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The compensation inequity issues first discussed in Chapter 4, allows context to the discussion of employee resistance. Table 5.11 summarises the previous discussions on leadership behaviours in managing the compensation and benefit issues, the culture factors that influenced these leadership behaviours, and the employees’ response to the leadership behaviours.

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Table 5.11 Leadership Behaviours in Managing Compensation and Benefit and the Integration Outcome

Acquisition Phase

Leadership Behaviours Compensation Inequity Outcomes Culture Dimension

Pre-acquisition New Chinese General Manager increased the salary for those managers and supervisors who negotiated for a salary increase as a condition to help with ending the strike

New Chinese General Manager was perceived to have broken the rule of ‘equal job, equal pay’. Some supervisors threatened to resign collectively due to lower pay compared with their peers

Equity equals Equality

Post- acquisition

British managers increased the salary for the managers to fix the compliance issue for individual income tax so that the managers’ take-home pay was not impacted

The rest of the Lucky China employees felt it was unfair for only managers to get the salary increase. They expected all employees should get salary increase at the same time.

Some operators collectively did not show up at work when their new managers came to work for Alexander China the first day.

Equity equals Equality

Post- acquisition

For new hires with English capability, the new Chinese General Manager made the decisions for their compensation without establishing related rules and guidelines.

The Lucky China staff felt that young and inexperienced new staff did not deserve the higher pay just for their English capability. They requested performance management policies to be set up so that consistency could be maintained Equity equals Equality; Unequal Power distribution Post- acquisition

No policies were established for performance management. British managers implemented the confidential policy for salary information in Alexander China

Lucky China employees’ perception was that there should be transparency and consistency for salary treatment. Rumor and speculation started.

Equity equals Equality

As seen in Table 5.11, Lucky China employees’ resistance behaviours occurred when their perceived rule of ‘equity’ was broken while their perceived ‘equity’ was essentially ‘equality’. Although the decisions of compensation and benefits had been made solely by the Owner without rules or procedures, all Lucky China interviewees believed the Owner was fair because their expectations of ‘equality’ were met. When the new Chinese General Manager changed the principle of ‘equality’ to differentiated compensation treatment without consistent criteria after the acquisition, his leadership behaviours were perceived as ineffective by the Lucky China employees.

Primarily, the interview findings indicate that when some Lucky China employees raised expectations for Alexander China to establish some consistent guidelines and procedures which link compensation to performance, essentially, they were possibly looking for the form of ‘equality’ that can be delivered from these guidelines and procedures. The lack of ‘equality’ in compensation treatment between Lucky China staff and new hires became one of the reasons for Lucky China employees’ resistance against the new hires.

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Resistance against the New Employees and New Departments

While compensation inequity was identified as one reason that had caused Lucky China employees’ resistance against the new staff, it was not the only reason. It was found that the combined effect between compensation inequity and no prior communication about intended changes, led to the strong resistance from Lucky China employees against the new employees and new departments.

Table 5.12 summarises the four primary reasons that were perceived to have caused such resistance against the new employees. Table number for each of the four reasons is noted in the Table 5.12 for easy reference back to the original table in this chapter where that reason was first discussed.

Table 5.12 Summary of Causes Leading to Lucky China Employees’ Resistance against New Employees and New Departments

Acquisition Phase

Leadership Behaviours Resistance Outcomes Culture Dimension

Post-acquisition (Table 5.11)

For new hires with English

capability, the new Chinese General Manager made the decisions for their compensation without establishing related rules and guidelines.

Lucky China staff felt that young and inexperienced new staff did not deserve the higher pay just for English capability. They believed it was unfair. They requested performance management policies to be set up so that consistency could be maintained Equity equals Equality; Unequal Power Distribution Post-acquisition (Table 5.10)

Leadership did not conduct prior communications about changes of new hires and new departments and their impact on existing employees.

No prior communication about who the new employees were, nor clarity of roles and responsibilities between Lucky China staff and new staff.

Absence of communications, Lucky China employees viewed the new hires as job security threat and treated the new hires with hostile attitude.

Conflict occurred between Lucky China staff and new employees.

Nepotism

Post-acquisition (Table 5.5)

British managers made the new English speaking staff the communications interface between British managers and Lucky China staff;

Lucky China managers felt loss of ‘face’ by taking instructions via the inexperienced new staff.

Unequal Power Distribution

Post-acquisition (Table 5.5)

British managers held Lucky China staff accountable for issues and problems

Lucky China managers felt loss of ‘face’ when being blamed by the British managers for issues. Conflict occurred between Lucky China staff and new staff

Unequal Power Distribution

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Strong resistance from Lucky China employees against the new hires resulted in poor collaboration between the two groups and negatively impacted on getting work done for Alexander China. Furthermore, the experience from 25 out of 53 Chinese interviewees was that there was no effort by the Alexander China leadership team to resolve the conflict between the two groups and manage the resistance from Lucy China employees. Table 5.13 provides the details of these 25 interviewees.

