Tag Archives: Human resources

China’s Toughest Human Resource Issue in 2013 – Air Quality

Some rights reserved by Bohan Shen_沈伯韩 http://www.flickr.com/photos/antonis/8513582105/
Photo Credit: Some rights reserved by Bohan Shen沈伯韩

I am an expat working and living in China for the past 2 years.  It has been a tremendous experience for me and family.  It is an experience of a lifetime learning and adapting to a new culture.  I have the privilege of blending my work and life in this country.

As a HR professional, dealing with the “war for talent,” engagement, talent development and retention are on-going topics for me and other HR confront while doing business in China.

However, at the end of the first two years, there is one thing that I cannot overlook – China’s deteriorating air and other environmental problems.  It is a constant and daily reminder of physiological and psychological impact.  I monitor the air quality index on my mobile phone each morning as I wake up.  Wearing face masks is as common as I wear my socks and shoes to go out each day.  I get on busy subway train and face the pushing and shoving as ordinary citizens do each day.

This has caused me to rethink what sustainable life means for its people working in big (and small, for that matter) cities in China.  This should be, if not already, a human resource topic that needs to be addressed now.

Deteriorating Air Environment

Since the US embassy started to publish an AQI (Air Quality Index) from its website and likewise, China has started to publish its own data.  There is greater awareness and transparency for better environmental and air quality.

Fewer expats and foreign special talent are willing to come to China.  We saw earlier this year that a number of “old China hands” were leaving China, in part due to the degrading air quality environment.  Others were declining new assignments to come to China.  This is especially true of expats with families and small children.

Middle and upper management skills continue to be scarce in China.  Companies continue to rely on expats for knowledge and skills transfer.  Thus, it is taking companies longer to find internal candidates willing to take on China assignments.  There may be more cost for companies and “hazard pay” and additional home leaves may be needed for expat assignments.

Chinese employees are feeling the impact of high air-pollution levels as well.  I have been hearing more employees asking about internal transfers to the US.  In part, they are concerned about the deteriorating air quality on their young children.  High costs of housing and grueling education for their children are other reasons.

Apple and Toyota are just two among a growing number of companies who are resorting to providing face masks to employees.  Companies are installing air purifying systems in offices and have the potential of making this as a new aspect of employee benefit.

Social Environmental Stress

Chinese HR leaders see the impact of other social environment impacting employee morale and engagement.  In addition to normal work stress, employees come to work at a higher stress levels.  South China Morning Post cited a Regus survey on employee workplace stress and found that Mainland China saw the biggest number of stressed workers with 75 per cent of the 355 respondents polled reporting a rise in stress levels from 18 months ago – 25 per cent higher than the global average.

Sources of stress include job-related career development, time management and constant change in organizational direction.

Daily life of commuting to and from work is another source of stress.  Watch is video of people pushing and shoving of over-crowded buses and subways.  Employees go through this twice per day, going to working and returning home.

In this video, Tencent News depicts various sources of anxiety and stress felt by young Chinese professionals.

Impact on Business

Businesses say it is tough to curtail air pollution while trying to maintain China’s economic growth target.  However, when air quality is in the stratosphere, planes can’t fly, government is halting vehicles on the roads and factories faces shut down.  The city of Harbin, a city of 11 million people, came to a grinding halt in October.  Shanghai, China’s financial center, also came to to a hitting record high on its pollution index.  The government ordered school shutdowns, limited automobile traffic and its airports were closed.  There is direct impact to businesses and China future economic growth if air quality issues persists.

Topics for Human Resources

There doesn’t appear to be any social cushion to help people manage and cope.  People can’t run away from the air.  With China’s rapid rise economically, this is causing strain on people trying to catch up with “The Jones,” as the saying goes.

These employee angst are seeping into the workplace and has an impact on employee engagement, mental health and other effects.  It isn’t too much of a stretch to think that environmental issues will take a toll on employees and their focus at work.  An increase in employees going to hospitals to treat smog related illnesses disrupts productivity at work and see increase costs for medical treatment and potential, see increase costs on medical insurance premiums.

