Organizational Management

Chinese management has its roots in ancient thinking and practices, especially with regard to values, performance evaluation, personnel selection, and quality control and project management. It is characterized by teamwork, orientation around relationships and multi-level regulations. Public ownership is the mainstay of the economy, although four types of ownership exist:

state-owned

collective

joint venture

private

Historically, China has tested several models of management system, from three-men management, through one-man management and director responsibility under Communist Party committee Leadership to the director responsibility system. Approaching the twenty-first century, under the program of economic reform instigated in the early 1990s China is moving towards a more decentralized, market-oriented, innovative and international stage, with a resultant need for changes in management.

TRADITIONAL MANAGEMENT[51]

The development and practices of Chinese management have been heavily influenced by the cultural traditions of the country. Many ideas regarding the work ethic, performance evaluation, personnel selection, accounting systems management production and quality control have been applied for centuries in Chinese work and business situations. Their origins are described below.

Early Chinese management was influenced by several ancient Chines philosophies including Confucianism, Taoism, Buddhism and Legalism. Confucius (551-479 BC), who most affected thinking on administrative behavior during later periods, emphasized that benevolence should be regarded as the basis of administrative power. Taoism denied the hierarchical administrative style and showed less social responsibility, while Buddhism emphasized equality, kindness and commitment. Han Fei, a Legalist representative around 230 Bc, noted four management principles:

1. Management by standards and rules;

2. Management by strategy planning and the control of personnel;

3. Established practices for responsibility and authority within organizations; and

4. Prevention of usurpation using ruthless means.

FINANCIAL & ACCOUNTING MANAGEMENT[52]

In China the concept of accounting originated with the Chou Dynasty around 1027-800 BC. It consisted of Counting- the daily checking of expense and income- and summing- the comprehensive periodic evaluation of the economic situation. The formal Chinese accounting system was established around 475221 BC and functioned primarily as a performance evaluation system, with indicators for promotion and demotion. During the Tang Dynasty the formal Chinese Auditing system was set up. By the time of the Sony Dynasty there existed comprehensive volumes of accounting records listing and analyzing economic data.

PERSONNEL MANAGEMENT [53]

According to the Rites of the Chou Dynasty (Yang 1984), a classic of ancient Chinese literature, the first Chinese bureaucratic system was formulated as early as 1200-1100 BC with management responsibilities for 360 positions in six categories of official rank. Int eh Art of War, an ancient Chinese military text, Sun Tzu stressed the principle of understanding counterparts for every success, advocating the importance of understanding the characteristics of subordinate, task and situations in management. Then, China established the worlds first comprehensive national system of personnel examination and selection, the imperial examination systems, for the civil service, a system that lasted over 1300 years. The emphasis was on multi-level screening, public recruiting and competitive selection, with examinations on both basic knowledge and problemsolving abilities. With examinations all three levels- country, provincial and state the system included essays, oral exams and performance texts. During the Ming

and Ching Dynasties, the personnel examination system became more complicated, incorporating four aspects of assessment:

Ability

Morality

Performance

And Seniority.

PRODUCTION & SYSTEMS MANAGEMENT[54]

In ancient China mass movement was the primary means of organizing and managing large projects such as the building of Great Wall, which involved more than 300,000 laborers, and the opening of the Great Canal, which involved nearly one million people. Prior to this MO introduced the idea of labor division, while more recently Dong tried to reduce unnecessary time lag in order to shorten the production process and raise work efficiency. Another well-known example of Chinese ancient systems management was the implementation of the Dujiang Dam project during 306-251 BC.

TEAM MANAGEMENT

A dominant principal in Chinese management is the team approach , including group decision making, group reward, group responsibility and team management through the excellent group evaluation campaign and optimization through re-grouping. The team approach has been especially effective in the field of quality management, which is characterized as expertworker joint quality control. In relation to this approach, good interpersonal relationships within teams is emphasized as crucial to a successful management. Linking individual interests with group and organizational interests has been greatly encouraged to facilitate higher organizational commitment and effectiveness. Loyalty is further encouraged via the provision by organizations of housing, medical care, childrens daycare and services for retired employees.

