Fresh+Perspectives Winning in China Nov10[1]

8/4/2019 Fresh+Perspectives Winning in China Nov10[1]

1/12

Fresh Perspectives

Winning in China:Building Talent Competitiveness


2/12

2 Winning In China: Building Talent Competitiveness

Manpower Inc. (NYSE:MAN), ranked number 143 on the Fortune 500 list,

provides innovative workorce solutions to organizations o all sizes via its

network o 4,000 oces in 82 countries and territories. For more inormation

visit www.manpower.com.

ArticleIn Th is Chinas talent landscape is changing; Chinese companies are gradually

gaining traction on the international stage and oreign companies are

losing their appeal or Chinese workers, who now preer to work or

Chinese private-owned companies.*

Foreign companies operating in China will ace greater challengesnding the talent they need and will nd it particularly dicult to retain

talent at the manager level where shortages are most severe. They nolonger have a reputation as the highest-paying and best employers.

HR management in oreign companies are already eeling the eects ocompetition rom Chinese private-owned companies as they struggle

to attract talent, yet surprisingly ew are responding to the challenge.

Competition or talent can only intensiy as Chinese private-owned companies are ambitious about initial public oerings and

internationalization and more oreign companies increase their ocus

on the Chinese market.

In response to the escalating war or talent, oreign companiesmust leverage HR as a strategic partner in order to ensure therecruitment and retention o top talent over local private-owned

companies. They must also oer competitive salaries and

benets, prioritize the development o uture managers and

localize their talent strategies to the Chinese market.

Chinese private-owned companies still ace serious challenges inmodernizing their internal management systems. They still must invest

intensively in their human capital in order to compete eectively with

oreign companies or talent.

* Reers to companies not owned by the State.

More articles like this can be ound in Manpowers Research Center

atwww.manpower.com/researchcenter


3/12

Fresh Perspectives 3

IntroductionFor over three decades, oreign companies have

fourished in China. Many Fortune 500 companies

now have operations in the country, including:

General Electric, AT&T, General Motors, Microsot

and Pepsi Cola. In April 2010, oreign direct

investment surged 24.7 percent year-on-year to

over $7 billion, according to the Chinese Ministry

o Commerce.1

With a reputation as golden brands, oreign

companies have long been regarded by Chinese

workers as highly desirable places to work.

However, all that is starting to change. In the

wake o the recent nancial crisis, many oreign

companies have cut production and reduced their

payrolls; some have even shut down Chinese

operations. Recent unrest and industrial action

among workers also indicates a pool o disgruntled

workers who are seeking improved benets.2 It

seems that oreign companies are beginning to

lose their allure.

This comes at a bad time; Chinas working

population is aging and the number o Chinese

workers ages 15-19 will all dramatically ater 2011,

according to the United States Census Bureau.3

Maintaining their talent pipeline, particularly at the

manager level, is now a business critical issue or

oreign-owned companies.

Compounding the challenge or oreign

companies, more Chinese rms, both state-

owned and private-owned, are gaining prestige on

the international stage and are enjoying a better

reputation among workers. In this context, the

talent war between oreign and Chinese private-owned companies is beginning to turn in avor o

Chinese private-owned companies.

While this trend presents many opportunities

or Chinese private-owned companiesboth

domestically and overseasoreign organizations

will ace greater challenges in nding the talent

they need to help them achieve their

business objectives.

A shiting talentlandscapeManpowers2010 Foreign and Chinese Private-Owned

Companies Talent Competitiveness Surveyindicates that the

lure o oreign-owned companies is now waning or Chinese

employees, with more preerring instead to work or Chinese

private-owned businesses.4 The data reveals a clear change

in job seekers preerences; compared to the 2006 survey

results, the percentage o job seekers considering Chinese

private-owned companies as their rst choice is up by ve

percentage points, while those preerring oreign companies

is down by 10 percentage points (see Chart 1).5 Chinese

private-owned companies are especially avored by job

seekers rom South China where companies are relatively

more mature and generally have more modern management

systems. These companies, such as Anta, Vanke and

Hengan, are well respected in their industries and have

good reputations as employers.

