Recruiting in China

HONG Kong's employment continued to improve from May to July with the jobless rate dipping to 3.2 percent, the lowest level in a decade, according to latest statistics of the Census and Statistics Department released yesterday.

Declines in the jobless rate were recorded in the construction, transport and import-export trades from May to July compared with April to June, according to the department.

Total employment rose by 1,400 to 3,53 million while the labor force surged by 4,500 to nearly 3,66 million.

From May to July the number of jobless people rose by 3,100 to 124,600 while the number of underemployed grew by 2,100 to 69,900.

The department's data also showed the underemployment rate remained stable at 1.9 percent from April to July.

Declines in the underemployment rate were mainly recorded in the decoration and maintenance, welfare and community services and sanitary services sectors, offsetting rises in the foundation and superstructure construction, and amusement and recreational services sectors.

The total labor force grew mainly due to fresh graduates and school leavers entering the job market, the department said.

With a relatively satisfactory absorption of these newcomers and increased job opportunities in the construction sector, the number of unemployed people only recorded a mild rise.

While welcoming the latest fall in the jobless rate, Secretary for Labor and Welfare Matthew Cheung said the Hong Kong government would do its best to promote employment on all fronts and help those adjusting to the increasingly knowledge-based economy through training, retraining and skill upgrading.

Dating and recruiting have a lot in common. Learn how to improve your recruiting efforts by applying the most common dating rules.

Dating rule #1
First impressions are critical.

Recruiting application:
Differentiate yourself. Resist the “I have a great position for you” especially if you have never spoken to them.

Dating rule #2
Don’t believe everything you see. We have all heard stories from people that signed up for an online dating service and were shocked when their date was two feet shorter and 10 years older than the profile.

Recruiting application:
Candidates exaggerate their strengths and skills and down play their weaknesses. Do not assume anything. Prescreen, interview, administer assessments, and call the references before you present the candidate to your hiring manager.

Dating rule #3
Play hard to get. Desperation is the world’s worst perfume.

Recruiting application:
If you make a huge fuss over the candidate and beg them to interview, you will diminish your negotiating power.

Dating rule #4
Be selective. You can not change people.

Recruiting application:
Look for the red flags; don’t avoid them. It is better for you to uncover any candidate weaknesses or issues than your hiring manager discovering them. Your name and reputation is all you have in this business.

Dating rule #5
Prepare for the date.

Recruiting application:
If your candidate has spent 20 minutes on the phone with you and takes time off work to come to interview, and then you ask them “so, tell me what you want to do?” — you are wasting the candidate’s time. You should have notes on the candidate’s resume that you want to clarify, and if appropriate, the company profiles that best match what your candidate’s needs.

Dating rule #6
Don’t talk too much. People who express the “enough about me, what do you think about me?” attitude sit home alone, a lot.

Recruiting application:
The candidate should be doing most of the talking. Assess what the candidate has to offer, what they need, and then set expectations of how you will work together. Let the candidate talk about the interview before you disclose the hiring manager’s view. If you blurt out “they love you, you are the best candidate they have ever met!” — what do you think happens to the candidate’s salary requirements?

Dating rule #7
Follow up with your date.

Recruiting application:
As an industry, one of the biggest complaints we get from candidates and hiring managers is the lack of communication. No news is still considered news to the candidate; make sure you keep your candidate in the loop.

Dating rule #8
Don’t be afraid to end the date early.

Recruiting application:
Prescreen carefully, ask the hard questions, and always tell the candidate the truth. If they are not going to fit into your recruiting focus (skills, salary expectations, location, etc.), coach or make suggestions regarding who may be able to help them in the market.

Dating rule #9
Improve your odds by hanging out where (like) people hang out.

Recruiting application:
If you are recruiting technology talent, sign up and participate in technology activities in your market. Volunteer at association meetings to check members in: you will meet every attending member, every meeting.

Explain to people you meet that there are two types of people you would like to be introduced to: those who are leaders in their field and are looking for an opportunity and those who are leaders in their field and are not looking for an opportunity right now. You are an expert in your market, so people who are not looking now would still benefit from knowing you and the people in your network.

Dating Rule #10
They will not buy the cow if they are getting the milk for free.

Recruiting application:
When you agree to represent a candidate, you are entering into a business agreement. You need to set clear expectations of how the process must work. If the candidate will not agree to the terms, they are not committed to you, so turn them loose.

