I 'm very glad to be here and to share my experience with all the guests. Since we founded Fosun Group thirteen years ago, we've gone through all kinds of HR problems at different stages of development. When we started the company, we had to find talent not only with intelligence but also with passion. With the growth of the company, we had to solve problems arising between old employees who helped us build the business and new employees who helped us expand the business. When the company reached a certain scale, we had to build a strong HR system. Now our company is ranked 40th by profit among the top 500 Chinese companies, and the biggest taxpayer among Chinese private companies for three consecutive years. I believe that the key success factor is the outstanding management team we have. We admire each other and cooperate with each other. I also believe that to become a world-class company, we need to have a strong HR Management.

DEVELOPMENT IS THE KEY: CREATE AN ENVIRONMENT APPEALING TO TALENT

Different from many other companies, Fosun started from nothing more than a vision. The founders of Fosun Group didn't have money, connections, or any special technologies. But we were ambitious, willing to take risks and worked hard, so the people we recruited were of the same kind.
.
At the very beginning, when we set up this company, we developed an HR Management Strategy as followed: Attract talent by offering them room for development; Retain talent by building a promising business; Develop talent by giving them challenging work; Evaluate talent by their performance. Since then, we have maintained this strategy, and we will stick to it.

At Fosun, there are more opportunities for employees to improve their ability and develop their career. It is not only the strategy for a small private company like us to compete with foreign or big state-owned companies, but also the main reason for us to be able to attract talented people. We always encourage our employees to "pay more attention to the ability to improve, to future benefits instead of current benefits or the sense of stability".

Since this company was founded, recruitment has always been the critical part of our HR management. To assess the value of talent is a difficult job, so we developed a philosophy of "investing in talent". Recruiting high-level talent is like making an investment. You have to do some research on that. There are two important things to be considered: The first is the potential value a real talent can create for this company. Is his skill complementary to the company? The second is his market value. How much other companies would pay him? All these years, our experiences told us that the investment we made in human resources is the most rewarding. For example, our real estate company once hired a Taiwanese professional sales manager and paid him ten times higher than the market price. Although it was only a two-year term, the advanced managing system he brought to the company was worth three to five times more than consulting fees.

When we decide to make an investment in some other companies, the quality of the management team of that company is one of the key issues we will investigate. We will only invest in a good company with team spirit.

The other important part of HR management is training and retaining talent. We created an "80-day conversation & memo with direct boss", which requires that the direct boss have one conversation with the staff members every 80 days, and then write a memo about it. The conversation covers the issues like job satisfaction, salary and work environment. We're doing this to make sure Fosun is attractive to our employees.

TEAMWORK: TEAM COMPETITIVENESS OVER INDIVIDUAL CAPABILITY

Once you get the talent you want, the next step is to make those talented employees cooperate with each other.

Because there are small chances to find a versatile talent capable to do a variety of jobs, we stress the spirit of teamwork. Ideally speaking, a good team leader should have four kinds of abilities: strategic judgment, professional abilities; management skills and leadership. But in reality, it's hard to find such a person. Therefore we focus on building a managing team. We analyse everyone's specialty and make sure the team members are complementary to each other, so our company becomes more competitive within a relatively short time.

To build such a team, we have to go through four different stages: Self-perception (identifying one's own weaknesses); recognising other people's advantages; dividing the work; and evaluating the performance.

Self-perception is very important. We adopted the "360 degree evaluation" in 1997 and have been practicing it since then. Direct supervisors, colleagues and subordinates are asked to give each other anonymous evaluation about strategic judgment, professional abilities, management skills and leadership. The result will be compared to the person's self- evaluation. And then, the direct supervisor will have a detailed conversation with this person, helping him to identify his weaknesses and other people's skills and talents.

After having this done, we go on to divide the work. We want to make sure that everyone clearly understands his responsibility.

Based on it, we build the performance evaluation system for individuals and teams to solidify achievements. In many cases, a bonus is granted to the team instead of the individuals. With the consensus of the team, the team leader can decide on the exact percentage of the bonus that each member can get. The details have to be reported at the beginning of each year.

Up to now, at the Group level, in addition to five co-founders, we added financial, HR and legal experts to our board. And this management team has been working together closely for over 10 years. We're also planning to add some independent board members. They need to be very famous both in China and abroad with experiences in steel, pharmaceutical and finance industries. We build relatively stable teams in different industries and in various portfolio companies. Of course, we also examine our teams from time to time to improve the structure.