Chart1:IndividualsEmployerPreferences

Chineseprivate-ownedcompanies

Whichtypeofcompanywouldbeyourrst

choicewhenyouconsideryournexttransition?

Foreigncompanies

up5%

down10%

Percentage o job seekersconsidering Chinese private-ownedcompanies as their frst choice is upby fve percent compared to 2006.

Percentage o job seekersconsidering oreign companiesas their frst choice is down by10 percent compared to 2006.

Source: Manpower China


4/12


With talent shortages becoming more acute, and as ast-growing Chinese private-owned companies

become more competitive, oreign companies will nd it increasingly challenging to retain managers.

Manpowers survey indicates that this pressure will continue and even intensiy as Chinese private-

owned companies have become markedly more attractive to management-level job seekers.6 Sixty

percent o managers responding to the survey say that a Chinese private-owned company would now

be their rst choice as an employer.

Foreign companies ace urther competitive threats rom Chinese private-owned companies which

have been investing heavily in talent, oering highly avorable compensation and benets packages.

Consequently, oreign companies no longer have a reputation as the highest-paying employers.

Manpowers survey reveals that 43 percent o job seekers view better compensation as the primary

reason to avor Chinese private-owned companies, seven percentage points higher than or those who

are attracted to oreign companies (see Chart 2). However, when it comes to corporate culture, Chinese

private-owned companies still lag behind their oreign counterparts. Only 20 percent o job seekers

view experiencing a new corporate culture as the primary reason to choose Chinese private-ownedcompanies, compared to 28 percent among those preerring employment with oreign companies.

These shits in the balance o talent are already being elt among HR management o oreign

companies. Sixty percent say they eel the eects o competition rom Chinese private-owned

companies when it comes to their ability to attract talent and they say this impact is increasing,

particularly in Eastern China. However, surprisingly ew oreign companies are responding to the

challenge. The percentage o oreign companies who have taken countermeasures to improve their

talent attraction strategies is lower than, or almost the same as, that o Chinese private-owned

companies. The dierence is especially evident when it comes to making an investment to secure

talent, including increasing compensation and benets packages (a 10 percentage point gap) as well

as oering training incentives and learning opportunities (a 16 percentage point gap, see Chart 3).

Chart2:PrimaryDriversofCompanyPreference

Whataretheprimaryreasonsforchoosingthesecompanies?

Chineseprivate-ownedcompanies Foreigncompanies

Bettercompensation andbenets package

Better workcapabilities

Better trainingand learningopportunities

Facilitatinglong-term career

development

Experiencing newcorporate cultureand environment

Accommodatingbetter work/lie

balance


43%

36%

37%

31%

28%

22%

59%

52%

48%

20%

16%

9%

As a global organization with operations in China, we are seeing the impact o this

shit in motivations o job seekers as some are becoming less loyal to the companies

they work or and more loyal to their purpose, said John Rice, President and CEO o

General Electric Technology Inrastructure. Thats why, at GE, we have intentionally

ostered a culture o continuous learning to increase the experience and exposure

were giving our employees and help develop their careers.


5/12


So what does the uture hold or oreign and Chinese private-owned companies competing or talent?

As growth continues, Chinese companies are generally ambitious about initial public oerings (IPO) and

internationalization. On the other hand, at the global strategic level, more oreign companies are signicantly

increasing their ocus on the Chinese market. This means that competition between the two groups toattract and retain talent will only intensiy as they seek to increase their ootholds in the Chinese market.

Winning the Talent War:Advice or Foreign Companies

Maintain a exible compensation system: Whenoreign companies rst started operations in China, Chinese

employees were oered remuneration similar to those o oreignsta. Now, however, compensation and benets oered to

executives by some Chinese private-owned companies are even

more attractive than those oered by oreign companies. Their

equity incentive plans are particularly eective in luring executive

talent away rom oreign companies.

