Category: "Recruiting & HR Tips and Practices"
Executives in China Need Autonomy and Access to Boss
September 15th, 2006By Carol Hymowitz
From The Wall Street Journal Online
SHANGHAI -- On a recent evening stroll, James Rice, a vice president at Tyson Foods and the head of its China operations, wandered into a narrow alley, drawn by the pungent scent of spices coming from a food vendor's stall. The vendor was selling skewers of barbecued lamb coated with cumin, a popular evening snack here.
That detour gave Mr. Rice the idea for a new food product: cumin-flavored chicken strips. "I found just what I was looking for -- an exotic flavor that is authentically Chinese," he says. Within a few weeks, his research-and-development manager had created a new recipe, and members of his marketing staff had begun testing it with consumers. When they got a 90% approval rating, they knew they had a hit. Mr. Rice began selling the new product in just two months.
That quick launch was the result of strong teamwork by his staff. It also reflects the freedom Mr. Rice has been given by superiors at Tyson's headquarters in Springdale, Ark., to build the company's business in China as he thinks best. "When I see a way to modify or create a new product I think we can make money on, I don't have to go through layers of management or wait months to get a decision," he says.
Some of the executives who oversee operations for multinational companies in China have this kind of autonomy. Others must seek approval from bosses located elsewhere for even small decisions, such as making a change in packaging or pricing. Many spend considerable time weighing when to act independently and when to take marching orders from corporate headquarters.
It is the yin-yang management challenge for overseas executives everywhere. But the stakes are higher in China, the world's fastest growing economy, where every multinational company wants to do business. "If you don't have flexibility to respond quickly to new markets or situations -- to make a pricing or flavor change -- it's very hard to compete against Chinese companies, which do react quickly and also have the advantage of much lower fixed costs," Mr. Rice says.
It also can be an operational nightmare when corporate bosses insist on centralized systems. An executive at an industrial-products concern spent months last year arguing with his bosses in the U.S. about an information-technology system they wanted to use globally that wasn't compatible with Chinese characters. They purchased the system, and he had to buy a separate IT system that his employees could actually use.
A manager at a consumer-products company wanted to reduce the package size of a product in order to lower the cost and attract more lower-income Chinese customers. He sent the request to his boss, the vice president of Asia operations, who sent it to the vice president of international, who in turn sent it to senior executives in the U.S. The request was approved, but by then five months had passed and a competitor already had launched a similar product in a small package.
Country managers who focus on what their superiors back home want may not pay close enough attention to local preferences and practices. That can be a fatal error, says Desmond Wong, Americas Coordinating Partner-China at Ernst & Young Americas. "Anyone who manages Chinese employees has to understand that they expect an extra month's pay at Chinese New Year, and if they don't get it, they'll try to find work elsewhere," he says.
Local hires also want assurance that their boss has the ear and respect of his or her boss. "So it's important to persuade top executives to visit China at least once a year," Mr. Wong says. "And if you tell employees before the visit that you want them to look good to the bosses, they'll go extra miles for you."
The most successful executives in China have autonomy, as well as access to corporate chiefs when they need it. Jack Q. Gao, vice president and regional director of Autodesk's operations in China, believes that "to grow in this market, which is so dynamic and unique, I need to be directly supported by top executives who can present one strategy to the government." China's government, he notes, not only sets economic policy but is the largest customer of Autodesk and many other multinational companies.
Since he took his current job two years ago, Mr. Gao, who oversees about 1,600 employees, has opened research-and-development centers in China to create software products tailored for Chinese customers. He also is partnering with local businesses to create new applications for AutoCAD, Autodesk's software design tool. "It's a new business model," he says, and it may help to offset software piracy.
Mr. Gao meets several times each year with Autodesk Chief Executive Carol Bartz, along with the company's chief operating officer, head of global sales and vice president of the Asia-Pacific region. The group, which is known as the China Initiative Steering Committee, is also available to confer about "anything unique or experimental I may want to try," he says, " and gives me a direct channel [to the top] for decision making." Unlike some of his counterparts at other multinational companies, he adds, "I don't have to spend all my time educating corporate executives about China."
The New Science of Hiring
September 13th, 2006Care to dramatically enhance your chance of finding great employees? Trade in your gut instincts for a systematic approach to interviewing, testing, and evaluating job candidates.
What was her company missing? Susan Bowman asked herself that as soon as she plopped into her chair at Tri-anim, a medical-supplies distributor in Sylmar, California. It was two and a half years ago. Bowman had just joined the company as head of human resources, and her highest priority was improving the company's hiring. When she arrived, the HR department was basically shut out of the hiring of salespeople. Bowman wanted to make it more useful, especially after she noticed some hires were fantastic and others were disappointments.
What Tri-anim was missing--and Bowman fortunately recognized this--was something most employers in America have been missing: Conventional job interviews don't work.
A typical interview--unstructured, rambling, unfocused--tells the interviewer almost nothing about job candidates, other than how they seem during a couple of meetings in a conference room. But what are these people like late at night and under pressure? What motivates them? How smart are they? Have they handled tough projects? Do they prefer working alone or are they better with a team? Regular interviews assess barely any of this, and in fact are miserable predictors of job success. In technical terms, they have a .2 correlation with predicting success.
Discouraging, isn't it? It would be--except that industrial and organizational psychologists are on the job, seeking the best ways to evaluate job candidates. A focused three-part approach can make the hiring process as standardized and objective as possible--and can help predict the best performers. The system starts with what is called behavioral interviewing, in which candidates are barraged with tough questions about how they've handled specific assignments and problems. Bluffing becomes close to impossible, and the process is based on facts, not feelings. Interviewing is followed by two kinds of tests: cognitive tests, which measure intellectual ability, and personality tests, which are now sophisticated enough that companies can directly compare candidates with their top performers. The third step is asking candidates to do tasks like the ones they'd do on the job.
Most employers will recite over and over that people are the secret to their success--and given that turnover costs about 1.5 times the salary of the employee who moves on, according to PricewaterhouseCoopers, they'd better mean it. But it's astounding how few companies bother with more than improvised, all-but-meaningless interviews to hire their people. "This is a topic that's been researched to death by the field of industrial and organizational psychology," says Peter Cappelli, management professor and director of the center for human resources at the Wharton School of the University of Pennsylvania. "The amazing thing is how few companies take this seriously. It's kind of mind-boggling that they would undertake such huge investments and not pay attention to what we know about how to pick out the people who are going to be best."
Susan Bowman had been studying some of this research. She was pleased to see that Tri-anim had been using the testing company PSI to assess candidates for some positions. She was less pleased that the test criteria hadn't been updated in six years and that some of the company's hiring managers didn't use the tests. Bowman immediately had PSI reassess the best and worst performers in a number of areas and develop profiles of the top performers. The goal is to compare candidates with the ideal. Tri-anim salespeople, for example, need to be not just energetic and detail-oriented (pretty common in salespeople) but also unusually independent: They spend a lot of time alone.
Bowman began requiring the PSI assessments as a last step in the managerial, IT, and sales hiring processes. They've already turned up surprising results. Recently, a recruiter and a manager were disagreeing over two candidates for a position--until the PSI reports came back. "The results were really staggeringly different. It was a combination of not only skill sets, but that one individual's people skills were so much lower than the manager had anticipated and the other candidate scored much higher," Bowman says.
She has now trained all of Tri-anim's hiring managers in behavioral interviews. "Structured interviews with behaviorally based questions really allow us to drill down," she says. In a daylong session, the managers learned the tenets of behavioral interviews and practiced asking open-ended questions. Though she doesn't use work assessments--and that could increase the company's hiring success even further--these two steps paint rich, objective portraits of candidates. Even the sales hiring managers, who didn't want to abandon their random interviewing tactics, have become believers as turnover has dropped. "We all want to hire the best," Bowman says. "This gives really good, objective information that allows the manager to take the halo off the applicant."
Step 1
In which the bored interviewer turns intrepid interrogator
Other than people's wan complexions beneath fluorescent office lights, there's not much that's consistent in typical job interviews. Topics discussed completely depend on the interviewer, who might spend an hour discussing a candidate's alma mater, the recent weather, or even himself. He could dismiss the candidate before she's even started speaking because she's overweight or overdressed, or he could lose focus because he's having a rotten day. Afterward, the interviewer is left with a resume and a vague sense of...how the candidate acts during an interview. Is she qualified? Dunno, but her resume looks nice. Would she be good at the job? Well, she likes to sail, which is fun.
.2 Correlation between conventional interviewing and successful hiringAs psychologists have pointed out, traditional interviews produce a subjective, acutely narrow view of a job candidate. That view is likely biased--studies have shown interviewers tend to prefer candidates similar to them, judge candidates on fewer criteria than they think they're judging them on, and tend to let biases about matters like race and gender get in the way. "Everybody thinks they're much better interviewers than they are," says Ben Dattner, a New York City industrial and organizational psychologist.
Still, the interview is a brilliant tool if you make certain changes to it. Behavioral interviews have almost triple the correlation of conventional interviews with job success. (To gauge if a hire is successful, academics use measures like the dollar value of an employee's contribution to the company, his or her relative share in overall output, and later performance reviews, promotions, and raises.) Behavioral interviewing involves, by definition, a group of interviewers defining qualities needed for a job, asking candidates to give past examples of how they've demonstrated those qualities, asking the same questions of each candidate, and taking notes throughout. The premise is that what someone has done in past jobs is a superior indicator of what he or she will do in future jobs. It's the same idea behind checking references.
To see how structured interviews work, take a look at Hope Lumber & Supply, where HR chief Bill Vogt credits much of his company's growth to behavioral interviewing. Hope, which is based in Tulsa, brings in $1.2 billion a year selling building supplies to contractors. Eight years ago, when the company was making a fifth of that, Vogt and the owners predicted, correctly, that the housing market was about to surge. If they hired the right managers, they could ride that wave.
Following behavioral-interviewing maxims, Vogt starts by talking to people intimate with the job and deciding what qualities are necessary for it. He has a standard template for what he wants in managers: leadership, a drive to make money for the company and for themselves, ambition, and past operational responsibility. Depending on the challenges of the specific business unit, he'll alter the template.
Then he comes up with open-ended questions that get at the desired qualities. Behavioral interviews use questions that are rooted in the past--"Tell me about a time when"--rather than hypotheticals--"What would you do if?" Vogt digs deep into his candidates' work experience. "I get into the current operation," he says. "What did you inherit? What were the sales margins, accounts payable, percent current status, inventory like? What did you do with that, what did you achieve? Clearly, we're looking for achievers and winners and people very knowledgeable of their operation." Specific questions like these, in addition to assessing candidates' skills, combat resume fraud--it's pretty difficult to lie about sales margins and inventory turns.
Ideally, a team of people will meet with the candidate. That minimizes the importance of any one person's reaction, good or bad. Vogt arranges a panel interview for general questions, and then sets up one-on-one interviews focused on specific areas. Vogt asks about EEOC compliance and OSHA incidents; the CFO asks about accounting details; the COO asks logistics questions. In any behavioral interview, questions should be job-related, to keep the interview relevant and to avoid discrimination complaints. To the extent possible, every candidate should be asked the same questions. Interviewers should take notes, and should get together to discuss their views just after the candidate leaves.
Step 2
In which the candidate relives college-entrance tests
As helpful as behavioral interviews are, they're even more effective when combined with employment tests, many of which are now administered online. These are given to candidates to assess either cognitive abilities (cognitive tests are filled with SAT-like verbal and math questions) or personality traits (personality tests include preferential questions like "Would you rather spend a night at home alone than go to a crowded party?" or biographical questions like "Were you a class officer in high school?"). While cognitive tests have a slightly closer correlation with job success, personality tests are useful both as a basis for interview questions and for subsequent development. For the best results, companies should use both sorts of tests or a single test that combines the two elements. (For a roster of tests, see "Choose Your Weapon".)
Many testing companies today can do impressive comparisons of candidates against existing employees--the goal being to essentially clone top performers. "The assessments allow you to really identify what is different between our stars and our slugs," says James Hazen, an organizational psychologist and the owner of Applied Behavioral Insights, a consulting firm based in Wexford, Pennsylvania. Hazen uses several tests with his clients.
2,500 Number of cognitive and personality tests on the marketAssessments can turn up some fascinating findings. Dayton Freight Lines, a trucking company based in Dayton, Ohio, had been having trouble with drivers. Customers reported that some drivers were rude. Some drivers were complaining over their CB radios. Some workers' productivity was falling, or they were late on their deliveries. Denise Noel, the director of quality at Dayton Freight, was stumped. These drivers all had good qualifications and had interviewed well, yet she saw no way to predict who would be an outstanding performer on the road. Finally she brought in a company called Hogan Assessment Systems and had the company present its extensive research on truck drivers.
Noel had assumed all truck drivers were similar. But Hogan had found two distinct truck-driver profiles. The top city performers are social and gregarious, great with customers--which makes sense, because they pick up and drop off multiple times a day. The best line-haul drivers are quiet and introspective--which is good for people who never see a customer. Noel has adjusted her hiring now, having candidates take the Hogan assessment to find the best job for them. Turnover for drivers has fallen to 22 percent (the industry average is 116 percent). "You just think a driver is a driver, and that's not true," Noel says. "We just didn't look at that part of the hiring process enough."
Discussing the results of assessment tests with candidates--or even giving them the full report--is increasingly popular. "The trend has really been to lay it all on the table between the second and third interviews," says James Hazen. This gives candidates the chance to explain themselves, gives the interviewer a chance to address weak spots, and, if someone is hired, points out ways he or she might best be managed.
There are, by some estimates, 2,500 employment tests on the market. One of the biggest mistakes companies make is using the wrong test. A classic example is the Myers-Briggs Type Indicator, that ubiquitous test that sorts people into 16 personality categories. Myers-Briggs, a test created by a Pennsylvania woman who was fascinated by how her merry personality differed from that of her straightforward husband, has a weak record of predicting job success. Indeed, its publisher warns that "It is unethical and in many cases illegal to require job applicants to take the Indicator if the results will be used to screen out applicants."
With so many tests available, it's not a surprise that employers use tests meant for other purposes, like Myers-Briggs (which is fine, by the way, for employee development), or even design their own tests. But choosing the wrong one can mean dismissing qualified candidates and even getting sued for discrimination. Employers need to know whether a test is appropriate for hiring, what it measures, and how it's designed, along with making sure it's legal. Psychologists evaluate a psychological test by two measures, called reliability and validity. Reliability examines whether items that supposedly measure the same thing (agreeableness, say, or conscientiousness) correlate highly with one another. Validity asks, in this case, for proof that scores on tests are related to success in specific jobs. "If you go out on the Net and look at the hundreds of tests out there, a very small percentage have validity data," says Seymour Adler, a senior vice president at Aon Consulting and a teacher of organizational psychology at New York University.
Recent psychological research supports going beyond validity and reliability data. First, both for legal purposes and to ensure usefulness, make certain the test is designed for selecting--as distinct from developing or training--employees. It should be created or adapted for the workplace, not for clinical or medical diagnosis. Pre-employment tests are more predictive when they compare an individual's score against a group (they use "normative" scales, in the lexicon) instead of just presenting it on its own ("ipsative" scales). For the best results, too, employers should continue to evaluate and revalidate the tests within their companies to make sure they are still predicting top performers.
A note about testing for hourly employees. There, employers might care most about who's punctual and honest. Rock Bottom Restaurants, a 29-store chain based in Louisville, Colorado, switched three years ago from a pencil-and-paper application for its hourly employees to a test from Unicru. (Kenexa and PreVisor are two other assessment companies focusing on entry-level and hourly applicants.) For waiters, it tests for sociability and team orientation; for the back of the house, it asks applicants whether they've worked in on-their-feet jobs before; for all job candidates, it looks at integrity. Applicants in each pool--cooks, bartenders, and so on--are ranked according to their assessment scores, which gives the Rock Bottom management a good starting point. "It's not 100 percent predictive, and that's why we interview people, but it's at least an indicator," says Ted Williams, senior vice president of the brewery division at Rock Bottom. Rock Bottom's turnover for its 6,000 hourly employees has dropped by 20 percent, which Williams thinks is largely because of the system.