Is giving out N95 face masks to employees enough?  Is there more that we can do?  Please provide your ideas below.

 

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Employee Referral Program – Building a Referral Culture

© iQoncept - Fotolia

Survey studies show that Employee Referral programs bring in the best hires in the shortest time.  John Sullivan writes extensively on the best practices.

In a recent benchmark survey of companies in China, all companies studied have a formal referral program and 100% offer a referral bonus to employees with successful hires.

The average bonus payout is roughly 3,000 RMB (slightly under 500 USD).  The upper range of bonus payments, are reserved for difficult-to-fill and managerial positions, on average is 10,000 RMB (1,600 USD).  The very high end of the range are between 25,000 RMB (5,100 USD) to 30,000 RMB (6,100 USD).  These payments are for the most critical and senior level hires for the company.

While I don’t have statics, a show of hands, indicate that the average referral rate is roughly 20-25% out of the total sourcing channels.

Survey Summary:

*Data collected by 招聘兄弟会,Q2, 2013.

Industry # of Participating Companies Average Bonus Range Minimum (in RMB) Average Bonus Range Maximum (in RMB)
Automation 2  ¥3,000
Banking 2  ¥5,000  ¥25,000
Electronic 1  ¥2,000  ¥15,000
Entertainment 1  ¥2,000  ¥7,000
Healthcare 2  ¥3,500  ¥10,000
Industrial 3  ¥2,833  ¥6,333
Internet 2  ¥2,000  ¥8,000
IT/telecom 8  ¥2,838  ¥10,250
Professional Services 2  ¥10,000  ¥30,000
Retail/FMCG 4  ¥1,875  ¥6,667
Grand Total 27  ¥3,258  ¥10,762
Payout Period Total
After Onboard 4
After Onboard (3 months) 3
After Onboard (50%) / After Probation (50%) 1
After Probation 8
After Probation (2 months) 1
After Probation (3 months) 1
After Probation (6 months) 8
Not Applicable 1
Grand Total 27

Building A Referral Culture

Out of the 27 companies surveyed, just one company does not offer any referral bonus.  Yet, that company achieves a referral rate of over 35%, year over year.  Only two other companies exceed this benchmark with 45% and 65% referral rates but, those other 2 offer referral bonuses.  The other 24 companies, even with bonus money, not a small sum, in China standards on the high-end, do not yield the high results as one might want.

 

The high referral rate are a results of the following:

Proactive Recruiters – they do the same things as what other companies might do, that is to send out referral notices by email or other company communication channels.  To achieve the desired referral rates, they go the extra mile by proactively engaging employees and managers for referrals.  They sit with them to go through their list of business cards and identify other leads.

Leadership Involvement – referrals is not just an HR activity.  Hiring managers announce vacancies to their team in staff meetings.  Managers encourage their staff to provide leads to the recruiting team for follow up.  This one company in particular have a referral lunch where senior managers will take successful referral hires and the referring employee out to lunch.  This reinforces management and leadership focus on referrals.

Engaged Employees – employees refer if they find an emotional connection with the company and people whom they work with.  Otherwise, there is no incentive for them to refer and if the work culture is poor, why subject their friends to an unhealthy work environment.  One recruiter suggested, we should look at the retention rate and its correlation to employee referral rates.  In this one company’s experience they have exceeded benchmark referral rates without monetary rewards.

 

Please refer to this presentation I delivered at the HREC 9th Annual Recruiting & Staffing Conference (July 16-17, 2013) in Shanghai, China.

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Where is the Innovation in Compensation II?

@ http://www.flickr.com/photos/25496152@N08/7308083714
Peter explains the survey methodology. (Photo credit: aveo.org)

How many of us have actually taken part in a compensation survey or other HR talent attraction and retention survey?  The data collected from these survey is supposed to give us insight into trends and leading practices by industry peers.  C&B professionals take these results and build their internal compensation, benefits and talent management strategy. However, the survey results are generally the same; this year is trending up, the past year is trending down etc.

