Choosing the right organizational chart to your Chinese setup

cultural intelligence

I recently coached a Danish SME on how to design the organizational chart for their Chinese office. The office was not new – it had been there for about fifteen years – but recent changes in the management team had created a possibility to design a brand-new organizational chart aimed at overcoming the challenges they were facing when working with their Chinese office.

Their challenges were not unusual; in fact, I would say they were pretty common. Frustrations regarding the information flow, issues with work efficiency relating to the progress (or lack thereof) in their innovation projects, and delays occurring despite continuous on-site follow-ups. In general, I have regularly come across such challenges when working with SMEs doing business in China. The Danish company thought that the Chinese office would adopt the Danish business culture, while the Chinese office seemed to think that the Danish head office was holding back information and showing a lack of understanding of the Chinese business culture in general.

When I asked to see the original organizational chart, the good old matrix was presented to me. Why do matrix organizations seem to work fine in the Western culture but not in the Asian one? It’s because of the hierarchy… and the willingness to take risks.

Firstly, in Western business culture, it is perfectly normal to be involved in several projects at the same time – and for some of them you don’t even report to your direct boss. This is not the case in Asian business culture. In Asia, your boss informs you of your tasks and projects, and if you need information from another department you go through your boss to obtain it. (I’m painting the picture in black and white here; there are exceptions, of course).

The willingness to take risks

Secondly, there is a much (!) greater willingness to take risks in Western business culture than in Asian business culture. If you make a mistake in a Danish organization, you just say ‘sorry’ and move on. You might even be asked to bring in a cake for it! We are encouraged to make mistakes throughout our time in the school system, since this is where we truly learn. In short, a person would have to make a relatively big mistake to lose their job – and even if they do, they simply find a new one! (Again, there are exceptions regarding the types of mistakes, but you get what I mean). This is not the case in Asia, where it is not only common to lose your job if you make a mistake, but it can also be difficult to get a new one afterwards because your ‘guanxi’ is damaged. If you then add into the equation the fact that there is no social safety net, then I personally understand why employees prefer not to say anything rather than admit they have made a mistake. After all, their job might be on the line, and that poses a much greater risk on the Asian side of the table.

But you might think “This is our Chinese office. We have a totally different ‘open door’ or ‘fail fast’ policy”. Well, do you, really? These challenges have their roots in culture – something that cannot be fixed or changed by putting it into an Excel sheet, or a matrix organizational chart.

So what should you do?
• Acknowledge the Asian business culture, and especially the hierarchy.
• Think about whether a Western general manager or a Chinese one would be the wiser choice.
• Consider which teams/divisions you are setting up, and create the right hierarchy in them (‘key seats on the bus’).
• Clearly communicate (and repeat) who has overall responsibility for the decisions and progress or mistakes, and what will happen if mistakes are made.
• Listen. Make an effort to get to know your colleagues, spend time with them. Pay attention to what they are telling you; sometimes the greatest obstacles can be overcome merely by asking…

Soon, organizations will be celebrating Chinese New Year and will be reshaped by who returns after the holiday. Maybe this would be a convenient time to re-visit your organizational chart moving forward, and leave some of your frustrations back in 2018. Happy New Year – all over the world!

Heidi Larsen, the Supply Chain Princess of Plus 7