In addition, some oreign companies assume that since labor in

China is cheap, they can pay lower salaries to local executives.

As a result, some local executives are paid hal or even a third

o the salaries that oreign executives receive, even though the

latters perormances are not necessarily any better than that olocal executives. Such unair compensation distribution clearly

has a serious negative impact on local employees motivation to

work or oreign-owned companies.

Manpowers annual 2010 Talent Shortage Surveyshows

that skills shortages in China are most severe among senior

managers, so to win over scarce local talent, oreign companies

have to pay local senior managers at least as much as those

rom overseas.7 However, pay is rising across the board. In

act, rom 2002 to 2006 workers wages rose by more than

nine percent per year (in U.S. Dollars) nationwide, while wagesjumped by over 11 percent or those working in cities.8 In order

to maintain sustainable competitiveness, it is critical or oreign

companies to exercise fexible compensation systems which

adapt quickly to market changes. Moreover, the requency and

margin o pay adjustment should be based on the severity o the

shortages and demand or relevant talent in the market. Due to

the mismatch between supply and demand, it is not uncommon

or managers in some positions to receive an annual two-digit

percentage salary increase in order to retain them.9

Chart3:EmployerMeasurestoAttractandRetainTalent

Giventheincreasinglycompetitiveenvironment,whatmeasureswillyourcompanytaketoattractandretaintalent?(Youmayselectmorethanonechoice)

Chineseprivate-ownedcompanies

Increasing compensationand benets packages

Foreigncompanies

Oering better workopportunities

Oering more training andlearning opportunities

Providing career planningor employees

Improving employerbrand, shaping bettercorporate culture andenvironment

Adopting proessionalHR services

No measures available atpresent

72%

62%

39%

33%

67%

51%

47%

28%

47%

37%

22%

22%

8%

8%


A Critical Battle or Talent


6/12


Leverage unique training opportunities: From the perspective otalent retention and business costs, it is not a long-term solution to rely solely

on increasing compensation and benets packages; companies poaching

talent with attractive remuneration should be wary o nding themselves stuck

in a vicious cycle as other companies poach their talent with even higher

wages. Although money is a critical actor in talent attraction, particularly ormanagement roles, it is by no means the only actor: Chinese managers are

also attracted by training and development opportunities.

Many Chinese private-owned companies have started paying attention to talent

development as they experience ast growth; some are even developing their

own training schemes. To stay ahead o the game in terms o employee training

and development opportunities, oreign companies should continue to leverage

their unique advantages, or example, by oering high achievers the opportunity

to experience diverse cultures and cross-country training, regardless o their

position, educational background or seniority. Foreign companies should also

combine successor planning with leadership training and maintain a strongocus on employee development within the whole company.

Break the glass ceiling: Some oreign companies have started toassign local talent to senior executive positions in China. This trend should be

encouraged, especially or Japanese and Korean companies, but most oreign

companies still appoint expatriate managers. This has led to many talented

executives choosing to work or Chinese private-owned companies in recent

years because they reached the glass ceiling at oreign companiesthat is,

they could progress no urther. This trend is conrmed in Manpowers 2010

Foreign and Chinese Private-Owned Companies Talent Competitiveness

Survey, which reveals that 55 percent o management job seekers madethe decision to switch employers in order to benet rom long-term career

development. In ast-growing Chinese private-owned companies, mid-level and

senior-level managers are generously empowered and oered great promotion

potentialin some cases promotion is as requent as once a year or even once

a quarter.