A few weeks ago, my colleague showed me a C&B survey on a section pertaining to employee attraction and retention.   Because I am in recruiting, she asked me for my opinion on how I might answer the question.  Well, I asked her what were the choices I had to choose from?  The only choices (forced choice) were: basic salary, bonus, benefits, health welfare, etc.
I started to think…  these are all very C&B’ish answers.  The survey results all center around these topics and strategy recommendation are all within the confines of these areas.  Again, this year is trending up, the past year in trending down.
Are there other choices for survey responses?  Can I answer?: I want to work for a technology leadership company;  I want to work here because my friends work here; I want to work here because I was laid-off at my previous company; I want to work here because of (fill in the blank)?
In my role as a recruiter, rarely do I find candidates tell me right off the bat that they want to join the company because of pay or benefits.  They are leaving the other firm because of career mobility and for a more interesting role.  In my current company, I have a very high employee referral rate.  In such cases, they friends are enticing them to join.  Money helps.  But, there are many situations where I have not given a salary increase to join.  They come over flat against their current pay.  More recently, due to the faltering industry, many are seeking jobs because their current positions may no longer exist.
We all trust C&B surveys for their rigour in data integrity.  However, allowing for broader perspective in C&B responses gives HR and management teams greater insight into talent attraction, engagement and retention.
By the way, might the survey methodology be skewed?  They survey asks HR to respond.  Why not ask employees what C&B elements and rationale for joining, working and staying at the company?
We need to rethink if the C&B survey results truly reflect the real reason why people join and stay at companies.
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Where is the Innovation in Compensation

Where is the Innovation in Compensation?

Creative Commons Attribution to epSos.de@Flickr

Let me start off the year with a topic I haven’t written much about previously.  The topic of compensation plans and design has been on my mind as of late.  Too often, at least in China, our hiring managers “complain” that we are unable to afford the talent we need to hire.  Offering competitive salary packages is a challenge.  Often times, prospective candidate’s existing compensation plans are out of range.  Line managers often have employees going to them with offers from another companies, resigning from their current position.

 

Purpose of Compensation

There are multiple purposes of compensation in an organization.  The primary is to pay for the people skills and competencies needed to run your business.  We also want to motivate employees to do their very best.  We want to employee to focus on the mission of the company aligning to the business objectives.   Employee retention is also a key outcome of a strong compensation program.   The cost of a replacement hire is often more than a new hire.

There is the desire to make compensation a cornerstone of a company’s brand and culture to employees.  The aim is to design compensation and reward programs as a differentiator when competing and retaining critical talent.

However, I believe many compensation plans often fall short of these lofty goals.

 

Aligning to Market Practices

A key annual practice of compensation professionals is the participation in salary survey benchmark.  They may take part in job evaluations to align on responsibilities and scope of work.  The key outcome of this routine is to benchmark against peer-company practices.  The results are used to tweak pay programs which end up “more or less” like their peer company’s pay programs.

  • When I am recruiting I sometimes find it difficult to develop competitive offer packages for high performers, let alone the majority of the typical performers.  Their pay, bonuses, equity plans are somewhat similar.
  • In order to make a competitive offer or, at least one that is meaningful enough to jump to another company, the resulting base salary can often be at the top end of salary range.  HR and compensation managers often discourage paying at the top end of the range.
  • Rather than compensation being a cornerstone I often resort to other intangibles to the job and company to prospective candidates.

 

Pay for Performance

Compensation managers design pay programs that reward employees for innovation and for positive results, contributing the company’s bottom-line.   Companies utilize performance and/or profit sharing bonuses in attempt to align employee actions to company goals.

