By Steve Kelman
My hotel in Xi’an China – the historic capital that is home of the terracotta warriors and where I have been giving some lectures at Xi’an Jiaotong University – is in the middle of a newly developed mall/tourism area encompassing a large swath of land not too far from downtown. (Given the size of the redeveloped area and the tendency in China to displace large numbers of people for new construction with hardly the bat of an eye, I asked what was in this area before its recent redevelopment, and was told it was “villages,” which seems slightly implausible given how urban the surrounding area is.)
The theme of the whole complex is the Tang Dynasty, with faux (though to my eyes attractive) old Chinese-style architecture, statues of ancient figures lining the middle of the widest boulevard in the area, and a Tang Dynasty theme park near the shopping areas. In all, the feel reflects the interest in China in ancient dynasties – the Tang were about a thousand years ago – rather than a modern Chinese history featuring first decline and humiliation by the West, and then the years of Communism.
The blocks of stores that dominate the area give an interesting insight into Chinese mass middle class consumption. There is no Gucci or Louis Vuitton here, though the manager at my hotel noted with some satisfaction that Xi’an’s first Rolls-Royce dealership lies next to the hotel. Instead, there is a lot of American fast food (Pizza Hut, KFC, Subway, and Dairy Queen all within 100 feet of each other), along with Japanese noodles (Ajisen) and some Chinese food as well.
I spent a while in a mid-market, Chinese brand department store outlet called Vanguard, which had a range of items such as clothing and electronics but compared to an American counterpart was more dominated by food and personal care items. Both its similarities and its differences with counterparts in the West are noteworthy. For somebody raised on images (and personal experiences, at least as a visitor) of Eastern European communism – where the arrival of a supply of over-ripe bananas could generate lines stretching a city block – the most striking similarity with US stores was the mounds of fruits and vegetables piled high and bountifully plentiful. Some of the items on display were different from those you’d see in an American supermarket, but the overall effect of abundance and prosperity was similar. Prices were about 60 percent of what they would be in the US, though with Chinese wages, the items were more expensive relatively.
A second similarity was the dominance of Western brands – Colgate, Olay, L’Oreal – in the personal care section. I don’t suspect any of these products are actually made in the US (the packages were pretty much entirely in Chinese, and I don’t know if there are country of origin labels; I would guess a lot of these items were made in China, Thailand, or Malaysia). But Western brands were definitely holding their own. In other parts of the store I saw a huge barrel filled with Snickers bars, and a detergent section with endless variants on Tide detergent.
Perhaps the biggest difference between this store and a counterpart in the US was the large number of sales staff, several milling around in each section, not just in consumer electronics or fruits and vegetables but in personal care and packaged foods sections. There were a fairly significant number of product demonstrations going on around the store, and I was approached several times by staff, asking me if I needed help. This suggests a role in educating new consumers about what’s out there.
At the risk of appearing either naive or of embracing a crude economic determinism, I did think as I wandered through this temple to popular consumption that it was hard to imagine Americans and Chinese being different enough or hostile enough to each other ever to get into a bad fight.
PS. Some China miscellany: A major bridge collapsed early in the morning – when there wasn’t even much traffic on it -- in the northeastern city of Harbin, killing three people. This was the sixth bridge collapse in the last year in China, “renewing worries over the quality of Chinese infrastructure amid a construction boom across the nation,” as the China Daily put it. Also, there has been a fair amount of publicity in China around a slightly weird adaptation of ancient Confucian principles of respect for parents issued by the “Office of the National Committee for Senior Citizen Affairs,” providing 24 examples of how children can show “filial piety” in today’s world, including teaching one’s parents to use the Internet and phoning them at least once a week.
Posted on Aug 28, 2012 at 7:03 PM1 comments
I recently attended the annual meeting of the Academy of Management, the association of professors (mostly at business schools) who study organizations. I heard an interesting paper which, although the data comes from the UK national government, is quite relevant to people thinking about how US federal employees will deal with the looming tight budget environment in government.
The authors – Tina Kiefer and Jean Hartley of the Warwick Business School, Neal Conway of Birkbeck College, and Rob Briner of the University of Bath –conducted a survey of various elements of job satisfaction, employee engagement, and how oriented the employee is to providing good service. By coincidence, in the middle of conducting the survey the new British Conservative government announced budget cuts averaging 25 percent over four years. (Remember that in Britain’s parliamentary government, when the Prime Minister announces a policy like this, it is pretty much automatically passed by the majority in Parliament, which is always the same political party or coalition as the Prime Minister.) This coincidence about the announcement allowed them to compare the attitudes of respondents who answered the survey before the budget cut announcements and afterwards, which is neat. With the announcement, they decided also to conduct a follow-up survey 6 months later asking many of the same questions, allowing some comparisons after the budget cut announcements had sunk in and begun to be implemented.
Some of the findings in the study will hardly come as a surprise to federal employees or managers, but one particular revelation might. And it has practical implications for managing in tough budget times.
The employees who answered the survey after the government announcement showed lower job satisfaction than those answering before the announcement (though there were no differences in engagement or service delivery attitudes.)