Table 5.13 Negative Impact of Poor Collaboration between New Employees and Lucky China Employees

Employee Type Operators Professionals Supervisors Managers Total

Lucky China employees 3 7 4 3 17 Alexander new employees 0 4 0 4 8

The new management team, made up of new local managers, Lucky China managers and British managers in Alexander China, would normally have a critical role to improve the collaboration between new employees and Lucky China employees. However, according to three out of seven Lucky China professionals, in reality, it was the Lucky China managers and the new managers hired by Alexander China who should be held accountable for creating the negative attitude of ‘them versus us’ in Alexander China. Consequently, the new employees and Lucky China employees became two hostile groups. L-SP7 said:

If the top management is teaming together, we as subordinates could deliver as well and work well together. We could not get team work now as our managers are not working together.

In Alexander China, among the prevailing mindset of ‘them versus us’, two positive exceptions were identified where one out of seven Lucky China managers and one out of six new local managers demonstrated good leadership behaviours to facilitate the integration between new employees and Lucky China employees. One out of seven Lucky China professional and two out of six new professionals appreciated that one Lucky China manager led by example to establish a collaborative environment for his department. Lucky China professional staff L-PF6 said:

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We did not have any communications problems between new members and Lucky China staff because of our leader. He is leading by example to encourage open communications style between the new hires and us Lucky China employees.

The view of L-PF6 was echoed by new professional staff A-PF4, “Our leader is from Lucky China and he has a lot of experience and willing to teach the new staff, very patient. We very much appreciated his support”.

The new manager A-MM7 was another role model who facilitated good integration between the new employees and Lucky China staff. In the view of A-MM7, an attitude of openness from the new employees was very important to the Lucky China staff. His insight was that the critical foundation for good personal relationships was to take care of employees’ personal needs, he said: I got along with Lucky China staff very well, including my own direct reports and the managers. What I did was that I helped my direct reports with their salary issues and they got their salary increased. Now they followed me completely and we had very good team work in my team. I also always gathered my team together off work to have meals, and I feel that situation is better and better than before.

A-MM7 believed that confrontation between new managers and Lucky China managers could have been avoided, and his view was that good personal relationship building with Lucky China managers was critical to a good working relationship:

I think personal relationship with Lucky China leaders will help with the business relationship. So I always join the meals with Lucky China leaders together to get familiar with them, also I consult with them about some staff. I have tried to get along with them through these things. And it worked out well for me.

British management was criticised for not making any effort to promote collaboration between Lucky China staff and new employees. In fact, nine interviewees, including five out of nine Lucky China supervisors and four out of six new managers specifically pointed out that British managers contributed to the conflict between Lucky China staff and new employees. Their stated reasons for their belief that British managers contributed to the group conflict were found consistent with the four causes listed in Table 5.12.

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Five out of six new managers expressed their strong frustration about the resistance they received from Lucky China managers. However, they were more disappointed about how ineffectively the British managers and the local Chinese General Manager managed such resistance, especially during the initial period when they joined Alexander China. Details of one example of such frustration from A-MM7 were discussed earlier in Chapter 4 under the section on nepotism.

Regarding the overall poor collaboration between the Lucky China employees and the new staff, some specific suggestions were raised about how to improve collaboration. L-SP4 recommended that the British senior leaders should have established a company culture that engaged both the Lucky China staff and new employees. He said:

The senior leaders should establish a company culture to make all staff, old Lucky China and new employee felt that we are on the same boat. Without such a culture, we could not engage employees’ heart.

The recommendation from L-PF5 was that the management team could organise collective training attended by both employee groups so that the new employees could teach the Lucky China staff modern management systems such as quality process while Lucky China staff could teach the new employees about the industry and product knowledge.

Furthermore, two out of nine Lucky China workshop supervisors and two out of seven Lucky China managers recommended that the management team should have sent new employees to work in the shop floor for at least two to three months to become familiar with the products and the people, instead of sitting in the offices. As described by L-SM4:

The new employees should come to the workshop to interact with the old staff instead of sitting in the offices. The new employees are strong in theories but are disconnected from the real practice, while the old staff work according to experience without too much theoretical knowledge. This will help the old staff to accelerate the acceptance of new ideas and new projects, which they needed some time to absorb and work effectively.

Overall, the management team of Alexander China, including the Lucky China managers, new manager and British managers were perceived to have contributed to the creation of resistance

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between Lucky China employee and the new employees group and they had not done much to improve the collaboration between the two groups.

Besides the conflict between the Lucky China employees and the new employees, Strong resistance against the establishment of new departments was discussed and agreed as an issue by 25 out of 53 Chinese interviewees (see Table 5.14).

Table 5.14 Lucky China Employees’ Resistance against New Departments

Employee Type Operators Professionals Supervisors Managers Total

Lucky China employees

0 0 9 7 16

Alexander China new employees

0 4 0 5 9

The contributing factors to such strong resistance as discussed by these 25 interviewees were primarily related to the lack of leadership communication about the significant changes such as restructuring the existing Lucky China organisation to align with the Alexander Global structure and establishing new department as a result of such realignment. In the absence of such communication, the impact on Lucky China employees and new employees were discussed in the earlier section of Leadership Communications on Future and Significant Changes (refer to Table 5.10).