Recruiting in China

This year in the recruiting industry there has been a lot of talk about how companies are tapping into Web 2.0 technologies to enhance their recruiting. But how is the candidate community also using these technologies for their own purposes, and what impact is it having on our recruiting strategies?

Web 2.0 Candidates Are:
Faster. Candidates can gain access to more available jobs within minutes on any day.
Smarter. Access to salary, compensation, and corporate performance data is everywhere.
More Connected. Social networks help candidates identify insiders at any employer before or after they apply for any position.
Web 2.0 Candidates Are Faster
When job boards came on the scene 10 years ago, they made accessing available job information much easier for candidates. No more digging through the classified section of the Sunday newspaper, crafting up witty cover letters on fluorescent letterhead to get attention and postal mailing resumes. Remember when we’d put our fax numbers on our ads? Come on: how many candidates really had fax machines in their houses? Today, there are “job aggregators” such as indeed.com and simplyhired.com which put all the jobs from multiple job boards into a single search engine that stream directly into any candidate’s personal home page on Google via RSS feeds every day.

I think one of the main reasons that recruiters are after “passive candidates” is that we think we have more time to get them through the interview process, versus “active candidates” who machine-gun apply from job boards to a dozen jobs on any Monday. With the latter, we have to get them setup with an interview within 24 hours and make a hiring decision within two to four days. That’s how fast the market is moving with so much job data available online.

Web 2.0 Candidates Are Smarter
In addition to having access to an ocean of jobs, most candidates tap into salary and compensation data via sites such as payscale.com and/or salary.com. Not to mention that the younger generation of workers aren’t shy about sharing their comp levels in the lunchroom or over beers, unlike our parents’ generation who considered salary discussions to be so taboo they would only share this information with the IRS when filing their annual tax returns.

Many recruiters have candidates show up with a salary report printed from one of these salary sites and demand that their pay be at or above the level on the report. Candidates don’t care if our job descriptions aren’t perfectly matching the ones on those websites; they just see the numbers and get an expectation that’s usually out of line with our compensation levels. Regardless of how you handle this situation in your interview process, employers are under pressure to know how their pay grades compare to other major employers in their markets.

Web 2.0 Candidates Are More Connected
Remember when you would get an applicant resume, see which companies a candidate previously worked for, and then quickly find which of your internal employees had worked with the applicant in the past, in order to get “inside information” to determine if they were a good or bad prospect? (Never mind that 51% of people will comment positively or negatively on someone because of how they liked their personality — and not their actual work performance.)

During the interview process, candidates were lucky to run into a former colleague in the hallways. Or if they get lucky in the interview, they will discover who they might know in common with the interviewing managers and try to discover which “moles” they could find within the prospective company, which would help them do their own due diligence on the employer — not to mention that they will try and gain advocates to help them get the job should their interest grow.

Well, because of the growth of social networks (Facebook, MySpace, LinkedIn, Jigsaw, and many more), the minute most candidates apply for any job (and sometimes even before they apply for a job), they can now instantly see who they know at any prospective employer, all the way back to their old high school or college buddies.

This tilts the access of information toward the candidate community — who can now see if there are bad previous bosses or old enemies working within your company, which they may wish to avoid. The candidates’ reasoning will be if your company hires personalities the candidate disliked, it indicates that your culture prefers those types of individuals, which will have an impact on your employer brand whether you get a chance to enter the conversation or not.

This puts a new pressure on employers to create a working culture that will attract these more web savvy candidates. These Web 2.0 candidates don’t believe most of our career sites’ language about having an exciting work environment. They want to find out for themselves (via networking) what it’s really like to work within the sub-cultures within our company, which are driven by management personalities and business cycles which are exciting to certain candidate types, and a turnoff to others.

After a lengthy screening process, the hiring committee feels it has found the right candidate for the company. Now comes the tricky part: how do you design an offer and go through the offer stage of the process without damaging the relationship with the candidate?

Many companies are not prepared to go through the offer step of the process. As a result, they damage the relationship with the candidate. This leads to one of two unfortunate conclusions. Either they lose the candidate or the candidate comes on board, but with scar tissue. Applying some of the best practices from the sales world into a sales talent screening program helps to avoid that scenario.

The offer stage of the hiring process parallels the proposal phase of sales. Best practices in sales say that you don’t present a proposal until a thorough needs analysis has been completed. If a sales person is presenting a proposal to a prospect, he has acquired the information needed to design a solution, has discussed budget, has a full understanding of their solution requirements, and has set an expectation on pricing. This is certainly the case if the salesperson is going to be successful in winning the account.

