Kong: Management Development Center of Hong Kong, Vocational Training Council, 1989). 71 R.L. Kane, M. Abraham
and J.D. Crawford, ’Training and Staff Development: Integrated or Isolated?’, Asia Pacific Journal of Human Resources, Vol. 32, No. 2, 1994, pp. 112-32. 72 I.H.S. Chow and O. Shenkar, HR Practices in the People’s Republic of China, Personne!, December 1989, pp. 41-47. 73 Sloman, op. cit.
57
Samples were drawn from those companies which have establishments or offices in both Hong Kong and the PRC. Information on the prospective companies was obtained from various sources including the Hong Kong Industrial Relations Association (HKIRA), the Hong Kong Institute of Human Resource Management (IHRM) and the 1995 Members’ Directory of the Federation of Hong Kong Industries. In all 623 questionnaires were mailed to those companies that had investment or operations in the PRC in late January and early February 1997. Of these 54 completed usable questionnaires were obtained, that is, a response rate of 8.7 per cent. The low response rate has a number of implications. The Chinese tend to be relatively conservative and are less likely to reveal information to outsiders let alone filling questionnaires. Moreover, studies related to training and development practices are limited in the PRC and the Chinese in general do not have much experience in responding to such questionnaires. For example, the sample size of a survey on compensation management conducted by the Hong Kong Industrial Relations Association&dquo; was 62 and the response rate of a survey on human resource practices in the PRC conducted by Hong Kong Institute of Human Resource Management was 10.6 per cent.7’ All data were manipulated using relevant descriptive statistics and processed by using the SPSS software.
FINDINGS
Out of the 54 responses, 77.8 per cent of the companies were involved iri the manufacturing sector in the PRC. Concerning the forms of investment, 44.4 per cent and 33.3 per cent of the participating companies were wholly foreignowned enterprises and equity joint ventures, respectively. The majority of the participating companies had establishments in Shenzhen (50.0 per cent),
Dongguan (37.0 per cent), Shanghai (31.5 per cent), Guangzhou (29.6 per cent) and Beijing (27.8 per cent). Other locations included Qingdao, Huizhou and Dalian. Further, 74.1 per cent of the companies were owned by Hong Kong investors. Among the 54 participating companies, 17 had been operating in China for 2-5 years while another 16 companies had been in the PRC for 6-9 Also, 70.4 per cent of the companies had 200 or more employees. Almost
years.
all the participating companies had the following job levels: manual or technical, clerical, and supervisory or managerial. In terms of training and development strategy, 57.4 per cent of the companies had a training department. The job positions offered in the training department included training officer (71.0 per cent), trainer (58.1 per cent) and training manager (51.6 per cent). For companies which did not have a separate training 74
Hong Kong Industrial Relations Association, 1996, The (Hong Kong: Author, 1996). Tang, Lai, Cheng and Zhang, op. cit. 75
PRC
Pay Level and Benefits Survey
.
58 Table 1 Profile of the Participating Companies (N
=
54)
59
department, the human resource or personnel department, the departmental head, the supervisor or a staff member from Hong Kong assumed the responsibility of training the local employees. Among these companies, 68.5 per cent had a training policy. Concerning training expenditure, 34.6 per cent and 30.8 of them spent less than 2 per cent and 2-4 per cent of the total staff training and development respectively. Moreover, 53.7 per cent of the companies reported that they sent their managers abroad for training and per
cent
payroll
on
development. Teble 2
Strategy of Training and Development ( N
=
54 )
The common types of training needs assessment used include task analysis (68.5 per cent), person analysis (46.3 per cent), organisational analysis (41.2 per cent) and mandatory training (27.5 per cent). Job analysis, performance appraisal and human
planning were among the most common methods used in needs analysing training among three levels of employees in these companies. The findings regarding methods used for analysing training needs of the local employees are listed in Table 3. In terms of training methods, coaching was one of most popular methods across the board. At the supervisory and managerial levels, a variety of methods were used which included lectures, group discussion and case study. Alternative methods such as game, project and in-basket exercise were relatively underutilised. Concerning training facilities, the most common resource for training was company’s facilities (89.6 per cent). This was followed by provisions from various organisations such as consultants (68.5 per cent) and local training centres
resource
(66.7 per cent).
60 Table 3
Methods used
Note:
Figures within parentheses
to
are
Analyse Training Needs (N
=
54)
percentages.
In terms of training programmes, orientation or induction, work safety, fire prevention and product knowledge were commonly provided for all levels of employees. Supervisory skills, computer training, product knowledge, customer services and language training were only provided to those at the clerical, supervisory and managerial levels. Information is needed in order to evaluate the effectiveness of the training activities. However, in the light of the findings, the most common method to obtain information was through observation. The alternative methods included the employment of tests adopted at the level of manual and technical staff and interviews for the clerical, supervisory and managerial staff. In evaluating training effectiveness, the areas concerned were the fulfilment of training objectives (79.6 per cent), the adaptability of the training programme (68.5 per cent), and the training cost (64.8 per cent). Due to the unique political, economic and social environment, engaging in training and development in the PRC is not problem free. In the light of the findings, the difficulties included the trainee’s low educational level (51.9 per cent), high turnover rate (48.1 per cent), lack of local training resources (42.6 per cent), incompetency of the trainer (42.6 per cent) and the trainee’s poor
61
Training Methods used
Note:
Figures
within
parentheses
Facilities used
are
to
to
Table 4 Deliver Training
Programme (N
=
percentages.