Step 3
In which the process starts to imitate finding World War II spies
In 1943, a pretty countryside residence in Fairfax, Virginia, was renamed Station S and repurposed as a testing site for Office of Strategic Services recruits. In an atmosphere of intense secrecy--candidates were stripped of their clothes and given military fatigues, then driven in a windowless van to Fairfax, where they would invent a cover story and fake name--the OSS studied their performance during job simulations. One test had "couriers" giving candidates a map, which they'd need to memorize in eight minutes. Other exercises included interrogating ersatz prisoners of war, devising propaganda plans, and recovering papers from an agent's room (and, aggravatingly, getting interrupted by a rifle-wielding "German" midway). The tests went on for three and a half days.
Inspired by that work-based approach, corporations such as AT&T starting using assessment centers to select executives. By the late 1950s, the candidate in the gray flannel suit was performing in-basket assessments in which he'd be graded on how he handled a set of letters, papers, tasks, and telephone calls that mimicked what he'd get on the job.
Today's work samples are essentially updates of those AT&T tests. Work samples are a proven predictor of success and can be simple to arrange. A company can design its own by laying out the criteria for a job and asking a candidate to perform a task based on those criteria. For example: "Explain how you would sell this product to Target, step by step," or "Tell me how you'd improve these lines of C++ code."
4 Number of weeks capital H Group dedicates to hiring a single consultantAt Sterling Communications, a technology PR firm in Los Gatos, California, CEO Marianne O'Connor knows her account reps have to be good at understanding technical information, at figuring out how to pitch to a media outlet, and at writing. Logical enough. So she's started giving job candidates a two-hour test before she even meets with them. It describes a client's technology, identifies a target publication and its readership, and asks a candidate to distill the salient technical points and write a pitch to the magazine. Three staffers review the pitch, and that decides whether the candidate will get an interview. "If they can't write in my business, it's not going to work," O'Connor says.
On the complicated end of the work-sample spectrum, Seymour Adler, the Aon Consulting psychologist, has created a four-hour online exercise called Leader, which Motorola and other companies use to test would-be executives. Candidates see an in box with e-mails that came in the night before, answer phone calls and listen to voice mails, and have access to reports and research. They're asked to tackle tasks like ones they would see on the job, such as solving a conflict between two underlings or leading a team of workers in creating a presentation for the CEO. At the end, Adler's team assesses the candidates on whatever areas the company is curious about--decisiveness, leadership, and so forth--and issues a report to the company. A company called Development Dimensions International offers similar exercises; these take place at one of its 75 assessment centers rather than online. Half-day and full-day job simulations cost from $4,000 to $12,000.
And finally...
Put it all together-- without riling your candidates
Dan Weinfurter runs Capital H Group, a human resources consulting firm in Chicago, though he's not an HR guy but an entrepreneur at heart. He founded the accounting and consulting firm Parson Group, which hit No. 1 on the Inc. 500 in 2000 with a four-year growth rate of 27,992 percent, and sold it four years ago for $55 million. Before that, he was second in command at Alternative Resources, an IT staffing company that was a two-time Inc. 500 honoree. For all he knew about running a company, however, Weinfurter came to the conclusion that he didn't know much about hiring. "I thought I was pretty good at interviewing," he says, "but I was no better, and maybe was worse, than other people. If you're just going through it and trying to guess, you'll guess right some of the time. But you won't be able to guess right often enough to grow a business from scratch."
So at Capital H, he unleashed his on-staff psychologists, who created a hiring system that's a textbook example of the latest hiring research. Let's say Capital H has an opening for a consultant. A group of candidates are interviewed by telephone by the HR manager (or by Weinfurter himself, if the position is very senior), and candidates with appropriate skills and backgrounds are then passed to a local office to meet with local executives. He or she takes the Watson-Glaser Critical Thinking Appraisal, a popular and well-validated cognitive-ability test, and the Devine Inventory, which measures the applicant's traits and tendencies against those of existing Capital H consultants. (See "Let's Turn the Tables" for a sample of questions from Watson-Glaser.) About one in four candidates are then flown to Chicago headquarters, where they spend a full day in behavioral interviews with multiple executives. Finally, applicants are asked to choose a presentation they've done in the past and give that to a group of Capital H execs back at the local office in a work-sample exercise. The executives discuss the candidates until they reach consensus.
Weinfurter figures he spends up to four weeks, and tons of his workers' billable hours, per interview. But he estimates the cost of hiring a bad consultant can be in the millions, considering not just salary but also missed sales and lost clients. "I think the hiring process is the most important process in business, but it's probably the least disciplined in terms of how it's executed across American business," he says.
People who study hiring, and business owners who are passionate about the subject, love to see systems like Capital H's. Candidates may not feel the same way. Certainly you'll have to make concessions in some cases--say you're trying to recruit a CFO from a rival company. "If they've already done a job like this, what's the point of the test? It's not obvious you want to give this to everyone and for every job," Peter Cappelli at Wharton notes. In every case, candidates will have a better attitude toward the process, and the company, if they believe that the hiring methods are respectful, fair, and smart. So use appropriate cognitive tests--don't ask accountants basic math questions. Use only tests designed for the workplace, so that the questions clearly deal with business situations and seem relevant. And explain why you're adopting an approach that to some candidates will seem overwrought: to be fair and quantitative.
There will always be skeptics about this approach to hiring, people who believe their gut tells them more than any structured interview or test could. And while Bill Vogt or Denise Noel or Dan Weinfurter could offer testimonials about the new science of hiring, the point is not that this system has worked in a handful of cases. It's that hundreds of studies have confirmed that testing and structured interviews do a much better job at finding good workers than do regular interviews. Given that, the gut-feel proponents start to seem like people who eschew antibiotics in favor of good old-fashioned bloodletting.
Maybe people don't like to believe that something as crucial to a business as hiring can be reduced to a series of processes. After all, we rely on feeling and judgment to get through our lives, whether to fall in love, keep safe on dark streets, or assess business partners. This science-based approach isn't perfect. It won't anoint every superstar, and it won't bar the door to all of the mediocre players. What it will do is give employers a fuller, more balanced, and fairer view of candidates, and give them a much better shot at hiring the best people. It's still up to employers to make the call on whether to hire or to pass, and that's where feeling and judgment still play a part. But that part now comes after employers have gathered all of the facts.
Stephanie Clifford is a staff writer.
Lack of professionals hampers China
August 18th, 2006By Kelly Proctor and Tina Qiu Bloomberg News
Published: August 16, 2006, Shanghai
In the three years since receiving his engineering degree in Shanghai, Jason Zhang has switched jobs twice and quintupled his salary as overseas companies scour China for professional workers.
"If you have language skills, if you have technical skills, it's very easy to find a job," says Zhang, 26, who speaks fluent English and now writes software for International Business Machines. "There are more jobs than even two years ago because of the outsourcing from Europe and the U.S."
However, Zhang is an anomaly in China and his successful job moves illustrate the large demand in China for qualified workers.
Employers like General Electric, Freshfields Bruckhaus Deringer and Ernst & Young are struggling to find engineers, lawyers and accountants as Chinese universities fail to turn out qualified professionals, especially those who speak English.
The shortage is threatening expansion plans and driving up salaries in China, the world's fastest-growing major economy.
"We could argue that more than water, energy and infrastructure, talent is the greatest constraint on China's growth," said Andrew Grant, who heads the greater China office of McKinsey, a consulting firm that advises two-thirds of the Fortune 1000 companies.
Fewer than 10 percent of Chinese job-seekers are qualified for accounting, finance and engineering jobs at overseas companies, according to a November report by McKinsey that was based on interviews with more than 80 human resources executives. Most lack English skills and a "cultural fit," the report said.
Ernst & Young, which plans to expand its work force in China fivefold, to 25,000, in the next decade, has turned down clients because it cannot hire enough accountants, said Anthony Wu, a senior adviser and former chairman of the Ernst & Young office in China.
The need for people qualified to work in the financial field shows no sign of decreasing. China recently lifted a one-year ban on share sales, and public companies are required to meet international accounting standards by next year, spurring demand for accountants.
The country has 69,000 licensed accountants and needs more than 300,000, said Chen Yugui, secretary general of the Chinese Institute of Certified Public Accountants. China did not have a university major in certified public accounting until 1994.
"The gap between the need and the supply is still huge," Chen said.
Other professions are suffering, too. Even though a third of China's university graduates receive engineering degrees, international companies cannot find enough engineers. Many graduates are not qualified because they are steeped in theory and have not learned to handle projects or work in a team, McKinsey wrote in its report.
Freshfields, a law firm based in London that has offices in 18 countries, is searching for qualified lawyers as part of an expansion that will add as many as 65 attorneys in China during the next five years, said Mary Wicks, human resources director for Freshfields in Asia. Freshfields is recruiting lawyers who are fluent in Mandarin and have international law degrees.
China has 120,000 lawyers, or one for every 10,800 people, compared with a ratio of one to 375 in England and Wales. "Competition is tough," Wicks said.
Companies are increasing pay and benefits to attract talented workers. The average salary in China for accountants at firms like Ernst & Young and Deloitte & Touche Tohmatsu rose 30 percent to $9,000 last year, according to a survey by Mercer Human Resource Consulting, based in New York.
Ernst & Young is offering more vacation time and flexible work schedules, said Catherine Yen, the firm's head of human resources for China. In the first half of this year, average annual wages in urban China rose to $1,160, or 14.3 percent, from a year earlier, China's National Bureau of Statistics reported.
SHANGHAI In the three years since receiving his engineering degree in Shanghai, Jason Zhang has switched jobs twice and quintupled his salary as overseas companies scour China for professional workers.
"If you have language skills, if you have technical skills, it's very easy to find a job," says Zhang, 26, who speaks fluent English and now writes software for International Business Machines. "There are more jobs than even two years ago because of the outsourcing from Europe and the U.S."
However, Zhang is an anomaly in China and his successful job moves illustrate the large demand in China for qualified workers.
Employers like General Electric, Freshfields Bruckhaus Deringer and Ernst & Young are struggling to find engineers, lawyers and accountants as Chinese universities fail to turn out qualified professionals, especially those who speak English.
The shortage is threatening expansion plans and driving up salaries in China, the world's fastest-growing major economy.
"We could argue that more than water, energy and infrastructure, talent is the greatest constraint on China's growth," said Andrew Grant, who heads the greater China office of McKinsey, a consulting firm that advises two-thirds of the Fortune 1000 companies.
Fewer than 10 percent of Chinese job-seekers are qualified for accounting, finance and engineering jobs at overseas companies, according to a November report by McKinsey that was based on interviews with more than 80 human resources executives. Most lack English skills and a "cultural fit," the report said.
Ernst & Young, which plans to expand its work force in China fivefold, to 25,000, in the next decade, has turned down clients because it cannot hire enough accountants, said Anthony Wu, a senior adviser and former chairman of the Ernst & Young office in China.
The need for people qualified to work in the financial field shows no sign of decreasing. China recently lifted a one-year ban on share sales, and public companies are required to meet international accounting standards by next year, spurring demand for accountants.
The country has 69,000 licensed accountants and needs more than 300,000, said Chen Yugui, secretary general of the Chinese Institute of Certified Public Accountants. China did not have a university major in certified public accounting until 1994.
"The gap between the need and the supply is still huge," Chen said.
Other professions are suffering, too. Even though a third of China's university graduates receive engineering degrees, international companies cannot find enough engineers. Many graduates are not qualified because they are steeped in theory and have not learned to handle projects or work in a team, McKinsey wrote in its report.
Freshfields, a law firm based in London that has offices in 18 countries, is searching for qualified lawyers as part of an expansion that will add as many as 65 attorneys in China during the next five years, said Mary Wicks, human resources director for Freshfields in Asia. Freshfields is recruiting lawyers who are fluent in Mandarin and have international law degrees.
China has 120,000 lawyers, or one for every 10,800 people, compared with a ratio of one to 375 in England and Wales. "Competition is tough," Wicks said.
Companies are increasing pay and benefits to attract talented workers. The average salary in China for accountants at firms like Ernst & Young and Deloitte & Touche Tohmatsu rose 30 percent to $9,000 last year, according to a survey by Mercer Human Resource Consulting, based in New York.
Ernst & Young is offering more vacation time and flexible work schedules, said Catherine Yen, the firm's head of human resources for China. In the first half of this year, average annual wages in urban China rose to $1,160, or 14.3 percent, from a year earlier, China's National Bureau of Statistics reported.
SHANGHAI In the three years since receiving his engineering degree in Shanghai, Jason Zhang has switched jobs twice and quintupled his salary as overseas companies scour China for professional workers.
"If you have language skills, if you have technical skills, it's very easy to find a job," says Zhang, 26, who speaks fluent English and now writes software for International Business Machines. "There are more jobs than even two years ago because of the outsourcing from Europe and the U.S."
However, Zhang is an anomaly in China and his successful job moves illustrate the large demand in China for qualified workers.
Employers like General Electric, Freshfields Bruckhaus Deringer and Ernst & Young are struggling to find engineers, lawyers and accountants as Chinese universities fail to turn out qualified professionals, especially those who speak English.
The shortage is threatening expansion plans and driving up salaries in China, the world's fastest-growing major economy.
"We could argue that more than water, energy and infrastructure, talent is the greatest constraint on China's growth," said Andrew Grant, who heads the greater China office of McKinsey, a consulting firm that advises two-thirds of the Fortune 1000 companies.
Fewer than 10 percent of Chinese job-seekers are qualified for accounting, finance and engineering jobs at overseas companies, according to a November report by McKinsey that was based on interviews with more than 80 human resources executives. Most lack English skills and a "cultural fit," the report said.
Ernst & Young, which plans to expand its work force in China fivefold, to 25,000, in the next decade, has turned down clients because it cannot hire
CHINA EMPLOYMENT HANDBOOK
August 11th, 2006CHINA EMPLOYMENT HANDBOOK
Article by David Cui
Attorney at Law
Employers either domestic or foreign are expected to cope with the increasingly complex legal framework that now governs China employment law. Ignorance of the law can lead to complaints and even the possibility of costly legal action. The China Employment Handbook unravels this web and brings all the relevant information together.
Written by the experienced lawyer in the field, The China Employment Handbook is a goldmine of practical, hands-on expert advice. It identifies both the legal essentials (what employers are required to do), the non-legal essentials (actions that are not legal requirements but are fundamental for effective people management) as well as how to protect both parties interests and rights. Topics include: staff recruitment, writing employment contracts, paying staff, Working hours and holidays, writing a staff handbook, personnel records and data protection, handling discipline and staff grievances, terminating employment, welfare and benefit, working with trade unions, trade secret production, secondment and individual income tax.
Staff Recuitment
Most foreign corporations choose not to directly employ local Chinese employees. Under China - PRC employment law a foreign investment enterprise such as a WFOE can enter into any employment contract with local PRC staff, An FIE may enter into employment contracts directly with PRC or non-PRC nationals and would normally deal with the settlement of salaries and other statutory benefits due to its staff directly. Under China PRC employment laws a WFOE can enter into individual labor contracts with each individual PRC employee and is required to submit the labor contracts for certification by the local labor bureau.
As to a representative office which must employ local staff through an authorized foreign enterprise service corporation such as Foreign Enterprise Service Company (FESCO). The local staff working in a representative office (RO) is technically speaking not employees of the representative office, but employees of the foreign enterprise service corporation seconded to the representative office. This peculiar feature does not carry much practical significance in terms of the actual performance of work by employees.