Leverage HR as a strategic partner: HR departments o oreigncompanies must be leveraged as strategic partners in organizations business

development plans. For example, HR can add real value in securing the

talent needed or business expansion, as well as ormulating and improving

strategies or talent fow, attraction and retention across countries, citiesand regions. Finding talent to uel business expansion in particular can be

challenging or oreign companies targeting second- and third-tier cities or

even smaller markets in China. In addition to coping with high turnover o

managers in rst-tier cities, they have to attract and recruit a large number o

business development sta each year. However, cross-regional HR allocation

in China is not straightorward. First, it is challenging to move and retain talent

in emerging markets, which lag behind rst-tier cities in terms o education,

Many Chinese private-owned companies

have started paying

attention to talent

development as

they experience ast

growth; some are

even developing their

own training schemes.


7/12


medical resources, service acilities and overall standard o living. Second,

Chinese private-owned companies, who are better at encircling cities

rom rural areas, transer their research and development and marketing

centers to rst and second-tier cities where talent is plentiul, such as Beijing,

Guangzhou, Shanghai, Xiamen and Shenzhen. This leads to increasingly

erce competition or management-level talent between oreign and Chinese

private-owned companies.

To gain an advantage in the current talent war, oreign companies should not

only regularly review their compensation incentive systems and employee

benets according to the local market, but HR departments must also

consider how best to develop high-potential employees rom the perspective

o a mid- and long-term business strategy.

Prioritize development o management talent: Due to thepronounced shortage o talent at the management level, oreign companies

need to pay particular attention to prioritizing the development o employees

at that level. As competition or talent escalates, oreign companies must behighly responsive to trends in the labor market and ensure that they do not

just become a training ground or individuals who then leave to grow their

careers with Chinese private-owned companies.

Today, when there is no perect candidate or a position, companies are

being rewarded or delaying hiring decisions while demand or their goods

and services remains uncertain. With the global economy still ragile,

organizations cannot aord to make an unsuitable hire, so they are instead

getting more out o their existing workorce to meet the modest uptick in

demand they are experiencing. But as organizations look ahead at the

looming talent shortage, a shortage already elt at the management level,they must begin to look or candidates, perhaps within the organizations, that

are a teachable tthat is they may not have all the capabilities required or

the job, but skills gaps can be lled in a timely and cost-eective way.

Upgrade the organizations HR strategy ormanagement-level talent: According to the2010 Business ClimateSurveyby the American Chamber o Commerce in China (AmCham-China),

HR issues have been the biggest challenge or AmCham-China members

over the past three years.10 The more experience a job seeker has, the more

likely they are to avor Chinese private-owned companies. According to

Manpowers2010 Foreign and Chinese Private-Owned Companies TalentCompetitiveness Survey, o those job seekers preerring to work or Chinese

private-owned companies, 61 percent are at management level and most

are rom oreign companies. This indicates that retaining management-level

talent is a burning issue that oreign companies must address. During a

period o rapid growth in the Chinese economy, one o the top priorities o

HR management in oreign companies must be to attract, train, retain and

develop high-potential talent.


8/12


Winning the Talent War: Advice orChinese Private-Owned Companies

Create a strong employer brand: A wealth o data indicates that employerbrands are especially important or attracting senior managers. Chinese private-owned

companies need to create a strong employer brand that makes the organization a magnet

or management talent. Employer brands should identiy and ampliy the distinctive values,

character and style that set the organization apart rom others. It is an expression o an

organizations values and culture, and any given companys employer brand should be

unique. The key to building the right employer brand begins with identiying the distinctive

qualities o the organization that create an emotional connection between employer

and employee.

Create a compelling corporate culture: Corporate culture, as the basis orlong-term survival, development and ultimately success, plays an important role in attracting

and retaining talent. There is still a considerable gap between Chinese private-owned

companies ocus on their corporate culture and that o oreign companies. However, some

outstanding Chinese private-owned companies have successully shaped their own unique

corporate cultures as they have developed, which has increased their brand appeal. The

grass-roots culture o Anta, Chinas largest sportswear manuacturer, is a prime example.