Looking at this process in relation to the offer stage of the sales talent screening program, many of the same best practices from sales hold true. During the screening program, information needs to be gathered from the candidate to determine their financial requirements. Unfortunately, many sales talent screening programs focus exclusively on screening the candidate for fit, but do not consider the needs for the offer phase of the process. This leads to a last-minute scurry to mine the information from the candidate, or they design the offer blindly. Neither of those are best practices for the offer stage.

In sales, it is said that if you are going to lose, lose early. This prevents you from making a huge investment in a relationship that will not generate revenue. The parallel to screening sales talent is understanding the financial requirements of the candidate early enough to stop the process before over-investing in the relationship. There is no point in continuing a process with a candidate who requires a compensation level 25% above what you can offer. This probably seems logical, but hiring executives rarely focus on this as a de-selection element early in the process.

Just like discussing pricing with a prospect, the financial-needs discussion requires finesse. The candidate knows that you are asking questions about their financials, just like a prospect knows a sales person is fishing for budget information. The better-skilled salespeople tell their prospects, “I don’t want to waste your time by getting you excited about a solution that will not fit in your budget constraints…”

In much the same way, this discussion can be had with the candidate, “I don’t want to excite you about an opportunity that might not be a match for your financial needs. As you look at making a change in position, what thoughts have you given to your compensation requirements?”

With continued finesse, you can dig further into the mix of salary versus commission. Some candidates may rebuff this discussion as they feel the information will be used against them. In some instances, they are justified for having that concern. Hopefully, that is not the case in your company. We’ll come back to this point later. The bottom line is that the two goals of this phase are to gather information that allow you to formulate an offer and to de-select those candidates whose requirements exceed your financial package.

In sales, the proposal phase should not be like a magic show. The prospect should not be shocked by what is included in the proposal. In essence, the proposal is the documentation of what has already been discussed. No surprises. The same holds true for candidates. The time to review the compensation plan details is not after they are hired, or even at the offer stage. The compensation plan should be reviewed at the point where you have a genuine interest in pursuing the candidate and they have a complete enough understanding of the company that they will be able to comprehend the compensation plan.

One of the core requirements associated with any process is that it is measurable. The offer phase of the sales talent screening program should be measured statistically to determine effectiveness. The key statistic is number of offers made versus ones that are accepted. If the acceptance level is less than 80%, the process should be reviewed by asking the following questions.

At what point of the process are the candidate’s financial requirements reviewed?
When it is known that the candidate’s financial requirements exceed the package, is the candidate removed from the process?
At what step is the compensation plan reviewed with the candidate?
In what level of detail is the compensation plan reviewed with the candidate?
How often is the initial offer to the candidate rejected, and subsequently, negotiated successfully?
The last question in the list above ties back to my opening position about damaging the relationship. Again, this ties back to lessons that can be learned from sales. Many years ago, a procurement training specialist shared a pearl about the counsel he gives to salespeople who ask about pricing strategy. He said, “Provide us with the best pricing that you feel comfortable providing and either way you are happy.” This always puzzled salespeople so he explained further. “If you provide your best pricing and are selected, you are happy because you won the account. If you are not selected because we found lower pricing elsewhere, you are happy because you would not have been happy at that price point. Again, either way you are happy.”

Consider this when making an offer to the sales candidate. Develop an offer based on what was learned from the candidate that represents the best offer you are willing to make. Early in the process, tell the candidate that you don’t negotiate offers, but rather put your best offer on the table upfront. It demonstrates a professional message to the candidate and reduces their fear of attempts to lowball them. When companies negotiate offers, while they may “win” the candidate, they damage the relationship. This person is onboarded with the worst scar tissue of all, a lack of trust. The salesperson will always be on the lookout for the company to try to cheat them.

As with any component of the sales talent screening process, preparation is the key to success. Organize your team and design a process that achieves your desired results. This will allow you to create longlasting, fruitful sales marriages.

CHINESE people are perceived as more likely to be their own boss running a business and this spirit of entrepreneurship is what franchise owners at an exhibition are hoping to tap into.

"Chinese are more enterprising than other people. We have the feeling they are more likely to do their own business rather than work for others," Anton Widjaja, vice president of PT Top Food Indonesia, the operator of the country's biggest fast-food chain 77 Esteler Juara Indonesia.

The company, which has 180 stores in Singapore, Australia and Indonesia, is looking for a master franchisee to tap the Chinese market. It aims to open the first store in Shanghai by the end of the year and open at least 10 stores within 2 years in cities like Guangzhou and Shenzhen.

The two-day 2008 Shanghai International Franchise Exhibition, which opened yesterday at the Shanghai International Exhibition Center, has lured 100 franchise owners and huge crowds. Among the exhibition participants were names in the dining industry such as Dio Coffee and Dicos fried chicken.