RO will have to enter into a contract with FESCO for the relevant PRC national to provide services to RO. The salary and other statutory benefits due to such RO personnel may be settled through FESCO which will charge a fee for handling such matters. RO and the relevant PRC national may enter into a supplemental contract regarding the details of the terms and conditions of the employment.
RO personnel may be non-PRC nationals who are employees of the foreign company but seconded to RO. A non-PRC national seconded to RO as the chief representative or an ordinary representative would continue to be employed under a foreign employment contract with the overseas employer.
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Employment of Expatriates
A foreign national seeking employment in China and applying for the visas and permits must:
• be at least 18 years of age and in good health;
• possess the necessary professional skills and job experience required for the intended position;
• not have a criminal record;
• have an employer;
• hold a valid passport, or other international travel document which can serve in lieu of a passport; and There are four steps to employment of a foreign national in China.
1. Obtaining an employment permit
The employer must first file an employment application with local labor authorities in accordance with the Regulations for Employment of Foreign Nationals in China, and the Regulations for Employment of Taiwan, Hong Kong and Macao Residents on the Mainland. A foreign national may only be recruited after the employer is licensed.
Since provincial and local labour departments have considerable autonomy in employment matters, procedures vary from region to region. It is important to bear this in mind when preparing to work in China.
For representative offices in China, there is no need to apply for an employment permit in hiring a foreigner as its chief representative. The employer must, however, seek approval from the appropriate approval authority in China. The authority will issue a working card for the employee and based on this the employee can apply for an employment visa.
2. Obtaining an employment visa
Upon approval and issuing of an Employment Permit, of the P. R. China for Foreign Nationals, the authorized organization shall issue a verification notice and a permit. The foreign national then shall apply to a Chinese Embassy or Consulate General abroad for the work visa against the permit, verification notice and an effective passport.
3. Obtaining an employment certificate
The enterprise shall apply to the local labor authorities to get an employment certificate for the foreign national against the permit, the employment contract signed with the foreign national and an effective passport within 15 days after the foreign national enters China.
The validity of the employment certificate will be restricted to the region as specified by the local labour department.
4. Obtaining a residence permit
A foreign national who has already an employment certificate shall apply to the public security authorities for a residence permit against such a certificate. In case of employment of Taiwan, Hong Kong and Macao residents, the enterprise shall report to local labor authorities and receive an employment certificate upon their approval. A Taiwan, Hong Kong and Macao resident who have already been approved to work in Chinese mainland shall apply local public security bureau for a temporary residence against the employment certificate within 30 days of entering China.
Employment restrictions
Laborers shall not be discriminated against in employment, regardless of their ethnic community, race, sex, or religious belief. China's National Labor Law forbids employers to hire workers under 16 years of age and specifies administrative review, fines and revocation of business licenses of those businesses that hire minors. Laborers between the ages 16 and 18 are referred to as "juvenile workers" and are prohibited from engaging in certain forms of physical work including labor in mines.
Employers must also implement occupational health and safety programs in the workplace, and conduct regular physical examinations for employees in hazardous occupations.
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Writing employment contracts,
Before both sides sign the employment contract, either party should talk to a lawyer. It would cost you a lot less to avoid the problems by getting a lawyer to review it in the first place as they can comment on what IS in the contract rather than what MIGHT be in.
Term of Contract
In China, the term of an employment contract is either fixed term, flexible term or taking the completion of a specific amount of work as a term. In case an employee has worked in the same organization for ten years or more and the parties involved agree to extend the term of the employment contract, the employee has the right to ask for a contract without a fixed term.
Form and Main Clauses
All job agreements in China must be made in writing, not orally. The latter is not legally binding under the PRC Labor Law. Please beware that, under China law, the employee still have powerful employee contract rights even without a written contract conditioned that he/she has the evidence to prove the employer’s payment on a regular basis or the timecard which can also be considered to be a contract.
The contract in writing generally contains the following clauses:
Required clauses: term of a labor contract, work assignment, labor protection and working conditions, labor remuneration, labor discipline, conditions for the termination of the labor contract and liabilities for the violation of the labor contract;
Agreed clauses: probation term, business secrets, training, modification of contact and so on;
Specific agreement: agreements on post, confidentiality, training, retirement, lay-off and lengthy holiday.
Collective Conract
The staff of an enterprise may conclude a collective contract with the enterprise on matters relating to employment remuneration, working hours, rest and vacations, occupational safety and health, insurance and welfare. It is not a mandatory requirement for foreign investment enterprises to sign such contracts and which do not replace individual contracts, but provide a framework that must be observed in the individual contracts.
Language
The contract may be signed in a Chinese and a foreign language version, but in case of discrepancies, the Chinese version controls. Only the Chinese version can be registered.
Employee’s Negotiation Tips
If some of the phrasing is confusing, the employees are advised to ask your company what certain things were when you are going to sign. It is employer’s responsibility to disclose what their contract implies and made it in writing. If they lie or mislead you then you have a case against them. Though, if they are a good company they would be more than happy to clarify the contract with you.
In addition, if you (employee) do wish to make a change to the contract and not want to reject their offer be sure to do the following. Say that you are continuing to consider their offer and are not rejecting their offer but you wish to suggest the following change... Doing this ensures that you have legally protected your position by not rejecting their offer, but can still "suggest" changes to the contract without the contract becoming null and void before you even sign it.
Probationary Period
The purpose of set up a probationary period is to enable the employer to decide whether the worker is suitable before he/she is taken on staff.
This is not mandatory in China. Employers may require a probationary period. The term of the probationary period varies in correspondence with the term of the contract, but the maximum probationary period shall not exceed six months. If a contract term is less than one year, the probationary period is one month. If the term ranges from one year to three years, the probationary period would be no more than three months. The longest period will be six months if the contract is more than three years. During this period, either employers or employees may terminate the contract.
According to Chinese Law, a separate probationary contract will not be valid, and in the event of a dispute, this type of contract will be treated as a formal contract of employment.
The enterprise may terminate its contract with an employee who does not meet requirements during the probationary period.
Invalid Labor Contract and Its Effect
A labour contract concluded in violations in laws or administrative decrees, or by resorting to such measures as cheating and intimidation is considered invalid. An invalid labor contract shall have no legal binding force from the very beginning of its conclusion. The invalidity of a labour contract shall be confirmed by a labor dispute arbitration committee or a people's court.
Where a part of a labor contract is confirmed as invalid and where the validity of the remaining part is not affected, the remaining part hall remain valid.
In accordance with the Measures Governing Compensation for Losses Resulting from Violation of Labor Contract Stipulations of the Labor Law of PRC (Enacted as of May 10, 1995), if the employing unit is responsible for invalid or partially invalid labor contracts, the employee under which shall be entitled to the compensation for the losses.
Liability Provisions under China Labor Law
The Labor law generally emphasizes civil liability for breach of contract as and incentive to compliance with contractual obligations in place of administrative sanctions. In the law, disciplinary violations are treated as a breach of contract, entitling the employer to terminate the employee (Article 25), rather than as a violation of administrative regulation. The employer may no longer prevent a worker from quitting by refusing permission, but may sue the worker and/or his new employer for damages.
The employer and the employee may agree to stipulate the compensation or damages clause in the labor contract to remedy the losses brought by either party’s violation.
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Compensation
In the event that either party breaches any of the provisions of this Contract and this results in the other party incurring losses, the party in breach shall be liable to compensate the other party for the corresponding losses;
Damages
If the employee terminates the contract earlier, other than as provided in law or clauses of the contract, the employer shall have the right to claim a certain amount of money as damages.
Please do understand that there are breaches and material breaches each which allow different remedies, therefore both sides should specify clearly and specific about the definition or scope of the breach and the damages or compensation thereof.
Implementation Rules of Shanghai Employment Contract
Regulation of Shanghai Municipality on Labor Contract adopted by the Session of the Stand Committee of the Shanghai People's Congress, came into effect on May 1st, 2002. In late April, 2002, the Shanghai Administration of Labor and Social Security issued the Notice on Several Issues regarding Implementation of Shanghai Municipality Employment Contract Regulations (the "Notice") to clarify and interpret the Regulations.
Jurisdiction and Majors
The Regulation provides the details for the conclusion, performance, alternation, dissolution and termination of the labor contracts within the Shanghai area.
Definition of Employer and Employee
According to the Notice, "employers" subject to the Regulations include all types of for-profit enterprises, sole proprietorships, incorporated and unincorporated non-profit organizations (the "employer") and all government agencies in Shanghai municipality.
Domestic workers, professional insurance agents, full-time students who work on a part-time basis, and those who provide independent services are not protected under the Regulations.
It should be noted that although the regulation is ambiguous on its applicability to the contracts involving non-PRC citizens or those from Hong Kong, Macau and Taiwan, the Regulation shall deserve the attention due to the special mandatory nature of Labor Contract Law of PRC rather a kind of contract under the Contract Law of PRC.
Confidentiality and Business Secret
The regulation also provides that the labor contract parties can include confidentiality clause in their labor contracts or reach secret information agreement separately.
Penalties
For laborers who are in breach of the service period or trade secret, the penalties can be imposed.
Formation and Workers type
Besides, the regulation also stipulates that the labor relationships shall be established as long as the obligation has been performed in spite of the conclusion of the labor contracts. Special articles for non-fulltime worker, in other words, worker by hours have been included in the regulation.
Paying Staff
The Labour Law provides a minimum wage requirement, which is determined at a provincial level. For example, as of 1 July 2004, the hourly minimum wage for part-time workers is RMB6.8 (including all social insurance contributions) in Beijing and RMB5.5 (excluding all social insurance contributions) in Shanghai. However, these municipalities only regard employees who work not more than 4 hours each day as part-time workers. By way of comparison, the monthly minimum wage for full-time workers is RMB545 (excluding all social insurance contributions) in Beijing and RMB635 (excluding all social insurance contributions) in Shanghai.
The 1993 Regulations on Minimum Wages in Enterprises (amended in October 1994) require all provinces, autonomous regions, and directly administered municipalities to set minimum wage standards and report them to the Ministry. Employers that fail to meet these standards may be ordered by the Chinese Ministry of Labor and Social Security (MOLSS) and/or its local counterpart to pay the outstanding remuneration and penalty in the amount of 100% to 500% of the outstanding remuneration to its employees. This is substantially more than under the Old Regulations, which provided for more lenient penalties (i.e., 20% to 100% of the outstanding remuneration). Employers must also deduct and withhold employee individual income tax, social security and related payments. Its purpose was to protect workers from market forces that would drive the income of the lowest paid workers below a fair and decent level.
It is worth noting that wages in China in theory are subject to “collective bargaining” between representatives of employers and employees (at least in cases where the labor union so requests, provided that the company has commenced business operations). The employer should also hear the labor union’s opinion in the board of directors before making any resolution on personnel-related matters such as wage levels.
The mandated minimum wages are formulated by the relevant local authorities and vary from location to location.
Payment Time and Means
Wages shall be paid monthly to laborers themselves in the form of currency. The wages paid to laborers shall not be deducted or delayed without justification. Enterprises should pay monthly wages in cash to their workers at least once a month. Workers employed on an hourly or weekly basis may be paid daily or weekly. Enterprises should pay temporary staff or project-based staff immediately after they have completed their job according to the relevant agreement or contract.
Welfare and benefit
The employing unit and laborers must participate in social insurance and pay social insurance premiums in accordance with the law. Employers must pay living subsidies and provide medical treatment allowances for all PRC employees. Employers and employees must also participate in the PRC social insurance system for unemployment, old age pensions, medical treatment, work-related injuries and maternity care. In addition to these mandatory subsidies, employers may also introduce incentive schemes such as bonuses or allowances. These schemes must be paid out of an employee bonus and welfare fund which is created from the employer's after-tax profits.
For example, both employers and employees must contribute to a workers' pension fund. The employer is required to contribute 20% of a staff's monthly salary, while the employee contributes 8% of his or her monthly pay; similar payments are made to medical insurance schemes with employers forking out the larger share. But such contributions vary from region to region. Foreign firms tend to provide more generous medical plans than their local counterparts to attract staff and both employers and employees also contribute to a national scheme set up to help the jobless.
Working hours and holidays
China practices an 8-hour workday, 5 days a week, a 40 hour work week working hour system. (Article 36: The state shall practice a working hour system under which laborers shall work no more than eight hours a day and no more than 40 hours a week on average) (as of May 1, 1997)
Restrictions apply to overtime work. The employing unit may extend working hours due to the requirements of its production or business after consultation with the trade union and laborers, but the extended working hours for a day shall generally not exceed one hour; and such extended hours shall not exceed three hours a day and only under the condition that the health of the laborer is guaranteed. However, the total extension in a month shall not exceed thirty-six hours.
This means that overtime work should never exceed three hours a day, making the longest legal shift permitted 11 hours. It is illegal to work more than 9 overtime hours a week. That caps the longest legal workweek allowed at 49 hours.
Under the PRC Labor Law, generally overtime pay is to be 150% of the normal base wage, 200% for work on non-holiday rest days when substitute rest cannot be arranged, and 300% for work on public holidays.
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Employees’ leave
The statutory holidays are provided in the PRC Labor Law, including New Year’s Day, Lunar New Year’s Day, International Workers’ Day, National Day and other public holidays as provided in the PRC laws and regulations.
Employees are only entitled to annual leave after one year's service with the same employer. The amount of annual leave varies according to work obligations, qualifications, and other factors, but normally does not exceed two weeks a year. Employees are also entitled to home leave if they are required to live away from their spouse or parents. Employees visiting their spouse are entitled to 30 days home leave per year. Home leave to visit parents is either 20 days per year or 20 days per four years, depending on whether the employer is married.
China has a 5-day week system, and Saturday and Sunday are not included as working days.
Employment termination
Employment termination is complicated in the PRC and employers should exercise caution when sacking employees. You should also have a proper knowledge that it is not very easy to terminate or suspend any employee if you conclude the contract with him/her which is to assume that everyone coming to work for you will someday have to be terminated. Therefore keep track performance in a standardized way is a must for you to have in mind always.
1. No notice is required if an employment contract is terminated during the probation period and the employee has failed to meet employment requirements, or if an employer can demonstrate that the employee has seriously violated the employer's rules and regulations or has committed other offences, engaged in graft or is charged with a crime.
2. Employers are required to provide 30 days’ notice prior to dismissing employees or terminating labour contracts. Under PRC Labour Law, an employer cannot dismiss an employee without a cause. To terminate an employment contract under the PRC Labour Law, an employer must demonstrate that the laborers can neither take up their original jobs nor any other kinds of new jobs assigned by the employer after completion of medical treatment for their illnesses or injuries not suffered during work; No agreements on a alteration of labor contracts can be reached through consultation between and by the parties involved when major changes taking place in the objective conditions serving as the basis of the conclusion of these contracts prevent them being implemented; that an employee is “incapable of performing a job and remaining unqualified even after training or moved to another post” and under circumstances which employer experiencing serious economic difficulties, the employer can lay off workers after he has solicited the views of the enterprise trade union and has submitted report to the labor authorities; workers cannot be terminated simply to improve productivity and efficiency. Employers however must give priority to laid-off employees if they recruit again within six months after a layoff.
3. An Employer Shall Not Rescind a Labor Contract If : 1) an employee suffers from an occupational disease or a work-related injury and has been confirmed as being totally or partially unable to work; 2) an employee suffers from an illness or injury for which medical treatment within a stipulated period is allowed; 3) a female employee is pregnant, on maternity leave or within the stipulated period for nursing.
4. Employers may indicate in the contracts certain circumstances under which they can terminate the contract as long as they don't violate the statutory provisions.
FIE employers are required to pay an employment severance payment when the employment contract is terminated. One month's wage is payable to a departing employee for each completed year the employee has worked.
Under China - PRC employment Law generally provides that the WFOE may terminate the direct relationship with thirty days of notice and specifically defined cause. Termination in China for less than cause subjects the employer to legal action in a very fluid legal environment. Termination of a FESCO engagement also requires thirty days of notice.
