Recruiting in China

Internet giant Yahoo announced on Tuesday that it planned to lay off at least 10 percent of its workforce over the next few months as sales declined for the third consecutive quarter this year.

At least 1,500 employees will lose their jobs as part of Yahoo's cost-saving plan, which Yahoo hoped would reduce costs by 400 million U.S. dollars a year.

The company said it would also achieve "substantial additional cost savings" by addressing "structural inefficiencies."

Also on Tuesday, Yahoo said its third-quarter sales, excluding commissions, were 1.32 billion dollars, a decrease of 21 million from the previous quarter.

Its third quarter profits were 54.3 million dollars, or 4 cents per share, down 77 million dollars from the previous quarter, a 64-percent decline.

In a statement, Yahoo Chief Executive Jerry Yang said that economic conditions and online advertising had softened during the third quarter.

Yahoo now projects that 2008 revenue will be between 7.18 billion and 7.38 billion dollars, down from a forecast, issued three months ago, of 7.35 billion to 7.85 billion.

Yang said the company would continue to balance the investment in new products with a tight control on costs.

"Despite a tough environment, we remain optimistic about Yahoo's future," he said during a conference call with analysts.

Following the release of the third quarter revenue report, Yahoo shares lost 6.1 percent, or 79 cents, to 12.07 dollars in regular trading on Tuesday and then gained more than 5 percent in after-hours trading.

The new labor contract law does not increase any labor costs for lawful enterprises, says an article on the website of People's Daily. The following is an excerpt:

When facing the same labor contract law, enterprises have different views about its impact upon labor costs. As a textile factory owner in Fujian province said, the law tilts in favor of employees, pushing up labor costs and thus squeezing the room for development; while the boss of Anta, a sports shoes producer in Fujian, believed that it does not affect their normal operation and will contribute to merger and restructuring, boosting their development.

On Oct 7, Sun Chunlan, vice-chairwoman of All-China Federation of Trade Unions, told the press that the recent bankruptcy of small- and medium-sized enterprises has nothing to do with the implementation of the labor contract law.

The plight faced by SMEs is mainly because of the worsened international economic situation such as the fluctuation of exchange rates, weak foreign demands and domestic policies about taxation and finance. And the labor contract law in fact does not increase the labor costs of enterprises. The reasons are as follows:

First, the labor contract law does add some labor costs for enterprises that had seldom obeyed the labor law in the past. The previous labor laws and regulations in China already clarified what the employers should pay for employees including salaries, social security, welfare, housing fund and overtime compensation.

The newly enforced labor contract law only adds the requirement that employers should compensate for the termination of labor contracts with employees. So, if employers renew the contracts with employees or employees volunteer to quit their work, employers do not need to pay this compensation.

Second, some employers reduced their labor costs by adopting abnormal practices such as not paying social security for employees before the enactment of the labor contract law.

As a survey conducted in Guangdong province showed, the payment of social security for employees accounts for 2 percent of the total costs of an enterprise. The new labor contract law demands unlawful employers to make the payment of social security, leaving them with the feeling that labor costs have been raised by this new law. But we should note that social security payment is what employers should have offered and thus it does not increase labor costs for employers who have already paid this money to employees.

Therefore, in practice, it is those employers who had adopted illegal practices and seldom obeyed labor laws in the past who believe the labor contract law would increase their burdens.

The growth of an enterprise cannot be achieved at the expense of the legal rights of employees. It is not correct to regard the expenditures that should have been paid by enterprises as their increased labor costs.

The new labor contract law has just stripped unlawful enterprises of their inappropriate profits. It is a protection for lawful enterprises. Instead of weakening their competitive edge, it can bring new growth opportunities for them.

The government will continue to promote policies aimed at enticing skilled overseas Chinese to return home to develop their careers and build an innovative country.

"It is the talent pool that empowers China to compete in the campaign of global innovation," Wan Gang, science and technology minister, said during the 5th Overseas Chinese Forum Worldwide yesterday in Beijing.

The government has always endeavored to cultivate the nation's technological talent base, and its human resources in regard to the technology fields are now among the best in the world, Wan said.

China is emerging as an ever-popular destination for foreign students, with numbers steadily rising over the past few years, he said.

The country already ranks sixth in the world's overseas study market, according to the latest research of the China Association of Science and Technology.

"However, the market is still hungry for cutting-edge technological talents," Wan said at the forum, which attracted more than 200 overseas Chinese from 14 foreign countries.

"The forum aims to be a bridge for overseas Chinese to learn about the favorable policies of the Chinese government, and share cooperative purposes with domestic peers," Li Haifeng, the chief of the Overseas Chinese Affairs Office of the State Council, said.

"I made the right decision to come back to China and restart my career here," Xue Lan, chief of Tsinghua University's Public Policy and Management School, said, after studying and working in America for about 20 years before the 1990s.