Franchising has seen an encouraging growth in China as it provides an easy way to do business and help brand owners to rapidly grow business in a market they may not be familiar with.

Last year, the sector in China's mainland jumped 16 percent, with more than 2,600 franchisers operating in the country and over 200,000 franchised outlets, the Ministry of Commerce said.

China's labor market is in the pincer grip of dwindling surplus labor on one hand and growing unemployment on the other as a result of mass closures of outdated factories.

Apparently contradictory, these two rising trends have come to define the labor market of late. Employers are finding it difficult to find suitable workers and employees are scratching heads in their search for ideal positions.

In terms of labor supply, which has long been seen as a factor in the nation's economic miracle, China has already entered a complicated era of a dwindling workforce and a shortage of skilled workers.

But don't panic.

Cai Fang, a senior think tank economist from the Chinese Academy of Social Sciences, assured the Chinese leadership while correcting the widely accepted perception that China's labor supply is still endlessly abundant.

According to some economists, the number of surplus laborers in rural areas alone surpasses 150 million, equivalent to half of the US's total population.

But Cai insisted that this figure was inaccurate. He said 52 million would be a more realistic estimate.

Cai reported the research result when China's highest leaders lent their ears to the country's top-level economists in July to find solutions to the current economic headaches.

"Our research finding has revealed that surplus labor is far less than we expected," said Cai, who is also a member of the Standing Committee of the National People's Congress.

The number of surplus laborers is declining in rural regions. Cai assured the leadership, currently puzzled by rising inflation, energy supply and possible economic slowdown, that by 2020, China's labor supply would increase at an encouraging pace.

To ensure a healthier economy, Cai said China needs to upgrade its economic structure and further improve the treatment of laborers and equip them with new skills and knowledge.

Since last year, the government has been determined to close the labor-intensive but energy-crunching factories. The impact is obvious as many of China's factories are labor-intensive. This will continuously result in unemployment, said Liu Junsheng, a senior researcher from the Labor-Wage Institute affiliated to the Ministry of Human Resources and Social Security.

THE number of Americans filing first-time claims for unemployment benefits rose last week to the highest level since September 2001, as hurricanes kept residents of Texas and Louisiana out of work.

Initial jobless claims increased by 32,000 to 493,000 in the week that ended last Saturday, from 461,000 in the prior week, Bloomberg News reported the United States government as saying yesterday.

Hurricanes Ike and Gustav added 50,000 claims, the department said.

The figures may reinforce concern that consumer spending, which accounts for more than two-thirds of the United States economy, will falter.

Growth is already slowing due to the housing slump and the worst financial crisis since the Great Depression.

"The labor market is clearly in recession," said Steven Wood, president of California-based Insight Economics LLC.

The number of people continuing to collect jobless benefits climbed close to a five-year high of 3.542 million in the week ending on September 13, from 3.479 million in the prior week.

More than 100 foreign-funded companies in Shenzhen have been ordered to sign collective contracts with their employees by Dec 5, the local trade union federation said on Monday.

Zhang Youquan, director of the legal affairs department of the Shenzhen Federation of Trade Unions (SFTU), said at a press conference that the firms, which include McDonald's, Carrefour and Ikea, should start negotiations with their employees within 10 working days (of Monday).

The talks should encompass such issues as pay, working hours, paid vacation, social security and welfare, and agreement should be reached by Nov 14, he said.

Contracts should then be signed before Dec 5, he said.

"Our proposal is protected by the law," Zhang said.

"Companies that fail to respond within 10 working days or turn down the offer will be regarded as violating the law," he said, without elaborating on what punishments those who break the law might face.

The federation will also publicly condemn any company that tries to delay the negotiations without good reason, he said, again without elaborating.

Employers should give due consideration to the rising cost of living when negotiating pay rises with their workers, he said.

"Basically the average pay rise should be based on GDP growth and the CPI (consumer price index)," he said.

Li Shaomei, vice-chairman of SFTU, said the latest push for collective contracts comes on the heels of US retailing giant Wal-Mart signing contracts with employees at its 108 unionized stores across the country.

"Wal-Mart has set an example, which is a milestone for collective agreements among foreign-funded companies," she said.

The federation will offer training, if required, to representatives of management teams and trade unions before they begin negotiations, she said.

According to figures from the SFTU, since collective negotiations were introduced to Shenzhen in 1995, more than 40,000 firms have signed contracts with more than 4 million employees.

Wal-mart became the first foreign-funded firm to do so in July, after 18 months of tough negotiations, Li said.