In this era of VUCA (Volatility, Uncertainty, Complexity and Ambiguity), the only certainty is uncertainty. Every business leader must be prepared to face uncertainty at all times.

A business leader is like a captain of a ship in unknown waters: it is impossible for one to know where reefs and undercurrents hide. Under such circumstances, the entire crew must be depended on to perform their jobs properly. Everyone works together to ensure the ship and makes it to its destination safe and sound.

Professor ZHENG Xiaoming from the Department of Leadership and Organization Management at Tsinghua University School of Economics and Management (Tsinghua SEM) spoke about how entrepreneurs can use traditional Chinese wisdom to motivate their employees in the sixth module of the second Tsinghua-Alibaba New Business Xuetang.

1. Human nature and loyalty

Confucius said: "See a person's means of getting things; observe their motives; examine that in which they rest; how can a person conceal their character?" To know someone, one need only examine their actions and words and try to understand their motives and feelings. The core of leadership lies in understanding human nature and fostering loyalty. The purpose is to motivate the entire staff.

Human nature can be bad or good. Proper motivation should suppress the bad parts and advocate for the good. At the base level, employees desire financial gain and recognition. These desires should be incentivized. Huawei pays its employees who work in Africa several times what it pays those at its headquarters.

Mid-level employees should not be allowed to rest on their laurels. Their income should be divided into two parts: labor contributions and capital gains, at a ratio of 3 to 1. This encourages them to keep up their hard work. Senior managers require a sense of mission. A dozen managers with a keen sense of mission can inspire hundreds of others to follow, and that hundred may become thousands.

The recent Tsinghua-Alibaba New Business Xuetang used Risfond Executive Search (Risfond) as a case study for incentives. Risfond is a technology-driven headhunting firm. Founded in 2008, it has more than 140 branches in more than 70 cities across the world.

In its transition stage, Risfond adopted the cross-partner models (CPM) to encourage motivated staff to form partnership with the company and open new branches. It was also a way to prevent its best employees from leaving the company and starting their own businesses. Individual partners contribute 50 percent of the start-up funds and receive 40 to 70 percent of the net profits from the new company. The opportunity has helped the headhunting company retain its best recruiters as it continues to grow.

The model enabled Risfond to quickly open more than 60 branch companies in its rapid nationwide expansion from 2014 to 2016.

2. Seeking like minds

Grown-ups have fixed personalities and values. Confucius said, "If your paths are different, you cannot make plans together." Therefore, business leaders should use those who most conform to their values.

The ancients gave us some advice for how to see into people's hearts. First, we can "warn the subjects of imminent danger and see if they will compromise their moral principles." Times of crisis reveal whether a person is upright. Second, we can "trust the subjects with money to see if they will put it into their pockets." We should avoid those who are easily tempted by money. Third, we can "send the subjects away to do something to see if they are loyal, or make them do something by our side to see if they are respectful." Generally, business leaders tend to promote their own chauffeurs or secretaries. It's better to send those chosen ones away to do something and examine whether they are truly loyal.

Risfond's corporate culture is organic and formed over its development. The cross-partner model is focused on performance, but it has given rise to some customer poaching practices within the company and forced some partners to leave the company with their whole teams.

I once said to HUANG Xiaoping, founder of Risfond, "The reform will make some people leave your company, but it will eventually attract more likeminded workers."

Risfond wanted to use technology to improve staff and to drive society forward with its products. It worked hard to reform its culture and put it into practice. As a result, the company saw the number of its staff recover and rise noticeably.

3. Aligning the corporate vision and employee needs

Many business leaders expect employees to take on the company's goals as their own. This is obviously unrealistic. Why not make their personal goals into the company's goals?

Business leaders like to talk about corporate values and visions and pay little attention to their employees' personal visions. Only by aligning the company's vision with what its employees want will they be motivated.

Risfond's cross-partner models were very appealing early on, as they made many partners rich. However, once the first partners lost interest in the model once their material needs were satisfied.

By comparison, those born in the 1990s grew up in an affluent society and are not easily incentivized by material rewards such as expensive cars or big houses. After reflecting on its corporate culture, Risfond redefined its vision "to become an esteemed world-class talent services company" to awaken a sense of mission in its employees and prepare for the next round of expansion and improvement.

4. Utilizing strengths, tolerating weaknesses

It's hard to change someone's personality. Good leaders use their team's strengths and tolerate their weaknesses.

LIU Bang, the founding emperor of the Han dynasty, was inferior to his rival XIANG Yu in terms of family background, martial capacity, and appearance. But LIU could recognize talent and used people to his best advantage. He once said, "As for coming up with a military strategy and implementing it, I am not as good as Zifang (ZHANG Liang). When it comes to ruling a state, controlling the public, and keeping vital supplies replenished, I'm not as good as XIAO He. In terms of leading a large army and winning battles, I cannot rival HAN Xin. These three people have outstanding abilities, but they work for me. That was why I won the war and became the ruler of this country."