However, Xue said that China still has a long way to go to promote "trilateral networks among academia, state and industry".

The current global financial crisis could increase world unemployment by an estimated 20 million, according to the International Labour Office earlier this month.

Insiders said that although the crisis might also plague China, it could serve as opportunity to entice more overseas Chinese home.

"My former colleagues in America call me every day to consult me on the latest information and chances to work in China since the recent economic crisis hit America," Wang Dazong, general manager of Beijing Automotive Industry Holding Company, who studied in America and worked for General Motors, told China Daily.

The Overseas Chinese Forum will finish today.

Yang Xiaxi seldom paid attention to the happenings in the US because he thought they had nothing to do with him.

Laid-off workers of bankrupt toy-maker, Smart Union, board a bus on Friday to downtown Dongguan to find a job. [China Daily]

But now he realizes he was wrong because in a globalized world, a financial crisis on the other side of the globe can cause a person his job even in Dongguan, Guangdong province.

Though he describes himself as an experienced and professional art designer, he has been out of a job since his former employer, Smart Union, folded up 10 days ago. The Hong Kong-listed toy-maker cited weakening US orders and rising costs, to file for bankruptcy on Oct 17.

"It's a cutthroat job market," he said yesterday. "Some firms are offering a salary just equal to the province's minimum monthly salary (about 800 yuan, or $120), which I cannot accept, while others have closed their doors to job applicants even if they are not downsizing their existing staff."

Manufacturers in the Pearl River Delta region, China's economic engine, are now struggling to keep afloat after the worst Wall Street meltdown since the 1930s has shrunk the demand for Chinese goods.

Universities in Guangdong have seen fewer firms going for campus recruitments.

Huang Yongping, a teacher in the employment guide center of Guangzhou's Sun Yat-sen University, said several big firms have cited the global financial crisis as a reason for doing away with or deferring their campus recruitment plans. "And fewer small- and medium-sized firms have approached us this year."

University students are finding it difficult to get a job in the Yangtze River Delta region, China's other economic powerhouse, too.

Jobs offered to Zhejiang University students have fallen by about 30 percent compared with last year, said Zhou Min, an international commerce major of the university.

Competition for jobs also looks exceptionally fierce in Shanghai, which houses many financial institutions that have been hit hard by the financial crisis.

Xu Wei, 22, has a prestigious university degree, internship with several multinational companies and is fluent in oral and written English. But the English major of Shanghai International Studies University still cannot get an interview call for a job.

"I have applied online for more than 30 jobs and visited various job fairs but have got no reply," Xu said.

Tang Xiaolin, director of Fudan University's career development center, said: "There is no doubt the global financial crisis has hurt job growth in China."

Worsening the situation will be the entry of 6 million fresh graduates into the job market next year - 7 percent more than this year, according to official figures.

Chinese Vice Premier Hui Liangyu said on Saturday farmers should share equal job opportunities with urban residents, which was key to realize the government goal of doubling farmer's income by 2020.

Farmers were encouraged to start their own business and local government should work out more favourable policies including preferential taxation and easier market access to help farmers find jobs and business opportunities, Hui said at a prize award ceremony of the elite rural entrepreneurs.

The reform and innovation of the rural banking system should be pushed forward so as to resolve the rural residents' problem of cash shortage in starting their own business, Hui said.

China vowed to double rural residents' income from the current level by the end of 2012 as a part of the plan aimed to revitalize the country's rural area and agriculture, which was proved on the Third Plenary Session of the 17th Communist Party of China Central Committee.

Hui said vocational training for rural people should be enhanced to allow more migrant workers to go back to their hometown to run business.

Everywhere you look today, you see the elements of another “perfect storm” for recruiters. The economy is in a free fall. Companies are looking at ways to reduce headcount. Recruiting budgets are frozen. Those sought-after “passive candidates” are hunkering down to try to weather the storm, so they’re not taking your calls, if you’re even making them.

What’s a recruiter to do?

Focus on retention. It’s at times like these that organizations earn their employees’ loyalty. As the saying goes, this isn’t my first rodeo. I’ve seen the market soar and tank. The way companies treat their employees in stressful and frightening economic times goes a long way in determining who comes out of these difficult times better positioned to re-take greater market share.

Kevin Wheeler had a great piece earlier this month about framing the future you want and identifying four things you can do now to make that future more likely. But there’s more that we can do internally. I agree with Kevin that keeping in touch with our best candidates and keeping our pipeline active is critical. The importance of using this time to plan and educate ourselves for our own future success cannot be overstated. But one of the first things I learned as a recruiter is “If you’re not recruiting your best people, someone else is.”

