The Chinese HR conundrum

IE Focus

1 January 2005

Winning a niche in the Chinese market is hard for human resources, too. Companies that aren’t fighting recruiting wars are battling to find and retain managers.

The HR side of managing is becoming a big concern for western companies in China.

Topping the list of new dilemmas is how to share roles among expatriate workers and locals. Firms in China say it’s important to create an HR team of Chinese, right from the start. It makes local understanding easier, and is vital for the firm’s local image. A stabilizing factor, it helps develop confidence in new recruits.

Only a Chinese HR director, these companies claim, can create a positive balance among the workforce’s myriad clans and their various regions of origin. It’s also better for negotiating purposes, for questioning hires and for mastering the mystifying local bureaucracy.

Western firms are also awarding sales and marketing positions to Chinese. Expats, they admit, are too quickly overcome by the nation’s business culture and tortuous administrative procedures.

Where expatriates are found, curiously enough, is in the back-office, in logistics positions, or in posts dealing with technology or finance. In these jobs, companies observe, they can better oversee process structuring and dispense their knowhow among the locals, who remain eager to learn.

Homegrown employees should occupy positions of expertise, so they can readily transmit their competencies. France’s Saint-Gobain, for example, gives positions of responsibility more readily to Chinese executives, using expats for new projects. Other large multinationals are looking for Asian managers who can link experience in western businesses with mastery of the often inscrutable local subtleties in law or social relations. Executives from Hong Kong are particularly sought after just now, and highly paid. Western firms in China have also learned to offer their Chinese managers positions abroad, so they can multiply their skills before returning home. A dozen of Saint-Gobain’s Chinese high-potentials are currently at postings at several of the group’s western offices.

As anywhere, corporations have learned by experience the importance of motivating the workforce. It’s vital to give Chinese managers more autonomy, responsibility and creativity. It’s also important that they feel they are being managed individually.

The Chinese prefer verbal over written communication, which means the western culture of meetings and permanent reporting can pose problems for them.

Loyalty schemes and training programs

China is likewise seeing huge competition on the market for sought-after managers, which is producing a strong turnover in some areas. As a result, firms are creating and putting in place many schemes to insure employee loyalty.

Chinese managers, in particular the younger ones, are growing quite demanding for personal perks and merit compensation, among other things. Headhunting has reached new highs, and recruiters have been known to offer salary hikes of as much as 50 to 100 percent for executives changing jobs.

But European firms are finding it hard to compete with wealthier American groups. So instead of fat paychecks, Europeans are turning to loyalty schemes. The Chinese are keen on learning and personal development, so firms are offering interesting or fruitful projects, visibility or personal development possibilities, which they say help keep local staff onboard.

Some have created training centers. This approach makes nationals feel that being part of the company has value, and that they belong to a structured organization - essential elements for worker retention.

Other firms have inaugurated twin-company systems. Under these schemes, each Chinese manager has a personal tutor, and can benefit from exchange programs in the firm’s home country. France’s PSA is one company which is betting heavily on recruiting and training young graduates. Last year it began one such program for 400 young Chinese executives and engineers, and this year it is doing the same for 430 fresh recruits. These programs deal with quality, methodologies and project management.

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