SOE Reform and the Professional Manager System
Author： Source： Date：2017-04-25
Former deputy director of the PRC’s State Commission for Restructuring the Economic System, former governor of Jilin province, Hu Hong joined the Public Lecture Series with a speech on SOE Reform and the Professional Manager System on the morning of April 25th
Main points
To implement the professional management system in China requires relevant measures. The exiting personnel and cadre system within the SOEs is not compatible with the professional manager system as managers in the SOEs are paid and employed by the government and consequently does not fit in the market system. The administrative identity of the managers prohibits the formation of their social identity as a professional manager.
There can’t be two standards for professional manager system, one complying with the state-owned economy while the other subject to the market. Similarly, there can only be one market for the professionals. The flow of human capital in and out of the enterprises should overcome such restrictions. It is more important to establish a professional management system within the non-stated-owned economy. The reform of the professional management system is an integral part of the SOE reform.
The reason why we abolish the administrative certificate issued by the government for professional managers is that such administrative certificate cannot be a prerequisite in the market, and that professional managers do not need a certificate from the government.
Take the example of private sector. With such a rule, someone who starts a company would need to receive a certificate from the government to have the qualification to run his business. Will such rule benefit the private sector? And how many private enterprises have such a certificate? Therefore, it is noticeable that such qualification should come from the market rather than the government.
Then how should we set the salary scale for professional manager? We should have a functioning system for professional management. Otherwise we would be stuck in a situation where an employee is not officially a cadre but continues to be regulated as a cadre member. We should avoid such a situation.
Main points
To implement the professional management system in China requires relevant measures. The exiting personnel and cadre system within the SOEs is not compatible with the professional manager system as managers in the SOEs are paid and employed by the government and consequently does not fit in the market system. The administrative identity of the managers prohibits the formation of their social identity as a professional manager.
There can’t be two standards for professional manager system, one complying with the state-owned economy while the other subject to the market. Similarly, there can only be one market for the professionals. The flow of human capital in and out of the enterprises should overcome such restrictions. It is more important to establish a professional management system within the non-stated-owned economy. The reform of the professional management system is an integral part of the SOE reform.
The reason why we abolish the administrative certificate issued by the government for professional managers is that such administrative certificate cannot be a prerequisite in the market, and that professional managers do not need a certificate from the government.
Take the example of private sector. With such a rule, someone who starts a company would need to receive a certificate from the government to have the qualification to run his business. Will such rule benefit the private sector? And how many private enterprises have such a certificate? Therefore, it is noticeable that such qualification should come from the market rather than the government.
Then how should we set the salary scale for professional manager? We should have a functioning system for professional management. Otherwise we would be stuck in a situation where an employee is not officially a cadre but continues to be regulated as a cadre member. We should avoid such a situation.
