The war for China’s talent

With a population of 1.3 billion inhabitants, China would appear to offer an endless supply of human capital. Yet in recent years, businesses in the republic have been facing challenges in hiring and retaining the right talent.

One reason for this is that the Chinese talent pool has become better educated. According to the latest data released by China’s Bureau of National Statistics, the number of university graduates has doubled over the past decade. Out of every 100,000 Chinese people, 8,930 now have a university education compared to 3,611 in 2000.

As they gain greater academic qualifications, Chinese employees are beginning to expect more from their employers. They are also constantly on the lookout for new opportunities. “The primary challenge in employing Chinese staff is their willingness to stay and grow with a company over a longer timeframe,” says Elisa Wong, VP of HR at Hilti Asia Pacific, a manufacturer of tools for the construction industry. Indeed, the market is so hot that the average length of service in China is around three years.

The young and the restless

Understanding the needs and expectations of the Chinese talent pool will help companies better cope with the HR challenges in the region.

The psyche of the Chinese employee has changed significantly over the years. In the 1980s and early 1990s, China saw an outflow of rural workers from villages seeking a better life in cities. These workers were willing to take on low-level jobs. Today’s generation of Chinese workers are better qualified and more ambitious.

In general, white-collar Chinese employees are very well educated with particularly strong technical skills and a solid foundation in core business skills, says Conrad Schmidt, Global Research Officer, Corporate Executive Board. “They are also extremely hard working and motivated – qualities clearly valued as strengths,” he adds. However, Schmidt feels that these same qualities sometimes translate into high levels of personal ambition that create unrealistic expectations about career progression and workplace expectations – a detrimental weakness.

Young Chinese talent want fast-track career opportunities and attractive career packages, says Wong. “Every two years, they typically start to look for new challenges and career advancement opportunities,” she explains. They also look for more autonomy at work and prefer jobs which provide them with freedom to act, and those that are more entrepreneurial in nature.

Overcoming hurdles

There is a unique set of obstacles that foreign multinational companies operating in China need to overcome.

Engagement levels are pretty low in the country, leading to disengaged or partially engaged employees, according to Saikumar Shamanna, Associate VP – HR, Infosys Technologies. Employees do not emotionally attach themselves to their jobs and this makes it easier for them to leave the organisation or deliver low-quality output. To counter this, Infosys has rolled out several engagement initiatives involving leadership and other stakeholders to improve employee morale and increase engagement levels.

China’s tight labour market also makes it challenging for HR to attract and retain key qualified talent. “Western companies with aggressive growth goals in China (and Asia) are hard-pressed to hire qualified employees to fuel this growth, says Schmidt.

The technology sector, for example, is experiencing a shortage of talent for senior level positions, says Saikumar of Infosys.

With an abundance of university graduates available, the issue is not talent but suitability, says Elizabeth Martin-Chua who was formerly Senior Vice-President, HR, Greater China and Co-ordinator, Asia at Philips Electronics. Many of the talented individuals may not fit the kind of jobs that are available as they lack the relevant experience and skills, putting a great deal of pressure on training, coaching and mentoring. “In China, HR has to possess the mindset that you hire for values and train for competence. Trying to get a good fit in all aspects is unrealistic,” she says.

Auto parts manufacturer Tenneco, for example, has seen a shortage of experienced engineers in the market place. It is tackling this issue by developing from within, says Dora Hang, the company’s HR Director for China. The company selects high potential graduates from universities to embark on a two-year training programme which aims to develop their capabilities. Selected employees are also sent for training at Tenneco locations throughout Asia, Europe and North America.

Companies in China are also facing the consequences of market overheating. According to a recent study by Hewitt, multinational corporations (MNCs) in China are increasing their headcount at around 25% whereas local privately owned enterprises are growing at a rate of 42%. “The talent war has resulted in higher turnover rates, shorter tenure in jobs and ‘over promotion’,” says Wong.

The immobility of the Chinese talent pool is another weakness, says Pierre Zhang, Managing Director, Bo Le, China, a partner of the RGF Group. “With China’s current tax and “Hukou” (the system of 'class system' residency permits), many professionals especially senior executives are reluctant to leave the city where they were born and raised and migrate to a new city.”

This limitation resonates with Hilti, which faces the challenge of rapidly providing new opportunities to match the fast-track career ambitions of senior local talents. These employees are less interested in overseas jobs as they want to capture the growing opportunities in the local Chinese market, says Wong. “As a result we can only leverage local job openings to meet the increasing demand for career advancement,” she says.

MNCs losing favour

In the past, competition for talent was mainly amongst Western multinational corporations. However, recent trends show that graduates are being lured by local enterprises.

State-owned companies are growing and maturing rapidly, making them look increasingly similar to Western MNCs in terms of compensation, development and career growth, says Schmidt. These employers are also able to draw on strong nationalistic sentiments within the Chinese workforce. “There is a good deal of pride associated with working for a Chinese company – especially one that is seen as progressive, technologically sophisticated, and able to offer a compelling career,” he says.

Despite all of these challenges, China with its population of over a billion represents a market that is ripe with opportunities. It is clear that talent recruitment and development will give companies an edge over the competition. As Hang says: “The growth of the market here in China has been remarkable. We will continue to work with our employees to ensure that their skills grow at the same pace as business opportunities.”

+       Elisa Wong from Hilti and Dora Hang from Tenneco will be speaking on Sep 29 at the Singapore Human Capital Summit.