To build a business empire that can survive a complex and fast changing world, top management not only has to stay on top of things by digitalizing operations and information but also implement a robust system to deal with what the Dalian Wanda chairman calls “inherent human weaknesses”.
Corruption is rampant in China, Wanda chief Wang Jianlin wrote in the Hong Kong Economic Journal. And property, Wanda’s flagship business, is a hotbed of corruption.
Here is how he tackled the problem and set up a defense system.
Right off the bat, he limited the mandate of regional offices, with key decisions made exclusively by head office.
Going one step further, Wang regularly reshuffles local managers, making sure skeletons cannot be easily hidden.
Those who refuse reassignment have one way to go — out.
In all regional offices, staff involved in key issues such as finance, costing, quality and safety control report directly to head office.
They, too, get reassigned every three years to prevent them from colluding with other local employees in shady activities.
“There are inherent character flaws in human beings. Wanda wants to rely on a system, not on individual worker’s integrity and loyalty,” he wrote.
“An employee might be loyal this year. Next year is a different story. Someone might be able to say no to bribe money but that person might not be able to say no to a beautiful girl. That’s why we need a stringent system.”
A robust system makes it hard for employees to get themselves into trouble.
When Wanda looks for a contractor or supplier, only those on the approved list can submit bids, even for something as small as a power switch.
On the leasing side, when Wanda looks for tenants for its malls, it uses a list of approved brands as well.
Wanda has also got itself a powerful audit department, the only unit that directly reports to Wang.
This is the company’s disciplinary watchdog which goes to different offices, reviews their operations, makes assessments and recommends penalties, if there are irregularities.
Wang cited a popular project in Zhangzhou in southern China in which the general manager and the sales manager conspired to block the unit from potential customers, using fake buyer names to bypass the internal control system.
They then demanded bribes from interested buyers. Wang’s watchdog nailed them in an audit and the culprits were sacked.
– Contact us at english@hkej.com
RA