Finding talent from a pool of 1.3 billion people may seem easy, but human resources managers in China are telling another story. Ann Liotta, vice president of human resources and organizational development at Nypro Inc., said at the Plastics News China Forum in Rosemont that the management supply is sparse and highly competitive.
But hiring difficulties may be temporary, as the young workforce gains experience in the global business arena.
Frank Gallo, president of Beijing-based Calypso Consulting Inc., said the Chinese workforce on average is 10-15 years younger than their counterparts in the United States, mostly in the age group of mid-20s to 40s. The scarcity of seasoned managerial and technical talent in China is not a matter of education or competency; it is rather a matter of experience.
At present, challenges abound.
As foreign direct investment pours in and domestic businesses boom, demand for qualified workers outweighs supply, resulting in an average of 30 percent turnover, even higher in booming areas such as Suzhou (about 30 miles west of Shanghai). Meantime, salaries are increasing 10 percent annually, on average, although inflation is low. In such a market, attracting and retaining key talent is the number one human resource issue in China.
Hiring difficulties in China will exist for at least five more years, Gallo warned. Rather than wait for time to solve the problem, companies need to take quick and effective actions, he said.
``Companies that are good at attraction and retention have a higher return to shareholders than those who do it poorly,'' Gallo said. ``Having a defined plan to improve this is necessary.''
Nypro, a Clinton, Mass.-based injection molder, generates one-third of its total sales from Asia, which includes 10 plants in China. To find managers in today's competitive market, the company brings Chinese expatriates from Singapore, Hong Kong and India to mainland China.
``We've found almost a hierarchy of expatriates in China: Hong Kong [managers are] better than [those from] Singapore - they are more practical,'' Liotta said. Expatriates from India mostly work on technical engineering and program management.
But the flow of talent is two way. Nypro also is bringing Chinese workers specialized in toolmaking and manufacturing to India. Liotta added that Nypro provides English-language training for management-level personnel in China.
A strategy to hire expatriate managers may be necessary in the beginning, but it is not a long-term solution to the shortage. Nypro is working to train and prepare more local Chinese people for management positions. Liotta said having a balance between the expatriates and local workers is critical.
Gallo, who also serves as a senior adviser to human resources giant Hewitt Associates LLC, said retaining talent in China is not a secret. He advised employers to provide competitive rewards, high quality supervision, opportunities for advancement - laterally as well as vertically - and an inviting and collegial work culture.
To this end, Liotta noted that the employee-owned Nypro has implemented a program to offer the equivalent of stock ownership to its non-U.S. employees. The program - called STAR, for stock appreciation rights - faced specific challenges in China, where the law is uncertain regarding the legality of owning foreign company stock. But Nypro worked through the issues by framing the STAR plan as an employee benefit, akin to profit sharing. Its Chinese plants in Hong Kong, Shenzhen and Tianjin currently can participate, with its facilities in Suzhou and Guangzhou among those expecting to be eligible in the future. Such a plan, which requires vesting over time, offers an incentive for employees to stay with the company.
Gallo, meanwhile, suggested setting payment level around the medium. But fair compensation and benefits alone are not sufficient. Young Chinese professionals expect to become a manager after three years out of college. Titles are important for not only their work, but also their social life. Gallo suggested that firms recognize that expectation and institute some hierarchy in the organization.
Gallo provided some hands-on tips for ``positively influencing motivation in China'':
* Compliment employees on their work, which is not common in China.
* Show patience and concern, which are important Confucian values.
* Let employees share responsibility for improving the work process, which reinforces collectivism.
* Appreciate quiet workers - not only the outspoken ones - because Chinese people are taught to be low-key.
* Share your corporate vision, although it is still uncommon in China.
Both Liotta and Gallo stressed the importance of maintaining a human resources infrastructure in China.
``Like senior management, finding senior human resources personnel is not easy,'' Gallo said.