Talent Management Column

The Most Powerful HR Department in the World

There are a surprising number of similarities between the way U.S.-based corporations used to handle talent management and the way the Chinese Communist Party does now.

Monday, June 18, 2012
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How would you like to work in an HR department so influential that CEOs tremble before you? Where you made or broke the careers of the most powerful people around? Where experts spent their time trying to anticipate your every decision?

There are a couple of catches. First, you'd have to move to China. Second, you would have had to spend your career in the Communist Party.

The world's most powerful HR department -- frankly, nothing else even comes close -- is the Central Organization Department of the Chinese Communist Party. It controls appointments to the key jobs in government, business and, indeed, the entire society.

Before I describe what it does, imagine for a moment that I'm actually writing about a big U.S. corporation from the glory days before the 1980s. See if it sounds different.

The COD keeps detailed tabs on promising leaders -- both in and outside government -- following their career achievements. A promising young leader might be given an assignment to run a small agency in a remote area to see how well they can perform.

Imagine this as the equivalent of Jack Welch's "popcorn stands," the small P&Ls used like a farm team in sports to test junior executives. Among the most important of these test assignments are turning around a failing agency or region.

Those leaders are then assessed against a series of metrics that measure the overall achievements of the organization they have been running.

In deciding which leaders should get promotions to bigger roles, the COD uses many of the techniques used by search consultants and sophisticated talent managers: extensive background checks to look for problems in their private lives that might become issues in a bigger role, psychological tests on factors such as temperament, 360 evaluations from peers and an elaborate series of metrics to measure objective aspects of performance.

The COD routinely makes use of developmental assignments for leaders, including job rotations to different agencies or indeed from government jobs into business and vice versa; that's easy to do because the biggest business operations in China, by far, are state-owned enterprises.

The idea behind these rotational assignments, as in big corporations, is to provide exposure to new contexts and the opportunity to learn from them.

Succession planning is the ultimate mission of the COD. To get a feel for how important succession is, note that the successor to the president of China is set a decade before they take office. The term of office is 10 years, and a new successor is appointed each time a new president takes office.

The best guess is that the COD controls roughly the 5,000 most important jobs in the country, from university presidencies and CEOs to Party secretaries in each province.

How does the COD keep control over the country?

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Anyone who wants to get one of those key jobs has to stay in the good graces of the COD. That means taking the assignments when given -- just as corporations used to require executives to move to new jobs -- and performing well in each assignment.

If you get into trouble in your personal life, if you fail to show commitment to the party, if you don't perform well in your last job, you never get that next promotion.

It's perhaps not surprising that the COD exists. Its roots arguably can be traced back to the Han Dynasty and the Civil Service Ministry, which set exams to get into government jobs and then advised on promotions.

The Soviet Union had a similar organization, and China borrowed from that model in the 1930s. The move to a market economy created new, powerful institutions in the form of business and new, powerful jobs for the people who run them.

If the United States has a revolving door for leaders who move between business and government jobs, from running industries to regulating them, China has the same thing -- except that it is all done intentionally.

You want a seat at the table? These guys own the table.

Peter Cappelli is the George W. Taylor Professor of Management and director of the Center for Human Resources at The Wharton School. His forthcoming book is Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It.

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