Often Overlooked Points
There are a lot of important points that the investor usually overlooked and running the risks of violation and penalties thereof after they executed the contract with the employee. The following are the key points that foreign investor should have in mind:
1) China practices an working term of 8-hour workday, 5 days a week, a 40 hour work week;
2) There is a daily quota limitation;
3) No Forced Overtime/Overtime Strictly Limited to Nine Hours a Week/ Legal Work Week Capped at 49 hours;
4) All Overtime Work Must Be Paid at a Premium;
5) After one year, all workers are entitled to paid annual vacations;
6) Detaining Workers Wages, Fines or Mandatory Deposits is Illegal;
7) Companies Must Join and Pay into Social Security;
No Discrimination Against Women;
9) The Right To Organize Independent Unions;
10) Every Worker Has the Right to a Written Work Contract.
In addition, you should also take into account the accuracy of an applicant's CV conduct physical examinations of new employees.
Resignation
Although the labor contract has the clause on the length of service period, China's laws grant employees the right to resign. The Constitution of China protects the laborer's right to work, which should include both the right to establish labor relations and the right of terminating such relations. Article 31 of the Labor Law of the People's Republic of China, which came into effect on January 1, 1995, establishes the right to resignation of laborers. It specifies the conditions for premature termination of labor contract as: (1) To notify employing unit 30 days in advance; (2) to notify the employing unit in writing; (3) to notify the employing unit without having got the consent of the unit; (4) a laborer shall pay default fines to the employing unit if the labor contract has the provisions on responsibilities for the breach of contract by terminating labor contract in advance. But if the labor contract does not contain provisions on the responsibilities for the breach of earlier termination of contract, it shall run the risk of being regarded as the employing unit having given up the demand for default fines and the laborer needs not to pay default fines.
In addition, employees can resign without notice during the trial employment period, or at any time when the enterprise has violated the labor contract and encroached the lawful rights of the employees under Chinese law as follows:
• where no notice is required: the employer has 'coerced' workers with violence, threats or illegal restrictions on personal freedom;
• where the employer fails to pay wages or provide working conditions as agreed to in the labor contract; or
• at any time during his/her probation period.
Labor Dispute Settlement
According to the China Labor Law and Regulations, whenever a labor dispute arises between a worker and an enterprise, either party may apply to the labor dispute mediation committee at the enterprise for mediation. If the mediation fails or if neither party wants mediation, then they may apply to the local labor dispute arbitration committee for arbitration.
Generally speaking, arbitration and litigation are the most helpful ways to settle labor disputes. The parties involved in the dispute can apply to the labor dispute arbitration committee for arbitration within sixty (60) days from the date the dispute arises. The Labor Dispute Arbitration Committee will arbitrate the case and issue an arbitration award. However, this award is not final. If the relevant parties fail to agree to the arbitration award, they can file a lawsuit on the case to the relevant People's Court, which will then make a final decision on the case. In China, the two parties involved in the dispute are not allowed to file lawsuits directly to the People's Court. They must apply for arbitration first.
Burden of proof
To prevail in a civil case, the general rule is that “he who asserts must prove”, i.e., the burden rests with the plaintiff (the party bringing the action).
There are some exceptions to this rule, one of them is the rule in labor dispute resolution due to the great disparity between employee and employer in terms of related strength.
The Interpretation on Several Questions Concerning the Application of Law in Trying the Cases of Labor disputes promulgated by the Supreme People’s Court of PRC states the burden of proof of just discharge, suspension, reduce remuneration and the calculation of employee’s term of employment for cause shall be on the employer.
Therefore, the burden of proof of good cause for leaving work shall be on the employee, and the burden of proof of misconduct shall be on the employer.
Writing a staff handbook
From an employer's perspective, the handbook should only contain provisions that are going to help the employer with respect to employment issues. In China, however, according to law, the administrative authority exercises tight control over the termination and suspension of employment contract. So an employee can not be fired at any time without cause which is much different from the practice of western countries. There should not also provide that the handbook can be modified or amended by the employer at any time and for any reason.
It certainly could be a problem for an employer to include provisions in a handbook that don't reflect actual conditions of employment or that may impose unintended duties or obligations on the employer. (Believe it or not, this happens all the time when employers simply decide to copy over and use a "canned" set of policies and procedures they have taken from somewhere else without making sure that the handbooks conform in all respects to their particular business operations.)
An employee handbook will usually include:
• Working hours and days and break times
• Overtime rules
• Sick days and sick leave policies
• How sick leave is accumulated
• Health and other benefits
• Official paid holidays
• Vacation policies How vacation time is accrued and rules as to how and when employees can take it
• Procedures for specific work duties
• Dress codes
• Safety and hygiene rules
• A statement that the handbook "has been passed by the worker’s congress with due procedures" which means such handbook could be incorporated into the employment contract as part of it.
It's extremely important to have employee handbooks drafted by or at least reviewed by legal counsel periodically in order to make sure that they comply with applicable law and take into account that might not be so obvious.
It should also be noted that you should present each new employees with an employee handbook on their first day on the job, you won't accidentally overlook anyone and have the employee sign and date a statement that he or she has received the handbook. That way, you can prove at a later date that the employee had the information in the handbook.
Harassment and Discrimination Claims
Up to now, China does not have the specific law on harassment and discrimination in workplace however its top legislature is now formulating the Law on the Protection of the Rights and Interests of Women. In which sexual harassment will be expected for the first time be recognized as a crime and become punishable by law; also according to the draft amendment, no one shall be allowed to subject women to sexual harassment and all work units shall take measures against sexual harassment in working places.
Nevertheless it is still difficult to define exactly what constitutes sexual harassment a problem with which governments all over the world have struggled.
China employment Legislation
The “Labor Law of the People’s Republic of China” effective from 1 January 1995, PRC Trade Union Law, promulgated on 28 June 1950 and revised on 3 April 1992 and 17 October 2001, are the principal Chinese labor laws.
Supplementary laws have also been issued for particular aspects of employment, including:
• The Regulations on Labour Management in Foreign Investment Enterprises (the Labour Management Regulations), adopted in 1994;
• The Regulations of the State Council Governing Working Hours for Workers, adopted in 1995; and
• The Provisional Administrative Measures on Wage Incomes of FIEs, adopted in 1997.
China labor law governs all employment relationships: it covers all forms of business organization, encompasses both blue-collar and white-collar occupations and applies equally to companies owned by domestic interests and employers which are affiliates of foreign companies.
Labour practices vary between regions as provincial and local labour departments have fairly wide discretion in handling local labor matters.
Trade Secrets Protection
In order for business information to qualify as a trade secret, the information must:
1. not be generally known or ascertainable through legal methods;
2. provide a competitive advantage or have economic value; and
3. be the subject of reasonable efforts to maintain secrecy.
Which generally include: product formula, survey methods used by professional pollsters, recipes, a new invention for which a patent application has not yet been filed, marketing strategies, client lists, manufacturing techniques, computer algorithms, etc.
During the course of business, you may have to disclose your business secrets to your employees. What happens when you have a disloyal, untrustworthy, and dishonest employee? The employee may know your secrets. Is there anything that you can do to stop that employee from disclosing your secrets to others?
The best way to protect yourself is to have the employee sign a nondisclosure agreement (sometimes called a disclosure agreement or confidentiality agreement) before you disclose any secrets. If someone signs a nondisclosure agreement and later uses your secret without authorization, you can sue for damages.
Nondisclosure agreements vary in format. Generally, they contain these important elements:
Definition of what is and what isn't confidential information;
Obligations of the receiving party, and
time periods.
You should also get in the habit of having all employees, consultants, independent contractors and potential business partners routinely sign confidentially agreements if they may receive or have access to any of your company's trade secrets.
In addition, during the course of business, you may have to disclose your business secrets to your employees. But what happens when these employees leave your company? They know your secrets and there is nothing stopping them from telling others. By requiring your employees to sign a non-compete agreement, employees must agree not to work for a direct competitor for a certain amount of time after leaving your company. The theory behind this is that after a certain amount of time, your trade secret may no longer be valuable or will have changed as your business advances.
However, in China, there are restrictions imposed on enforcing non-compete agreements against employees such as the length for non-compete and the compensation thereof.
In China, there is protection against disclosure of a trade secret which imposes liability on the enterprises who employ the persons with confidentiality agreement not expired. Article 10 of the Unfair Competition Law, prohibits business operations from engaging in any of the following acts:
1. obtaining the trade secrets of any rightful party by theft, inducement, duress, or other illegal means;
2. disclosing, using or allowing others to use the trade secrets of any rightful party obtained by illegal means; or
3. disclosing, using or allowing others to use trade secrets in breach of an agreement or the confidentiality requirements imposed by any rightful party.
There is also third-party liability. Third parties who obtain, use, or disclose business secrets that they knew or should have known to have been infringed by any of the methods in (1)-(3) above, will be deemed to have infringed the trade secrets of the rightful party.
In case of a suspected infringement of one's trade secrets, there are both judicial and administrative actions which can be undertaken to enforce one's rights.
The infringed party can institute proceedings in one of the people's courts to seek compensation for damages under Article 20 of the Unfair Competition Law. In cases where damages cannot be reliably calculated, the amount of profits obtained by the infringing party can be used as the basis for the compensation claim. In addition, expenses and fees arising from investigating and obtaining evidence of the infringement can also be included in the claim for damages.
For administrative enforcement for infringement of one's trade secret, the offices of the Administration for Industry and Commerce (AIC) above the county level will, after an investigation and determination of wrongdoing, order the infringer to cease its infringing acts and impose a civil fine of at least RMB10,000 but less that RMB200,000. If the infringer does not comply with the cessation order, a fine of more than twice and less than three times the amount of the value of goods sold will be imposed. All decisions of the Administration for Industry and Commerce may be appealed to the people's courts.
While the most important point to protect your right is take self protection measures from the very beginning to ensure that an employee will not steal, copy or disclose confidential information, the employer should be sufficient to establish that the material in question was deemed to be confidential and adequate measures had been established for its protection. That determination is essential if one is to effectively undertake any type of enforcement action against an infringer of one's trade secrets.
If an employee has departed your company by reason of resignation or termination and gone to work with a competitor, then the first step to take is to give immediate notice to the new employer of the employee's continuing obligation to not disclose your trade secrets. This can be accomplished by sending a registered letter to the new employer, indicating that the new employee has knowledge of trade secrets, the general subject matter of the trade secrets, an explanation of the legal basis for the employee's obligation to maintain secrecy (for example, a Non-Disclosure agreement), and that by virtue of the foregoing, the trade-secret owner may have a cause of action against the new employer.
For Third Party Liability to arise, the new employer must know, or have reason to know, that its new employee had access to trade secrets and may be about to breach a confidential relationship.
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Personnel records
The right to fire is becoming more and more restricted because of the inherent nature in China laws that favor employees. These days, more and more workers who feel they have been unjustly discharged or forced to quit have filed employment-related suits and courts are increasingly taking the employee's side.
The best way to "win" a lawsuit for employers is to avoid it in the first place. By keeping in mind some basic management and interpersonal rules, many of these rules are also useful in establishing your defense — that you had a good reason to fire your employee — if it turns out that the worker does sue you, after all.
Under china law, the employer can revoke labor contracts should any one of the following cases occur with its laborers: (1) When they are proved during probation periods to be unqualified for employment; (2) When they seriously violate labor disciplines or the rules or regulations of the employer; (3) When they cause great losses to the employer due to serious dereliction of duties or engagement in malpractice for selfish ends; (4) When they are brought to hold criminal responsibilities in accordance with law.
As the China labor law does not define clearly what is to be unqualified, serious violation, dereliction or malpractice for the revocation, therefore, the safest way to fire someone, from a legal standpoint, is to be sure that you have a valid, nondiscriminatory business reason for the action, and that you have enough documentation to prove it. Your documentation must be created in the normal course of business, before you fire the person which includes fair work rules and policies just like a company handbook but it must be the reasonable rules your business requires, a performance feedback system
It's important to remember that workers (and courts) are more likely to perceive a firing as "fair" if your employees have had plenty of notice about what conduct and performance you expect from them which are very clear and specific. It's also important that workers receive regular feedback about their job performance, and that they are warned whenever you find that they are not living up to expectations, investigate the "last straw" incident thoroughly. It should be also noted that the using of progressive disciplinary measures in your rules must be enforced fairly otherwise it would be useless. For legal purposes, you must apply your rules equally to all your employees, if you hope to rely on them.
The last but not least, before the fire, you are required to solicit the opinion of the trade union of your company which had been the concern of the hearing judge.
Secondment arrangement
"Secondment Contract" means the contract to be entered into between the Company and Party B (or any of its Affiliate(s)) for the secondment of certain employees by Party B (or such Affiliate(s)) to the Company.
Due to the internal policies of foreign investment enterprises (FIEs) and their foreign parent companies, the difficulties in understanding PRC employment law and how it operates, as well as to avoid the business tax and withhold tax, a number of FIEs structure their employment of foreign nationals in China by way of secondment.
From the perspective of PRC law or the law of the country from where the person seconded, the dual legal conflicts and inconsistencies could cause more problems as the employment contract and the labor disputes arise thereof shall be governed and interpreted by Chinese relevant law and regulations which means that a foreign employment agreement cannot prevent the PRC law from applying if the expatriate will be working in the PRC for more than three months.
To avoid that risk, a PRC company may employ the foreign national directly and to state PRC law as the governing law in the employment agreement. In the meantime, detailed arrangements and entitlements could be structured in line with the foreign parent's HR policy or the PRC company's HR policy.
Of course, there are a number of other points should be paid attention such as Residence, Personal income tax, Taxable presence risk, and Compliance obligations which could avoid or mitigate potential risks in the commonly adopted secondment arrangements identified above. It is important that employers work together with their lawyers to benefit from the employment of expatriates in China and avoid the risks of being stuck in the law of two or more jurisdictions.
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Individual income tax
For people working in China, the taxable income is the balance of their monthly income after deducting RMB 1600 for personal expenses.
If you are employed from outside China, the taxable income is the balance of their MONTHLY income after deducting RMB 4,000. The income from the wage and salary will be taxed at the progressive rates ranging from 5% to 45%.
Monthly Salary Tax Rate Quick Calculation Deduction
RMB5,000 - 20,000 20% RMB375
20,001 - 40,000 25% RMB1,375
40,001 - 60,000 30% RMB3,375
60,001-80,000 35% RMB6,375
80,001-100,000 40% RMB10,375
RMB100,000 + 45% RMB15,375
If you derive income and work in the mainland for over 183 days, you are liable to individual income tax in China.
Certain income of foreign workers is eligible for individual income tax concessions. They are housing allowance, meal allowance, removal expenses, travel allowance, language training fees and children's education expenses, etc. If all these eligible expenses are included in the salary payment without separate receipts income tax concessions will not be granted.
Any foreign individual who resides in China consecutively or accumulatively for not more than 90 days (or 183 days for those from countries that have signed tax treaties with China) in a tax year is exempt from individual income tax if his wage or salary is not paid or borne by his employer in China and is not borne by resident establishment or permanent venue of his employer in China.
We believe the important threshold for foreign residents liable to individual income tax (IIT) is the number of days staying in the mainland which is 183 for tax treaty nations with China. Using multiple or splitting the employment contract for an expatriate cannot help minimize the income tax liability. We would advise that in order for the company to comply with China IIT laws they should consult the tax professionals.
When you said tax year (or calender year), it means from January 1st to December 31th.
If you are employed by a Chinese company with a permanent base of operation in the mainland your income are liable to individual income tax irrespective of the length of period of working in China and how the income are paid.
Some people have made up really high housing costs to bring down taxes owed. Word is that the authorities may audit housing contracts, and cross-check them with market rates. The claim for housing allowance should broadly comensurate with the staff's status in the company and its size and prestige. Also the amount of claim should not deviate much from the market value of the property in one particular area or district. Clearly all the valid evidence and documents should be produced to support the claim.
