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Big Chinese firms preferred to multinationals
October 11, 2010, Monday
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HAVING left one of the Big Four accounting firms in her home city last year to go to university in the US, Shanghai-native Amanda Peng is already thinking about the companies she wants to work for after she finishes her studies and returns to China.
Not so long ago, Western multinationals would have been among her top choices because of their ability to offer better pay and more career opportunities than, say, a local state-owned enterprise (SOE).
But having witnessed the "ruthless" layoffs of many of her colleagues in 2008, Peng says she is looking at SOEs in a different light.
She's not alone. According to the eighth annual Best Employer Ranking published in August by Chinahr.com, an online recruiting company, Chinese companies are gaining ground among young graduates as places where they aspire to work.
Polling roughly 200,000 university students in 200 schools across China, it found that of the 50 most popular employers, 46 are domestic companies, up from 29 in the previous year's study. Among them, 33 are SOEs, including China Mobile, Bank of China and the State Grid.
This shift in attitude among young job seekers is just one of a number of changes that China's HR professionals are grappling with as their companies leave the worst of the global economic downturn behind and return to hiring mode.
While they say the war for talent among China's white-collar workers is raging once again, pay packages and bonus schemes reflect the new mood among employers, which is more cautious and frugal than in previous times.
More for less seems to be the new mantra. While China's relatively low wage levels have been hotly debated ever since the wave of high-profile pay-related disputes erupted at factories across the country this year, HR professionals of both local and foreign firms are now under pressure to find innovative ways to attract and retain talent other than the salary one-upmanship with rival employees that was once the norm.
Along with innovation, there's also a need for speed as more firms reignite the job market. Already in the first part of this year - as other economies around the world were still being pummeled by the downturn - 51job, China's largest recruitment company, reported a 61 percent increase in online recruitment ad revenue over the same period last year, to US$16 million, and a 74 percent increase in the second quarter, to US$20 million.
Salary and staff turnover rates are also on the rebound. According to the recent Total Compensation and Measurement 2009-2010 Study from Hewitt, a global HR consulting and outsourcing company, salaries in China are expected to increase 8.4 percent year on year in 2010, up from the 4.5 percent recorded in 2009 but down from 2008's 10.3 percent.
As for next year, there will be more of the same as wages are expected to rise in China 9.1 percent, with supervisors and middle management receiving the highest pay hikes.
Job-hopping
Along with wage inflation, HR managers are back on familiar ground in another way: Employees are job-hopping once again. Hewitt's research shows that attrition rates have become staggeringly high, increasing from an average 8.3 percent in 2001 to a 10-year high of 16.7 percent by mid-2010.
Many HR experts say that part of the reason for escalating attrition rates has to do with the harsh layoffs undertaken during the downturn, tarnishing the reputations of many companies, particularly foreign multinationals that had to slash headcount at satellite offices worldwide in response to their ailing domestic markets.
That's been a concern for Craig Rong, HR director for East China of A.P. Moller-Maersk, a Danish shipping and energy conglomerate, which tumbled into the red for the first time in its 105-year history in 2009, booking a US$1 billion net loss and was forced to cut worldwide headcount by around 20 percent.
Maersk currently has 1,500 staff in China. Though back in the black with a US$2.52 billion profit in the first half of 2010 and providing the markets with an upbeat full-year profits forecast in August, Rong says staff turnover at Maersk in China has been high since the beginning of the year.
"We are not the only ones," he adds. "Most foreign companies in China face similar challenges, as many SOEs and private Chinese companies did not pursue aggressive layoffs for a variety of reasons."
The financial crisis has made companies more acutely aware of one of their biggest costs - their staff, says Tim Glowa, lead consultant of employee research at Hewitt. Increasingly, he says, corporate HR managers such as Rong are designing compensation packages with greater employee input about which benefits - ranging from housing to pensions - they deem the most important.
But it's not all about pay, says Nico Van Dam, a senior consultant with Hay Group, another HR advisory firm. Research from Hay has found that alongside cash, Chinese employees rate the quality of their boss's leadership, respect and recognition, and work-life balance as the top reasons why they stay at a company, ahead of compensation.
