Human Resources in China: 7 Tips on How to Retain your Talent Outside First Tier Cities

We have heard and read a lot about the difficulties companies face trying to retain their talent in China. Things get even worse when your business needs force you to relocate your Beijing and Shanghai managers into second and third tier cities.

I recommend a very good article at Shanghai Business Review by Katrina Hamlin. It deals with what she calls “The Migrant Manager”, talent sent from main hubs into second and third tier cities, and how this is forcing employers to refine talent management strategies. (I encourage you to read the full article- you need to be subscribed but you can also register for a free trial- and it is a really good publication)

“Many companies have become resistant to hiring their staff from tier one cities to work in their tier two and three offices preferring to try the local talent. But in some places, especially in the newest business hubs, appropriate talent may be in short supply, and there is little choice but to import talent from other areas” says Vivian Ng, managing director at Morgan McKinley.

Below, you may read some of the ideas captured in the article on how to retain talent (register for a free trial if you do not subscribe already)

1.Brand relocation as a strong career move
“The senior and junior positions tend to be filled, but only a few are available to cover mid-level positions. So, for those occupying junior-level positions (in Shanghai), a move to Chengdu may turn out to be a better option. That´s a significant push factor. It´s a step up, and they know they can return (to Shanghai)..” says Andy Bentote, North and Eastern China managing director, Michael Page International.

2.Tailor the package to suit the individual’s needs and career goals.
Pay attention to employee´s personal situation and needs. Packages should include accommodation, transport allowance, return flights, flexible approach to family visits, schooling (Emma Charnock, Hong Kong and China’s regional director of Hays).

3.Make sure they feel supported by the local office
Other intangible assistance from the local office such as helping to find a school for the children who relocated with them, could also make a difference. All these help boost their confidence to stay in the city (Emma Charnock, Hong Kong and China’s regional director of Hays).

4.Keep promises you make
“While it is important to construct a package that can motivate and attract the candidate to join, it is also necessary to keep the promises (especially on the non-financial side) if you’re going to retain the candidates who have joined.” says Mr Charnock

5.Pick the right person
How then c an a recruiter assess willingness (to go away from first tier cities)? Personal connections were identified as the most significant, decisive factor. “Where they are from, where they went to university …” according to Bentote.

6.Comunication is critical. Companies need to understand the challenges their staff are facing (Laura Shen, director, RPO and talent management, China, at Hudson).

7.Conduct follow up interviews six months after the employee has moved on.
I am not sure an employee is completely honest in a traditional exit interview… But they might be honest after that break- and if, on reflection, they wish they´d stayed with us, it gives us a chance to take them back (John Crawford, HR director at Biomet’s Asian Operations).

What is your experience? Do you think it is not possible to hire your talent locally? Have you been able to retain your top talent in second and third tier cities?

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You may read more about human resources in China here:

* 3 Trends in the Chinese Labour Market
* 5 Recruitment Tips for Entrepreneurs in China
* 7 Tips on How to Recruit Managers for SMEs in China
* HR in China: “Accept what you’ve got and model them into what you expect them to be”
* Retaining your Chinese Employee
* 6 Tips on How to Retain your Chinese Talent
* China Stories: Trustworthy Employee… Please, Don’t Go!
* Top Challenge for Foreign Companies in China: Human Resources Constraints
* HR in China: Structure your Needs and Plan your Growth
* Foreign Companies: Sexy No More
* 10 Reasons Why your Chinese Employee is Leaving You
* Why are your Chinese Employees Leaving You?

Receiving Feedback in China. Not easy but possible!

I have frequently heard people complaining about the lack of feedback they receive from their employees or colleagues in China. Most people attributes this to the Chinese education system that does not encourage actively participating and expressing opinions (although I must say that I have also heard that this is starting to change now).

I have entitled today´s tip “Receiving feedback in China. Not easy but possible” because I wanted to share an story that Mr P. M. García Sola, Project Manager China at Kunshan Inautek Automotive Components Co. Ltd. told me some time back. These are his views on why it is so difficult to get feedback from your Chinese colleagues and his own story about fixing this (and at the end of this post there is a summary of the lessons he learnt):

At school we were used to raising our hand and saying “I do not understand that” but you do not get this in China, it’s not well regarded here. This translates later into work life. A machine operator will work eight hours a week with a machine and he may have ideas to improve the ergonomicsor machine functioning. But he will not propose them to his superior. A Chinese employee expects his leader to solve the problems. It is not laziness, convenience or lack of interest. It is how they have been culturally trained.

We need to understand that feedback and information is not going to come the way we are used to and that we need to encourage it and make it happen ourselves.

