As China enters its ‘new normal’, CEOs appear uneasy about the shifting economic landscape and its impact on their organisations. Sitting at the top of their list of worries this year is recruitment and retention—but as HR Magazine finds, this is not merely an issue of economics but a disconnect between the desires of business experiences and the aspirations of young Chinese.
Nine out of 10 Chinese CEOs believe that problems with finding, nurturing and retaining key skilled talent is one of the biggest threats to their company’s growth—this according to PwC’s 18th Annual Global CEO Survey—China Summary ‘Dealing with disruption–Thriving in China’s ‘new normal’. It was the joint number one concern for employers in the wide-ranging report which found that, as a result, only just over a third of CEOs were ‘very confident’ about their business prospects for the next 12 months. Strangely, for a growing economy like China, confidence in the long term now sits below the global average.
China is certainly entering a new phase. After GDP growth fell from 7.4% last year, Premier Li Keqiang’s Government Work Report predicts growth of ‘approximately’ 7% for 2015—signalling the winding down of heavy investment in favour of higher consumer spending. It is this shift that President Xi Jinping has labelled the so-called ‘new normal’. With this, it is now the task of CEOs to win new business to continue seeing growth—and for this they need new talent with innovative ideas, especially in an age where they are challenged by digital competitors.
Skill gap enigma
The problem of attracting talent, however, is not new. According to a recent report by the Center on International Education Benchmarking (CIEB), the lack of skilled talent has been an issue for decades because of lower educational provisions from the previous era. In 2012, for example, of the 8.5 million employees in the electronics and information industry, only 50% were classified as skilled—with other industries showing similar results. Filling the gap is an enormous task, which appears now, in an era of lower growth, more important than ever.
To this end, companies appear to be going all out to scout for talent with 77% of CEOs saying that they actively search for talent in different geographies, industries and demographic segments. What’s more is that 88% state that they are tapping into multiple channels, including online platforms and social networking to reach new people. But why do businesses continue to struggle?
88% of CEOs say they tap into multiple channels to reach new people.
‘Picky’ Generation
One would think that turning to China’s 7.5 million 2015 graduates would more than help fill the gap—a number that is seven times that of 15 years ago. Not to mention that this adds on to graduates from previous years who are ready to enter the job market. As the higher education sector expands and the numbers of students swell, China’s graduates often find themselves in the depths of unemployment. Figures by Prof. Joseph Cheng, Professor of Political Science, City University of Hong Kong, and quoted by the BBC, suggests that the unemployment rate for fresh graduates could be as high as 30%.
It is a worrying disconnect. On the one hand, CEOs are desperate to hire, yet on the other, graduates struggle to get employment. So what is going wrong? Some attribute this to the perceptions of those hoping to get onto the employment ladder. Speaking to Bloomberg, Zhou Xiaozheng, Professor of Sociology, Renmin University put the problems down to graduates being too picky, “Young people now want to make money, but don’t want to work hard.” He added, “For college grads, their idols aren’t hard-working people, but those who become billionaires overnight on the stock market.”
But this is only one side of the coin. From the perspective of the potential employees, the sectors they want to get into are simply not offering the jobs or experience they wish to have. A report released last year and produced jointly by Peking University and recruitment company Ganji, found that Chinese graduates craved the white-collar jobs in HR, administration, accounting, teaching and secretarial work. Yet it found that newcomers were mainly faced with the choice of careers as salesmen, technicians, agents, customer service staff and waiters.
“Young people now want to make money, but don’t want to work hard.”
53% use data analytics to analyse how their current skills could be better deployed.
Need to think outside the box
It begs the question of how such differences can be reconciled. For PwC, the solution evolves around HR developing strategies to increase and leverage the diversity of their company’s talent pools. Working within the existing workforce, their report recommends incentives and rewards for innovation as well as making greater use of technology to improve the efficiency of the workforce. For instance, only 53% of CEOs were found to use data analytics to analyse how their current skills could be better deployed.
It is also a question of how HR can appeal to a broader base of prospective employees who are more demanding than the generation before. Previously, HR Magazine spoke at length about the importance of transitioning to digitalisation as a means to appeal to the ‘PlayStation generation’ and to release their potential as employees and future leaders by better incorporating them into decision-making. It is a point that should not be lost on HR as it is clear the young Chinese of today do seek quality as much as a decent salary.
Equally, HR in China should look more at developing a bond with the evolving education sector. In the last year in particular, Premier Li has been keen to promote the virtues of vocational education, which followed a State Council guideline in 2014 aiming to add around 10 million more students into this sector by 2020.
According to the CIEB’s report on vocational education in China, although vocational schools and colleges need greater investment in resources, the links between them and employers are weak. It cited lack of work experience placement offers as well as a lack of adequate preparation for the world of work because of this weak link. By sharing employers’ expectations, it could prove a valuable source of potential as more than 22 million people attend secondary vocational schools and 10 million in post-secondary vocational colleges.
Embracing the ‘new normal’ comes at a time when the up and coming generation are more sceptical and picky. Reality will no doubt force them to lower their expectations—but companies must meet them half way. Filling the gap may be an arduous task but China is not currently short of people or potential. Companies adapting to the needs of the upcoming generation will likely see their business thrive in the ‘new normal’.
Paul Arkwright
Publisher
