The majority of China's private enterprises today are in the growth stage, facing two major development bottlenecks: how to scale up and achieve sustainable growth. Breaking through these bottlenecks means that they must face transformation (commonly known as "secondary entrepreneurship"). The core of enterprise transformation lies in three fundamental constructions: organization, culture, and strategy.
If these three fundamental constructions are not resolved, it will be difficult for human resources management in the enterprise to play a role and create value. To put it bluntly, there would be no need for it. If we compare the enterprise to a skyscraper, then the three fundamental constructions are the foundation and frame structure, while human resources management is the modern decorative material of the skyscraper. If a growing enterprise tries to implement human resources management without transforming its original foundation and structure through transition, it would be like trying to build a modern skyscraper using the method of constructing civilian houses with modern construction decoration materials — it is impossible to succeed. I believe this is the deeper reason why human resources management currently receives such attention in growing enterprises.
1. Human Resources Management and Organizational Management
I refer to this as the relationship between root and branch. I have formed the concept that "the problems existing in Chinese enterprises are largely not talent problems, but organizational problems." It could even be said that the basic problems of Chinese enterprises are largely not issues that can be solved by human resources management, but rather issues that should be addressed by organizational management. Because organizations are the soil and environment in which talents survive and grow; it is the soil and environment of the organization that cultivate talent, not the other way around.
To be more specific, organizational management solves the problems of grassroots employees and operational rules within the organization. Constructing an organization is like building a machine; one must solve the structural configuration and operating procedures of the machine. Similarly, organizational management must address the organization’s structure, departmental functions, job responsibilities, and its basic operational rules before considering how to place the right people in the right positions and contemplating the key function of human resources management — matching people to positions and developing talent.
2. Human Resources Management and Cultural Management
I call this the prerequisite relationship. Chinese traditional culture is a rule-of-man agrarian culture lacking the genetic makeup of modern business culture. A local saying goes, "A single Chinese person is a dragon, three Chinese people are three worms; one monk carries water to drink, two monks carry water together, three monks have no water to drink." These sayings highlight the lack of traditional organizational cultural genes in Chinese culture. Andy Grove, the former president of Intel Corporation, who has considerable insight into Chinese culture, pointed out the issue of organizational culture among Chinese people. He said, "Chinese people have an innate creativity for wealth, but lack attention and enthusiasm for organization and organizational planning," citing the bankruptcy of Wang Laboratories, a U.S.-based Chinese company, as evidence supporting his view that Chinese people lack an organizational perspective.
In enterprise management, cultural management addresses employees' perceptions, attitudes, and basic judgments regarding the company. When employees ignore organizational rules and regulations and lack respect for them, it becomes difficult to standardize basic group behavior, let alone take human resources management seriously. Only through dual construction of culture and organization can employees both identify with the organization's concepts and values, feel a sense of belonging, and show sufficient respect for organizational rules and regulations. Then, and only then, can human resources management and development be discussed.
3. Human Resources Management and Strategic Management
I refer to this as the supportive relationship. The reason human resources management is about managing human capital rather than personnel management lies fundamentally in the importance of its capital characteristics in supporting strategy.
Strategic management clarifies the basic direction, vision, road map, and policies for enterprise development, while human resources management provides strong support related to people and human capital for the implementation of these strategic factors. Human resources management is definitely based on strategy, not function, which may be one of the main reasons why function-based human resources management is not valued by senior management in growing enterprises.
Human resources practitioners working in growing private enterprises must clearly understand the significant meaning of enterprise transformation for their work. Redefining their own roles and responsibilities as human resources management professionals, and making the promotion of enterprise transformation their new core objective and major responsibility—this is a crucial decision for human resources managers to demonstrate their value and change their own destiny.
Of course, as a long-term researcher of enterprise transformation and a senior management consultant, assigning new tasks of enterprise transformation to human resources management in growing enterprises is also one of my major goals and responsibilities.