When I was in Beijing, one of my first tasks was to look for a technical team and train them. The first day I talked to them for eight hours. Any questions? No questions. They would note down absolutely everything, every single word I said even my jokes!

On the third day I had to stay on later for some work and I realized that all the attendants of my training were meeting in a room. They were sharing ideas and debating. They would not dare to ask me, their teacher, their laoshi. The following day I changed my approach. I asked them questions directly: “how would you do this?” “what do you think about this?” The first few times they struggled a bit. You could see the relief on the faces of those who had not been asked. Very temporary relief, though, because I would then turn to them and ask them: “So, what do you think about your colleague´s opinion?” After a few days things got a lot better. I have to admit that it was not easy, but it can be done. You just need to understand their background and facilitate and encourage the way you want the interaction to flow.

Summary of the lessons he learnt:

  1. Lack of feedback or opinion sharing is not lack of interest.
  2. Chinese employees expect their leaders to propose ideas and solve problems
  3. The root of the problem can be attributedto educational and cultural reasons.
  4. Participation can be encourage. It is not easy but possible.
  5. You may need to change your approach and ask specific questions so that information starts flowing.
  6. It is hard work

What is your experience receiving feedback from your work colleagues?

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5 Top Hiring Mistakes in China

I´ve just been watching the webinar “The Talent Management in China and How to Overcome it” presented by talent management expert Michelle LaVallee, Founder and Partner at Management Success in China. The recording is full of good insights and lessons on talent management.You may watch this webinar at China Business Webinars.

On the recruitment topic, Mrs LaVallee emphasizes on the fact that desperate and urgent hiring leads into hiring the wrong person 75% of the times. Today I will share with you Mrs LaVallee´s “Top Hiring Mistakes in China” list and some of her recommendations:

1.Basing decision on resume content and short behavioral based or hypothetical interviews.
Some resumes are just out of this world. Quite frankly, the great majority of them are simply not true. They are made up, there are all kind of mistakes with titles and responsibilities.
Checking those resumes and making sure that they are factual is an incredibly important step to increase your hiring success in China.

2.Using vague job descriptions to recruit and interview.
Most job descriptions are just quickly put together to do some recruiting. They are too long, the employer does not look at them, they are not used in performance reviews, development or coaching. If you are not using them, they are just a waste of time and you may need to rethink that strategy.

Mrs LaVallee explains that the best alternative is to create what she calls a “job scorecard”. A job scorecard is a brief document, could be just two pages an it will cover the following points:
-Identify the mission for the role, in simple language

-Identify 5-7 yearly key accountabilities with specific measures of success and actual deliverables for a High Performer

-Rate Minimal Competencies- the skills you must have to get the job (so you can actually rate the candidate as you are conducting interviews).

3.Not investing in interview training for hiring managers
The most important decisions regarding “talent” are too often based on poorly conducted interviews.It is all based on hypothetical questions and, unfortunately, your interviewees know well how to answer hypothetical questions and know how to give answers that sound great (they have done plenty of interviews!). You need to base the interviews on specific questions on their experience, on what they have actually done and not on “fake questions”.

Some advice to improve your hiring success:
-Invest in interview skill training for all hiring managers

-Make time in your schedule to do tandem interviews (2 people) with your hiring managers

-Observe your hiring managers interview skills

4.Not conducting thorough reference checks
If you do not conduct thorough reference checks you are setting up for failure. There is here the myths that it is not culturally appropriate to do reference checks in China. Reality is quite different as most companies are happy to share their experiences about colleagues and you are able to ask a lot of questions.

5.Failing to look within for promotable talent
There is a lot of talented people in China. There should be a special focus on assessing them early and developing them.

“Talent review” is simple but very useful tool that helps you measure the success of your hiring and promotion decisions (the presentation shows an example of this tool). It helps you understand and track performance, suitability to the job and plan carrier steps and promotions.

What do you think? Are you following the right hiring steps?

If you are interested in this topic you may also like to read the following posts:

* 3 Trends in the Chinese Labour Market
* 5 Recruitment Tips for Entrepreneurs in China
* 7 Tips on How to Recruit Managers for SMEs in China
* Retaining your Chinese Employee
* 6 Tips on How to Retain your Chinese Talent
* 10 Reasons Why your Chinese Employee is Leaving You
* Why are your Chinese Employees Leaving You?

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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?

10 Reasons Why your Chinese Employee is Leaving You

I recently attended an event hosted by Servcorp Shanghai where Christian Groeger and Valourie Xuan, from Fiducia Management Consultants, delivered a presentation entitled “Winning the Talent War (in China) in 2011”.

