Why am
I concerning the corporate management?
---
Frank Nov. 4, 2013 in Waterloo,Ontario, Canada
Updated in May 18, 2018; Dec. 9, 10, 13, 15, 2019
http://www.kwcg.ca/bbs/home.php?mod=space&uid=61910&do=blog&id=3824
[Highlight] The success of China's economic reform does not lie in the efficiency of one party dictatorship, but, in the humanized social governance that is the recognition and use of human selfish nature and largely increased the share of work-performance liked payment.
Feb. 09, 2014, in article Management is the Art of Playing Human Nature, I indicate that: “Human behaviors are determined by dual natures: The cultural nature of those acquired altruistic qualities, and natural (animal) nature of those inborn selfish instincts. The Management is to finish purposeful tasks with the culture nature driven by meeting the animal nature with payment under the enforcement of regulations.”
--- Frank Dec. 17，2019 in Waterloo, On. Ca.
With the enlightening of the Industrial Engineering, in the past 17 years, when working in different companies in Canada, I accustomed to observe and analyze the likelihood to increase the productivity with some writings in discussing such issue.
Recently, when I am writing articles in talking about the Corporate Management, I have been considering that, why and when, I have started to focus on such issue, an issue that was far away with my profession of Material Engineering. Some memories were gradually clear. Now, let us go into the world in my memories.
1.. The pain from
social shudder when Economic Reform
In
China, I once worked in an Iron & Steel Research Institute of a large-scale integrated steel making company that acted as the father of China's steel industry to have bred a large number of technical and management personnel for those later developed steel making companies.
Above right photo is microscope and is my tool for making living, left photo is the metallographic photo of cast iron. My major is metallography, also known as metal doctor, which is to change and ensure the metal properties required by real needs from the the level of inner micro-structure of steels. I am also engaged in the analysis of serving failure of mechanical parts, and the analysis of the causes of defective products in the production of iron and steel.
At
the start, my salary was not associated with my work performance. the standard of payment was
unified nationally, which was copied the wage system of the former Soviet
Union.
When the Economic Reform promoting nation-widely from the test zone – the city of Shenzhen, my Company
freed from the state controlled rigid planning economy, and accessed to the independent operation
rights with self financing. The significant one was the right of self deciding the
payment and contribution-linked bonus.
Now in the morning of Dec. 9, 2019, when I revising this article and looking back the experience of economic reform of China, I think that this issue is vital important in worth to discuss a little more.
Redundancy and inefficiency are the thorny inevitable problem of state-owned enterprises in the world and which was the reason that many western developed countries have to privatized again after nationalized and based on which established communist style welfare system. The flexible use of payment is a wonderful medicine to treat such diseases in the state owned economy.
Since the need of work, I have to often go to production site for investigating and made many friends from those who work in the production plants. They were the provider of I needed information.
I remember that the workers, technical and managerial personnel who work at the steel production site, their share of wages linked to production output was far exceeded the fixed wage portion that prescribed by the state. After the end of a shift, workers can immediately calculate out the income for the day.
By increasing the share of payment linked to production quality, it not only stimulates the employees' full potential for production, but also reduces the cost on the payment for redundant staff. By such a simple way to have solved the thorny problem of inefficiency of the state-owned enterprise.
No one would deny the convincing fact that Invisible Hand of Adam Smith or free market economy has indeed brought prosperity to the world. However, any problem has two sides, good or bad. As a country, many problems cannot be solved across the board, especially in the development of economy.
For any countries, some construction projects of infrastructure cannot recover investment, or cannot be recovered as quickly as possible. As a private company for profit, it is difficult to participate in such projects. However, as state-owned enterprises whose profits and losses belong to the country, there is no such concern. Although it is impossible to recover the investment on specific projects, but through the promotion of developing the regional economy, it is not only recoverable, but also will gain much more.
Forcing China to reduce the proportion of state-owned enterprises is one of the focuses of the US in current Sino-US trade war. The fact is clear that the negotiation team of the US actually acts dogmatically with the experiences of Western corporate management experiences that once have failed state owned enterprises.
May 18, 2016, in article <How to save Canada's manufacturing from disappearing>, I indicate that "the cause of Canada's manufacturing decline is nothing else, but the mess in corporate management, since it has been in confused ideologies kidnapping by the reckless brain defectives." "The ideologies, such as, freedom, values, rights, social polarization and, trade unions, their starting points are good, but the social outcomes are bad. So, I called them as confused ideologies."
It is the same in the United States. The confused ideologies, to a large extent, have been used as legally handcuffs to disable the normal administration of the government and has been in destroying the manufacturing industry of western countries.
It is not limited in the United States, but, it is almost all politicians in the West are shouting in defense of values - a confused ideology, but, no one care about the true values - creation that is a values relates self survival.