Because he was expert at using talents, LIU Bang won the Chu-Han Contention and became the ruler of China. ZHANG Liang, a master strategist, helped LIU Bang deploy his forces. During the war, XIAO He remained in Guanzhong to defend the home base and ensure the front received adequate supplies. HAN Xin was a highly capable general who won many battles and eventually helped LIU Bang to establish his rule. Talents are like chess pieces, and each has a unique use. A great business leader should accommodate them all and provide a suitable position to each.

5. Incentivizing communication

If a tree falls in a forest and no one is around to hear it, does it make a sound? A Zen student may say no. In communications, what really matters is not the sender of the message but the receiver. In other words, what makes communication successful is not sending the message, but receiving and understanding it.

Communication is the way by which we exchange information and feelings. Most importantly it's how we incentivize others. If the generations born in the 1990s or the 2000s want to grow into sincere leaders, they must develop their skills in communicating.

Few people born in the 1960s ever thought of quitting their jobs. Those born in the 1970s or the 1980s may quit for a better-paying opportunity. However, those born in the 1990s may quit a job merely due to boredom, and people born in the 2000s often quit because they don't feel heard.

Risfond has many young employees. To keep them motivated, the company takes them to grasslands for hiking and to Japan to see the cherry blossoms. The employees are rewarded for their hard work in such ways.

Risfond had its corporate culture composed into a song so employees could sing it instead of recite it. It tries to influence young employees in subtle ways by using methods they may find enjoyable.

6. Earning employees' trust

Why do employees trust their leaders and follow them? Many people may think it's because the leaders excel at their work or because they are sincere and honest. Our corporate trust study found that if people have faith in their superiors if they know their superiors are trusted by higher management. This is reflects Chinese culture.

Many mid-level and senior managers tend to express their grievances in front of their subordinates in hopes of making their subordinates understand and feel for them. In fact, this is counterproductive. Their subordinates may think their leaders are not capable of earning the trust of higher managers. Gradually these subordinates lose faith in their leaders.

7. Connecting the company and families

Geert Hofstede's theory of cultural dimensions posits that the difference between Chinese culture and Western culture lies in the gap between collectivism and individualism. The West has an individualist culture and advocates for freedom and hard work.

The East has a collectivist culture, epitomized by Japan's permanent employment. The Chinese culture, however, is a blend of individualism and collectivism. It's centered around family bonds and extends to love of the motherland. In China, leadership is paternalistic: it is a product of Chinese culture, and should be respected.

As a company's manager, have you ever visited your employees' families? Teachers often talk to their students' parents about the students' performance at school. Army officers look after rookies and make phone calls to their families.

The establishment of these connections makes parents glad to send their children to school or the army. These are typical examples of China's family-centered culture. By establishing connections with its employees' families, a company can motivate them.

8. Guaranteeing fairness

In an enterprise, failure to guarantee fairness will greatly weaken a leader's authority. Absolute fairness doesn't exist in the world. Fairness is relative, not absolute. It is subjective, not objective.

Fairness should be reflected in three aspects:

Firstly, it should be reflected in results. This is what employees who work for a company for one or two years care about the most. New employees don't know much about the company. If they consider the results unfair, they will leave.

Second, fairness should be present in the process. This is what veteran employees care about. A company should involve its veteran employees in all reforms, large or small. Veteran employees should be given special attention and consulted so they can feel they are respected. When the results are not fair enough, veterans may be placated by emotional appeals.

Third, fairness in interpersonal relations. New managers tend to value this the most. When a new employee shows up, colleagues who are having a casual chat may stop talking. The newcomer may feel rejected and depressed. In such cases, the company's leaders should interact with them and find an opportunity to learn about their families and make the newcomers feel accepted.

About Professor ZHENG Xiaoming

ZHENG Xiaoming is a tenured professor and doctoral supervisor in the Department of Leadership and Organization Management at Tsinghua SEM. He is also the director of the China Business Case Center. In 1998, he received a doctoral degree in industrial and organizational psychology from the Chinese Academy of Sciences' Institute of Psychology, and later joined Tsinghua SEM. From 2007 to 2008, ZHENG was a visiting scholar at the MIT Sloan School of Management, and later at Harvard Business School, where he studied case method. In 2011, he returned to the MIT Sloan School of Management as an International Faculty Fellow (IFF). ZHENG's main courses teach leadership development, organizational behavior, and strategic human resource management.

Editors: REN Zhongxi, PA Li, Derrick Sobodash