Beidaihe meeting

Mediocrity culture under threat

PUBLISHED : Friday, 30 July, 1999, 12:00am
UPDATED : Friday, 30 July, 1999, 12:00am

The practice of moderation embodied in the Confucian doctrine of the golden mean is a sensible policy for everyday life but can lead to bizarre corporate interpretations.

Talk to Jiang Wen, an editor in a state publishing house. He has always enjoyed doing his job and so puts in more than his fair share of time and effort into writing and editing. In recent weeks, however, he has slowed.

Why? By working hard and being enthusiastic, he has raised eyebrows among his less ardent colleagues. Now, to conform and be accepted, he works at their pace.

'It is not easy to shine at the workplace without incurring the wrath of your colleagues,' he lamented.

The syndrome is not peculiar to Mr Jiang's publishing house, as it also occurs in firms throughout the world.

On the whole, however, incentive systems in most foreign companies reward excellence and hard work and penalise sloth and mediocrity.

In the mainland, the pressure against excellence in the workplace is pervasive in the moribund state sector, becoming an albatross around reforms to lift productivity.

Managers in many state firms are plagued by the fear of outshining their colleagues and survive by upholding the the golden mean policy: do not be too brilliant or too obscure, just mediocre.

As Mr Jiang said: 'In the workplace, you cannot go wrong by adopting the way of the golden mean; colleagues cannot be cross with you and your superiors cannot say you are lazy.' The fear of excellence at the workplace and the lack of a proper incentive system to reward state-enterprise managers and employees are at the root of the crisis plaguing the state sectors.

Published reports say the state sector has about 100,000 employees in the managerial ranks. Enough of them stick to the golden mean policy for the syndrome to be singled out in a recent People's Daily report.

Changes to the incentive system - such as introducing stock options for senior managers - are being extensively debated in academic and government circles to spur productivity and hard work in state enterprises. Not much progress has been made, because the party is still unable to reach an ideological consensus for fear of a leaking of state assets.

Signs coming out of Beijing in recent weeks suggest something might finally happen. At the yearly Beidaihe summer resort meeting starting next week, the mainland leadership might agree on loosing the reins on state enterprises, particularly allowing sale of non-tradeable, state-owned shares in listed companies to non-state entities and individuals.

Through various holding firms, the state now controls 60-70 per cent of most listed companies. With the state retaining control, managers who used to run inefficient state enterprises are still appointed to positions of power when enterprises go public.

The only difference is state enterprises with share offers are now known as shareholding companies.

That is why cynical investors say the listed companies only resort to huan tang bu huan yao - a change in form, but not substance.

That is likely to change after the Beidaihe meeting and the autumn session of the fourth plenary meeting of the Chinese Communist Party, where removal of serious ideological impediments to state-sector reforms are being proposed.

The main proposal is to reduce the state's stakes in a wide range of industries, allowing non-state shareholders to become majority shareholders.

This will have far-reaching effects, because new majority owners will have the liberty to appoint new, forward-thinking managers.

That will allow for a proper system of incentives to be installed and a culture of excellence to prevail - elements crucial to corporate survival.