Now is the time to make sure that you are reaching out to your own best people and involving them in conversation. You’ve seen economic downturns before and so have they. We know that we’ll come out of these things, and when we do, the phones will start ringing.

Think about it. When the market starts going up again and senior management is confident that the upswing is for real, you’re going to be asked to go out and get the people you need to sustain your company’s participation in the improving marketplace. But so is your competition — and don’t think they don’t know who the best people in your organization are. They’ve got a list of people in the industry that they covet. They may even have had conversations with your people at conferences or on their own.

You need to be reaching out to your best people now. Not necessarily to reassure them, because you can’t promise anyone anything, but to keep the internal lines of communication open. This is no time for HR to take on a bunker mentality behind closed doors. Hiding in your office is never a good idea. You don’t want to start rumors that could actually stoke people’s fears.

Jim: Where are all the HR people?
Joe: They’re in their offices with the doors closed.
Jim: The economy is real bad. They must be planning a downsizing.
Joe: Uh-oh, you’re right. I’ve heard that a lot of companies in this area are cutting jobs. As soon as things pick up I’m going start looking. Better to do it to them before they do it to me!
Jim: You got that right. Hey Bill, did you hear that there’s going to be a RIF soon?

And that’s how it starts. You don’t want to do is give people one more reason to listen to calls from your competition. The other question that comes to mind goes a little differently, but it’s another reason to be focusing on the positive things you can do when things look bad.

Joe: We’re really taking a hit from this economy. I hear a lot of companies are considering layoffs.
Jim: Yeah, HR is probably making a list right now.
Joe: How come you never see HR people on those lists?
Jim: Yeah! I mean we’re not hiring anyone right now. What are they doing? Why not lay off a few recruiters and save the jobs of the people who do the real work around here?

Doesn’t sound pretty, does it? That’s why you’ve got to get out there and be visible. I’ve heard that nobody wants to see HR walking around during a downturn, because people are afraid that we’re looking to see who’s working, who’s busy, and who’s not. Don’t let that deter you. Get out there. Be open and honest in talking with managers and their best staff to see what you can do to help alleviate people’s fears at a time like this. Encourage managers to have staff or town-hall style meetings with employees to give them a chance to speak openly about their concerns. HR needs to be side-by-side with managers at these meetings.

To be sure, there will be some companies letting people go, and yours may be one of them. But no matter what, no matter how deeply you cut, you’re not going to lay off your best people. These are the most valuable assets your organization has. Unless you’re turning out the lights and rolling up the carpets, as long as your firm is around, you want them working for you. These are the people who make your company successful, and will again in the future. That’s why you need to be re-engaging them now, when things look bleakest. You can’t give them double-digit raises or six-figure bonuses, but give them what you can, and possibly what they crave most: open communication.

Remind them of how valuable they are to the company. Stress that management is exploring options how best to weather this storm. Ask for their best ideas of what the company can or should do right now, six months down the road, or a year from now when things are different. Because things will be different. Maybe better, hopefully not worse, but certainly different. Ask them what they think is going to happen. They are closer to the front lines and therefore may be hearing different things than the people in the executive suite are hearing. Treat them with respect and get their input. After all, these are your best people. The same things that make them good at their jobs may also give them insights about where your industry is going.

I brought ideas like this to one company I was working with when they were considering layoffs. I asked senior management what they were planning to do for those employees who remained after the reductions. One manager said, in all seriousness, “We don’t have to do anything for them. They should be HTHJ. Happy to have jobs.” That organization did survive the setbacks it was going through, but has morphed and merged several times since. Many of the best people from that organization have left for the competition or to start businesses of their own. Sure the superstars made it through that round of downsizing, but as soon as it was over, they started looking.

Treating people with respect when things look worst is not just being nice to people, it’s good for business. These are the kind of people you’d have to pay a fortune to get if they were on the open market. Do everything you can now, while they are inside your doors, to keep them there. People are always less likely to look when the economy is bad, but the good people are just as likely to bolt if they see your company behaving badly in bad times. This is an opportunity for your organization to make its reputation. How many times have you heard companies boast about having been in business “X” number of years and never had a layoff? Companies point with pride at a record like that not because they’re nice but because it’s a recruiting and retention tool. They’re working to retain their best and most valuable employees.

Nucor Steel reduces executive perks and will even shorten the workweek from five days to four but doesn’t lay people off. It runs some of the most profitable and efficient steel mills in the world. Lincoln Electric guarantees jobs to employees with just three years of service and has not had a layoff since the 1950s. Its turnover rate is infinitesimal.

Many of us are recruiters, and our job is to find the best people to fill the vacancies in our organizations. But we are also human resource professionals. When vacancies dry up, we need to focus on other things we can do to add value to our organizations.

Get out there. Be visible. Retention is the most cost-effective form of recruiting. And the time to do it is now.