What was especially interesting in the paper, though, was another set of questions that asked respondents, both in the original survey and six months later, about the presence at their workplace of various kinds of change initiatives. In categorizing the 25-odd change initiatives they asked about, the authors distinguish between efficiency-related changes (which they define as those “with a main focus on reducing costs or restructuring processes”) and innovation-related changes (which they define as those “introducing new practices or processes”). They then compared the change in the presence of these change initiatives over the six-month period with changes in employee attitudes over the same time. They found that when efficiency-type changes went up over the period, employee job satisfaction, employee engagement and service delivery attitudes all declined. A closer look suggests that this was not so surprising, because most of the reported changes characterized as “efficiency” changes involved increases in voluntary or compulsory staff cutbacks and service delivery cutbacks.
However, the authors also found that increases in innovation-related changes were accompanied by increases over the six-month period in job satisfaction and employee engagement (though not in service delivery attitudes). This despite the general negative climate the budget cuts created.
This is a fascinating research finding and suggests a path forward for federal managers during a period of tight budgets. I would add that the innovation-related changes government organizations can carry out may also decrease costs and thus improve efficiency (bang for the budgetary buck) – indeed, one criticism I have of the paper is the use of the phrase “efficiency changes” to describe what in fact is just simple cost cutting without any real changes at all, such as getting rid of staff or cutting back services. The real distinction should not be between “efficiency” and “innovation” but between changes that actually seek to help government work better and cost less on the one hand, and the simple meat cleaver of staff or service cutbacks on the other.
Posted on Aug 23, 2012 at 7:03 PM1 comments
As regular readers of this blog know, one topic that I frequently teach about is the proliferation of rules in government organizations. It was my view while working on contracting issues while in government – and it is my view as a scholar and teacher about management – that, while rules often serve valuable functions in organizations, government organizations are frequently too rule-bound, creating problems both for customer satisfaction and for performance.
In class, I often discuss what features of a government environment – in particular media and political scrutiny that put more emphasis on avoiding scandal than on achieving great success – tend to make government more rule-bound than private companies. In executive education, managers frequently discuss ways to reduce the negative effect of rules, such as being aggressive about using exception authorities when the rule doesn’t fit.
But I also always teach that many of the problems we see in managing government organizations often exist in the private sector as well, so we in government should not flagellate ourselves too much.
I have recently experienced a dramatic example of the truth of this observation as a customer of Sovereign Bank. It would give the worst of government bureaucracy and inflexibility a run for its money.
I have kept most of my money-market cash and certificates of deposit in the Harvard Square branch of Sovereign Bank for a while. Last year, the bank manager suggested I start using Sovereign for my checking, and for a number of reasons, I was tempted by his suggestion. However, I did have a worry, which was that I wanted funds to be transferred directly from my money market account to any new checking account whenever money was needed to cover a check, and I was concerned that regulations limited the number of withdrawals I could make each month. However, the manager assured me this would not create a problem, so I proceeded to spend a fair amount of time transferring a large number of automatic payments (e.g. credit card and utility bills) to the new checking account.
Soon the previous Harvard Square manager left, and soon I began receiving notices that I had made too many withdrawals a month from my money market fund, and that this wasn’t allowed. I explained to the new manager what I had been told and the amount of time I had spent transferring automatic payments out of the account (he already knew I was quite a good customer). I suggested the following solution: I would transfer a sum from money market into checking at the beginning of each month that would pay most or all of my checks, and they would give my checking account the same rate of interest as the money market, so I could just leave funds lying there for a while.
Some time later the manager got back to me and said my request had been turned down by a regional manager – Sovereign’s rule was not to offer interest on checking accounts.
I said to the branch manager to ask the regional manager to go up further in the bank to the level of somebody authorized to make an exception to the rule. The rule is not a law of nature or a government regulation. Somewhere within Sovereign Bank there was somebody authorized to make an exception. If it had to go to the CEO, take it there, I added -- somewhat rhetorically.
Well, I’ve now heard back from the regional manager. Sovereign has no interest-paying checking account “product,” he told me, so my request couldn’t be granted, no matter how good a customer I was. Yes, I understood they had no such “product,” that was why I was asking them to make an exception to their rule; if they had an interest-bearing “product,” there would be no need to make an exception. We went back and forth with him repeating “no product” in a way reminding one of the worst stereotype of an unresponsive bureaucrat.
I finally said that if he could not authorize an exception to their rule about no interest, I was asking him to take the decision up to a higher level of Sovereign Bank, where somebody was authorized to make an exception. He was authorized to make an exception, he said, but he chose not to do so. Why did he choose not to do so, I asked? Because Sovereign Bank had no interest-bearing “product.”
Ugh, he can’t make an exception to the rule because doing so would violate the rule! I blurted out, “I understand! That’s why I am asking for an exception to your rule.”
Quickly I realized we were in a do-loop; the regional manager started repeating something about wanting to send me a communication that put our conversation in writing, so he could “memorialize” that we had had a conversation, again a behavior more bureaucratic than most government bureaucrats.
This actually reminded me of an experience I once had while in government. I was chairing a meeting of the FAR (Federal Acquisition Regulation) Council that was discussing rewriting Part 15 of the regulation. As I led a discussion of a certain possible change, I could watch a particularly conservative Defense Department staffer becoming more and more agitated, redder and redder in the face, until finally he blurted out, “You can’t make that change! It’s contrary to the FAR!” As calmly as I could, I responded: “What we are doing now is rewriting the FAR.”
Our goal in government should be to be better than my Sovereign Bank regional manager. But then again, I fear this is far, far too low a standard.
Posted on Aug 14, 2012 at 7:03 PM7 comments