Companies are in China because of the large market opportunities. This country has been a drive of top-line growth for many companies. However, the tides are turning. China has seen a slow-down in GDP. Inflationary pressures has been an issue. Some have been forecasting a burst in the real estate bubble and the ripple affect that will have. The recently announced Social Security reform is creating another “tax” on expatriate staff. All this is leading to more uncertainty in China in the upcoming year.
Employee Engagement Challenge
Employee attraction, engagement and retention is a perennial issue in China for as long as I can remember. According to Jim Leininger, Principal Consultant at Towers Watson and Co-Chair of the AmCham China HR Forum, China employee has the lowest level of employee engagement, 78% engagement level vs 81% (US) and 85% (Global). While 39% of employees will entertain new career opportunities vs 20% of US employees.
Talent War Volatility
Data provided by MRI China’s Chris Watkins showed that 64% of job seekers had received at least 1 offer in the last 8 months. 46% of those indicated that they received offers of at least a 30% increase.
Furthermore, from MRI’s survey data, one-third of job seekers took counter-offers. Fortunately, a spot survey of the Conference participants fared a bit better: 47% of conference participants had a <10% offer reject due to counter-offers; 38% had 10-20% offer rejects; and 13% had reject rates of 20% and above.
The volatility of the talent market in China is significant when you consider the employee engagement (employees who are continually looking for new career opportunities) and talent attraction (having multiple offers in hand).
Strategic HR Effectiveness
When you compare the top of mind concerns for CEO’s (China and global economic downturn, protectionism and labor costs) and those of HR heads (delivering consistent HR policies, employee engagement, streamlining HR), one can see that HR is not entirely aligned to business head priorities.
David Mitchell, GM of Kronos China, observe that HR in China is “building up HR effectiveness but HR is not operationally effective.”
In today’s environment, David summarizes that workforce population requires #1) Instant Engagement – consider the proliferation of SMS, microblogs and other social media. Employees are fast becoming used to instant engagement. #2) Guided Decisions – HR need to be analytical and use data to guide the decision making process. #3) Mobile Management – Everyone is carrying a mobile phone in China. HR communications via mobile devices is a necessity and bi-directional communication is required.
China continues to offer significant opportunities for companies doing business in China. However, it takes very skillful business heads and strong HR leadership to maneuver through the challenging landscape. HR need continue to operate effectively, develop and engage talent, and lead the business through valleys to the peak of success.