For most recruiters the make or break moment comes at the end of the process, when it’s time to negotiate the offer. A successful negotiation means that the process concludes with a hire, and the recruiter rides off into the sunset.

But a successful negotiation doesn’t mean coming out on top with a low-ball offer that gets accepted. That can cause the candidate to get turned off and in the worst-case result in the candidate walking away. Even if accepted, it could leave the candidate with a sour taste in the mouth and essentially starting off with a negative attitude toward the employer. An overly generous offer on the other hand is a waste of the employer’s resources and can upset internal equity. Getting it right is not easy as few recruiters are trained in negotiating.

The number of books that have been written on negotiating can fill a large room — several thousand are in print. But an easier approach can be discerned from recent research at Northwestern University. A study by Prof. Adam Galinsky and his colleagues suggests that a powerful way to influence the outcome to be closer to a win-win situation is to view the situation from the candidate’s perspective — also know as the perspective-taking approach.

What this means and how it works is explained below, but the research has demonstrated that recruiters using such an approach consistently achieve the highest level of economic efficiency, without sacri?cing their own material interests. They produce a better overall outcome for both sides.

Getting Inside the Candidate’s Head

The perspective approach means try to get inside the candidate’s head. To achieve an understanding of the candidate — their motives and likely behaviors — consider the world from their viewpoint. Basically, put yourself on their side of the table. This is not as ridiculous as it may appear. The research demonstrates that recruiters adopting such an approach achieve the best possible outcome close to half the time.

To be able to do this well recruiters need to do their homework before arriving at the negotiation. First, have an understanding of the likely issues. These always fall into three categories.

1) Distributive: issues for which the parties’ preferences are diametrically opposite. For example, the candidate wants a higher salary and the recruiter wants to pay a lower one.

2) Compatible: issues on which the parties’ preferences are identical. For example, the job location.

3) Integrative: issues on which the parties have different high and low priorities. For example, bonus and vacation time. The candidate may care more about the bonus amount because of a belief in her own ability to earn it. The recruiter may care more about getting the candidate to accept a smaller amount of vacation since that represents guaranteed income.

The solution to the disagreements is not to split everything down the middle, but rather to try and maximize the joint outcomes. That requires having a good idea about what makes the candidate tick — taking their perspective. Recruiters need to make an effort during the interview process to gauge what is important to a candidate. An assessment can help to fill out the picture, but even without that it’s important to pick up cues about what drives a candidate. That does not mean to ask questions that are unrelated to the job, but to probe for what a candidate considers important or not.

Head not Heart
There is a danger that a recruiter attempting to take the candidate’s perspective may end up empathizing with them — that is, show compassion for the candidate’s situation. Successful negotiation, especially where economic outcomes are involved, do not require having an emotional connection with the other party. The research demonstrated that empathizing recruiters achieved the poorest individual outcomes, and the gains went almost entirely to the candidates.

It’s better to “think for” than to “feel for” the candidate. It is more bene?cial to get inside their heads than to have them in your heart.

Conclusion
Taking the perspective approach is easier said than done. It requires serious effort to try and understand a candidate, based on a lot of information that may not be readily available to the individual handling the offer negotiation. The more people who are involved in the selection process, the harder this gets, especially since most interviewers do a poor job of documenting what they learn about a candidate. Recruiters may also be constrained by the extent of flexibility they have in negotiating particular issues.

That being said, the Galinsky research does show that a failure to take a disciplined approach to an offer negotiation will produce a poor outcome for all concerned. Ultimately, organizations that fail to recognize this will suffer the consequences of losing good talent.

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.

As a result, the pro-business institutional and economic measures were introduced. And the companies involved, especially those in manufacturing, energy, information technology and agriculture, may get the lion's share of R&D investment.

But these measures, which are aimed at sustaining this economic growth miracle, cannot necessarily lead to rosy employment prospects, especially for the poor. And since last year, the government has been determined to close the labor-intensive but energy-crunching factories. The closure plan will be extended to 2010.

The impact is obvious as many of China's factories are labor-intensive. This is causing and 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 economic growth rate has slowed to 10.4 percent for the first half of this year, from 11.5 percent during the same period last year. The 1 percentage point drop means a loss of about 1 million jobs, Liu said.

