How do you attract and retain the best executives to work for your company in fast growth markets like China? Who has the upperhand, local companies or multi-nationals and why? What types of people are best able to lead and grow organizations in such environments?
When it comes to finding talent, the biggest challenge these days for multi-nationals is to roll out to second, third and fourth-tier Chinese cities according to John Quelch, Dean of the China Europe International Business School in Shanghai. Quelch addressed the battle for talent in China at an ACCJ’s HR Committee event.
Quelch says top employees in Shanghai and Beijing don’t want to go to the smaller centers, because they are comfortable in Shanghai and Beijing. It is like asking someone who has lived in London or Oxford to work in Newcastle.
Not many people line up for the opportunity. That leaves foreign investors with a great challenge.
The reverse is also true: people from third-tier cities don’t want to move to Shanghai or Beijing because the standard of living is beyond their means. It is not economical because the costs are so different between Shanghai and Chongqing. So Quelch says staffing across the country represents a major challenge.
In terms of competition, an important question is, “What do young Chinese actually want? Do they really care about their employer? Do they really care about the company they work for?” Li Na, a famous tennis player, made a very interesting statement recently which was heavily debated on Chinese blogs. It went something like this: “all I am concerned about is winning for myself. I don’t care about the state. I am not here to win for the state. I am here to win for myself.”
That, as you can imagine, was a very controversial statement and might reflect the way many Chinese people, especially the young, actually think. Their top priorities are themselves and their family. The state and the company they work for are way down the list.
Of course, there remain many Chinese who are committed to their company to the extent that their employer can project the firm as family and community that one can be part of for the long term. This notion can be extremely powerful to some Chinese. But forthe most part, Quelch says most Chinese are not confident that the success they are currently enjoying is going to last forever. So to use an old English expression, it is a matter of “making hay while the sun shines.” Go all out for yourself and get as much as you can because one never knows when the party is going to end.
Job hopping is an endemic issue in China. There are obviously a vast number of opportunities presented to people but there is a huge problem with fraudulent credentials. In fact, the ability to verify credentials is extremely under-developed.
Quelch says a tremendous status exists towards being promoted and getting a new job that is partly a function of China’s one-child only policy, which places a tremendous amount of parental or grandparental pressure on children to perform and get ahead. Quelch says, in a crass sense, there is a great deal of pressure to see return on the educational investment that has been provided for them.
In the last two years, foreign companies have been losing ground to Chinese state-owned enterprises in recruiting top talent. In part, this is because the state-owned enterprises are often monopolies with money to throw around. And they do throw it around. Compensation levels are surprisingly high and there is a tremendous amount of investment in training and development. Chinese companies normally have outstanding training and development centers, bringing in top people from Harvard and Stanford to instruct their employees.
In addition, following the financial crisis in the West, Chinese state-owned firms have done well compared American and European companies. They have also taken advantage of their track record for growth, saying to young people, “we are going to grow by X percent a year, come with us.” Opportunities for promotional paths open up quickly, with many of these companies expanding internationally. Chinese and European graduates of international business schools are very attractive to companies like SinoPac or China Development Bank. These firms need English-speaking talent to lead their expansion.
MNC ATTRACTIVENESS AS EMPLOYERS IN CHINA
Skilled Chinese workers are also considering foreign multinationals much less attractive. A 2009 study by the Corporate Executive Board found that only 18 percent of Chinese workers favored MNCs, versus 33 percent two years previously. Domestic firms, on the other hand, jumped in attractiveness from 13 to 35 percent. Quelch believes this was due to the global financial crisis and damaged reputation of Western capitalism.
So how can foreign companies respond? Quelch says multinationals that develop good university partnerships are likely to benefit. University ties extend beyond business schools to the undergraduate talent pools that come out of top Chinese universities. For example, the confectionary company Mars has an outstanding university recruiting program in China, accepting 11,000 applications yearly and hiring seventeen people. Quelch says China has a tremendous amount of talent – foreign firms just need to find it and nurture it.
So, what qualities characterize the most successful China CEOs of multinationals? What should you look for when you appoint an expat to an important position in China? Quelch advocates looking for a sense of cultural versatility and a sense of curiosity. Asia or China experience is not as important experience in a growth market.
Quelch would not appoint someone to be the head of China who had not had some growth market experience. Significant growth market experience suggests a senior manager has likely learned about government relations.
Obviously the state sector in all growth markets is a high percentage of GDP. Successful growth markets experience also suggests competency and experience developing and managing joint ventures. It is also important to have someone who can manage ambiguity because in China, like Japan, culture dictates why you need someone in the job who understands that “yes” doesn’t necessarily mean “yes.”
The challenge is that China and is an engine of growth, yet very few people at board level overseas know anything about the market. What typically is happening is that because of the strategic importance of China, high level people are now being appointed there as country managers.
Twenty or thirty years ago, if you wanted to be the CEO for a multinational company you would have to serve time at a major subsidiary in Europe. Quelch says China now serves in that role. Few people will become the CEO of a major multinational corporation if they haven’t spent time in China. So we are seeing a lot of folks competing for the opportunity to get into China and get a piece of China.
They all want to have the experience of China on their CV.