Now let us return to main topic.
As a part of the set of comprehensive operational reforms, the company also let our institute into self financing with a policy of profit-sharing that amounted to 20% of the profit gains of company from commercial application of our research achievements in the large scale production.
In
my Institute, there 20% of the funds from the profit-sharing were used
as bonus for those who finished research project, and the remaining part was divided
into two parts: One was shared by those who worked in service position, such
as, management, accountants, and other one was used to build residential
apartments, which was allocated to
employee according to the contribution.
As
the returns of my hard work, it was not only my incomes largely increased, but also my family's living condition largely improved in far outstanding among my peers. My home became spacious with well-decorated, which was specially built for senior engineers.
The
Policy in Profit-Sharing largely changed researchers’ behavior of mediocrity
and complacency to have released their work enthusiasm, and incented them to
look for researching project from the large scale production, such as, the
development of new products, the improvement of the equipment, the improvement in production technologies
and so on. As the results, my Company got rapid development from the new products and new
technologies, the contribution of our
scientific research accounts for 10% of total profit of Company annually.
My practice in looking for improvement in workplace was habitually
formed in such a environment at that period.
At
that time, there many Enterprises were stopped production
without money for payment. In a situation that
China had not established social security system, the life of those people without incomes
was difficult and had to seek the help
from parents and relatives. (Now views back, it is that humanized tradition of Chinese family's unity and mutual assistance saved the biggest crisis of economic reform. Blessed by misfortune, in today China, the founders of many large international companies are those who lost their jobs and were forced to make a living in the marketplace).
Across
from my home building, there was a residential building of the people who were no incomes available. The rooms of their home was less and the space was small without money pays for heating. The
geographical location of my home city was similar as that of Toronto. It was
very cold in winter. After snow, the temperature would be deeply dropped.
Whenever
in such a cold day, I could not help but look at the opposite building in my
warm home, and to image the people who were struggling in the ice. I
thought that, if the socialized production well organized and managed, the living condition
of those people would be same with that of me. They did not have to suffer the
cold.
More sadness was from the classmates of my son.
At that time, my son was just entered primary school, after
school, his classmates were often to my home for playing Games by computer. At
that time, computer was very expensive in comparison with income, there few family had money to buy computer. From the talks of those kids, I learnt that
many of their parents had no income already. My wife and I felt very sad with heartbroken,
but, cannot help beside prepared some delicious foods for them.
Since
then, I have reallocated the part of my time and energy to study the reason of
that socialist practice failed especially the Corporate Management and the
marketing. In spare time after work, I went library to read magazine on the management and social issue, also I took part in many
classes in the colleges that were financed by Company
without charge for intuition beside textbook.
It
was said that, in public ownership of the means of production, the property of
the interest is not clear. Lesser people care about the public interest. The
rigid wage system lacks incentive, the payments are always the same regardless
of the work is done more or less, work quality is good or not. It caused the social
production inefficiency and became one of the reasons that socialist camp
collapsed.
In
the early days of China's economic reforms, many companies are still in
state-owned without the establishment
of private one.
For my Company, in the situation of state owned under planning economy, just by the
policy of flexibility in the payment, to have largely
increased the share of work-performance linked wages and bonuses, the
productivity is greatly increased.
The
success of China's economic reforms, it was not by changing the form of the ownership of
enterprises, but, to give enterprises more autonomy in policy-making, in
particular, the largely increase of work-performance linked payment.
Here,
I would like to say that, for the fast economic development of China, the key was
that largely increased the share of work-performance liked payment. It was the key for improving social
productivity - the key of economic development.
This was one of reason that I wrote article The
management is the art of playing human nature.
Compared
with that of former socialist countries, the material wealth of capitalist
countries is prosperity. This should be attributed to the advantage of private
ownership of the means of production, the interest of the property is clear.
With
the motivation to learn the advanced management of Canada, in the past 11
years, I specifically worked in different types of enterprises in Canada. I
found similar problems with that of socialist countries, which badly affect the
production efficiency, such as, the payments are not associated with the work
performance.
Also,
there were some problems that are not obvious in the company China, such as, workplace
deviance in reckless trouble
making without fear to be punished; especially, there many of managements seem
without a rational mentality for what is their duty.
Such absurd behaviors induced me often
thinking of an article Optimal
IQ’s for Various Groups of Dec. 23, 2011.
North Coastal China: 115-118
South Coastal China: 112-116
Generalized Japanese/Korean: 110-112
Generalized Northern Euros: 97-102
Generalized Southern Euros: 92-102
Generalized Indian: 92-96 (they suffer
from poor environment)
Sub-Saharan Africans: 85ish
(malnutrition and poor education, but age bias favors them).