Its culture is refected in its HR management so that competent, intellectually curious and

high-perorming workers are rewarded with advancement opportunities and avorable

compensation, regardless o his or her background and seniority. This helps Anta to attract

and retain diversied talent, improving an employees sense o belonging and allowing the

company to reap the benets o implementing ideas rom a variety o backgrounds.

Establish an appropriate management-level structure: As Chinaintegrates into the global economy, management o Chinese private-owned companies,

which has traditionally been extremely hierarchical, is increasingly inclusive and open to new

talent. For instance, long-serving senior employees will now resign rom leading posts or

become members o the executive management team to make room or a new generation

o executives. Leaders are now willing to delegate more to managers, improving managerial

competence in Chinese private-owned companies. Nevertheless, old habits die hard, and

so Chinese private-owned companies must clearly dene the rights, obligations and duties

o owners, operators and executors. They should also implement or improve assessments

and decision-making systems, particularly during the transition rom centralized todelegated management.

Refne the organizations HR management: As the market continues togrow, Chinese private-owned companies planning an IPO or international expansion are

nding it dicult to attract and retain talent as a result o inadequate HR strategies and

inecient recruitment.


9/12


Fortunately, some o them are now aware o these diculties and are consciously

increasing their eorts to attract HR managerial talent. The demand or such talent is

eight times greater than the demand or HR talent at a non-management level.11

However, in stark contrast to the robust demand, only 35 percent o HR proessionals

avor work opportunities at Chinese private-owned companies. This indicates an

urgent need or the companies to better attract such talent.12

HR management needs to ensure that employees in unctional posts and at the

management level understand how their personal work goals support the business

objectives o the organization. Criteria or talent selection and assessment must be

designed to match the strategic development o the organization, with candidate

proles o competencies and qualications to ensure alignment. Thereore, high-

caliber recruitment teams should be developed to guide the recruitment process

in order to recruit the right talent. I necessary, Chinese private-owned companies

should establish a set o ecient and normative recruitment systems and

management processes with the help o a HR consulting partner.

In the meantime, in response to talent shortages, and especially to the global talent

shortage, Chinese private-owned companies should reserve key talent or IPOs and

overseas expansion.

Moreover, as Chinas labor market becomes more sophisticated, employees

awareness o their rights is also increasing, as is the quality o talent. Chinese private-

owned companies thereore urgently need to rene their HR management with

respect to labor and employee relations, perormance management, career planning

and development, and employee training and development. They must shit HR

management rom day-to-day management to developing employee potential,

which will also serve to systematically attract and retain core talent in alignment with

corporate strategy.

Anta preers those whose career development planning matches

the career platorm o the company. To be sure, there are risks in

employing talent rom another industry. Thats why Anta sets up a

one-year trial period or risk evaluation.

~ Yang Yong, HR Director, ANTA (China) Co., Ltd.


10/12


Retaining oreign talent: Many Chinese private-owned companies aretroubled by a low retention rate o non-native, senior-level talent brought into the

company rom outside the organization. However, they still like to employ senior

oreign workers because o their international business experience.

To overcome low retention rates, companies should establish targeted strategies and

methods or retaining oreign employees. They should have a rm idea o the talent

required by clearly dening the skills and qualications needed as the organizations

business strategy evolves. During the selection process, they should identiy whether

the motives o the job seeker match the career platorms and values o the company

in order to ensure an optimal cultural t between the applicant and the job. Beore a

new employee starts a job with the company, clariy incentive mechanisms and set

up reasonable expectations and a trial period, so that he or she may ulll his or her

commitments made in being oered the role.

Seek advice rom an HR proessional service partner: It is typicalor Chinese private-owned companies not to have clear strategies or re-branding

and industry upgrading because many lack the relevant experience. In the absence o

adequate internal resources, the most eective way to solve this problem is to seek

help rom third-party consulting partners. With proessional support, the company

may complete its evolution toward proessional management rom top to bottom and

improve its organizational structure and remuneration policies. This will enable the

organization to rapidly improve its internal management systems and bridge the gap

with internationally recognized peers.