The message to employers in China is clear, says Van Dam: A bigger paycheck won't stop talent from leaving.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. All rights reserved. The views are its own. Shanghai Daily condensed the article.)
Not so long ago, Western multinationals would have been among her top choices because of their ability to offer better pay and more career opportunities than, say, a local state-owned enterprise (SOE).
But having witnessed the "ruthless" layoffs of many of her colleagues in 2008, Peng says she is looking at SOEs in a different light.
She's not alone. According to the eighth annual Best Employer Ranking published in August by Chinahr.com, an online recruiting company, Chinese companies are gaining ground among young graduates as places where they aspire to work.
Polling roughly 200,000 university students in 200 schools across China, it found that of the 50 most popular employers, 46 are domestic companies, up from 29 in the previous year's study. Among them, 33 are SOEs, including China Mobile, Bank of China and the State Grid.
This shift in attitude among young job seekers is just one of a number of changes that China's HR professionals are grappling with as their companies leave the worst of the global economic downturn behind and return to hiring mode.
While they say the war for talent among China's white-collar workers is raging once again, pay packages and bonus schemes reflect the new mood among employers, which is more cautious and frugal than in previous times.
More for less seems to be the new mantra. While China's relatively low wage levels have been hotly debated ever since the wave of high-profile pay-related disputes erupted at factories across the country this year, HR professionals of both local and foreign firms are now under pressure to find innovative ways to attract and retain talent other than the salary one-upmanship with rival employees that was once the norm.
Along with innovation, there's also a need for speed as more firms reignite the job market. Already in the first part of this year - as other economies around the world were still being pummeled by the downturn - 51job, China's largest recruitment company, reported a 61 percent increase in online recruitment ad revenue over the same period last year, to US$16 million, and a 74 percent increase in the second quarter, to US$20 million.
Salary and staff turnover rates are also on the rebound. According to the recent Total Compensation and Measurement 2009-2010 Study from Hewitt, a global HR consulting and outsourcing company, salaries in China are expected to increase 8.4 percent year on year in 2010, up from the 4.5 percent recorded in 2009 but down from 2008's 10.3 percent.
As for next year, there will be more of the same as wages are expected to rise in China 9.1 percent, with supervisors and middle management receiving the highest pay hikes.
Job-hopping
Along with wage inflation, HR managers are back on familiar ground in another way: Employees are job-hopping once again. Hewitt's research shows that attrition rates have become staggeringly high, increasing from an average 8.3 percent in 2001 to a 10-year high of 16.7 percent by mid-2010.
Many HR experts say that part of the reason for escalating attrition rates has to do with the harsh layoffs undertaken during the downturn, tarnishing the reputations of many companies, particularly foreign multinationals that had to slash headcount at satellite offices worldwide in response to their ailing domestic markets.
That's been a concern for Craig Rong, HR director for East China of A.P. Moller-Maersk, a Danish shipping and energy conglomerate, which tumbled into the red for the first time in its 105-year history in 2009, booking a US$1 billion net loss and was forced to cut worldwide headcount by around 20 percent.
Maersk currently has 1,500 staff in China. Though back in the black with a US$2.52 billion profit in the first half of 2010 and providing the markets with an upbeat full-year profits forecast in August, Rong says staff turnover at Maersk in China has been high since the beginning of the year.
"We are not the only ones," he adds. "Most foreign companies in China face similar challenges, as many SOEs and private Chinese companies did not pursue aggressive layoffs for a variety of reasons."
The financial crisis has made companies more acutely aware of one of their biggest costs - their staff, says Tim Glowa, lead consultant of employee research at Hewitt. Increasingly, he says, corporate HR managers such as Rong are designing compensation packages with greater employee input about which benefits - ranging from housing to pensions - they deem the most important.
But it's not all about pay, says Nico Van Dam, a senior consultant with Hay Group, another HR advisory firm. Research from Hay has found that alongside cash, Chinese employees rate the quality of their boss's leadership, respect and recognition, and work-life balance as the top reasons why they stay at a company, ahead of compensation.
The message to employers in China is clear, says Van Dam: A bigger paycheck won't stop talent from leaving.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. All rights reserved. The views are its own. Shanghai Daily condensed the article.)
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