If you foreign company has a fixed office base of operation in China you are liable to individual income tax irrespective the number of days of stay in the mainland. Otherwise the 183 days rule will apply. The period of stay in China will be counted on the actual number of days basis.
Trade Union
trade union membership
Under the revisions of the Trade Union Law passed on October 27, 2001, all employees have the right to join the All China Federation of Trade Unions (ACFTU), the country's sole trade union run by the ruling Chinese Communist Party. No organizations or individuals may prevent their employees in China from organizing or joining a trade union, regardless of nationality, profession, religion, race, sex or education level. And all enterprise trade unions with more than twenty-five members are now obliged to have a trade union committee. Where there are workers, there should be trade unions for them. This is the principle that drives the ACFTU, who believes trade unions are not only for employees of state-owned enterprises, but also for migrant workers and employees from foreign-funded and private enterprises.
China’s Trade Union Law stipulates two ways for the establishment of trade unions: One is a request from employees on a voluntary basis, and the other is a suggestion from the trade unions at a higher level. Trade unions in the upper level of the national union hierarchy are authorized to send union officials to enterprises and help them establish trade unions. Enterprises have no right to interfere in the process.
As to the restrictions on trade unions, Trade Union Law actively prevents the formation of independent trade unions, while establishing the legal basis of the trade union monopoly held by the ACFTU subordinating local trade unions to the Constitution of Trade Unions of the PRC, securing the legal-political subordination of trade unions to the ruling Party and ideology.
Rights of a trade union member
According to article 3 of 'General Principles' of the Constitution of Trade Unions, Trade union members enjoy the following rights:
1. To elect, to be elected and to vote.
2. To criticize any trade union organization and personnel, to demand the removal or replacement of any union personnel, and to supervise the trade union work.
3. To make criticisms and suggestions concerning problems in the state and social life and to demand that trade union organizations accurately convey them to the departments concerned.
4. To demand that trade unions give them protection when their legitimate rights and interests are infringed upon.
5. To enjoy the preferential treatment provided by trade union-run undertakings in the fields of culture, education, sports, tourism, convalescence and recuperation; to enjoy various awards given by trade unions.
6. To participate in the discussions on trade union work and issues of concern to workers and staff members at union meetings and through trade union-run newspapers and journals.
Trade unions do have a right to be consulted on significant issues of operation and management, including the design of new facilities and processes and in the implementation of safety systems. The Trade Union Law also contains many provisions requiring unions to safeguard workers rights to 'democratic management' (e.g. Articles 5, 6, 19, 23, 35-3.
Furthermore, Both the Trade Union Law and the Work Safety Law give extensive powers to unions to ensure that standards are met (Trade Union Law Articles 21-26, Labour Safety Law Article 52). These provisions typically give unions the power to complain of a violation, and require the employer to investigate the compliant and make amends if a violation has occurred, If an employer refuses to do so, the union can refer the matter to local authorities. Unions have legal capacity and can sue in their own right.
On the foreigner membership, if a foreigner employed in China in accordance with the legal procedures (RULES FOR THE ADMINISTRATION OF EMPLOYMENT OF FOREIGNERS IN CHINA), then, the Trade Union law will apply which meant that he is entitled to join the trade union of the entity in which he works with if he is legally allowed by the China competent authority.
Relevant China laws and regulations do not expressly prohibit the double trade union membership if the foreigner and his employer abide by the China trade union law and other relevant laws and regulations.
Other issues
Except the abovementioned, the followings would be worthwhile attended for foreign investor’s success in China:
Under China’s Trade Union Law, enterprises pay the outlay for labor unions, which is equivalent to 2 percent of the total wages of employees, not the number of workers who join the trade union, with 60 percent repaid to employees in a form of welfare, and 40 percent submitted to trade unions at higher levels and the enterprises are also required to provide facilities and working place for the trade unions carrying out works.
Some local governments put too much emphasis on the growth of GDP and don’t pay enough attention to the protection of workers’ rights and interests so when they negotiate with the foreign investors about the investment, they may make some commitments which violate the trade union law or other relevant laws and regulations, therefore, a lawyer should be consulted for avoiding any future troubles.
Currently, it appears that the ACFTU pushes for better access to multinational corporations in the face of its declining influence;
It wouldn't be surprising in the Chinese environment, where strikes are forbidden and the official labour grouping actively supports the government's efforts to block the rise of independent unions. So the trade union could be good partner in your business operation if you deal with this issue properly.
Unions in enterprises and organizations with more than 200 members should elect one full-time chairperson, according to Trade Union law.
Any organization or individual that, in violation of the provisions of Articles 3 and 11 of the Union Law, obstructs the workers’ and staff members’ from joining or organizing of trade unions in accordance with law or the effort made by trade unions at higher levels to assist and guide the workers and staff members in establishing trade unions shall be ordered to by the administrative department for labor to make rectification; if it refuses to do so, the said department may apply to the people’s government at or above the county level for solution; where grave consequences are caused as a result of the use of such means as violence and threat in obstruction and thus a crime is constituted, criminal responsibility shall be investigated according to law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
David Cui
Lawyer
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China's MNCs pick local managers over expats
August 11th, 2006YINCHUAN (CHINA): Yong Wu, 40, heads a foreign invested factory that produces over a million tyres a year, most of which is sold worldwide. He is in charge of 3,000 workers toiling in three assembly lines.
Yong draws a salary of 6,000 yuan or Rs 30,000 a month. A third of his income goes towards mortgage on his house in Yinchuan, capital of the remote Ningxia province in west China. Zou Guanghui, his deputy, runs one of the assembly lines with 916 workers. Zou earns 4,000 yuan or Rs 20,000.
Yong and Zou are among the hundreds of low-profile wonder boys - as foreign investors sometimes describe them - who have become the darlings of these investors. These reliable managers are one of the many reasons why there is an almost endless flow of foreign investment into China's manufacturing sector.
Most of them earn about 20% of the salaries claimed by expat managers. And usually do not have sophisticated management degrees. But they exhibit an ability to efficiently manage vast armies of workmen.
Recent years have witnessed a huge growth in the number of Chinese managers being employed by foreign companies, who used to mostly rely on expatriate managers till the mid-90s.
Headhunting Heats Up in China Market
June 8th, 2006Marie-Anne Hogarth
The Recorder
September 28, 2005
Earlier this year, New York-based recruiter Henry Lipschutz persuaded Kurt Berney, a prized partner at Wilson Sonsini Goodrich & Rosati, to join O'Melveny & Myers' China practice.
Landing a skilled M&A partner like Berney who was willing to relocate to China was a coup. And it came from a cold call.
The world's largest law firms are intensely interested in China and the other fast-growing economies of Asia. But firms eager to open or expand offices there are finding the supply of lawyers is outstripped by demand.
That's creating opportunities for U.S.-based recruiters like Lipschutz, who says Asia now accounts for about 60 percent of his placements. For now, it's a small market -- there just aren't that many partners in Asia willing to move around. But it's expected to grow.
"There is tremendous opportunity for search work on the horizon [in China]," says Newport Beach, Calif.-based consultant Peter Zeughauser, who advises many firms on their China strategies. "It's starting now and it will be a long run -- maybe 15 to 25 years."
Firms with established China practices, like O'Melveny, can recruit people like Berney, who are willing to take a specialty and move it overseas. Firms trying to launch a China practice, however, need partners who've been on the ground in Asia.
"There are a lot of legal recruiters actively recruiting in China -- there is no shortage of people trying to do that," says partner Howard Chao, who heads O'Melveny's Asia practice. "Where things are tight are senior people with lots of China experience."
Lipschutz, who points to the shortage of partners in explaining why he's focused on recruiting second- to fifth-year corporate securities associates, agrees. "All the partner-level lawyers that should be in Asia have been there for the last three years," he says.
Thomas Shoesmith is one of them. After starting his career with Cooley Godward, he joined the Shanghai office of Paul, Hastings, Janofsky & Walker. Earlier this year, recruiter Avis Caravello brought the IP litigator to Thelen Reid & Priest, where he's launching the firm's China practice.
"Tom would call me at 8 at night" -- morning in China -- "and the kids would answer the phone, 'It's Tom Shoesmith,'" Caravello said.
Despite the need for evening and even middle-of-the-night phone calls -- there's a 15-hour time difference between San Francisco and Shanghai -- more U.S.-based recruiters are making inroads in China.
Zeughauser, who says he only represents partners who've told their current firms they are looking to leave, says he's currently doing some work in China.
Major, Lindsey & Africa joined the small colony of Western recruiters with offices in Hong Kong a few years ago. Recruiters there are increasingly doing more work for U.S. firms that want to open in Beijing and Shanghai.
"Demand has been strong now for five years, but at least with respect to China, it does now seem to be hitting a fever pitch," says Charles Fanning, a global practice leader at Major Lindsey who is based in San Francisco.
Joe Macrae, founder of Mlegal consulting, primarily does recruiting on behalf of U.S.-based firms in the London market. He says his firm is currently handling work on behalf of five candidates in Taiwan and Shanghai seeking to work stateside, or to move within their local markets. Silicon Valley recruiter Carl Baier recently handled work for candidates in China and India, and as a solo he forges deals with larger search firms in other parts of the world.
The biggest hurdle for recruiters is the shortage of recruits. "To the extent that we could find people in China, they would be very viable candidates," says Caravello. "But it is like the needle in the haystack in Asia."
Adding to the difficulty, talent searches in China have become increasingly specialized. Where firms employed generalists who could handle foreign direct investment, they're now calling on specialists in IP, private equity and M&A, says Gregory Nitzkowski, co-managing partner at at Paul, Hastings, Janofsky & Walker. The latter are especially in demand, recruiters say, as Chinese companies in the last year have developed an appetite for American ones.
As in other international markets, poaching is common. And as with many ex-patriot communities, lawyers in Hong Kong and China seem more often willing to make the move.
"There is more mobility in Asia," says partner Michael Gisser, who co-heads the Asia-Pacific practice of Skadden, Arps, Slate, Meagher & Flom. "There is less stigma associated with job-changing by partners and associates alike. In the U.S., "if someone is on their third or fourth law firm, it is more likely to raise a question."
While individual hires account for much recruiting, some firms prefer to bring on groups in the international market.
"Our London growth has been with groups and I love recruiting [that way]," says Morrison & Foerster Chairman Keith Wetmore. "I have higher confidence around quality and demonstrated team dynamics [with a group]. With a single person, you don't know why they are in the market."
Topic: Headhunting in the Mainland Chinese Market
June 8th, 2006Topic: Headhunting in the Mainland Chinese Market
October 2002 issue
with ART's Managing Director
Interview Date: 14 September, 2002:
Q1. How does recruiting for the mainland Chinese market differ from recruiting for other markets?
A1. Every market is a little different, and we do not find China to be notably different from most world markets in most respects. It's always the same question: "does this client's business model and expectation coincide with this candidate's experiences and career path?" The level of candidates that we recruit in China - mostly "C" level, VP level, Managing Director/ G.M. levels, and Director/ Manager levels - tend to be "global class" people. These are the same types of people that could and do operate successfully anywhere, be it in Beijing, Shanghai, Shenzhen, Hong Kong, Singapore, Taipei, San Francisco, New York, London, Zurich, etc. Most of these people have either lived, worked, or were educated in other parts of the Asia-Pacific, North America or Europe. These candidates might have known ART for years or might have heard about ART from trusted colleagues in China or abroad. They understand that the calibre of our candidates is high, and our clients' expectations of them are high. Such people usually find us, or we find them through our network of contacts. Generally, good people recommend other good people, so in recruiting people in China we place some reliance upon trusted referrals to steer us in the right direction.
Depending upon the specific job, industry or business model, sometimes there are shortages of specific mainland China profiles. In that case, it might be necessary for an employer to seriously consider Hong Kongers, Singaporeans, Taiwanese and other Chinese speakers from abroad. The most notable of these would be a VP or "C" level person for a small early stage China division of a small or medium sized foreign company. Foreign startups in particular typically are founded by people who have limited finances and who work very hard with limited staff. When they seek senior managers for new Chinese operations, they often look for the same type of "shirtsleeves" person to head their China groups. Such people, however, can be a bit hard to find in mainland China, particularly since most foreign-trained or foreign-company experienced Chinese executives come from large multinationals. So a person whose resume might suggest a high suitability for an American employer (i.e., s/he worked for U.S. multinationals, s/he received an education in the U.S.), that person might not automatically be suitable at all for a Silicon Valley-type startup firm. While a Chinese finance manager at a major U.S. multinational might be supported by a very large China staff, that person taking a job as a CFO of a startup China division, might find himself or herself alone in a room with the expectation of "doing it all." Most search firms operating in the China market do not appreciate this subtlety, and that is why many of their matches are not good fits for the candidate or the client. When we take on such assignments, then, we ask the employer to keep this factor in mind. When we discuss such jobs with candidates, if we do not see a lot of appropriate startup company experiences, we ask pointedly if such a job would interest her or him. We typically lay out scenarios: you will be expected to do all the work, you will not have a staff until business allows for hiring, you will have to do what ten others do at your present company, etc. We rather have nine candidates out of ten realize early that this would not be good for them, rather than to place someone in the wrong job.
Our focus in China tends to be people who are bilingual English/Chinese (Mandarin or Cantonese) speakers who are fully bicultural, which is to say that they are "at home" in China, familiar with mainland Chinese customers and business partners, and also are able to deal effectively with overseas companies, customers and business partners in the way that those companies would expect to be dealt with. Because China today is still a mix of people coming from state company experiences and domestic and foreign private company experiences, the overall numbers of Chinese middle managers and senior managers with the experience of running proper corporations or departments 100% along world class lines is still limited. In five or ten years, the expertise of Chinese managers will be truly outstanding, as today's junior managers and middle managers hone their skills. We recruit middle managers today for middle management roles, because we know that they are valuable recruits today and critical for tomorrow's CEO, CFO and VP placements. Right now, we are seeing in China many fully able world class managers, a larger number of managers with hybrid Chinese and foreign business styles, and a larger number that only could perform within their existing Chinese business models.
One somewhat different aspect of China recruitment is finding people who are suitable for joint ventures. While JV's are found in every country, there is a perception by some clients that entering into a joint venture in China with a local partner is a "high stakes" proposition, bringing a potential of high gain along with potentially high risk. So when we look for a General Manager or Finance head who is to be the prime contact person with the JV partner, a special person must be found. Some people can work perfectly well in monitoring a JV with a state partner, while others only would be good with a private sector JV partner. Also, the goals of JV's in China can vary significantly: it could be a transition for the foreign company to buy out a local partner, it could be a pure partnership, or it could be primarily a mechanism for funding or modernizing a local partner in return for a stake in future profits. JV General Managers or Finance Directors anywhere are always in a sort of high risk business model, regardless of the country, but in China, where cost accounting, manufacturing cost, and balance sheets are somewhat new concepts, it sometimes is hard for a prospective partner to fully understand what the local partner brings to the table, can bring to the table, or what it might take off the table. Each type of business model requires a manager suited to those ends. Most important is that the person be a trusted monitor and negotiator on behalf of our client's interests.
Q2. Is there still a "hardship" premium for postings to China?
A2: We are very leery of any foreign candidate in China or any person seeking a position in China who feels the place is a "hardship posting." In remote provincial areas, some special allowances might be quite justifiable, including for Chinese nationals relocated to those jobs, but in Beijing or Shanghai, a person calling for "hardship" premiums is probably someone that we would not be able to help.