SYSTEMATIC TRAINING: FOSTERING AND IMPROVEMENT TALENT

"Peter Principle" tells us that people will advance to their highest level of competence and consequently get promoted to a position where they're hopelessly inept. Unfortunately, Fosun is no exception. In order to solve the problem, you have to push a manager to divide his work, build a team, and use someone else's skills to make up for his own shortcomings. In the long term, you can either fire him or make him learn more. Fosun began to promote "learning organisation" in 1997.

The difficulty of the "learning organisation" is how to keep everyone motivated. The pressure from the company is necessary. But an employee's self-motivation is more important. Therefore, we extend the "360 degree evaluation" from top managers to employees, so that they can identify their own weaknesses and improve in those areas.
The other problem Fosun faced after our first five-year growth is how to integrate the company pioneers with the professional managers.

The veterans who helped us to build the company are loyal and passionate. But some of them couldn't keep up with the company's development after a while. Professional managers have expertise in what they do, but they're only loyal to what they do, not necessarily to the company.

In China, a large company cannot be built simply by the effort of the founding team. Professional managers are needed to help the company to grow. You can tell whether or not the company is mature by the relationship between the company veterans and the professional managers. For the same reason, you can tell whether or not a private company with a high growth rate has entered a stable stage by the environment created for the professional managers.

In order to retain the founding team and also recruit professional managers, we did the "360-degree evaluation" for all the top managers, helping them to identify their weaknesses. It took us almost a year. Then we came up with the idea of "inviting teachers". We asked those veterans to recruit professional managers to be their leaders, teachers and supervisors, so they could learn new things from those professional managers, improve themselves and catch up with the company's development. In fact, although some professional managers kept coming and going , they helped Fosun to build an outstanding team consisting of hard-working veterans with strong learning abilities.
 
In addition to "learning organisation" and "teachers", we also provide many "internship" opportunities to those talented young people with potentials. At Fosun, there are a lot of people who are less than 30 years old with several years of management experience. Some of them have become key leaders of Fosun Group.

Of course, during these years, business schools like China Europe International Business School offer us another option. Since last year, the board of the Group has asked all the subsidiary companies to make a plan of sending to business schools the employees with entrepreneurial potential. We have also sent employees from the same team to the same school to study at the same time. In this way, you can quickly improve the current team and effectively train the successive team leader. Many subsidiary companies of Fosun have become leading powers in their industry, for the leaders in those companies indeed improved themselves by studying management in business schools. For example, Ms. Wei Feiyan was a famous marketing expert in the pharmaceutical field even before going to business school. She turned a small product into one of the best sellers in the gynecology area. The systematic education in the business school did help a talented person like her to make a dramatic progress. In Fosun's subsidiary companies, there are many good general managers and chairmen with great potential. If their experiences are combined with cutting-edge management concepts, it is bound to benefit the company in an amazing way.

Since Fosun's business involves a variety of industries, it offers a unique opportunity to talented employees to get different experiences across industries. We call it "job rotation training". Fosun Group aims to become a conglomerate with the ability to professionally manage businesses across industries. So on one hand, we stress that our professionals and subsidiary companies should stick with their specialty; on the other hand, we encourage our managers to try more jobs at the Group level. Our managers have gained more experiences and become more capable in the management positions at the Group level after the job rotation. For example, one of our board members was a deputy director of a state owned electronics factory. He came to Fosun and became a director of the administration department of Fosun Pharmaceutical. Now he's the chairman of a big listed retail company and board member of Fosun Group, in charge of HR and administration. The management experiences across the industries contributed to his job at the Group level.

Fosun always wants to send such a message to all the employees: We want capabilities and passion. We don't care so much about the background and academic achievements. What we care about is the resources, the profits, the improvement of management and the culture one can bring to Fosun.

We set objectives for our manager development as followed: Quick adaptation, innovative ability, cost efficiency, one specialty with multi-abilities, a serving attitude, high Emotional Quotient and a global mindset.

CULTURE GENES: FOSUN HR TRADITION

Fosun luckily had a great team when it started with all the core team members from Fudan University. During the first few years, Fosun's culture was similar to the American "Garage Culture" in Silicon Valley. It was about passion and grasping the business opportunities.