Table 5 Deliver Training Programme ( N
=
54)
54)
62 Table 6
Training Areas being Provided ( N
Note:
Figures
within
parentheses
Methods used
to
are
=
54)
percentages.
Tobic 7 Monitor the Effectiveness of the
Training (N
=
54)
63 Table 7
(Continued)
Note: Figures within
parentheses are percentages.
Table 8 Areas and Source of Information being Evaluated (N
=
54)
Table 9
C6allenges of Training and Development in the PRC (N
=
54)
learning attitude (40.7 per cent). In order to retain employees at the end of the training, a majority of the companies had signed a contractual agreement (61.5 per cent) with their employees; 44.2 per cent and 36.5 per cent of them considered promotion and increasing wages for their employees respectively.
64 DISCUSSION AND RECOMMENDATION
Since there is an abundance of labour in the PRC, many foreign investors take advantage of the relatively cheap labour, especially in manufacturing. Thus, most companies in this study are engaged in the manufacturing sector (77.8 per cent) in the PRC and the results are similar to those obtained by Tang and associates. These locations coincide with the ten most popular locations and provinces in the PRC where a majority of foreign investors are situated. 76 In terms of the form of ownership, 74.1 per cent of the companies are owned by Hong Kong investors. The results also affirm the fact that Hong Kong is the major investor in the PRC&dquo; and the PRC is the biggest recipient of external Hong Kong investment.&dquo;
TRAINING AND DEVELOPMENT
An organisation’s investment in training and development not only enhances its human capabilities, but also strengthens its competitive edge.79 According to Sloman,80 a well sustained training programme has a positive effect on the motivation of employees and their commitment to the organisation. It also helps reduce the turnover rate and absenteeism leading to an improvement in the organisation’s productivity. Many foreign managers agreed that the most effective way for improving retention rates and increasing productivity was to enhance employee skills.8’ A majority of the respondents reported that their
companies had a training department (57.4 per cent) and a training policy (68.5 per cent)-this reveals their commitment to their employees. Moreover, in those companies which had a training budget, a majority of them (65.4 per cent) had fixed it
at a level below 4 per cent of the total staff payoff. This confirms a recent finding study* which reported that a majority of the companies set their training budget at a level below 3 per cent. Furthermore, overseas training is very attractive to the employees since they themselves cannot afford to travel overseas, and overseas experience and training allows them to obtain greater confidence and knowledge that can help them to improve their efficiency and effectiveness in their own plant or office. Thus, over 50 per cent of the companies provide overseas training for their employees. An accurate training needs analysis can help develop a meaningful programme objective, method and evaluation. Therefore, it is important for the companies 76
Asia-Pacific Weekly Economic Report, May
77
1994.
Ibid. 78 T. Peng, ’Developing Trilateral Economic and Trade Cooperation between the Mainland, Hong Kong, and Taiwan—The 1990s’, Chinese Economic Studies, Winter 1994, pp. 45-54. 79 Werther and Davis, op. cit. 80 81
82
Sloman, op. cit. Melvin, op. cit. Tang, Lai, Cheng and Zhang,
op. cit.
65
identify their training needs before organising any training programmes. In light of the findings, organisational analysis (41.2 per cent), task analysis (68.5 per cent), person analysis (46.3 per cent) and mandatory training (27.5 per cent) were being used by the companies to analyse their training needs. However, task analysis remains the most common form of analysis. Probably, traditional Chinese training is limited to task training and this is dependent on each workshop’s requirement in production. 13 Moreover, the most interesting finding was that mandatory training was used less frequently. Mandatory training is used to train employees to understand some national or provincial regulations in certain areas For instance, the regulations on fire prevention and work safety and technical training for certain professions such as those of electricians and boiler workers. This indicates that foreign companies show less concern about the Chinese worker’s safety. Therefore, there is a high rate of fatalities in industrial accidents in foreign companies. It was reported that industrial accidents quadrupled from 1991 to 1992 in Shenzhen.85 Besides, questionnaires and employee’s requests are rarely used in analysing training needs. This may imply that foreign companies care less for Chinese employees’ wants and needs in training matters. Typically, training methods can be categorised as on-the-job and off-the-job training and both have their own role in employee training. In this study, it was found that coaching was used more frequently from manual to managerial levels. Also, apprenticeship appeared to be more popular at the manual and technical levels. One possible reason may be because the procedures of coaching and apprenticeship are action-oriented. Also, Chinese employees emphasize attitudes and behavioural change.* They prefer training methods such as coaching and apprenticeship. Companies may also prefer on-the-job training as they are reluctant to allow the best employees to leave the office or factory for a long time. Methods such as case study, group discussion, role play and games are alternative training methods which are less frequently adopted in the to
the
Chinese education system.
