By Joab Meyer
In a recent survey, 41% of American Chamber of Commerce in China member companies and 48% of the Chamber's manufacturers indicate they are negatively affected by increased salary expenses.

A major impediment to corporate effectiveness in China is retaining top talent in a market of scarcity. A significant reason for this obstacle to effectiveness is the systemic problems within the Chinese educational system.

Big Blue Reinvents Education
Understanding the impact of labor scarcity on corporate effectiveness, IBM launched their Reinventing Education program in China in March of 2004 with a US$700,000 grant. The program aims "to improve teacher professional development as a way of helping students reach the new national curriculum standards." According to Stanley Litow, vice president for IBM Corporate Community Relations, this is "IBM's flagship philanthropic grant program" that since 1994 has been focused on "raising the quality of public education and bridging the digital divide." According to Litow this program is driven by the corporate belief that "a strong community is a key to a company's success."

Even more significant than the broad brush intentions of the program is its impact on students and teachers outlined in an independent report released in 2006. At the time of the report, not only had over 700 teachers fully adopted the program's innovative instructional methods and an additional 500 teachers were in the training process, but "staff at the 12 pilot schools also developed opportunities to train teachers in other schools, bringing the total number of teachers trained to 4,000 – more than three times the initial project goal. In addition, more than 13,000 teachers…participated in various training and outreach activities for further replication and expansion."

Beyond these raw numbers the program has profoundly impacted the education environment for participating institutions. Improvements include: increased teacher competency, "movement from teacher-centered to learner-center classroom activity, increased cross-regional communication among teachers, integration of ICT into teaching and learning and greater ICT literacy among teachers." The impact on students in participating schools included improvement in "problem solving and communication and collaboration skills" as well as an increased interest in learning.

The Strategic CSR Connection
For IBM the dividends from the Reinventing Education program move beyond esoteric community benefits to value that can be captured to make its operation more effective in retaining talent. Among the first insights from Manpower, a leading recruitment firm, into retaining talent in the competitive Chinese labor market is that companies "create a learning organization." Certainly, the most immediate application would be for IBM to put processes in place that foster such a corporate environment for its more than 7,000 current employees in China. However, this program addresses the long-term aspect of the same problem through working with local educational institutions to change the broader environment within which its future employees will be educated.

Like the e-waste dilemma, China's labor shortage issues must be faced with innovative strategies that comprehensively address the underlying problems. A report by Manpower outlines solutions to the retention issue and places a special emphasis on fostering employee engagement, which is "the employee's emotional and intellectual involvement in contributing to the organization and its success." Practices that have the strongest impact on developing employee engagement include "linking employee work objectives to business goals." It is in this employee engagement gap that the process innovation of CSR can foster corporate effectiveness in retaining talent.

CSR As Process Innovation
Whether it is contributing to the ecosystem of "learning organizations" or bridging the employee engagement gap, IBM's reinventing education initiative addresses fundamental issues in the Chinese IT labor market. What is critical in the long-term, however, is these issues are addressed through improving the underlying education system that has created the talent shortage in the first place.

In short, the company has implemented a strategic CSR initiative, which in the words of Harvard Professor Michael Porter "unlocks shared value by investing in social aspects of context that strengthen company competitiveness".

About the author:
Joab Meyer has a B.A. in East Asian Studies from the University of Minnesota and is a May 2007 MBA graduate from Thunderbird School of Global Management. Joab had the opportunity to gather data on CSR activities in China while participating in the Beijing AmCham CSR committee and working in Beijing in 2006. He would welcome comments on this article at joabmeyer@global.t-bird.edu.

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