HUMAN RESOURCE MANAGEMENT

The Chinese labor system is undergoing reforms to allow enterprises more power over recruitment and placement. The labor contract system was introduced throughout the country as a solution to the problem of the three guarantees as iron (guaranteed job assignment, pay irrespective of performance and tenure). In addition, labor markets have been established with some form of unemployment insurance plans. Within enterprises, since 1978 various kinds of reward systems have been implemented as a supplement to the fixed and structured wage system. Most of these include multi bonuses and are linked to an enterprises economic efficiency. Finally, in late 1993 China began implementing a new civil service system nationwide.

Vocational training has also been established throughout China, greatly raising the skills and competence level of the Chinese workforce. The nationwide management educational programs running since the early 1980s have trained million of managers and supervisors for large and medium-sized enterprises. The Chinese State Economic Commission and respective ministries of industries now

require managers to take short training programs on general management and organizational behavior. Distance learning and on-the-job training are also major strategies for managers and workers, with the Chinese Enterprise Management Association setting up a network of business school type programs, in consultation with international schools, to train top managers.

TECHNOLOGY MANGEMENT[55]

Since 1978 a series of organizational reforms have taken place and four special economic and development zones including fourteen coastal cities have been opened up to foreign investment an joint ventures. By 1993 there were more than 140,000 joint ventures in China, giving them a significant role in Chinese management.

In relation to organizational change, innovation and the transfer of technology is of great importance within Chinese enterprises, especially with regard to new management information systems. Wang (1989 a) formulated a theory of human computer interface hierarchy from studies on systems development. This theory views computing skills or expertise, system link or networking and participation as three facets of an interface hierarchy among people, the computer system and an organization, interaction among which influences the effectiveness of technological innovations. On the basis of action research among Chinese enterprises Wang (1992) also formulated three strategies for organizational reform and technology transfer:

1. Personnel strategy, which focuses upon the quality of skills, knowledge, expertise, attitudes and motivation.

2. System strategy, which deals with the reform of organizational structure, regrouping, vertical and lateral coordination, communication channels and management networks; and

3. Participation strategy, which emphasizes participative management styles, joint planning and user involvement for better management transparency and a more democratic management climate.

These strategies have been applied to the transformation of management both in state-owned companies and joint ventures.

MANAGERIAL DECISION MAKING[56]

Since 1984 leadership assessment has been a growth area in China. Assessment centers are now used to select top managers with the aid of group simulation tasks. Analysis of jobs has shown seven categories of management functions in Chinese enterprises:

Administration;

Ideological work;

Production;

 Technical work;

Marketing;

Welfare;

And personnel.

Other research has revealed a three-dimensional structure to Chinese leadership:

1. performance;

2. maintenance;

3. and morality ( namely, honesty, integrity and organizational commitment).

The study of scientific and democratic procedures for organizational decision making was another major growth area during the mid-1980s, surveys reporting the positive effects ofparticipative decision-making upon management effectiveness. Research also revealed different patterns and strategies of organizational decision making and influence-power sharing within management, dependent upon the type of management system and decision tasks.

AUTONOMY IN MANAGEMENT:[57]

The decision-making powers of State-owned enterprises has been delegated to the management prior to it in certain areas management have to take permission from the ministry of trade Corp. State Council for such Decision-making.

Management has expanded the decision-making power of enterprises in 10 areas. Enterprises could plan their own production and operations; market their products; determine prices for their products; purchase their own materials; manage their own funds and handle their own production systems. Enterprises also had the ability to establish departments, including those for the administration of personnel and labor management, and to distribute salaries and awards. Greater authority was also extended to domestic operations that were jointly managed by two or more domestic enterprises on the basis of a contract, though separately licensed.