"If the trend continues in the coming months, more workers will lose their jobs," said Liu.

China created 6.4 million jobs in the first half of the year, which represented 64 percent of the government's target of generating 10 million new jobs in 2008. Behind the figures lies the harsh reality: employment is not only a longstanding problem for job hunters but also a new headache for employers.

Finding a job is challenging in China and this year, has been extremely hard, as the country has experienced so many unexpected events.

The earthquake and snowstorms have closed down some enterprises. On top of that, at least 5.59 million students have graduated from colleges this year, 13 percent more than last year, and they face unprecedented pressure in the job market as about 700,000 graduates, who could not find work last year, will compete with them for employment.

Along with the steady rise in labor costs, factories and companies also face difficulty in finding "suitable hands" to feed the vacancies as some job hunters lack training. And for export-oriented companies, the appreciation of the yuan has exposed them to difficulties in expanding business.

Generally China has had strong economic growth but this has not been matched by equally strong job creation.

51job Inc.'s (JOBS) financial results for the second quarter showed a lower net profit margin due to higher sales and marketing expenses and a higher tax rate. Both its revenue and EPS missed the market consensus.

Although 51job continues to have the highest brand recognition in the online and offline recruiting markets in China, the leading position hasn't gained any competitive advantage for 51job to improve its profit margin. Therefore, we are downgrading the stock from Buy to Hold.

China has 253 million internet users as of the end of June 2008. It has approximately 750 million workers now and more and more companies of different size begin to use low-cost online recruiting. This is a very positive tail wind environment in which to operate. Additionally, it is estimated that revenue of online recruiting services in China will reach RMB 2.63 billion in 2011. According to estimates, revenue of online recruiting services will amount for 45.3% of the total recruiting market in 2010.

Through a targeted sales and marketing strategy, 51job has been focusing on further building the '51job' brand as the 'one-stop' human resource services provider. Now 51job is the most famous brand in the recruiting market in China and this position has helped the company enter more profitable second-tier cities in China.

Using a P/E multiple of 18.2x our fiscal year 2009 earnings per ADS estimate of $0.70 yields a target price of $12.75, which can reflect company's great growth prospects, in our view.

A businessman in Beijing has given fresh hope to a group of young women from Sichuan following the tragedy of the May 12 earthquake.

Singaporean Danny Chang, who has lived in China since 1997, opened a new bar "1/5" in east Beijing's embassy area early last month.

"I was wondering what a businessman like me could do to help, apart from just donating money," the 38-year-old said at his bar Monday.

Then a friend from Chengdu came up with the solution, he said: hire people from Sichuan.

"I thought it was really a good idea, so I flew to Chengdu immediately," he said.

His friend took him to a job fair at Sichuan College of Education, where lots of students were looking for jobs.

After chatting with dozens of candidates, Chang chose 12 young women - mostly third-year students majoring in tourist management - and offered them one-year internships.

But the recruitment process was not all plain sailing for the generous bar owner.

With his left arm tattooed with a totem pole and his right draped with a dozen silver bracelets, many students mistook the 1.9-m-tall Chang for a gangster.

Henna, a 22-year-old from Deyang, Sichuan, who managed to land one of the jobs, said Monday: "At first, we all thought he was a mafia boss. Some of my friends even told me not to go, because they thought it might be a trap," she said.

But Chang said he wanted to be honest and open with the candidates, which was why he did not cover up his arms.

As long as the applicants met the basic criteria, the jobs were offered on a first come, first served basis, he said.

"I was there to help people, not to be picky. If you have passion, you're qualified," he said.

The 1/5 interns work eight hours a day, six days a week. They can earn up to 1,000 yuan a month and also get free accommodation and meals.

But the internships are not about money or benefits, Chang said. They offer the girls the chance to learn about the industry and get some really useful work experience.

"They'll learn about cash flow, hosting, bar tending and service, which are all really useful skills," Chang said.

To help them acclimatize, Chang said he has also taken his newest workers out on shopping and sightseeing trips, and even to a club one Sunday night, his only day off.

He said he was impressed at how quickly some of them had picked up English, something he attributed to the nights they spent chatting to the bar's foreign customers.

"They spoke little English when they arrived, but they are getting much better.

"In six months' time, they'll be confident enough to chat with people from anywhere in the world," he said.