It kind of reminds me of the story that used to circulate a decade ago about how a cost of a cup of decaffeinated coffee in a Tokyo hotel restaurant was $20. My comment to that is either don't order decaf in a Tokyo 5-star hotel (drink tea instead), or don't leave your country if you exactly want to recreate every shred of your past life, brick by brick, in another country. Certainly don't expect that a prospective employer is going to happily coach you on to extract such benefits from their budget. A person who starts out feeling that China is a hardship posting probably should not be in China. There are benefits and problems in living in every city in the world. To a degree, "everything is negotiable," but if the China job seeker is primarily focused on expat benefits, we get nervous that they might be more interested in locking in big amounts of cash and a luxurious lifestyle, rather than concentrating on the bottom line: making our client's mission successful.Success involves commitment to a market, and success involves some sacrifice and risk taking. If the person comes into a tough job with all the comforts locked into an ironclad, long-term contract, where is the motivation to work hard? If an employer had to choose between two very closely matched candidates, one already living in China who only wanted a good salary, bonus and decent benefits package, versus another candidate who wanted all that plus a hefty expat package, which candidate do you think that the employer might regard more favorably? No employer is in a position to give away free money. If they are offering an expat package, it's likely because that candidate was the best candidate interviewed for the job.
Many international executive search firms sometimes seem to push high cost expat candidates on their clients without even seriously considering capable local candidates with bankable credentials. We do not specialize in expatriate recruitment. Some percentage of our placements involve expat assignments, but every job search that we take on, regardless of the country, assumes that we should first try to find candidates already in that city or country. In some cases, a client can consider bringing in people from other cities or countries, and they might be willing to consider reasonable expat benefits on a case-by-case basis. Some candidates might have requirements such as school fees or housing allowances, but these candidates might be competing with very good local candidates who don't need the employer to pay their food and rent, and who do not carry with their candidacy other such up-front burdens. The decision to consider one candidate with a reasonable total cost versus another with a higher set of requirements is left to the employer. We leave it to the employer to weigh the pluses and minuses of each candidate. Since our candidates are in 100 countries, we have a broad database of people to consider, depending upon the client's budget and needs. If the employer has no budgetary limits to bringing in managers from abroad, that is not a problem for us, of course.
Nowadays, we see people in Hong Kong, Singapore, Taiwan, Australia, North America and Europe who are willing to take a job in China and who do not even ask for the cost of a plane ticket, because they perceive that there are great opportunities in mainland China. The person who might speak of a hardship premium for a posting in Shanghai or Beijing these days might be a person who is only half interested in the place or the opportunity. This more than likely would be a person who overestimates his or her own current market value, or underestimates the capabilities of his or her competition.
Q3. What are the main attractions of a China posting for candidates?
A3. The most obvious attraction is probably the vastness of personal career opportunities. Just to discuss finance jobs, a person who is currently a finance director at a hum-drum job might be pegged for a China VP of Finance job at a multinational engaged in financing a vast China market expansion plan, or a very exciting startup that might make him or her a millionaire. Currently, the economies of Hong Kong, Singapore, the U.S., Europe, and Japan have been slow, so many foreign firms are seriously focusing their attention on countries like China. This interest, as well as an expansion amongst local Chinese companies, causes there to be many interesting management opportunities for Chinese nationals and foreign professionals alike.
Having good work experiences in China is seen as an asset in most resumes of senior and middle management candidates. If you are a foreigner considering a job in China, the likelihood is that when you return to your home country after a China assignment, your profile might possibly be raised in the view of employers. It is one thing to "think global," and it's another thing to have actually "been global."
The quality of the work in China, again only discussing finance jobs, can be very exciting. This is a country where much of the groundwork of creating formal finance structures, institutions and systems has only barely begun. A person who in his or her home country might not have the opportunity to make deals with the big players, much less help create financial systems, institutions and mechanisms for a country or industry, might possibly have the chance to do so in China.
Some people come to China because their family origins are in China and they would like to broaden their understanding of China.
Some people are returning migrants from abroad who, after several years working in foreign countries, feel that their best prospects are in serving as bridges between the country of their birth and the country of their professional lives.
Some people go to China in search of the proverbial proposition of selling their product or service to a billion people. These people might be motivated by big dreams or big money - or both.
Q4. What are the main drawbacks of a China posting for candidates?
A4. This answer really depends upon the location and the candidate. There can be a wide variety of issues that could make a China posting wrong for any one person. We therefore would highly recommend that a foreigner who has some interest in a China posting do a lot of research about the place in advance of considering applying for a job in China. In a thousand ways, life in China is not the same as in Taiwan, Hong Kong or Singapore, and even having Chinese fluency does not guarantee that one would be happy working in China or would be successful. Because of the many personal variables involved in such postings, ART tends to recommend to its client companies people who are already well experienced in or well established in the target city and market, be they Chinese nationals or foreigners. We think that by focusing on such candidates, we help minimize everyone's risk of failure.
Q5. Can you give an estimate of the increase/decrease in demand by international firms for candidates willing to relocate to China?
A5. Our firm specifically prides itself on trying to present local candidates on six continents, so most employers coming to ART seeking managers for mainland China or other countries usually do not look for us to present them with people who are not already in the country where they need the person to be based. Often, in fact, many employers contact us to help find the replacement for their past or current expat managers. Typically it is a situation where the person being replaced is the "first generation" manager being rotated back to the home country. In other cases, it is a case of the person simply having failed, often due to lack of local language skills, lack of local business contacts, or a limited understanding of local business culture. If anything, we are seeing a greater demand for high calibre, internationally trained or internationally experienced local Chinese managers to run Chinese operations. There can be quite a challenge in finding these candidates, but they will be the future, and companies that are lucky enough to snatch these people up will have, in our opinion, a much better chance of success than putting in charge a foreign manager who might describe himself as a "China expert," but who, shockingly too often, is usually a person who is not even capable of reading the day's weather report in a local Chinese language newspaper.
Q6. Any other issue you feel may be of interest to international employers looking to place staff in mainland China?
A6. Too often executive compensation in China is tragically misperceived by foreign companies without regard to either the supply and demand of appropriate candidates or without regard to the value that a really good local Chinese candidate can bring to a foreign employer. What we sometimes see is this potentially reckless and simplistic thought process by some employers: "Wages in China are a fraction of our own, so a Chinese general manager's salary should therefore be a fraction of a general manager's in our own country." Yes, it is true that the average general manager in China is much lower paid than the average general manager in most industrialized countries, but in China, an average general manager is someone who does not speak English well or at all, has never worked for a foreign company, and whose conception of profit and loss is one that a foreign company would never consider acceptable in running their China business unit.
The profile that most foreign companies seek for China is not the "average general manager." Rather, it would probably be something closer to the average one-tenth of one percent of the Chinese private sector industrial managerial class. These are the people who might have U.S. MBA's, who might have worked or lived in Europe, the US or Singapore, whose English is fluent, who perfectly understand foreign conceptions of business success and failure, and who have successful track records in China working as senior managers or general managers of foreign firms in China. Their salaries are high by Chinese standards because they are worth every penny, and their skills are constantly sought out by foreign firms. The first, easiest and worst mistake a foreign employer can ever make in entering the China market is to underpay their top local management team. Either you will not be successful in hiring the best managers that you need to shepherd your products and services properly into the Chinese market, or you will soon find that your key managers are giving you notice, because of the many opportunities offered them by your competitors and others, who do understand the value that their knowledge, skills, contacts and personal integrity can bring their companies.
China's Recruiters Speeding Up
June 8th, 2006As multinational companies expand into China, the headhunting business is growing quickly and moving online, says Zhaopin CEO Liu Hao
Zhaopin was founded in Beijing in 1997 as an old-fashioned headhunting company. Since then, it has shifted much of its focus to the Internet, and has become one of China's leading online recruitment firms. Still, Zhaopin hasn't abandoned the old ways of doing business, continuing to run recruitment ads in newspapers, especially in smaller cities. Clients include many multinationals such as Microsoft (MSFT), Shell (RDSB), DaimlerChrysler (DCX), Hewlett Packard (HPQ), Motorola (MOT), and Intel (INTC). Advertisement
Thirty-six-year-old CEO Liu Hao has degrees in physics from Beijing University and the University of Washington in Seattle, and a law degree from Yale University. He recently met with BusinessWeek's Beijing bureau chief, Dexter Roberts, at Zhaopin headquarters to discuss his Internet operation and the overall recruitment market in China. Edited excerpts follow:
How has your company developed recently?
We have been growing very rapidly, with 100% annual growth in revenues the last three years. A couple of years ago we were profitable, but in the last few years, with the speed up of our expansion -- we have grown from 4 cities to 16 cities -- we have not been profitable. In early '04 we had fewer than 300 people. Today we are at about 1,000.
We are particularly strong in the multinational business. Think of the Fortune 500 companies -- 95% of them are our clients. We are definitely not the largest recruiter in China. No. 1 is [Nasdaq-listed] 51job.com. But their strength is mainly in newspaper ads. They do only 20% of their business online. We instead are 60% online, with 20%-plus in newspapers. The rest of our revenues are from headhunting.
Why are you expanding into the interior of China?
We see this as the driver of our growth. In the past, the online market has really been centered in Beijing, Shanghai, Shenzhen, and Guangzhou. Outside these cities it was just in the development stage. But China's secondary cities also have huge populations. In the past, Internet penetration was not so high there, but that is changing.
For cities like Wuhan and Hangzhou, for example, their online jobs market might only be worth a couple million yuan ($125,000) right now. But in the next few years it will grow to 10 million yuan ($1.25 million). As multinational companies expand across China, we will go with them. We will probably be in 20 cities by yearend.
How bad is the talent shortage in China?
In the past, when companies first came into China, they were all struggling to fill managerial positions with people with solid operating experience. Chinese returnees with overseas degrees came back, but often had very little managerial experience. Over the last couple of years we have started to see a new pattern. General managerial staff is still in great demand, but the market demand is getting much more specialized.
For example, there's an acute shortage of skilled workers such as specialized engineers. That's particularly true in industries like autos, with the entry of BMW, Mercedes, and all the Japanese brands into China over the last few years. The pharmaceutical industry and the finance industries are also facing talent shortages. In general, sales and marketing professionals, medical care staff, and investment and fund managers are all facing serious shortages.
Are wage inflation and turnover a big problem right now?
China has doubled the number of people in its colleges over the last few years. That has had a deflationary effect on salaries for entry-level people. But in certain industries over the last couple of years, salaries have increased dramatically. For example, in the computer and Internet industries they have gone up 20% to 30% over the past year. Wherever you have venture capital flowing, salaries will go up. But in consumer electronics and the cell phone industry, we have seen that pay levels have dropped a little bit. So we actually see pockets of deflationary pressure.
Second-tier cities face a more severe problem. Cities other than Beijing and Shanghai have a particularly hard time keeping top talent. For example, take Xian. There are 100,000 to 200,000 college graduates in Xian every year. Xian is a city with a high educational level. But most graduates leave Xian after college. Beijing- and Shanghai-based companies offer higher salaries and a sexier work environment.
Chinese employees are known for changing jobs quickly. Why?
China's job market is still not very mature, and professional ethics are still in the process of developing. We still see cases where job candidates will sign an offer and then decide not to take it. People also jump ship more often here in China. The general sentiment of society is impatience.
People are very ambitious. It's like a virus affecting the job market: It is very hard to develop employee loyalty. People see working at a multinational as a stepping stone -- something to put on their résumé before moving on. Talented people are being lured away by local or private companies. Others would prefer to start their own companies.
How does that drive your business?
A lot of employers are starting to realize that going online is the best way to find the kind of employees they want. Certain employers use the Internet as a way to screen employees -- anyone the company would consider hiring should be proficient online. And a lot of multinationals are spending more online, while decreasing their print ads.
How do you see the overall online jobs market developing?
In Beijing, revenues from online job listings overtook newspaper listings last year and now lead by a large margin. Online jobs are growing at 30% a year now and were about 100 million yuan last year in Beijing. The size of the Shanghai market is a little smaller but growing at the same pace. Nationwide, newspaper revenues from recruitment ads are around 2 to 3 billion yuan, but growth is pretty much flat. The online recruitment market for all of China was probably around $50 million last year, and is growing at around 30%.
Any plans to take your company public?
Yes. Probably late next year. And it will most likely be on Nasdaq. It's where all the Chinese Internet companies have gone
Stealing Managers From The Big Boys - China Headhunting Story
April 19th, 2006Chinese companies are energetically wooing execs away from multinationals
By just about any measure, Aaron Tong was a success. He was pulling down $100,000-plus as a senior manager of Motorola Inc.'s (MOT ) cellular division in Beijing and had worked in Singapore and the U.S. But two years ago, when TV-and-phone-maker TCL Corp. asked if Tong might accept a position as vice-president, he jumped at the chance. Although the modest salary hike and stock options were welcome, that wasn't what really attracted him. "They were offering me a more challenging job," says Tong, 42. At "a Chinese company, you can do a lot more important things than with a multinational."
Tong isn't the only Chinese manager being poached from the global giants. Tang Jun, president of NASDAQ-listed online gaming company Shanda Interactive Entertainment (SNDA ), served as president of Microsoft Corp.'s (MSFT ) Chinese operations. Jean Cai, head of corporate communications at Lenovo, is a veteran of Ogilvy & Mather Worldwide and General Electric Co. (GE ) Telecom equipment maker Huawei has hired people away from Motorola and Nokia, while Haier (appliances), China Netcom (telecoms), and Brilliance China Automotive Holdings (CBA ) have lured staffers from consultants McKinsey, A.T. Kearney, and Boston Consulting Group.
This migration is a big change from five years ago, when no self-respecting white-collar worker in China would have dreamed of quitting a foreign company to join a local outfit. These days the turbo-charged growth, global aspirations, and deep pockets of China's ambitious private companies are looking better all the time. In 2000 locals made up just 20% to 30% of the managers recruited in China by headhunter Heidrick & Struggles. Today that figure is 60% to 70%. Local companies are "cherry-picking the best talent," says by a managing partner for a headhunting company.
Managers say working for local companies lets them take on more responsibility and make a greater contribution. That's what made Wu Xianyong, a 34-year-old native of the southern province of Yunnan, quit flogging Crest toothpaste and Pringles potato chips for Procter & Gamble Co. (PG ). In 2004, after nearly nine years at P&G, he jumped at the chance to serve as vice-president for marketing at Li-Ning, China's top athletic-shoe maker and sports apparel marketer. He has since taken on oversight of international business as well. "Li-Ning can provide me with a much better platform to play on," says Wu, who also snagged a 50% raise plus generous stock options. "I'm not just managing a brand. I do sports marketing, events, and PR, and I manage research." In fact, Li-Ning is chock-full of multinational alums: The vice-president for sales formerly worked at Avon Products Inc. (AVP ), the vice-president for footwear came from Nike Inc. (NKE ), and the chief financial officer left news wire Reuters Group PLC. (RTRSY ).
Much of the shift stems from global aspirations. By hiring execs with experience at multinationals, the Chinese figure, they'll have a leg up when they go abroad. For instance Gome, China's No. 2 retailer, has ambitious plans to expand. So in January it recruited Weng Xiangwei, a 37-year-old former vice-president in Morgan Stanley's mergers-and-acquisitions team, as its strategy chief and financial guru. "When a company grows to a certain size, it needs to think about more than just where to open its next store," says Weng, a Shanghai native with a PhD in biophysics from the University of California at Berkeley.
Some managers take a pay cut when they jump ship -- although stock options often fill in the gap. That trend will accelerate as more private Chinese companies list on overseas stock markets. Deng Kangming, for example, saw his salary drop by 20% when he left his job as head of human resources at Microsoft in Beijing for a similar job at Net auctioneer Alibaba Technology, but he was granted a generous dollop of options. Two years ago, 27-year-old Zhou Donglei took a 35% cut when she left Japan's Softbank Infrastructure Fund in Beijing to run business development and investor relations at Shanda. "What drew me was the opportunity, definitely not the salary," says Zhou.
Yet salary can play a role in many searches, especially for sought-after talents such as finance. One veteran of the Bank of China saw his pay jump in just six months from $70,000 to $180,000 after a bidding war broke out for his talents among a foreign bank and two Chinese companies, according to Heidrick & Struggles: The manager ended up as CFO for a local valve maker.
