Current regional recruitment landscape

This guide is aimed at helping HR and hiring managers to attract and retain a sustainable talent pipeline—something a lot easier said than actually done in practice. One of the most important keys to the success of any hiring strategy is for hiring mangers to really understand their target talent pool and find out what motivates them—again easier said than done. To help HR in this task, just a few months after the PRC became the second largest economy in the world, the MRI China Group surveyed over 3,000 professionals and managers to gain a deeper understanding of what motivates them as they pursue a job they love. The MRI China Group Talent Environment Index was conducted during Q4 of 2010 in China and Hong Kong targeting the mid to senior level management talent market, across a wide range of sectors. Out of a total of 3,185 respondents, 2,265 were based in China and 348 in Hong Kong. Here we summarise the key findings from the groundbreaking survey

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On the back of the Chinese People’s Political Consultative Conference (CPPC) and the Annual Plenary Session of the China’s National People Congress (NPC) in March 2010, a key trend among China’s middle-class is an increasing demand for higher quality of life. When combined with the fact that 64% of respondents received job offers in the last 18 months and 87% said they are open to making a move in 2011, employers face an extremely volatile talent market.

Happiness emerging theme

While compensation has long been a key motivator for Chinese talents, work-life balance is increasingly becoming an important factor and is now a key criterion for talents to evaluate their level of job satisfaction. This is indicative of a greater emphasis on happiness and quality of life amongst Chinese talents. As China continues to push forward the national ‘happiness and livelihood’ agenda of its current five-year plan, we are likely to see more talents in China placing work-life balance as their top priority when selecting employers.

When asked about reasons for changing jobs—respondents from mainland China and Hong Kong indicated different priorities. ‘Compensation’ ranked first in Hong Kong, while ‘increase in responsibility’ ranked first in mainland China. ‘Job security’ and ‘compensation’ appear to be stronger drivers of retention in Hong Kong. ‘Work Life Balance’ on the other hand seems to be a mounting preoccupation of junior professionals and managers in mainland China, while this trend is less apparent in Hong Kong. The majority of respondents remain dissatisfied with their current compensation. However, career advancement, or ‘increase in responsibility’ received the highest response rate as the most important reason to move to a new role in mainland China and the results also showed that ‘challenges’ and ‘people’ were the most important motivators to remain in their current job.

Almost half of mainland China respondents moved to a new role with a compensation increase of more than 30%. The majority of respondents also indicated that they see themselves in the top 30% of the market in terms of compensation, yet 42% in mainland China and 36% in Hong Kong are not satisfied with their current compensation. Accordingly, very few respondents are genuinely steady in their current job with 24% of the respondents in mainland China and 29% in Hong Kong determined to make a change in 2011 and the vast majority open to new opportunities. So, the outlook of talent markets in both mainland China and Hong Kong appears unstable for the two key reasons. Firstly, talents in general are unhappy about compensation. While the mentality of ‘there’s never enough money’ may still be valid, MRI believes that the lack of satisfaction is mainly driven by skyrocketing living costs in China. Secondly, the high volume of jobs continuing to be offered in both mainland and Hong Kong markets will prompt dissatisfied candidates to make quick changes. These factors combined make for a potentially lethal combination for employers in China.

Companies seeking to attract and retain talent are likely to face considerable pressure and increased costs on two counts should these market conditions continue. To retain current talent, rewards will play an important part, but can be balanced against areas such as challenging work, and increased earnings through increased responsibility. However, they also face the reality that almost half the candidates achieved over 31% increases in salary on making a move. This can and will make hiring new talent a potentially expensive business.

Challenges and people: people satisfaction in the workplace is first and foremost linked to a sense of progress and achievement in their work and to the culture of the company which is embodied by the people surrounding them.

Responsibility vs compensation: 38% of Hong Kong respondents place ‘compensation’ as their number one trigger for changing jobs whereas mainland China respondents placed ‘increased responsibility’ as their main trigger. Considering that an increase in responsibility is usually accompanied by an increase in compensation, the outcome is probably the same, especially when referring to compensation increases in mainland China which were much higher than in Hong Kong. When trying to attract talent in mainland China it should be noted that ‘increased responsibility’ and ‘career progression’ are key drivers ahead of ‘compensation’.