Nowadays, our employees come from everywhere; some are from state-owned companies, some are from foreign invested companies; some are from Shanghai, some are from other cities of China; some come back from overseas, and some have foreign nationalities. Fosun's culture becomes diversified. We're facing the challenge of cross culture management. But on the whole, we have a Fosun Culture featured four core values:

1) SHARING

Fosun would like to share its achievement with the society and with its team members. In our opinion, the best management system highly aligns shareholders' and managers' interests. We respect the people who create value for the company, and in order to show our respect, we encourage good teams to become Fosun's shareholders.

2) OPENNESS AND DIVERSITY

Fosun pays a lot of attention to culture management. Large scale of recruitment and acquisitions will incur cultural conflicts. We need to be patient, open-minded and tolerant. We try to understand each other and join our efforts together to achieve greater success. When we invest in other companies, in many cases, we have majority shares. But instead of sending out chairmen or general managers, we give portfolio companies significant decision-making authority. Usually, we only send financial directors to those companies. With proper incentive mechanisms and fusion of the culture, the managers from the acquired companies would gradually accept it that they're part of Fosun as well. In this way, we can smoothly restructure the company to achieve a high growth rate.

3) APPRECIATION

Appreciation is in every Fosun employee's heart. We routinely hold morning sessions for all the employees. At the end of the sessions, everyone has to say "from now on, we have to appreciate others, curtail our personal demands, always do our best and cherish what we have!"

We emphasise again and again our company's social responsibility. For example, in 2004, we paid tax of more than RMB3.5 billion. In 2005, from January to October, it went over RMB3.1 billion (including more than RMB2 billion from the companies in which we have majority shares). Every employee pays tax of more than RMB50, 000 a year. We're proud of such an achievement. We tell our employees that, in addition to supporting our own family, every employee in our company also successfully helps our government to support another family with a pretty good living standard. We encourage not only our companies to share the achievement with our employees, but also encourage our employees to value the company in the way Fosun values our society. We're actively involved in all kinds of charity activities to express our appreciation.

4) TRANSPARENCY

Transparency is the basic principle for Fosun to deal with all kinds of internal and external relationships.

Fosun is the first Chinese private company to hire Ernst & Young to do the auditing work. Fosun Group is not a listed company, but we provided the auditing result to all our creditors and supervising organisations. We're also the only private company in China to hire S&P and Moody to do our rating, so that the public, investors, and the government can see Fosun clearly.

For the same reason, we ask all the portfolio companies to be transparent and to obey the rules in business.

When it comes to personal relationships, we don't like "inner-circles". For example, most of the co-founders of Fosun are from Zhejiang and graduated from Fudan. When we just started Fosun, some employees asked for special treatment just because they're from Zhejiang or graduated from Fudan too. We asked them to leave. We like simple relationships. We treat cases differently, but not employees. What we care about is contributions, not relationships.

I mentioned the "360-degree evaluation" earlier on. In Fosun, it has been very easy to promote this evaluation mechanism, especially among middle to lower level employees. We didn;t hire any independent evaluator. The detailed conversation conducted between the direct supervisor and the employee worked perfectly well without any negative consequences. In Fosun, employees can report to a non-immediate boss. All the corporate emails can be copied to the biggest shareholders. These rules might scare some other companies' leaders. But at Fosun, they were adopted very quickly. The reason for it is Fosun's culture of transparency and honesty.

OUR CURRENT TASKS

We know we have to do a lot more on HR management, especially in the following areas.

• Succession planning. Fosun has realised the importance of having a talent pool of high-level managers. But we just started this job, and haven't set up the standards for related practice.

• Recruitment of global talent. We have some experiences in it, but given the company goal of going global, we've got a long way to go. We might face bigger challenges of recruitment and cross-cultural management.

• The information management system hasn't been built up yet.

Fosun developed the idea of "boundless communication of information and resources". But we haven't really built up a sharing system across the portfolio companies, industries or areas.

• Fosun aims to become a conglomerate with the ability to professionally manage businesses across industries. The challenge in HR management is not only the specialty, but also the ability to restructure the resources in the portfolio companies. Only with successful HR management, can the advantage of Fosun's human resources be fully leveraged.

All the above are some thoughts and practices of Fosun's HR management. We sincerely hope all the experts here can give us more advice on Fosun's future development.

(The author is Vice Chairman and Vice President of Shanghai Fosun High Technology Group. This article is based on the speech given by Mr. Liang at the CEIBS' "HR Leadership Forum" on December 16, 2005. )