High staff rotation is a big challenge for companies in China. Mr. Groeger approached the “talent war” drivers from both the employee and the employer’s perspective. Today I reproduce here Mr. Groeger’s insights about drivers and external influences from the employees perspective:

1. Problems with supervisors and leadership
This is a universal driver, which usually does not get that much attention because people are usually not that honest about their personal feelings. Interpersonal problems are easily compounded in intercultural (foreigner/local, returnee/local) settings.

2. Work-Life Imbalance
This issue is rapidly gaining importance, especially with younger employees – the  generation born in the 90’s or 90后 (jiu-ling-hou) as they are called in China. Members of this generation tend to be more self-conscious and have higher expectations about life than their parents generation.

3. Mounting expectations of one-child policy offspring to succeed
Single children have to deal not only with the expectations of their parents, but also their 4 grandparents and further. Often even the extended family contributes financially to the education and upbringing, creating a pyramid of expectations in turn.

4. Overestimation of own role/capabilities
Being used to be the centre of attention, many single children lack a realistic view of their capabilities.

5. Fast-track promotion and salary jumps available through job-hopping
Promotion and salary jumps of more than 20% (for middle management positions) provide a strong incentive to switch in an overheated HR market.

6. Pay inequality in the labour market (up to 300 percent difference in the same job category)
Differences in pay for the same job within the same industry, as well as across industries are 3-4 times more pronounced than in developed countries. This is because of huge gaps in the underlying productivity, as well as market standing of private Chinese companies, FIE’s and state monopolies.

7. Financial pressure for young families (housing, cost of education)
Married couples are expected to move into their own apartment, which puts especially young men looking for spouses under heavy pressure to buy property in order to receive approval by the spouse’s family.  As the cost of education soars, young families also start saving for schooling and university tuition at a reputable university or abroad.

8. Short-term focus and materialism
As young Chinese constantly engage in social benchmarking with their friends and student peers, short-term material gains sometimes count for more than long-term perspectives.

9. Group orientation (leaving together with other team members)
Often entire teams leave a company together with a manager out of stronger linkage to the person than to the company. In some industries this is becoming more customary as in hospitality, where Chefs are expected to bring along their own crew.

10. Increasing attractiveness of state-sector companies and institutions
A few years back, there was a distinctive group of individuals targeted by FIE’s and a different, more “local” group by private and state-owned enterprises. This distinction is gone, now all companies vie for the same pool of graduates and experienced staff.

Have you identified the same drivers?

…Coming soon, “Drivers of the Talent War. Employer’s Reasons

Foreign Companies: Sexy No More

Last week I attended an event hosted by Servcorp Shanghai where Christian Groeger and Valourie Xuan, from Fiducia Management Consultants, delivered a presentation entitled “Winning the Talent War (in China) in 2011”. I will be writing a few posts based on insights from that presentation.

One of the first watch-out points was that foreign companies are no longer the preferred employer for Chinese graduates. It may not be breaking news but the fact is that foreign companies seem to be losing the talent war. The reality on the ground is that state-owned enterprises (SOEs) and private Chinese companies are successfully pitching for that limited resource. I have already mentioned this in a previous post entitled “Top Challenge for Foreign Companies in China: Human Resources Constraints” quoting key findings from this year’s AmCham Shanghai China Business Report.

Mr Groeger shared the results of a survey published in 2010 by Universum. In this report (32.561 participants divided by field of study) graduates expressed their employer preferences. The top results for business graduates were as follows
1. Bank of China
2. China Mobile
3. Procter & Gamble
7. China Development Bank
8. Citi
9. China Merchants Bank
10. SGCC

Do you see a lot of foreign companies in the list? (you can read the Top 100 ranking for 2010 here).
Some other surveys paint an even grimmer picture. An article from China Business Review mentions the results of a survey conducted by (a poll of 200.000 students across 700 universities). The list of top 50 preferred employers included only four foreign companies, down from 21 the previous year. That sounds like a big switch in preferences in just one year.

Do you also feel it is getting tougher?

Human Resources in China: Structure your Needs and Plan for Growth

I’ve just read a very good post at All Roads Lead to China. The article is entitled “Managing a good team in China requires process. Not luck”, and I fully subscribe it. I think Richard Brubaker’s recommendations are universal and apply not just to China but everywhere else in the world.