MANAGEMENT NORMS[58]

At the enterprise level, these changes were accompanied by a move from participatory management in the Yanan tradition to a new structure of collective leadership and democratic management by worker under the direct leadership of the factory director. Modern enterprises have a minute division of labor, a high degree of continuity in production, strict technological requirements and complex relations of cooperation. It is therefore necessary to establish a unified, authoritative and highly efficient system to direct production and conduct operations and management. This calls for a system of the managing director assuming full responsibility. This document also prescribes that enterprises must specify in explicit staff member and must establish various forms of the economic

responsibility system with contracted jobs as the main content so as to invigorate the urban enterprises, raise the sense of responsibility of workers and staff members and bring into full play their initiative, enthusiasm and creativity. The system as a whole, though somewhat more flexible at the plant levels, still retains a high degree of centralization and control.

The Evolution Of Chinese Management [59]

Nationwide decentralization and the introduction of participative managerial decision making have enhanced the new organizational structure of Chinese enterprises. The reform of the management system took place over four stages:

1. The experimental stage ( 1978-83), decentralizing some management power to enterprises;

2. The expansion stage (1983-5), trying out various management responsibility systems in some large and medium-sized enterprises and handling over to enterprises decision-making power in areas such as production, sales, pricing of non-quota products, disposal of assets, organization, personnel selection and staffing and monetary incentives;

3. The management systems reform stage (1986-91), implementing management responsibility contract systems in about 90 percent of large and medium-sized enterprises;

4. The management structure transformation stage (1992-4), implementing 1992 state regulations on changing management and the 1993 Communist Party decision on establishing a socialist market-economy structure, namely to delegate fully various managerial decision-making powers and responsibilities of state-owned enterprises in areas including import and export, investment, aftertax profit distribution, joint venture, merging, recruitment and wage systems.

These reforms have resulted in significant increases in output values, profits and taxes. Specific management reform initiatives have included separating management power from ownership and splitting management into shareholding, contracting and internationalizing functions.

Management Philosophy of Chinese Govt.

China had a major boom in its economy during the last decade (1980-1990). Major changes were brought in the management style. New goals and new directions were set for the Chinese economy. Great Chinese leader Deng Xiapong was the person who showed a new way to Chinese management. He initiated some major reforms in 80s, which became a strong backbone for a prosperous future of China.

Major Management Reforms During 80s[60]

Reforms during 1980-88 are one of the main milestones, which helped the country to boost even further. Great Chinese leader Deng Xiapong as stated earlier initiated these reforms. Following were its major aspects.

Major Areas

The areas to be Reform were the Chinese Communist Party and its political activities, reform of government organization, reform of the economy, military, cultural and artistic, indeed China's post-Mao Zedong leaders called for reforms of every part of Chinese society.

The leaders of the People's Republic of China saw reforms as the way to realize the broad goal of modernization of industry, agriculture, science, technology and national defense. The goal was to bring China into the community of advanced industrial nations by the start of the new millennium.

Major Reforms[61]

In the reform movement, concerted efforts were made to bring about fundamental changes in administrative methods while keeping the overall institutional framework intact. Thus, the reform movement of the 1980s--which has been attributed largely to the insights and determination of Deng Xiapong, the most important figure in the post-Mao Zedong leadership--took its place in the broad spectrum of Chinese history.

In a rejection of the time-honored concept of "self-reliance," China entered into the milieu of international bank loans & joint ventures.

 Self-proclaimed successes of the reforms of the 1980s included improvements in both rural and urban life, adjustment of the structures of ownership, diversification of methods of operation, and introduction of more people into the decision-making process. As market mechanisms became an important part of the newly reformed planning system, products circulated more freely and the commodity market was rapidly improved.

The government sought to rationalize prices, revamp the wage structure, and reform the financial and taxation systems. The policy of opening up to the outside world (the Chinese eschew the term open door, with its legacy of imperialist impositions) brought a significant expansion of economic, technological, and trade relations with other countries. Reforms of the scientific, technological, and educational institutions rounded out the successes of the Deng-inspired reforms.