Finally, I would like to say that, in
the earlier stage, the government of China stopped to finance the enterprises
that were in loss-making and made people jobless without income, at the time,
the government has also opened up the private economy and all cities and towns
have built many free markets.
Those who were compelled to do
business in the market were both the victims of economic reforms and the
beneficiaries of economic reforms. It was that economic reform made them
jobless, and at same time, it was that economic reform helped them to have dug
the first pot of gold in life. In today’s China, many world class businesses
were developed from the small businesses of those people.
This almost shock-like reform in China
was according to the successful experience of the test cities.
2. My understanding for the
business owners
18 Jan 2013，in an interview, the
richest man Bill Gates said that I have no use for money. This is God’s work.
“I’m certainly well taken care of in terms of food and clothes,” he said,
redundantly. “Money has no utility to me beyond a certain point. Its utility is
entirely in building an organisation and getting the resources out to the
poorest in the world.”
From his words, we may understand that the personal and household
consumption is limited, no matter how much money and properties the person has?
Perhaps, for business owners, the purpose for launching a
business, initially, is just for breadwinner, for a better life of their
families. However, even if the business’ scale is gradually larger, even if
they got enough money, the majority of the entrepreneurs and their families are
still very frugal in daily life. The consumption of their families is similar
with those of general employees. The money they earned was to be invested to
make business stable and to expand the production.
In view of this, we can draw a general conclusion: it is that the
means of production is not personal consumer goods, does not matter who owns
it, the owner only possess the power of disposal or organization of the
production of social material wealth.
In consideration of social effect, the Entrepreneurs running the
Enterprises are to create tax revenue and job position for Community. Thus, the
meaning of their personal behaviors was sublimated from the parochial
self-interest originally to the public interest actually. From this point of view,
the Entrepreneurs are the best civil servants, and the communists in reality.
In some extent, the Enterprise is shared to make living by
Employees & Employers together.
Enterprise is the essential cells of the Community. If the cells
are not keeping in health, it would be big trouble for Canada; actually it will
harm every Canadian. Indeed, as my observation, due to improper management,
there are many such cells are not in health, and even dead in the simple
reason. The government should pay more attention for supporting the
Entrepreneurs, from every imaginable aspect, to solve problems for them with
maximum extent of the possibility, especially, by legislation to protect
entrepreneurs, to mandatory implement the good management practices, and to
establish standardized management system.
We should create this kind of ideological atmosphere in Canada.
Here, I would like to provide some examples from my experiences in
Canada, to show the hardships of as the Entrepreneurs.
3. Jerry, Adam and Albert
Jerry and Adam were the owners of an Auto Parts retailer in
Toronto, after landed in Canada, my first job was in their company,
and Albert was my supervisor.
Jerry was the big boss, and Adam was the second boss. Jerry was
too busy on business running to see him in workplace. Adam was aged with full
head of white hair and all day busy in the warehouse.
One day, I heard Adam scream loudly, I looked toward the
place of he was working; found that he sat down on an Auto Parts box. I ran to
see him.
His right arm was lifted, and his left palm was under the right
elbow, which seemed to want to touch but dared not touch. The pain made his
face grimacing with sweating profusely. I did not know what should I do, and
froze there with scare.
After a while, Adam recovered from the pain. He asked me that,
have you scared, right? I nodded my head as answer with tears in my eyes.
He said that, 30 years ago, he and Jerry escaped from Armenia,
Soviet Union to Turkey and Iraq in the period of the reign of Stalin. Then they
moved to Canada. In order to make livings, he and Jerry started to make auto
parts. At that time, the most of the jobs were heavy physical one. He and Jerry
both suffered arthritis on the elbow of the right arm. After said that, he
rolled up the sleeve of his clothe and untied wrapped gauze on the right arm,
to expose the elbow. I found that the water of joint effusion caused the skin
falling; it looked like a light bulb. His joint bones were heavy deformed.
He said that he was old enough for retirement. However, he could
not stand without the smells of lubricants oil and the noise of CNC Lathe.
He had to work in the warehouse every day, otherwise, he would sick.
He continued to say, when his working, he often forgot the
arthritis on the elbow to use right hand, and repeatedly made painful as that
of today.
At that time, I came to understand that why there was no anyone
came to see him when heard his load scream of pain besides me. The people in
the workplace have used to his scream and understood that could not be helped.
I said: “in the future, if you have something to do, please call
me, I am your right hand.”
Since then, we became good friend. Also, since I worked with full
heart, and became good friend of my supervisor Albert. Until now, I left the
company for more than 8 years already, but, we still have contacting each
other, and concerning each other. I will continue to discuss this company
later in the aticle the Family Business and Management Board.
It was the experience in this company, especially the hard
experience of Jerry, Adam and Albert in business runing, I began to focus on the
business management in Canada.