China's state-owned giants are also likely to pay a premium to woo talent. For instance, Ping An Insurance Group, China's second-largest life insurer, has hired managers away from Canadian Imperial Bank of Commerce and American International Group -- often upping their pay by as much as 50%. Ping An just hired a manager with five years of experience at an international bank for $65,000 per year -- a huge sum in China, and 40% more than he was making at his old job.
Most telling of all, Chinese companies are even starting to look overseas for talent. Michael Zhang, a 37-year-old native of Sichuan province, worked for four years at medical device maker Guidant Corp. (GDT ) before being recruited as CEO of Microport Medical (Shanghai) Co., which makes stents used in unblocking arteries. He, in turn, hired 33-year-old Zhao Ruilin, who had joined rival device-maker Medtronic Inc. (MDT ) in Minneapolis after earning a PhD from a Harvard University/Massachusetts Institute of Technology joint program in health sciences and technology, as well as an MBA from the Wharton School. Zhao now serves as Microport's vice-president for business development and strategic planning. He earns just $60,000 -- a bit more than half what he made at Medtronic, though he also gets free housing. Still, he says, the greater responsibilities he has, coupled with Microport's hypergrowth -- sales this year are expected to triple, to $30 million -- make up for the pay cut. "Working for this company is so much fun," Zhao says. "Now I'm interacting with bankers, private equity shops, lawyers, and accountants."
The drive for talent by China's best companies feeds into the boom for middle and upper managers at both multinationals and local firms. One recruiter estimates managing directors at Chinese state-owned companies can earn up to $300,000 a year plus a car and housing, while middle managers with the right skills pull down $70,000 or more. Annual raises of about 13% to 14% are necessary to hold on to employees, while poachers offer pay jumps of 20% to 30%, according to Hong Kong recruiting firm Bo Le Associates. "For mid-level management, the market is really hot," says Bo Le managing director Louisa Wong Rousseau.
And don't expect things to cool off anytime soon. China will need 75,000 globally capable execs in the next five years but has fewer than 5,000 today, estimates McKinsey. As long as multinationals in China train locals to run their operations, there's likely to be no shortage of mainland rivals eager to snatch them away.
China Staff hiring: Passion is key!
April 12th, 2006(China Daily)
While the international hotel giants battle to expand their empires in China and mull over branding and marketing strategies, there is something critical they can never ignore - staff.
"Talents are given priority in Marriott, their potential, loyalty, interest and team spirit matters," says J. Willard Marriott, the founder of US-based Marriott International. "Take good care of your associates and they will take good care of customers, who will then return."
As one of the leading international hotel groups, Marriott began operations in China in 1989. Now, its local presence is represented by 26 hotels, and by 2008, the portfolio will grow to 35.
Marriott is not alone in its rapid growth. By 2008, Shangri-La Hotels and Resorts, Asia-Pacific's leading luxury hotel group, will add 17 more to its local list which already numbers 19; UK-based InterContinental Hotel Group (IHG), a worldwide hotel group, has a portfolio of 51 hotels, and plans to develop 74 more by 2008. Ritz-Carlton Hotel Company, the world's leading high-end hotel brand, plans to have nine projects by 2009.
The aggressive expansion can be attributed to the upcoming 2008 Beijing Olympics and the development of China's economy.
"But how to attract and retain staff remains a pressing task," says Michael Malik, general manager with Beijing Marriott Hotel West, considered one of the best hotels in the Marriott chain.
Generally, academic credentials, work experience and English skills are the basic requirements on hotel recruitment lists. However, for most hotels, there are two things even more important personality and potential.
"We hire people for their attitudes," Malik says. "Passion is the key."
The recruitment policy of Portman Ritz-Carlton Shanghai (PRC), which has been ranked as the best employer in Asia and China for three consecutive years by Hewitt Associates, is simple. "We only get highly-talented people," says Ralph Grippo, vice-president area general manager.
The group has developed a quality selection process known across the world when recruiting staff, to test whether candidates fit its culture. "It really works and helps us find suitable staff," says Grippo.
Usually, high-level management aside, most hotel employees are local. The sources are various, including graduates from hotel-related training schools, talents from other industries or hotels, and internal recommendation.
At PRC, people through recommendation from its own staff compose the major source, accounting for 50 per cent of its total workforce.
"It is an efficient way, as our staff know who would be the most appropriate for PRC, and we reward those who succeed in any matchmaking with 500 yuan (US$62)," says Grippo.
Germany-based Kempinski looks for graduates majoring in hotel management abroad, such as France and the UK. "They have better English skills and more knowledge about Western nations," says Li Bo, deputy managing director with Kempinski Hotel Beijing.
However, some people's wariness of working in the hospitality industry remains a stumbling block to recruitment.
"Some people don't think highly of hospitality they believe they need to work longer and harder in hotels than in other jobs," says Winnie N.G, director of human resources at IHG China.
As more hotel groups expand into China's secondary cities, recruiting suitable employees in the smaller cities is not as easy as it is in Beijing and Shanghai, she adds.
Getting the right person is the first step, but it all proves futile in the end if hotels fail to treat them properly.
Employment turnover is a reflection of whether hotels have done a good job in retaining staff. In Beijing and Shanghai's four and five-star hotels, the average turnover is above 30 per cent.
"PRC enjoys the lowest turnover of 17 per cent annually," says Grippo.
Hotels use a number of methods to achieve a lower turnover.
For Malik, the main one is to engage with workers and seek their opinions.
Staff, except for those at management level, annually receive a questionnaire on how they feel about their benefits, managers and salary. A third party from the US then conducts all-round analysis and eventually presents a final report, indicating how employees rate the general managers and whether they are doing a good job.
"This is successful, and shows Marriott shares everything with associates and is proud to gain satisfaction from them," says Malik.
Cheong Waimeng, director of human resources with Grand Hyatt Beijing, says: "We listen to workers' opinions, making them feel they are part of the Hyatt family, instead of just being labour."
For international hotel group giants, being a powerful brand helps a lot. "A brand is in itself advertising, and can attract people automatically," says Malik.
"A strong employer brand encourages people to stay with us," agrees Winnie N.G. IHG often conducts brand promotions in China's major universities, gaining more access to potential candidates.
Training and appropriate rewards are also important tools to help people stay.
But training is not only time-consuming but also expensive. Grand Hyatt Beijing under Hyatt International Corporation annually invests 800,000-1 million yuan (US$97,561-121,951) in training. At Kempinski Beijing, training costs account for 2.5 per cent of revenue. PRC Shanghai puts 1 million yuan (US$121,951) into training every year. Staff at all levels in Marriott can get 40 hours of training.
Cross-department training is an especially powerful method for the international hotel groups. Thanks to their huge networks, staff can be transferred to different departments or hotels within the chain, which can help them to realize their full potential and creates opportunities for promotion.
At IHG, the Assessment Centre Programme aims to provide a talent pool of potential candidates for promotion. "This is a good way to retain," says Winnie N.G.
As for rewards, different hotels have different ideas.
Those who get annual best-performance certificates at PRC can bring their families to have a free dinner in the hotel. Every three months, the best five staff over the period are also given cash bonuses.
At Kempinski, monthly and annually-rated best staff get the chance to study or travel abroad for free.
"To become the best hotel, we will stick to the principle of taking care of our associates, handed down by Marriot's founder," says Malik. "We know the hotel would be in great trouble if our associates such as chefs and cleaners cannot come to work."
Market Size of China Recruiting Market 2002-2006
April 12th, 2006According to iResearch's China Online Recruiting Research Report 2004, China recruiting market rose to 4.16 billion RMB in 2004 and is expected to reach 5.12 billion RMB in 2006.
China Data: Human Resources
April 7th, 2006China Business Review recently published a HR data sheet, you can download from here. Inside, you will find:
Compensation and turnover statistics, as well as tips for attracting and retaining talent
China's Tight Talent Market
China Market Movement, 1995-2005
Salary Increase Rate by Job Level in First Tier Cities, 2005
Average Salary Increase by City, 2005
Salary by Exptriate Type, 2005
Total Cash Composition by Expatriate Type, 2005
Supplementary Benefits Practices among Foreign-Invested Enterprises, 2005
Employee Turnover Rate, 2001-05
Turnover Rate by Staff Type April 2004-March 2005
Why Employees Leave, 2005
Why Employees Stay, 2005
Tips for Attracting and Retaining Talent
Pitfalls in Talent Acquisition in China
Retaining Chinese Employees
April 7th, 2006"How do you keep and maintain a stable and qualified workforce?" asked one expatriate general manager, citing his prime concerns for the joint venture he runs. "How can we attract and retain workers with new ideas?"
If these questions are prime concerns for a general manager, they dominate the working lives of human resources (HR) professionals. The three basic tasks of HR managers — recruitment (see Recruiting the Right People), retention, and compensation and benefits (CnB) — are as fundamental in China as anywhere. But HR managers in foreign-invested enterprises (FIEs) in China have had to devise creative ways to carry them out to remain competitive in China's tight market for local managerial talent.
Retention in particular is the lynchpin of a company's HR strategy and is crucial to building an effective workforce and a thriving business. It is vital to short- and long-term stability, efficient day-to-day functioning, and the achievement of long-term goals such as localization — the replacement of expatriates with local Chinese managers.
Career development and other concrete retention tools
Career development programs are key retention tools that may seem nebulous but are concrete in any company able to keep its best managers; in a Korn Ferry International study conducted in Beijing in early 2001, it ranked first on local managers' lists of concerns.
"Career development is very important," said one HR manager. "But usually the bigger the organization, the less attention is given to certain personnel. They start to feel neglected. Usually the biggest problem is with mid-level personnel — they are the biggest group you really want to retain."
For many young Chinese managers, career development is a new and alien concept, and both manager and company benefit from regularly investing time and effort in it. The most effective career development plans are tailored to individuals. Just notifying employees that they have a lot of potential and will receive special training and attention is a valuable retention tool in itself.
Successful plans also spell out exactly how employees can fulfill the ambitions the company has for them. Vague assertions such as "I want you to be regional general manager in two years" won't work, for instance. Instead, the company must tell targeted employees what it will do to support them in attaining such goals. The company must also provide regular feedback, from multiple sources, as to the progress employees are making toward their goals. The goals should be reachable but also challenging. Many HR managers argue that it is better to promote people before they are ready and give them the additional support they need in a new position than to wait until they are past ready, and perhaps getting restless.
Other elements of a sincere career development program for higher-echelon managers are training and overseas assignments. Several HR managers from US multinationals mentioned the HSBC training program as a comprehensive retention model. The program includes 10 weeks of training in Britain for new managers, with fol low-up training in Hong Kong over a three-year period. HSBC gives participants bonuses, spread out over a year, after they complete the program and return to China. HSBC also offers these employees the opportunity to borrow money to purchase homes at below-market interest rates.
"This is very good," enthused one HR manager at a US oil company. "Everybody will want to be one of their trainees. It will make them think that the company really cares about them — they won't want to leave."
One US multinational with significant investments in China tracks employees with high potential by periodically evaluating them on the basis of job accomplishment, education, performance, competency, and the like. If they are performing well, they are given a three-month "professional development assignment" in an overseas office. The same multinational runs a second, longer program for promising Chinese managers that involves support for the development of a close working relationship with an expatriate in China and one or two years of work in an overseas offi ce.
Looking ahead, both Watson Wyatt Worldwide and Korn Ferry predict an increase in "personalized" retention efforts that include tailored employment packages, since what will retain different people varies greatly by age, gender, position, and personality, among other factors. To keep the packages fair and manageable, companies usually allocate them by grade levels. Executive MBAs are usually the major retention tool that companies give out exclusively on an individual basis. Designing and maintaining such tailored packages takes significant effort, but can save resources in the long run by keeping people with the company.
A look at the package
Last but not least of the tangible retention tools is, of course, financial compensation. The compensation portion of C&B includes salary, bonuses, stock options, incentive schemes, and deferred compensation plans. Competitive compensation is simply an assumed component of both recruitment and retention — to attract and retain the best workers, every company has to be within the same salary range. But competitive financial compensation is an effective retention tool only when used in combination with many other tangible — and intangible — retention techniques. High salary alone is simply not enough to retain employees in the increasingly sophisticated Chinese job market.
A joint venture is likely to offer lower salaries and higher non-cash benefits than a wholly foreign-owned enterprise (WFOE) because of the influence of the Chinese partner, which is accustomed to this compensation structure (see Human resources and the Transition to Sole Foreign Ownership). Indeed, even in a WFOE, the benefits side of the C&B package for Chinese employees is much more than the faithful administration of insurance and other miscellaneous benefits regardless of investment structure. Joint ventures and WFOEs alike have to abide by all the statutory regulations concerning social insurance, whereas representative offices pay the Foreign Enterprise Service Corp. (FESCO) or a similar employment agency, which is then supposed to take care of their employees' social insurance needs.
Companies must clearly articulate each and every C&B package and explain its benefits to recruits and current employees alike. Some HR departments make the mistake of assuming that employees read and understand the various e-mails or notices they send out regarding benefits. In fact, many young people, in particular, are so focused on cash that the mere mention of a pension fund is likely to make their eyes glaze over. A growing number of HR departments thus teach employees about the various aspects of compensation and explain, for instance, how the employee will ultimately benefit more from a total compensation package than from a package that is solely or primarily cash based. These HR departments also explain the company's own reasons for preferring a total compensation philosophy. Some comparison to compensation packages at other companies in the industry is useful as a frame of reference, particularly given the fact that salary and benefits information is widely shared in China. C&B packages are likely to be complicated and continue to evolve, requiring creativity and responsiveness on the part of their designers and administrators.
Compensation
Some parts of a compensation package are more effective than others in retaining employees.
Salary
Salary, of course, is the portion of the compensation package to which employees look first. Salary levels vary substantially by region, company, position, and investment type, but representative office salaries are generally the highest and joint-venture salaries the lowest. Salary surveys are conducted regularly in major cities by management consulting, HR, and other organizations.Compensation naturally differs from place to place since the cost of living varies so much from a coastal city like Shanghai to an interior city such as Xi'an, Shaanxi Province, not to mention smaller, third-tier cities like Xuzhou, Jiangsu Province. Most companies either abide by the local market when setting salaries or establish a general compensation and pay structure that carves China into first-, second-, and third-tier cities. Under this system, workers in a first-tier city would receive 100 percent of the salary scale while those in a second-tier city would get 80 percent and those in a third-tier city, 60 percent.
One aspect of salary about which it is possible to generalize is salary inflation, the bane of FIEs. Salary inflation ran at nearly 30 percent in the mid-1990s but leveled off considerably during the deflationary period at the end of the decade. Salaries are once again on the rise, however, and companies are likely to be grappling with the trend for the foreseeable future. Watson Wyatt estimates that salary increases in 2001 will hit 7.5-8 percent, much higher than the economy's current inflation rate of 1.2 percent. Indeed, the company's annual salary survey already shows that salaries are up in 2001, with the highest salaries in Beijing, Shanghai, and in Guangzhou and Shenzhen, Guangdong Province. The highest paid positions generally fall into the categories of information technology, sales, marketing, and finance. Staving off salary increases is an uphill battle, one that can be won only through comprehensive benefits, generous incentives, and a work environment that is both challenging and supportive enough that your best employees simply don't want to leave.
A final salary trend worth noting is a move toward decentralized payment decisions that give individual business units more authority and flexibility in determining employee salaries. This more flexible approach is being applied to both direct and variable pay and can be seen as part of the move toward individualizing compensation packages.