For the first time in modern Chinese history, the reforms also were being placed on the firm basis of a rational body of law and a carefully codified judicial system. Although reform and liberalization left the once more-strictly regimented society open to abuses, the new system of laws and judicial organizations continued to foster the stable domestic environment and favorable investment climate that China needed to realize its modernization goals.

A realistic pricing system that reflected accurately levels of supply and demand and the value of scarce resources had to be implemented. The tremendous demand for consumer goods and the lack of effective controls on investment and capital grants to local factories unleashed inflationary pressures that the government found difficult to contain.

Efforts to transform lethargic state factories into efficient enterprises responsible for their own profits and losses were hampered by shortages of

qualified managers and by the lack of both a legal framework for contracts and a consistent and predictable taxation system.

So these were the major areas in which reforms were made. All of these reforms took time to be implemented but gave a solid ground to country for a firm a concrete progress for the near future.

Future Trends In Management[62]

As Chinese management undergoes systematic reform, there has been a significant move towards holistic means of coordinating subsystems of management. Chen (1988) adopted the concept of macroeconomics as a broader framework and called for holistic management to integrate individual and organizational functions, short-term interests and long-term potentials, and material incentives and moral development. The holistic approach has also been used to integrate culture, organizational reform and management principles.

Organization Structure

Chinese organizations are the formal types of organizations. Here are some of the major properties of Chinese Organizations.

 As there is formal hierarchy and centralization decisions in the organizations, so the objectives are said by the top management and then implemented throughout the organization. The top management set the clear defined goals, so that subordinates put their efforts to achieve these goals in the positive manner. As there are defined goals, so management put their best efforts to achieve these goals.

As there is formalized organizational structure so top management makes the decisions in the hierarchical manner. So there is concept of centralization of decisions in the organizations. Meanwhile the State enterprises also have the upper hand over the decisions of the other organizations.

Each worker or manager is expected to be independent and not rely on anyone else. The tendency, therefore, is toward simple line organizations and broad spans of control.

The decision-making power of State-owned enterprises has been delegated to the management prior to it in certain areas management has to take permission from the ministry of trade Corp. State Council for such Decision-making.

In Chinese culture feed back is given indirectly, for example through the withdrawing of a favor, or via an intermediary person trusted by both superior and employee.

In the State owned enterprises, the policies are said by Giant State enterprises with the help of State economy trade commission, while in the private sector firm it said the policies keeping in view the policies of State owned enterprises.

 Many companies have offered employees lifetime employment in China, however, the effect that these employees have on the overall operations of a company is very critical when one of these employees joins a company, and they actually become part of it. They have planned of them including the method of advancement. This trend is currently changing due to the reason that many organizations in China are privatized. The workers or other members of these organizations have been laid off.

History of Different Chinese Organizational Designs[63]

Initially, in the beginning of this century the China adopted a Stalinist system industrial management modified by the special Chinese revolutionary traditions of the Yanan era. The main Characteristics of this system included a high degree of centralization with clear, detailed plans and standard operating procedures for their implementation. Risk aversion and adherence to formal rules dominated. Within the enterprise a pluralistic structure was adopted. This structure consisted of the Director, the Enterprise Party Committee, the Worker Congress, and the Trade Union Committee. Though the balance of power among the four institutions shifted over time, a tradition of limited participation of workers as part of the formal structure has remained.

Since 1978, a process of experimentation with organizational reform has led to several important modifications of the economic system. As part of these changes, the reforms introduced a new motivational system officially promulgated by the State Council in 1984 as the responsibility system. The basic principles of the system were a combination of responsibility, authority and benefit or simply a performance-oriented organization. The new imperative is to calculate prior to action rather than action before calculation. Rationalization of management techniques with a strong emphasis on the introduction of meansends analysis characterized the normative basis of these reforms.

In 1984, by reforms in the following dimension have been brought in the organization design in China.

I) Political system

II) Authority system

III) Role formalization system

IV) Hierarchical system.

