Implicit Rules in Chinese State-Owned Enterprise

“Implicit rules” in Chinese state-owned enterprise

By Ying LIU

Ethics, Responsibility and Sustainability

Professor Arno Kourula

7th September 2018

“What is the most expensive in the 21st century? One of the right answer could be talent”. Similarly, in terms of long-term development for a corporation, if the enterprise did not have an well-rounded human resources management ethical framework, it may face the risk of loss of talent which could not be valued in money.

I have been worked in a branch of State grid Corporation of China( SGCC) which is China's largest state-owned electric monopoly of China. As we all know, China has its own culture background in the business process and there is an relationship called “guanxi”which have some potential power we may not estimate. State-owned enterprises are usually slightly different from other companies in the context of particular Chinese business cultural environment. The word “guanxi” seems like some implicitly rules which have different meanings in our enterprise and even for the whole national electric system. For some circumstances the relationship can may determine the employees’promotion to a certain degree. Comparing with the written rules and regulations(explicit rules),the implicit rules imperceptibly influenced the managers’ decisions. The following three real cases could illustrate what is the implicit rules and how they influence during the management process.

In 2016, the HR manager promoted ten employees as leaders of departments without any signs, and all the employees were confused about the decision because they had no information about the promotion process. After the promotion they had private discussion about why he or she is be promoted. The answer is people who is promoted may had a relationship with manager or even the supervisors. All in all , obviously a majority number of employees unsatisfied with the promotion. However all of the employees kept silence and defaulted on the result, and they don’t want get any troubles with their career lives.

Another case is about sex discrimination. According to the research, the male and female admission ration within the SGCC system is 7:3, which means the male are more preferred in the corporation and have the absolute advantage during the recruitment. In 2017 the International Department needs to recruit 2 oversea students from the subsidiaries in each province and I was told that i am eligible to apply. The HR said that regardless of my qualifications and academic background and experiences, I could possibly be selected. But as a result, the department manager selected two man and give me the feedback because they believe compare to women, man could be more suitable for the position. The position requirement did not mention that they require man instead of women, but the implicit rule is they will consider the gender during the select process and this factor could be a vital determinate for the selection. In fact, if the explicit rule is a hard constraint, then the implicit rule is a soft constraint and sometimes the latter one could be more influential during the human management process especially for the enterprise which plays “guanxi” in the first place.