- Bonuses
A movement is currently under way to tie many aspects of compensation to performance as an incentive for employees to meet certain goals. Getting employees to accept performance-based compensation has not been easy, since bonuses in the PRC have long been viewed as entitlements rather than as true rewards for individual or company achievement. As companies gradually ratchet up the percentage of compensation tied to performance, however, employees are adapting. In areas such as sales, bonuses are particularly effective and are sometimes tied to additional incentives, such as even higher bonuses if the sales manager is able to collect cash on delivery. Other companies have introduced bonus schemes to reward employee s if they come up with creative ideas to reduce costs, improve safety conditions, or increase efficiency. Stock options
Even before the international markets began their decline last year, most HR managers argued that the jury was still out when it came to evaluating the effectiveness of stock options. Options were perceived as useful in high-technology firms whose stock prices were skyrocketing. Unsurprisingly, the recent steep declines have been accompanied by a diminished enthusiasm about the value of stock options in retaining employees."Stock options don't really work with young people," explained one HR manager. "Saying we'll give it to you in five years doesn't fly. They want options and cash." Ongoing education about the value of stock options will likely increase their usefulness as a retention tool, particularly in the case of employees who have remained with a company for a few years and have seen the value of their stocks appreciate.
Their efficacy as a retention tool aside, stock options increasingly form part of compensation packages at major multinationals. Corporate policy often dictates who receives stock options; in some companies all employees get options, no matter their level, while in other companies options are reserved for upper-level management. Most companies that give options award them according to position and performance.Awarding stock options to Chinese employees is complicated since foreign exchange restrictions prohibit PRC citizens from owning stocks listed overseas. However, companies have devised ways to issue stock shares to Chinese employees while technically abiding by PRC law. Under most plans — usually called "shadow" or "phantom" stock plans — employees never actually take possession of the stock and do not legally own it. Instead, the company issues employees a letter confirming the number of shares and the prices at which they were issued. The stocks are held in the United States, perhaps by a professional broker. After a specified vesting period, if employees should choose to cash in their options, the company or broker makes the transaction on the ir behalf and the company gives them the renminbi equivalent of profits from the sale. Taxes are deducted before employees receive the money and paid to the local tax bureau at a rate negotiated by the company.
- Golden handcuffs
Golden handcuffs, or deferred compensation plans, are financial incentives given to employees if they stay with the company for a contractually specified length of time, such as an extra year's salary after two years of employment. A few companies also extend golden handcuffs to employees who leave to earn an advanced degree at a top international university. The reasoning here is that no retention package can compete with a Harvard MBA, and young employees should not be discouraged from pursuing higher education. Rather than try to stop them, companies offer support by promising to reimburse their tuition if they return to the company for a specified number of years after completing their degree. This is a relatively new policy at most co mpanies and its effectiveness in bringing people back has yet to be measured. Other companies try to combat the problem of losing valued young managers to overseas study by sending them to school themselves, at established company programs or at universities with which the company has made special arrangements. Iron handcuffs
Iron handcuffs are punitive fines levied on employees if they leave before their contracts expire. The terms of iron handcuffs are included in labor contracts or in training agreements appended to labor contracts. For instance, a company might require managers embarking on extended overseas training assignments to agree to reimburse the company for the cost of the training should they leave before the contract expires or, in the case of open contracts, before a specified amount of time. Or, a company that has helped employees obtain mortgages and is paying the interest may require them to repay the interest, plus penalty, if they leave the company before th e contract expires.The enforceability of such agreements used to be a major question but most HR managers report that in cities such as Beijing, Shanghai, and Guangzhou, employees are generally willing to abide by the terms, albeit with a bit of negotiation over, for instance, the amount of time they are given to reimburse funds or pay penalties. "If they refuse to [abide by the terms] you take them to court," explained one HR manager. "But usually they won't do this, they will — pay it will influence their future if they don't."
- Other incentives
Incentive schemes are generally designed to spur productivity and encourage employees to remain with the company. They may involve cash, savings plans, travel, gift certificates, or in-kind rewards and may be given for anything from exceeding a sales target to coming up with a creative idea to working well as a team member. Incentive schemes that work best involve recognition as well as rewards and are tailored to individual preferences. Some HR managers tie the plans to business goals and design them i n consultation with the company's business units.
Benefits
Although employees may not consider benefits to be a significant part of their total compensation, at a joint venture or a WFOE they may add up to as much as 50-70 percent of salary. Benefits are lower at representative offices, partly because their pay scales tend to be higher. At a state-owned enterprise (SOE), on the other hand, non-cash benefits may be triple an employee's cash compensation. Benefits can be divided into two categories: social benefits and commercial benefits.
Social benefits
Social benefits consist of government-mandated payments into the government-run social insurance funds that currently include housing, pension, medical, unemployment, accident/disability, and maternity (see The CBR , May-June 2001, p.18). Regulations governing these funds, which were started on a local basis in 1995, vary widely from city to city, creating nightmares for HR and payroll divisions. Though the funds were created to alleviate the social welfare burden borne by enterprises, in reality most money for the new funds still comes from enterprises, with FIEs contributing a disproportionately high share. Contributions to the funds are split between employer and employee, with the local government setting the contribution percentages as well as the wage floors and ceilings upon which contribution levels are based. Many localities are phasing in contributions and will raise them in small increments every few years until they reach a final percentage.In Shanghai, for example, companies and employees each pay a percentage of their salary — with contribution percentages based on 300 percent of the average local wage — into four funds, with 7 percent from each going to housing, 2 percent from each going to medical, and 1 percent from each going to unemployment. Employees in Shanghai currently pay 6 percent into the pension fund; employers pay 25.5 percent. All of the individual's contribution goes into an individu al account, which receives 11 percent of the total contribution. The corporate contribution is scheduled to decline as the individual contribution rises to 8 percent. The remainder of the corporate contribution goes into a social pooling fund. Employees' contributions to the funds are deducted from their taxable income.
Pension funds, which place the largest burden on both employers and employees, are supposed to be unified nationwide, and the individual accounts are intended to be transferable should an account holder move to another city. Unification of the many local regulations has proved extremely difficult, however. Also, there is considerable question about the mobility of these funds, which in fact are simply numbers on paper, as the actual contributions are funding payments to today's retirees. As a result, some FIEs in Shanghai supplement pension funds with additional contributions or insurance. For example, one major US company in Shanghai contributes to its employees' pension funds based on their true salaries rather than the 300 percent of average monthly wage that the government requires. This extra contribution — 25.5 percent of the difference between 300 percent of average wage and the emplo yee's true salary — goes into the employee's individual account. However, a portion of this difference is actually taken by the Shanghai government and put into the pooled fund rather than the employee's individual account; the government announces the percentage it will take only at year's end.
"They say that if you want to do more for your employees, you have to do more for the government, too," explained the HR director at the company with this scheme.This company offers life, accident, and hospitalization insurance to employees as supplementary benefits, with life insurance equal to 52 times the employee's monthly salary. The firm also provides travel insurance, but only for business trips. Some companies put an additional percentage of the employee's salary into the housing fund, rather than just the mandated 6 percent.
Commercial benefits
HR managers design many commercial benefits perks to retain valued employees. Like compensation, benefits packages for senior managers are complicated and spread out over a period of time to encourage them to stay. Commercial benefits may include housing plans or mortgage assistance, including loans or the payment of interest on bank loans; car plans; additional accident and medical benefits, including partial coverage for one child; supplementary pension plans; child care and elder care; cell phones; health club memberships; extra vacation time; and tuition assistance programs.Commercial benefits programs tend to change with China's evolving economy and to follow social trends. Five years ago, purchasing a home was still a difficult enough endeavor that many companies offered extensive housing plans to senior managers, and some even built homes and sold them to employees at highly preferential rates. In the past two years, however, the stock of housing available for purchase in major cities has increased considerably, and banks have begun to make mortgage loans to individual buyers. Housing plans now more frequently take the form of mortgage assistance programs.
Important intangibles
Though all companies grapple with the retention issue using more or less the same set of tools, some are consistently more successful at it. The reasons cannot always be fully explained; one company may lose valued workers even while another retains them with a virtually identical C&B package. The reasons why may have much to do with intangible factors.
Identifying retention goals
At the top of the list of intangibles is how a company defines highly valued employees and subsequently determines its retention goals. Turnover is inevitable; companies that acknowledge this are least likely to suffer seriously when it happens. Indeed, the best way to avoid turnover is by anticipating and planning for it. Rather than trying to keep everyone equally happy, a company must target those employees who are most essential to its current functioning and future growth. While doing everything within reason to retain targeted employees, companies should keep possible successors in the p ipeline.Companies that suffer from high turnover rates should not let the fear that they have become virtual training schools for other FIEs limit development programs that could ultimately help with retention. "There will always be people who leave; that's life, you have to deal with it," summed up one HR manager. "You still have to train."
Managing employee expectations
Just as a company must honestly evaluate its own expectations when it comes to retention, so must it manage the expectations of its employees. Though it is important to keep people motivated and enthusiastic, it is equally important to dispel unrealistic expectations for fast promotion or rapidly increasing responsibility. And, just as employees need honest evaluations of their probable paths in the company, so do they need to have a sense of the company's own growth plans and goals.The importance that personal relationships play in retention in China should not be underes timated. Indeed, the Korn Ferry study mentioned above found that local managers listed relationships with their bosses second behind career development in a list of factors motivating them, more important even than salary.
As the HR manager of one major US multinational explained it, "The personal relationship of the manager and employee is very important. The sense of loyalty is to the person — the company is nothing, it's a building. You need to move beyond work, to family. You have to invest some time in getting to know your employees." This opinion was echoed by another HR director who noted, "Superiors are very important. Most people leave companies because they lose confidence or interest in their boss."
Employees who feel personally appreciated, respected, and cared for by their superiors are far more likely to stick with a job than those who do not. HR managers repeatedly stress that bosses must strive to show interest in and concern for their employees by asking after their families, organizing and participating in company outings and other social activities, visiting staff when they are sick, and expressing concern in other ways. This personal interest must start from the general manager and radiate down through the various levels of management. Naturally, the more genuine the interest and concern, the more effective it is likely to be, but even just going through the motions is better than ignoring this basic desire to humanize a corporate relationship.
Welcoming newcomers
One of the most important elements in a company's retention strategy is a commitment to ensure that the newcomers feel welcome. "Companies should pay more attention to bringing people into the organization," says Helen Tantau of Korn Ferry. "It's like a guest coming to your home, you need to take care of them from the beginning. Help them settle in, find their feet, see where they are going."The FIE environment is demanding for all concerned, but the effort it takes to integrate new employees — especially managers — into the company will be worthwhile in the long run. A smooth start and a thorough introduction to the workings and goals of the company can help make new employees feel like valued team members, encourage them in their work, and build their loyalty to their new company.
Some retention tools straddle the line between tangible and intangible. These include autonomy, empowerment, recognition, and credit. Upper-level managers are far more likely to stay if they are given the independence they need to make a mark and if they receive public recognition for their successes. Firms should also make clear to everyone that top-level Chinese managers will have the opportunity to move on to senior management positions; if a glass ceiling seems to exist, with all of the top positions staffed by expatriates, the turnover rate is likely to be higher. One way of making the possibility of promotion clear is to identify high-potential employee s and put them on an accelerated career track. Another, of course, is to staff top positions with local managers.
Measuring effectiveness
One aspect of retention policy that should be tangible — but often isn't — is the success or failure of various retention tools. Most companies can quote their turnover rate in an instant, but have a much harder time explaining why turnover continues at that rate or how retention tactics affect it. Since companies invest a considerable amount of time and money in retention tools, an analysis of their effectiveness is certainly worth the effort. Of course, when conducting an analysis, companies must consider such factors as the age of their workforce and the structure of the company. FIEs that hire a large percentage of recent college graduates will inevitably have a higher turnover rate than those that employ more people in their 30s or 40s. Similarly, FIEs that have flat organizations in China will have higher turnover rates than those that have deeper hierarchies and more opportunities for promotion.
HR bread and butter
For the near future, China will suffer a dearth of educated, experienced, and self-motivated men and women capable of managing in a global economy. Competition to hire managers with the most desirable qualifications therefore will remain stiff, with pervasive poaching, salary inflation, and localization efforts hobbled by problems with recruitment and retention. While China's impending WTO entry will eventually benefit HR development, in the short term the arrival of new foreign companies into the China market will likely heighten rivalry among FIEs to attract and retain talented and experienced managers. Finding, retaining, compensating, and training workers will thus still be the bread-and-butter work of most HR departments in foreign firms in China.
Sheila Melvin
http://www.chinabusinessreview.com/public/0111/melvin.html
Recruiting in China: what to expect
April 7th, 2006China is hot — but starting operations in a new market is not easy. Will you move your own people to the new location or will you start hiring locally? And if you hire locally, how do you attract the best candidates and what do these new recruits expect? Nannette Ripmeester reports.
Kevin Ng, Partner at the Beijing office of Deloitte, is clear about the type of graduates Deloitte targets. “We will only approach the first-tier universities in China to be assured of quality graduates," he says. "We conduct campus recruitment to introduce our firm and the attributes of graduates we are looking for.”
University ranking is extremely important in China and is directly related to salary expectations. Graduates from the top universities can command much higher salaries in comparison to the rest of the graduate market.
A survey by the Shanghai Labour and Social Security Bureau conducted in 2003 showed most fresh university graduates in Shanghai earn a monthly salary of between 1,500 Yuan Renminbi (abr. Yuan) and 2,500 Yuan — the city's average is 1,100 Yuan.
Only 1 percent of graduates earn top salaries — they earn between four to six times as much as the rest. Even though there is a wide difference between salaries and graduates from less prestigious universities are expect much lower salaries, Deloitte only targets the absolute top students.
“We make use of various methods such as written tests, group discussion and one-to-one interviews to assess the quality of the graduates. For us technical competence is less important, we focus on their personality,” says Kevin Ng.
ICI has taken a slightly different approach. “We have initially focussed our attention on Chinese nationals studying in Europe. Only now we are going to market on-campus in China as well,” says Esther Penketh, who is a member of the international recruitment team at ICI, based in the UK.
“Our first experiences in China have made us realise that it works best if we give prospective candidates more information upfront on how to approach the selection process," says Penketh.
"We tell them what we are looking for with regard to the on-line application, the telephone interview and the competencies we seek. Being very clear about the package on offer is also essential,” she says.
Kevin Ng agrees how essential it is to invest time and energy before starting to recruit in China: “Market intelligence is essential, be patient and diligent in hiring the right candidate — because it can be quite painful to dismiss a person in China!”
The following information is useful when dealing with the application process in China.
The application letter
For Chinese graduates an application letter, or cover letter, is not customary. They are more used to application forms.
The curriculum vitae
The Chinese do not use the term CV, but resume. Usually this document lists their education and experience in a very detailed manner.
In China it is not unusual to see a resume of more than two pages. The resume is usually typed, but hand-written documents are still surprisingly common.
Chinese resumes are usually set in a reverse-chronological order, listing the most recent first. Education plays a prominent role and references are not by standard included.
The Job interview
The Chinese are very modest people, and do not like to show off, or over-impress others. Be aware that it might not be easy to get through to a Chinese candidate at a certain level as they are educated to behave in a self-effacing manner.
Here are some facts based on the most recently published data (June 2004):
- Last year, Chinese university graduates faced difficulties in finding a job.
- This year, the job market seems even more disappointing for them – the starting salaries for university graduates in 2004 dropped between 25 to 30 percent, compared with last year.
- The average starting salaries of university graduates is 1,500RMB/month.
- Foreign invested enterprises (FIE) pay the highest salaries.
- Average salaries of governmental bureaus are 1516.7RMB/month.
- Average salaries of state owned enterprises are 1508.1RMB/month.
- Average salaries of foreign invested/owned enterprises are 2040RMB/month.
- Having an academic degree plays an important role in starting salaries;
- College (three-year professional education): 1300RMB/month
- University (four-year academic university): 1500RMB/month
- Postgraduates (Master degree): 3000RMB/month
- Those who graduated from famous universities (with a good ranking) earn 400RMB a month more on average than others from less prestigious universities.