Selling Cisco to China's Tech Talent Pool

With more and more multinationals opening offices and luring local talent, Jan Gronski's task at the company's Shanghai R&D center is getting tougher

Growing up in Warsaw at the peak of the Cold War, Jan Gronski was determined not to play a musical instrument—and his mother was just as eager for him to learn. So the eight-year-old and his mom reached a deal: No piano lessons, but instead little Jan would study English. That compromise certainly paid off for him in 1968, when after three years of study at the University of Warsaw, Gronski was allowed to emigrate to the U.S.

There, he earned a Ph.D. in mathematics from the University of Illinois and spent over a dozen years teaching at universities in the Midwest. Then followed stints at some of the top names in Corporate America, including Xerox (XRX), General Electric (GE) and, since 1994, Cisco Systems (CSCO). Gronski is now managing director of Cisco's Shanghai research center, its first in China. Of the decision to learn English instead of the piano, he says, "I think I made the right choice."

Now Gronski's knack for languages is rewarding him in a new way. Of the six languages in which the 59-year-old is fluent, one is Chinese, something he chose to study almost as a lark while a graduate student. "I needed a challenge, and since I was a teaching assistant I could audit free of charge any classes at the university," he recalls. So Chinese it was. There's a saying in Chinese: 'A blind cat ran into a mouse.' That's how it happened."

Gronski's fluency in Chinese and his appreciation for Chinese culture led him to Shanghai three years ago. Cisco dispatched him there with a view to repairing the company's reputation, which had been damaged by a messy lawsuit against national leader Huawei Technologies.

Employee Relations

In the suit, Cisco alleged that Huawei had pilfered its proprietary technology. The two parties settled out of court in 2004, but the whole affair left an impression in the minds of many Chinese that the U.S. company was hostile to the country's rise as an IT power. To demonstrate that Cisco remained committed to developing the Chinese market and utilizing Chinese talent, Chief Executive Officer John Chambers decided to open the company's first research and development center in China and tapped Gronski to set it up.

Walk into Gronski's office, a small room with no windows, and you'll see a map of Shanghai dotted with little red stickers. Each one represents the home of a Cisco R&D center employee. "I've plotted out where all the employees live," he says. "And 75% live three to five kilometers from here."

But why should Gronski care about that? Because in sprawling Shanghai, where lots of Western multinationals are opening up R&D centers like Cisco's and where the public transportation system is still in its infancy, the competition for talent is so intense that top-flight minds like Gronski have to sweat the smallest of details in order to keep employees happy. That includes scheduling shuttle buses to and from the nearest subway station so Cisco engineers don't get fed up with their commutes and look for work closer to home.

Recruiting and Retaining Workers

"People say that there are so many people [in China] that it's easy [to hire and retain talent]," he explains over the sound of a ping-pong game taking place in the hallway outside his office. "But that's not true. You have to set up an environment where they want to come to work. You want to keep them. This is important."

Figuring out how to hang onto their Chinese workers and recruit new ones is one of the toughest parts of the job for many foreign managers like Gronski. Throughout the decade there has been a steady growth in the number of multinationals setting up or expanding their R&D operations in China. For instance, in the past year, European drugmakers Novartis and AstraZeneca have each announced plans to invest $100 million in China-based R&D.

Companies such as Intel (INTC), Dell (DELL), Hewlett Packard (HPQ), and Motorola (MOT) are relying on their Chinese engineers to play a big role in designing products. At the same time, Chinese companies like Huawei, ZTE and are trying to beef up their own R&D operations in order to compete better with Western rivals globally.

The Talent Gap

The problem is, even a country with 1.3 billion people has a limited supply of top-notch workers. "China has a lot of very strong, raw talent," says Richard Zhang, a partner with McKinsey & Co. in Shanghai. Sure, it's not hard to find people straight out of school. But if you want to hire people a bit higher up in the pecking order, Chinese with skills and years of experience? Good luck. "People with English, capable of operating in a global environment, with strong technological skills—their numbers are still very limited," says Zhang. "The talent gap," he adds, "is significant."

Gronski says that, despite the spat with Huawei, there's no shortage of young Chinese grads eager to work for Cisco. "The numbers we get are staggering," he says. For each position, there are between 50 and 70 applicants. Weeding through all the applications and selecting the right people "is a non-trivial process," Gronski adds. More difficult still is turning those green engineers into trusty managers.

"This is the thing that wakes me up at night," he says. "While we have wonderful engineering talent here, there are not too many mid-level, experienced managers. The challenge is to go and find the few that exist or to grow them on your own. Given the speed at which we are proceeding, that's pretty hard."

Well Fed and Happy

That's why Gronski runs seminars every few weeks for junior managers in Shanghai, giving them the opportunity to do presentations, solve ordinary problems and learn about marketing issues. "I call it management kindergarten class," says Gronski. "I want to encourage presenters to understand that in order to be good engineers, you also have to have good business sense."

Some Western companies resort to all sorts of tricks in order to keep their Chinese employees from jumping ship. Roche, the Swiss drugmaker, was one of the first pharmaceutical companies to open an R&D center in China. And with so many other drug companies now following suit, "Knowledge workers are in great demand," says Andreas Tschirky, head of Roche's China R&D operation.

To help retention, Roche is focused on providing its China hires—which include a dozen Western-educated engineers—with opportunities to go abroad and work with Roche researchers in Europe and the U.S. "We have the high-level talent," he says. "Now we have to take care of them." That even includes empowering the local staff to make decisions about the food served at the company cafeteria. Since 2004, the R&D team has switched caterers six times. "They expect good quality," explains Tschirky.