Lubrizol is a people-oriented company. Our attention, respect, care and relentless

eort to provide sustainable growth to our employees runs deep in our blood. This

culture is implanted throughout our organization. This is our DNA.

~ Wendy Zhang, HR Director, Lubrizol Asia Pacifc


11/12


ConclusionChina is undoubtedly becoming a land o opportunity or both oreign and Chinese-based organizations.

The country is undergoing rapid growth which, coupled with shiting demographics and a growingawareness o the world outside its borders, is leading to changes in mindset when it comes to labor

and a real turning point in developmentaway rom actories that parachuted in to take advantage o

cheap labor, and toward a China determined to get a slice o the piein terms o both the domestic and

international market.

This means that both oreign and Chinese companies will need to adapt in order to stay ahead. Employers

must be alert to the shits in Chinas economy and understand the challenges as well as opportunities

that this will bring. Clarity o business objectives and the talent required to meet those objectives will be o

utmost importance, particularly as the war or talent will only become more intense as the global economic

recovery continues to gain traction.

1 Chinese Ministry o Commerce (http://www.mocom.gov.cn)

2 The next China, The Economist, 29 July 2010.

3 The Economist, op. cit.

42010 Foreign and Chinese Private-Owned Companies Talent

Competitiveness Survey, Manpower China, 2010.52006 China Employee Engagement and Retention Survey,

Manpower China, 2006.

62010 Foreign and Chinese Private-Owned Companies TalentCompetitiveness Survey, Manpower China, 2010.

72010 Talent Shortage Survery, Manpower Inc., 2010.

8 The Economist, op. cit.

9 The China Talent Paradox, Manpower China, 2006.

102010 Business Climate Survey, American Chamber oCommerce in China, 2010.

112009 Chinese Companies Talent Strategy Survey, ManpowerChina, 2009.

122010 Foreign and Chinese Private-Owned Companies TalentCompetitiveness Survey, Manpower China, 2010.

Reerences


12/12

About Manpower Inc.in ChinaManpower Inc., the world leader o innovative workorce solutions, has been

serving the Chinese market since 1964. Today, Manpower has more than 400

recruiters operating in 20 cities across the nation.

Oering a wide array o HR services, we provide executive search and

selection and business solution (Manpower Business Solutions/MBS) services

through our Manpower Proessional brand. Manpower Business Solutions

oers our clients Recruitment Process Outsourcing (RPO), managed services

and recruitment consultation. Under our Manpower brand, we provide fexible

stang, basic stang and workorce solution services. We serve more than

3,500 clients, including local and multinational companies in China, and haveover 500,000 middle-level to senior-level candidates in our database.

Through our subsidiary, Right Management, we provide talent assessment,

leadership development, organizational eectiveness, employee engagement

and workorce transition services. In addition, Manpower China is partnering

with the Chinese government to support the countrys rapidly evolving labor

market by providing proessional talent assessment, career development

planning, human resource consultation and international experience exchange

service to governments and related organizations.

In addition, David Arkless, Manpower Inc. President o Corporate and

Government Aairs, was appointed Vice President o the China International

Council or the Promotion o Multinational Corporations (CICPMC) in July

2010. The CICPMC is the largest and most prominent institution in China

specically engaged in promoting and serving the businesses o multinational

corporations with investment in China and saeguarding the legitimate rights o

multinational corporations.

For more inormation about Manpower and its operations in China,please visit: www.manpower.com.cn.

2010, Manpower Inc. All rights reserved.

GC-33

Manpower Inc.

100 Manpower Place | Milwaukee, WI 53212 U.S.A

Tel: +1 414 961 1000 | www.manpower.com

Date post:	07-Apr-2018
Category:	Documents
Upload:	harry-ye
View:	218 times
Download:	0 times

Fresh+Perspectives Winning in China Nov10[1]

Documents