Editor's note: Yuan Jianhua, managing director of Manpower China, shares his views on the different strategies privately-owned Chinese and foreign companies should adopt to maintain the competitiveness of talent during an interview with China Business Weekly reporter Yang Ning.
Q: Three decades of opening-up have created a large number of respected privately-owned Chinese companies. What are the difficulties for them in terms of human resources (HR)?
Yuan Jianhua, managing director of Manpower China, said that high-caliber recruitment teams should be built find the right employees for the job. Provided to China Daily
A: As scales expand, privately-owned Chinese companies planning an initial public offering (IPO) or internationalization are finding it difficult to attract and retain talent as a result of inappropriate HR strategies and inefficient recruitment.
According to our research, the demand for management-level HR talents is eight times greater than the demand for HR staff at non-management level. However, in stark contrast with the robust demand, only 35 percent of HR professionals favor work opportunities at Chinese private companies. This indicates an urgent need for the companies to better attract such talents.
Q: The survey showed that although the talent competitiveness of Chinese private companies was improving, corporate culture is still its biggest weakness. How can they improve the attractiveness of their corporate culture?
A: Corporate culture, as the basis for long-term survival and development, plays an important role in attracting and retaining talent. There is still a large gap between Chinese private companies and foreign companies in the development of corporate culture but, fortunately, some outstanding Chinese private companies have shaped unique corporate cultures in light of their own development, which has increased the attractiveness of their brands.
Q: Can you cite an example?
A: The "grass-roots" culture of Chinese sportswear brand Anta is a case in point. Anta has incorporated into its HR management its "grass-roots" culture, i.e. whoever is able, responsible and has outstanding performance will be provided good opportunities and favorable compensation regardless of his or her background and seniority. This helps Anta attract diversified talents and improve cohesion as well as employees' sense of belonging.
Q: What other advice and suggestions would you give to Chinese private companies in HR management?
A: High-caliber recruitment teams should be built to guide the recruitment process in order to recruit the right employees. If necessary, Chinese private companies may establish a set of efficient and normative recruitment systems and management processes with the help from professional HR companies.
Moreover, as China's labor policies gradually improve, employees' awareness of their rights also increases - as does the quality of talents - it is urgent for Chinese private companies to refine their HR management with respect to labor and employee relations, performance management, career planning and development, employee training. It involves shifting HR management from "day-to-day management" to "developing employee potential", which will also serve to systematically attract and retain core talents in alignment with corporate level strategies.
Q: More and more foreign companies are targeting the Chinese market because of its booming economy. What is the biggest challenge for them in attracting talent when competing with Chinese private companies?
A: Foreign companies will face tougher challenges if they are to enhance penetration of second- and third-tier - or even smaller markets - in China. In addition to coping with high turnover of managers in first-tier cities, they have to attract and recruit a large number of business development staff each year.
Q: Are they facing cross-regional HR allocation challenges?
A: Yes. It is challenging for foreign companies to move talents and retain them in emerging markets, which lag behind first-tier cities in terms of education, medical resources and service facilities.
By contrast, Chinese private companies better at "encircling cities from rural areas", transfer their research and development and marketing centers to first and second-tier cities with sufficient talents such as Beijing, Guangzhou, Shanghai and Shenzhen. This leads to increasingly fierce competition for management-level talents between foreign and Chinese private companies.
Q: Do you have any advice for foreign companies to attract management-level talent in China?
A: Some foreign companies assume that since labor in China is cheap they may offer a low salary to local executives. As a result, some local executives receive half or even a third of the pay that foreign executives receive. Such unfair compensation distribution clearly has a serious negative impact on local employees' work passion.
To win over excellent local talents, foreign companies have to pay local senior managers at least as much as, if not more than, the foreigners. It is critical to run a flexible compensation system that adapts to market changes, and the frequency and margin of pay adjustment should be based on the severity of the shortage and popularity of relevant talents in the market.