Work-life balance: ranked as the third most important trigger for accepting a new job role. The rapid increase in compensation for mid to senior level talent over the past five years, may now place people in a more comfortable position to look for a broader, more holistic approach to career choices. The desire for increased responsibilities and for work-life balance could create a significant challenge for companies seeking to attract and retain top young talent in China. China’s pace of development and the year-on-year growth of companies combine to produce long work hours for management; not to mention the matrix management structures of companies that require China-based mid to senior level talent to be engaged in late night and early morning calls to corporate offices in the US and Europe.

While in Hong Kong, work-life balance seems to be relatively more important to the most senior people who are also less keen on increased compensation. The survey found that younger managers in China are the ones facing the complex choice of wanting to achieve both: career advancement and work-life balance.

Since 2007, many parts of inland China have been growing at a faster pace than the coastal areas. The economic expansion of inland Chinese cities should further accelerate in the coming years with an increased demand on key professional talent. This talent should ideally be found and developed locally. However, for the first step companies may have to attract management and professional talent from their coastal-based operations in order to transfer best practices and support their expansion. The survey indicated a strong appetite for mobility within PRC and Asia with 64% of respondents in mainland China indicating they were seeking work both inside and outside local markets, and 29% of national respondents seeking work inside their local market. Similar trends were observed in Hong Kong. After working in their homeland, Singapore and Australia are the most sought after working destinations.

Many companies are experiencing 10-40% growth in their top line revenues and significant headcount and leadership needs when, due to similar growth in China over the last decade, talent is already in short supply. Companies must consider new approaches to talent management and attraction. This challenging search for talent is compounded by the added complexity of a maturing mid to senior level management profile seeking something more than a fast career and money. There is no easy answer in such a competitive talent environment even when companies recognise the issue. However, placing the talent agenda at the core of its China strategy may mean the company stands a better chance of successfully coping with and transforming a talent problem into a strategic weapon to win over the competition.

1. Put talent acquisition at heart of business structure

Assign a talent acquisition leader with a strong line to the CEO or MD of China. In many companies, this role is often situated 2-3 levels down from the head of the business. Shift talent acquisition from a recruitment procedure to a strategic driver of the business. Nearly every executive in China identifies failure to attract top candidates to their company as a major obstacle to meeting the business goals of the company. By repositioning this function as its own department, with the full sponsorship of the MD/CEO, it has a better chance of receiving the necessary resources and attention to help attract key talent.

2. Develop an attractive employer value proposition

Delivering a clear message on the company’s promise to employees will enhance the effectiveness and the return on investment of talent acquisition efforts. With career development and work-life balance holding such a strong position in the minds of the talent pool, companies should align their promises accordingly when representing themselves in the marketplace. They should also choose the right talent acquisition partners who are able to convey in a positive way their promise and employment brand to the market.

3. Be proactive

Prevent ‘crisis hiring’ by taking a proactive approach to talent acquisition. Through talent mapping and a thoughtful candidate engagement strategy, companies can increase their chances of attracting passive candidates. Passive candidates will, by definition, be at a lower risk of receiving multiple offers during the recruitment process and thereby give the company the ability to approach without having to face competition from multiple suitors.

4. Be decisive

The length of the selection process in China is a critical component for a company’s success rate in attracting top talent. Many jobseekers receive multiple offers and these are often received at the same time due to the slow interview and offer process of most companies. This gives the candidate the opportunity to interview with multiple companies and then compare offers to determine their ‘market value’ and play companies off against one another. A streamlined selection process, completed within 30 days, would eliminate much of this risk.

5. Be aware of compensation challenges

As mid to senior level talent in China demand international standards of compensation, companies must be competitive to attract the best people to their business. Derailing an internal compensation system to attract new talent is not an easy option, so companies will have to juggle and adapt to outside demands, seeking damage control while shaping their proposition around multiple dimensions, including career development and working environment.

In an overheated talent market, 2011 holds significant challenges as companies come to grips with the rising and shifting ambitions of talent in China. More than anywhere else in the world, talent should be on the agenda of any PRC-based CEO, as business success will be achieved through the retention and growth of a highly capable but demanding pool of professionals and executives. As always, a problem to solve but also a great opportunity for the best employers.