These reforms thus modified the mechanism for worker participation norms in the design of business organizations, introduced the values of teleological structures, emphasized formality of authority structures, and promoted the value of adaptiveness and flexibility within a rigid structure. In terms of leadership, the reforms emphasized values of innovation and experimentation. The importance of general managerial skills such as interpersonal and rational decision-making skills was also upgraded. The reforms, however, did not involve a basic change in the totalitarian nature of the government or the intensive use of both incentives and coercion to ensure implementation of government policies.

Organizational setup of Traditional Firms[64]

The Chinese have always had a proclivity for business and trade. As a result, most of the small business activity in both Singapore and Malaysia uses Chinese management approaches. Chinese enterprises vary in size from independent street hawkers to larger firms such as the rubber, tin mining firms, and a number of mercantile import-export firms. These firms are generally owner-managed and built around the family unit. It is usually difficult to separate the Chinese family as sociological unit from the family as a business enterprise. In the Chinese business unit, the following Characteristics are predominant:

The head of the family is the chief executive of the business Unit. the eldest son is next in the organization hierarchy. The younger sons and daughters are encouraged to further their education and often are sent to foreign universities.

The Chinese-managed enterprise develops capital by limiting consumption and through family savings. It is not unusual to find a wealthy Chinese family living on the premises of the firm in every modest housing. All members of the family are expected to contribute to the family enterprise. Long hours and hard worker traditional.

The Chinese businessmen place a high value on independence, seldom welcoming outside help or investment, and on family solidarity and loyalty. They raise the funds from saving and other resources.

The Chinese firm maintains only minimal financial records. The abacus is widely used, and much financial data exist only in the minds of the chief executives. For this reason, an income tax is very difficult to administer.

 Authority is based on age and is usually absolute. Subordinates are not expected to question the viewpoints of superiors. Group decision making plays a minor role.

Secrecy is a major element of the Chinese approach to management. Chinese firms have difficulty using outside consultants because of their tendency to avoid trusting outsiders. Even the identity of the owners of some Chinese enterprises may be kept secret.

The Chinese have a cool and calm personality. They do not understand outsiders who speak loudly or tend to fly off the handle. The Chinese businessman has a tendency to withdraw into himself without giving any outward indication of disagreement.

Centralized decision making by a dominant chief executive who is also an owner.

A paternalistic view of human resources of power and of mutual vertical obligations.

A relatively low level of formal system, structure and procedure, but an intense concentration on efficiency in the firms main function. Few support or non-line functions.

Weakness in incorporating complex activities which require extensive professionalization, decentralization of decision power and sophisticated coordination, as in successful bran marketing internationally.

 A tendency to stay in familiar industries where the accumulated knowledge of the chief executive is a strategic weapon.

A tendency to see business as deal making and opportunism.

The use of networks of external relations in pursuit of business opportunities, reliable information and capital. Not legalistic in approach: interpersonal trust is very important.

Able to respond rapidly to opportunity.

Highly sensitive to the efficient uses of capital, for example a high inventory turnover, careful debt management, and an astute use of borrowing.

Often linked into a network of stable supplier and customer relations and concentrated on one component of a total system, especially in manufacturing.

OBJECTIVES FORMULATION[65]

As there is formal hierarchy and centralization decisions in the organizations, so the objectives are said by the top management and then implemented throughout the organization.

GOAL SETTING:

The top management set the clear defined goals, so that subordinates put their efforts to achieve these goals in the positive manner. As there are defined goals, so management put their best efforts to achieve these goals.

POLICIES:

In the State owned enterprises, the policies are said by Giant State enterprises with the help of State economy trade commission, while in the private sector firm itself said the policies keeping in view the policies of State owned enterprises.

CENTRALIZATION:

As there is formalized organizational structure so the top management makes the decisions in the hierarchical manner. So there is concept of centralization of decisions in the organizations. Meanwhile the State enterprises also have the upper hand over the decisions of the other organizations.