  • Especially at the lower levels of an organization it is often difficult for an administrative assistant or a project analyst to see how their day-to-day work contribute to the company’s profits.
  • The R&D team while at the heart of innovation is being paid a performance bonus for today’s profits.  But, it is often unclear how the profit share paid out today is tied to innovation product, culture or practices that were created five years ago.
  • The only group that benefits from a pay for performance program is the sales team.  There is often clear line of sight between objectives and targets.  However, this still fall short when you want your sales team to drive for long-term sustainable sales strategy that go beyond the current sales quarter.

 

Incentives for Innovation

Very few companies have strong incentive plans that reward individuals and teams for innovation.  I suspect that most companies are intolerant of failures.  However, innovative services and products come only after multiple iterations of failures.  It is unclear to me how companies reward employees for taking risks.

This reminds me of Clayton M. Christensen‘s book, The Innovator’s Dilemma, where he examined the disk drive industry where disruptive technologies continue to push traditional and predominate players out of the market where smaller innovative companies take over.  For the existing large players, their revenue stream is not from new technology, where there is not a ready market.  Thus, companies often do not reward nor incentivize employees to work on disruptive technologies, while at the same time risking and cannibalizing current revenue stream.

  •  Incentives for innovation is especially important in the technology industry where companies live and die by their ability to bring new products to market, often with very short product life cycle.

 

The Need for Innovation in Compensation

For most companies, the existing compensation programs falls short of attracting and retaining key talent, let alone trying to motivate talent.  We we benchmark we constrain ourselves to those select group of companies within the survey.  We miss the opportunity to see what true innovators are doing, those who fall outside the peer group of companies.  When we become a part of the same we do not standout in a crowded space vying for a small pool of top talent.

HR and compensation managers should look for break-through compensation design truly help organisations reach its full potential.  Rather than seeing compensation as a cost of human resources taking a “investment” approach and seeking an ROI may yield a more coherent strategy to compensation design.

 

Share your thoughts…

What ideas to you have on innovative approaches to compensation?

 

 

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Year-End Wrap-Up – My Most Popular Posts 2012

The year 2012 is coming to an end.  Below is a list of my most popular posts for this year.

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Creative Commons Attribution to Roberto_Ventre@Flickr

Blogposts in 2012

I’ve listed those with 100 or more visits during this year.

  • Recruiting Practices in Vietnam – 215 pageviews
    • While I wrote the piece on Vietnam 4 years ago it still garners a strong readership.  As some of the resources listed may be outdated I probably should refresh this post with the most current practices.
  • Managing Workplace Diversity – 199 pageviews
    • The topic of diversity may not have the same emphasis as it does in the US.  Probably except for Singapore, the rest of Asia has a fairly homogeneous society.  However, topics of generational differences is becoming critical in managing employees.
  • Where are the Social Media Recruitment Asia surveys? – 197 pageviews
    • Use of social media for human resources recruitment continues to be a hot topic in Asia.  Social recruiting has taken center stage in the US but it is only beginning to take hold in Asia.  I suppose there are still many recruitment leaders trying to figure out how to make social tools a more widely used platform in the Asia Pacific region.
  • Recruiting Trends in Asia for 2011 – 135 pageviews
    • I wonder if those trend predictions came true?
  • Employee Engagement – A Perspective from China – 130 pageviews
    • China continues to be a hot and mission critical market for those doing business in the country.  Recruiting qualified staff is extremely difficult.  Once hired, employee development, engagement and retention is equally difficult but an absolute necessity.
  • Overview of HR Shared Services – Part 2 of 2 – 122 pageviews
    • Improving HR efficiencies while reducing administrative burdens allows HR to focus on more business partnership and strategy relationships.  Except for the few large enterprises getting to a regional and global standardized practices is still an on-going project for most HR organizations.
SlideShare in 2012

I also keep my workshop presentations on Slideshare.  Here are the Top 5 all time most viewed presentations.

Topics for 2013?
What are HR topics you would like to see more of on this blog for 2013?  Write in your suggestions below and I’ll see what I can do…  Thanks for visiting my blog!
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