Moreover, a wide range of training resources is employed in foreign companies. First, in-house resources (89.6 per cent) are popular since it becomes easy to control the entire process of training activities. Moreover, other companies send employees to local training centres (66.7 per cent), vocational training schools (46.3 per cent) and polytechnics or universities (40.8 per cent). Also, since private training companies and consultants are rapidly emerging in the PRC, external consultants may play a vital role in initiating the training activities. Therefore, as evident from the statistics, 68.5 per cent of the participating companies hired consultants to assume the responsibility of their training activities. In order to reduce training costs and to maximise the use of training resources, 39.0 per cent of the companies reported that they had launched joint 83 84 85 86
Warner, 1986, op. Melvin, op. cit. Yang, op. cit. Asia Law &
cit.
Practices
Ltd,
op. cit.
66
training schemes with other companies. Obviously, a variety of training resources is available in the PRC today. In terms of the training content, the findings reflect that ’orientation’ was widely used among these companies. It may be because orientation is necessary
for new employees so as to help them to learn more about the company. Also, fire prevention and work safety training were being provided since these special training courses need to be held regularly based on labour law.8’ In the PRC, the shortage of skilled labour is an acute problem, particularly skilled managers are in urgent demand. Therefore, a range of training areas has been provided for them such as supervisory skills, computer training, product knowledge, customer services and language training. After a training programme is completed, foreign companies should conduct an extensive evaluation of the training programme in order to ensure that the training objectives are realised. In this study, different kinds of training aspects and sources of information were used for evaluating training activities. Areas such as training objectives (79.6 per cent), training programmes (68.5 per cent), training costs (64.8 per cent), trainers (57.4 per cent), and trainees (55.6 per cent) were evaluated mostly by these companies. Since training objectives serve as the standard against which individual performance and training programme can be evaluated, it appears that the companies emphasise evaluation of the training objective. Observation is frequently used to analyse training activities and this finding is supported by a recent study+ which noted that observing the behaviour of trainees is a more popular method. Besides, the companies used other sources of information such as company records, interviews, tests and questionnaires to evaluate training activities for different purposes. Foreign companies face many difficulties in engaging in training and development in the PRC. These companies reported that they had problems with the trainee’s learning attitude (40.7’ per cent) as well as the language (40.7 per cent) used in training. One reason may be that the companies took the training materials off-the-shelf from their headquarters and English was most probably the language of instruction. However, most of the local Chinese employees do not possess the required level of proficiency in English to understand the instructions. Therefore, it is recommended that the training should be conducted in Chinese and the content needs to be tailor-made to the particular needs of the employees. Furthermore, as the Chinese workforce has long been educationally underqualified, the trainee’s low education level (51.9 per cent) is also a problem for a majority of the companies in developing training in the PRC. This is complicated by the high turnover rates (48.1 per cent) in the PRC. Engen89 pointed out that a lot of employees switch from one plant to another plant owing to the increase of RMBS in wages. In such circumstances, companies should adopt some effective measures to retain employees, especially those who have received training. -
87 88 89
Practices Ltd, op. cit. Tang, Lai, Cheng and Zhang, op. cit. Engen, op. cit. Asia Law &
67
Contractual agreement is one of the popular methods to retain employees. Under the contractual agreement, employees are required to stay in the company for a certain period after being trained otherwise they are fined. Offering promotion opportunities and increasing wages are also the key methods for retaining employees. One of the possible explanations is that as China transforms from an agricultural society to a market economy, money becomes the most important resource within a family, while obtaining promotion is a means to earn more. Engen asserts, ’money still ranks at the top of most Chinese workers’ lists, but they also value things like status, promotion opportunities and family security’.&dquo; Thus, increasing wages and promotion are effective methods for retaining employees.
DIRECTIONS FOR FURTHER RESEARCH
It is recommended that a similar study with a larger sample size is undertaken which will be more representative. This can reflect the general trends of training and development for indigenous employees of foreign companies in the PRC. Moreover, instead of merely concentrating on the manufacturing sector, different kinds of industries should be targeted. This can yield more information on the generalisation of training and development practices in the PRC. Finally, the training practices for indigenous managers and supervisors are worth examining since the training practices for managers and supervisors may be different from those for workers. As there is a considerable shortage of skilled managers in the PRC, foreign companies would be interested in finding out ways of retaining them via management development.
CONCLUSION
The shortage of skilled labour remains a serious problem for foreign companies in the PRC. More resources and efforts need to be devoted to training and retaining trained employees. The results of this study show that a considerable number of companies are committed to training and development in the PRC. The key issue for the enterprises to consider is how to retain the trained employees so as to ensure the long-term effectiveness of the organisational
performance.
90
Engen,
op. cit.
Authors’ Address:
Department of Marketing, School of Business, Hong Kong
Baptist University, Hong Kong.