 As an overall strategy, he tries to answer the following questions:
1. Where are the critical gaps in the organization
2. What skills & talents are required
3. What is the Job Description – and articulate the need in a way that will attract right people
4. How will I ensure I retain them

 From a practical perspective he takes you through some steps to help you build a good hiring strategy (some of them also to help retain your current staff). These steps cover your “homework” before you get out there and start looking for new employees:
1. Have and org chart. Know what people are doing or supposed to be doing
2. Write clear Job Descriptions for all positions. It will help hires and managers equally
3. Ensure your organizational structure allows for professional growth (if not your staff will soon grow demotivated )
4. Share your org charts with your current employees to input their views and insights in your decisions
5. Plan for unexpected growth/ Have a growth strategy in place. Where are the bottle necks?

I would probably add the following comments (insights coming from my interview to German Torrado, who has set up & managed HHRR award winning companies. You can read the complete article here):
6. Invest on the tools that will allow you to identify the right candidates (Do not base your recruitment decision on intuition! There are good tests that will help you make a more rational decision)
7. Define personality profiles required for every position.

I recommend you to read the full article from All Roads Lead to China here

 What do you think?

Top Challenge for Foreign Companies in China: Human Resources Constraints

If you have been reading this blog you will already be familiar with some of the findings from the AmCham Shanghai survey “China Business Report 2010-2011”. The US companies interviewed reported “human resources constraints” or the difficulty to recruit qualified staff  as the number one challenge they face (and it has been at the top of the list since 2006) (see other challenges here). The topic was obviously raised during the panel discussion that followed the survey presentation, and some interesting trends and insights were shared with the attendees:
1.- Everybody is competing for the same talent:
a) talent quality coming out from university is better than ever, but competition to get it is also fierce
b) competition to recruit top talent is coming not only from other foreign companies but also from private Chinese companies and state-owned enterprises (SOEs)
c) domestic companies are “replicating” some of the western formulas that make an employer attractive, like moving their offices to prime real estate so that they make the setting more attractive to top talent (1)
2.- There has been an evolution in the type of talent that is lacking: in 2001 there was a lack of professionals, in 2005 a lack of managers and 2011 sees a lack of executives (2)
3.- It is difficult to motivate Chinese talent (the executives we mention in the previous point) to move out of China in order to expand their “non Chinese experience”. They actually prefer to stay in China (2)

Some of the suggested tips to deal with these issues included:
– Quality working environment
– China specific culture
– Recognizing top employees
– Developing a “company brand”, not just a product brand, to become a more attractive work place

What is your experience recruiting local talent?

If you are interested in reading more about human resources in China, you can also check these links:
* 3 Trends in the Chinese Labour Market
* 5 Recruitment Tips for Entrepreneurs in China
* 7 Tips on How to Recruit Managers for SMEs in China
* HR in China: “Accept what you’ve got and model them into what you expect them to be”
* Retaining your Chinese Employee
* 6 Tips on How to Retain your Chinese Talent
* China Stories: Trustworthy Employee… Please, Don’t Go!

(1) Quoting Mr. Michael Klibaner, National Research Director, Jones Lang LaSalle China
(2) Quoting Mr. Pierre Cohade, President, Asia Pacific Region, Goodyear Tire Management Co

6 Tips on How to Retain your Chinese Talent

This is our third article about recruitment in China. I would like to thank Yan Wu ( from The JLJ Group who has prepared this post for us.

Tips on How to Retain your Chinese Talent

A sound talent retention plan is the key to sustaining one’s success in China. Without talent retention, continued implementation of strategies will be difficult and additional expenditures such as recruitment and training costs will be incurred.

1. Keep salaries competitive with market levels
Salaries often reflect one’s social status in China. Hence, better opportunities are often synonymous with higher salaries. This is a root cause behind the worker retention problem in China. In fact, many talented managers have been poached by competitors on the basis of higher salaries. Thus, it is extremely important to keep salaries competitive with market levels, especially for senior positions.

2. Initiate corporate training program
While competitive salaries offer a short-term solution to retaining talent, effective corporate training allows companies to align their long-term strategies with employees’ career goals. As foreign languages and specific skill sets are very relevant to one’s career progression, professional training in these areas tends to be highly sought after.

3. Provide career development opportunities
Career development is a primary motivation in exploring opportunities at other companies. Succession planning and talent rotation are, therefore, popular and effective tools for career development and employee retention.  Employees invest in the company when the company is investing in them. These retention programs help to identify those with the potential to assume greater responsibility and also to keep the top talent in the organization. However, employers should be careful with mentorship program. Mentors often withhold important skills and knowledge from their apprentices in order to secure their own positions in the company.

4. Develop a sense of ‘family’ through organizational culture
In general, Chinese employees prefer flexible organizations that place greater emphasis on interpersonal relationships. This allows room for creativity and creates a friendly working environment on the basis of helping each other instead of following orders. Thus, it will be beneficial for foreign companies to adapt their cultures and inculcate a greater sense of ‘family’ in their China offices. This will create a sense of belonging to the company and instil greater teamwork among the employees.

