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