The Platinum Rice Bowl
February 1st, 2009 by Kent KedlThe debacle in the U.S. over the bonuses paid to bankers for driving their companies into the ground reminded me of something we faced in China. In the mid to late 90s, I worked for a software company here, running their operations in East China and then taking over large account sales for the region. This company had been here since 1989, the first foreign software company licensed to operate in China. We were also one of the first foreign companies to institute a performance-based compensation plan where sales people got bonuses based on their sales success. The radical part was that our bonus levels were the same in China as they were in other parts of the world – there were no differences between the commissions that a local sales person could make and their expat counterpart (nor were there differences in the Chinese commissions and the U.S. commissions). Year after year, the top earners in the company were local Chinese and many of them became – rightly so – very wealthy.
We did intensive training for our sales staff on how to sell “solutions” (rather than just schlep software) and we instituted a process to walk prospects through the discovery and solution phases of a sales cycle. We had a sales pipeline management process where we listed the sales prospects and where they were in the process. This was all earth-shaking stuff at the time – such things were NEVER done in China where most sales were relationship-based (someone bought your product because you knew them or their families). To do a “cold call” or sell purely on the basis of how you could help a customer solve their problems was very new in China.
But getting there was tough. We were coming off of the old way of thinking in China, the “iron rice bowl” (铁饭碗 tie fan wan) where your compensation was not much, but it was guaranteed. If you showed up to work, kept your head down, you got your three squares a day and government housing, healthcare and schooling for your kids. Any bonuses were often in the form of a “13th month”, a guaranteed one-month salary at the end of the year in time for Spring Festival. In running our performance-based comp plan, we had to work through this mentality, that it was not enough to just show up – you actually had to perform as well. And we got HUGE resistance from our staff who thought that, because they “worked hard”, they should get the bonuses. The ones that got it succeeded; but there were many that couldn’t hack it and they went back to their comfortable iron rice bowls.
So when I read a story in the news where bankers were being interviewed about their bonuses and why they deserved them, I had a feeling of déjà-vu all over again. One banker said, “People come here because they want to work hard and get paid a lot for working hard” (my emphasis). Some of them go on to say that, if they are not paid their bonuses, then that is “just like socialism”.
What??? I would say just the opposite – it is “just like socialism” when you get a bonus just for for showing up and “working hard”, not because of your performance. I am sure it WAS hard work to sell the magical pixie dust that passed for financial instruments – hey, it was tough enough selling software in China when the same stuff could be bought on the street corner for 5 RMB! Granted, these bankers rice bowls are made of more precious stuff than iron, but the principle is the same. If you live by the sales comish, you die by it. End of story.
After the CNY holiday, I am going to be meeting some of my former software sales staff for lunch. I am DYING to hear what they have to say about these bonuses and, I am sure, am going to be pushed hard to explain just how this happened. And, as I often do when I can’t explain, I adopt my best befuddled look (and it IS a good one!) and say, “Hey…what can you do? They’re foreigners!”
