Why are our Chinese Employees Leaving Us? (part 2)

In my last post, Christian Groeger and Valourie Xuan, from Fiducia Management Consultants, shared with us the Chinese employees’ reasons to change jobs (their own drivers –if you missed it you can read them here). In today’s post they add a new perspective. What are employers doing that contributes to employees high rotation?

1. Top-down leadership approach
This is a generational issue. Many middle-aged Chinese employees in leading or middle management positions – as well as many expat managers frustrated by a perceived lack of independent handling capabilities with their staff – tend to follow a more top-down leadership approach and micro-managing style. This may work for some employees, but will put off others – especially the ones who are ambitious and capable.

2. High competition over small pool of qualified staff
Especially in industrial and service industry centers such as Shanghai or the Pearl River Data, a huge variety not only of FIE’s, but nowadays also SOE’s and Chinese Private Enterprises vie for the same pool of qualified staff, providing ample opportunities for these staff to select better offers and giving rise to a vibrant and aggressive HR industry. In addition, highly qualified Chinese staff is usually very hard to motivate to relocate to 2nd tier or 3rd tier locations where generic staff positions are easier to fill.

3. Lack of adequate career paths and top positions for local employees
Many FIE’s have an open or implicit policy to staff high-level positions with foreigners. With the relatively small scale of operations of most FIE’s as compared to big SOE’s, specialization opportunities may also be limited.

4. Uneven pay structure between long-term employees and newcomers (internal inequity)
In order to attract new talent, employers often have to pay a premium to new hires with good qualifications. It is very difficult to keep these payment premiums confidential, as long-term employees will try to benchmark themselves against these newcomers with their income level.

5. Long-term unsustainability of rising wages and not matching profitability/efficiency increases
The above described problem can lead to a self-perpetuating “vicious circle” if it is not sustainable in the long run. Income levels and raises therefore need to be linked to specific goals to increase underlying profitability and/or efficiency.

6. Inadequate training and development measures (also too much training without proper employee checks & balances)
In order for employees to achieve their goals, they require proper training and development opportunities. This needs to be in line with and reviewed against the company goals so as to prevent a mismatch of resources and employee frustration or, in the worst case, training employees for competitors.

7. Lack of communication inside the company
Dissatisfaction by employees is usually only communicated when it is too late and the decision to quit is hard to change any more. This problem is potentially more pronounced in inter-cultural settings.

8. Problems with practical application of pay-for-performance schemes / wrong incentives
Performance-linked targets are often not set in a SMART (specific, measurable, achievable, realistic and timely) way, not thoroughly reviewed or provide incentives which are not in line with the company goals. This can lead to a lack of clarity and transparency and increase the risk of employee alienation.

Do you share their views?

One comment

  1. Why are we looking for what we are doing wrong all the time? why are we so sure we ALL are doing the things wrongly?….perhaps we should start assuming that China is such an open market for employees that they have the upper hands, and in such case finding the best strategy for short-terms teams.