Using Ownership Incentives in China

1) PeriRaden's founder and CEO could export a local culture of employee ownership to China by adapting to the Chinese way of ownership incentives. Meeting with a business consultant that was a Chinese national was a step in the right direction since employee ownership in China has had a mixed history. The founder can start by providing the same equity structure and policies for all employees in each region.

In doing so, he can create a global organizational culture that holds every member of his team, domestic or international, to the same terms. To prevent his Chinese team from feeling as though he is strictly using an American-dominated approach, over time, he can change the equity structure to fit each region he plans to operate. This will now give him the ability to adapt to the cultural needs of the Chinese people, tax regulations, and establish a flexible ownership structure.

2) The factors that affect Roy Weber's decision to offer the Chinese team similar company ownership as the Silicon Valley team is 1) political uncertainties and an unstable social environment. Many Chinese entrepreneurs focus solely on short-term profits as their investments come from their personal funds or that of family and friends. 2) Unlike American entrepreneurs, the Chinese values and societal norms do not harness the attributes of self-initiative, flexibility, creativity, and profit-orientation.

They focus heavily on interpersonal harmony, making sure to respect people and having personal influence in their business dealings. They must first build trust with a person before going into business with them. From a financial standpoint some factors that will affect him is 1) having enough revenue available in the company and determining the expected growth. Since the average Chinese worker may not want stock options, the company needs to have some type of direct cash measure as well as employee benefits and subsidies. 2) He has to think about how the Chinese team will react to this offer.

Will they accept or reject it and if they reject, what are other options available to explore that model the Silicon Valley team. 3) The legal and tax regulations will weigh heavily on his company as equity compensation is held differently in the two countries. 4) Will his board of directors approve of this decision, they will want to know will this make workers more productive and efficient which in turns makes the company more profitable.

3) An ownership culture does not necessarily require stock ownership by employees. Financial ownership does not ensure a deep commitment to the company. The ownership needs to have some type of psychological value added. Not all employees want to become shareholders, but rather are involved in more work-related decisions to feel more complete in the company. Employee ownership needs a greater sense of personal responsibility and can differ among general employees and employees who are concerned with the company's long-term success. Ownership for some employees could be as simple as job security, which can help reduce some the high turnover rate by low and mid-level managers.

4) Some questions