5. Keep genuine relationship with employees
Just as relationships are important in managing external parties in China, relationships are also necessary in managing and retaining employees. It is a common mistake for managers to distant themselves away from their subordinates. They should instead build genuine friendships with their subordinates such that the latter will remain loyal to the company even in times of difficulties or despite receiving better offers. However, managers should also note that such relationships work in both ways – they may eventually find it difficult to terminate non-performing employees as a result of the personal relationships that may be involved.

6. Adapt different retention tools based on employee’s years of service
Young employees value more learning opportunity and career development, instead of retirement benefits.  Education reimbursement or corporate training goes a long way in motivation. For employees who have serviced the company for more than five years, they are more concerned about aligning their career with the direction of the company, so they will look out opportunities to participate in strategic decision making.  Relatively for employees who have spent ten years or longer with the company, they are seeking security from work place, such as retirement, medical benefits and long-term incentives.  They won’t be too keen on training or career development.

I hope all these tips help you. I would also love to hear what are the retention strategies that are working for you?

7 Tips on How to Recruit Managers for SMEs in China

This is the second post on a series of articles about Recruitment in China. The JLJ Group has provided the content and recommendations in this post.
You can check the previous post about labour market trends here.

Tips on How to Recruit Managers for SMEs in China
With the current labour trends in mind, there are some helpful rules of thumb to hire managers for SMEs.

1. Look for Passively Available Candidates for Important Positions
These tend to be highly capable individuals who are not threatened by the possibility of retrenchment, and differ from active job seekers who may have been retrenched due to performance-related issues. This is particularly important for positions that are responsible for a company’s profits and losses.

2. Do not depend solely on phone interviews when hiring in China
Phone interviews provide insufficient information for screening candidates. There have been cases of deceit in phone interviews where candidates engaged external help to ace through interviews without actually possessing the required competencies. Moreover, due to China’s great diversity, it becomes even harder to assess the qualities and reliability of a person through a simple phone call. Hence, companies should always conduct face-to-face interviews for better evaluation of candidates and prevent the occurrence of frauds.

3. Do not negotiate directly with candidates if you are unfamiliar with their cultures
This is particularly true for sensitive issues such as salary negotiations. Miscommunications tend to occur in negotiations due to cultural differences in expression.  This has repeatedly resulted in foreign companies dismissing good candidates prematurely. Hence, companies should always negotiate salaries and other sensitive issues via experienced recruiters or HR professionals who are familiar with the local culture.

4. Proficient users of English are clearly desirable, although often require high salaries
Due to the great disparity in English competency levels existing in China, candidates strong in English can easily command premium salaries that are 30% higher than the average employee. This is partly due to the high demand for such candidates from multi-national corporations (MNCs). Therefore, expect to pay a premium for proficient users of English.

5. If an office is located in a 2nd or 3rd tier city, companies are advised to hire candidates from the vicinity
Foreign SMEs have been found to prefer candidates from 1st tier cities even when their offices are located in 2nd or 3rd tier cities, because these candidates are more likely to be able to relate easily to their employers in terms of both language as well as their expectations for standards of living. However, such candidates may find it difficult to adapt to the poorer living conditions of the lower tiered cities. This can eventually lead to high employee turnover rates and become detrimental to the company.

6. Keep in touch with this selected candidate in the time before work begins
Chinese candidates have very strong desires to succeed in the global economy. Hence, it is not uncommon to find t hem continuing to search for better opportunities despite having accepted an offer. Thus, it would be wise for hiring managers to keep in touch with the selected candidates and take note if they are still keen and available to join the company. This will help to avoid unnecessary surprises when the candidate fails to show up on the first day of work.

7. Engage professional recruiters when sourcing for specific talents to fill important positions.
The key differentiating factor between a professional recruiter and an amateur lies in the methodology adopted in their search for candidates. Professional recruiters are in control of the entire process. They understand the specific needs of their clients and are able to accurately identify a best-fit candidate in the shortest possible time. In contrast, amateurs are heavily reliant on the quality of resumes they receive and may not be able to perform when faced with unfamiliar industries.
Besides methodology, intangible soft-skills are also critical in headhunting.  The suitability of a recruiter’s network contributes to the success of searching certain talents. Pursuasion skills are also highly desirable in a recruiter. Best-fit candidates may be passively available instead of being actively engaged in job-hunting. In other words, they are still employed and may require substantial persuasion to leave their established portfolio.

How does this sound? It would be great if you could add your own tips.