Latest News on the Ground in China

Matthew Chapman, CEO of The Chapman Consulting Group, joined by Shanghai based, Monica Levine, Director, at The Chapman Consulting Group, just completed their latest Quarter One HR Leadership sessions, held in Shanghai on 11 and 12 March.

Four APAC HR Leaders sessions were held in Shanghai at Pfizer, eBay, WPP, and Siemens. Each session allowed members of diverse HR functions to share HR topics, challenges and insights in a roundtable setting. What was most remarkable about the sessions is that a good mix of Global, Asia and local HR leaders attended, suggesting that China is more and more becoming a global and regional hub.

Following were the key questions, observations, challenges and insights that these HR leaders shared.

1. How Can HR Leaders in Asia Help to Ensure Cohesiveness when Transitioning to a Complex Matrix Structure?

Complex matrix structures are posing challenges for HR leaders across Asia. Employees are confused as to how to seek approval for key decisions. Communication is breaking down between local China HR leaders and global leaders in distant locations. When simple reporting lines become matrixed, individuals in leadership positions often feel threatened as their perception of personal risks may outweigh actual risks.

How can HR leaders ensure that new matrix reporting structures work to drive the business?

• At the onset of the restructure, empower promoters from within to act as cheerleaders for the new structure.
• Make leaders understand that initially, there will be employee resistance to this change and prepare them for this resistance. Educate them on the timeline for employee adjustment to the reorganisation.
• Clearly define the purpose for the new matrix reporting structure, such as Economies of Scale or creating a global system.
• Set partnership goals for functional and country leaders and consistent processes across functions.
• From the onset of the change, be clear and transparent about how roles will be affected.
• Strict adherence to compliance rules has become essential in China, especially for MNCs which are more likely to be targeted by local labour unions.
• It is important to be aware that employees at the lower level may strike if compensation is cut, especially at key times of the year (i.e. just before Chinese New Year), as these people need a minimal subsistence to survive and will feel they have nothing to lose if their compensation is cut below that minimum level.
• It is important to educate global leaders on the nature of Chinese labour unions so the unions are not viewed as a threat. For instance, while American unions have a history of challenging companies, unions that are set up by Chinese employees are often created to support their companies.
• Several HR leaders agreed that MNCs that proactively set up labour unions might actually divert union challenges as union members will see the company as a partner, rather than an adversary.
• Succession planning for union leaders is important for HR. If HR leaders can partner with Chinese Unions and get involved in this succession planning process, they will be more likely to ensure compliant future union leaders.
• HR leaders should work closely with the government and keep their ear to the ground so they can stay in front of possible labour issues.

5. HR Leaders Can Improve Employee Branding as a Means to Attract Quality Candidates

Measures to achieve this include:

• Helping to create a positive employee culture internally. It was agreed that the perception of a company by outsiders is often driven by communication from employees who are currently working, or have worked, at a company. Thus, by creating a positive culture within the organisation, positive employee branding will naturally ensue. Ideas for developing a positive company culture included: systematic investment and training of people; conducting employment engagement surveys to address gaps in employee satisfaction; using company returnees as well as past employees as ambassadors for the company (i.e. sending employees who have left the company current job postings which they will refer on).
• Working with the business leaders to define a company value proposition (EVP). HR must influence business leaders to buy into this value proposition. A successful recruitment and talent strategy is driven by a clear and consistent value proposition.
• Forming university partnerships is effective for building employee branding for the purpose of recruiting top graduates.

6. How Can HR Leaders Develop Local Chinese Talent?

HR leaders agree that it is more beneficial to businesses to groom and promote leaders internally rather than to “buy” outside talent. Good China talent is still scarce and by developing from within, companies can create their own talent, lower recruitment costs, and improve retention. Suggestions for driving this talent development, particularly in China, included the following:

• Create a rigorous campus employee branding and recruitment program. Attracting young, top talent and developing them will ensure strong future leaders.
• Coach Chinese leaders in MNCs to stand up and provide their opinion, especially in global and often virtual settings. As Chinese leaders traditionally tend to be less outspoken than their western counterparts, they should be encouraged to speak out so that their opinions are taken into account and they remain engaged.
• Sending Chinese leaders abroad can result in a greater appreciation among Chinese employees for what it takes to operate at the global level. Overseas assignments develop global leaders.
• Providing Chinese cultural training to Western leaders can help them to understand the drivers behind differences in Western/Chinese communication. Creating cultural understanding between Western and Chinese counterparts can work wonders to achieve cultural integration.
• Create formal learning programs that continue over specified time frames. For instance, accelerated programs for high potential employees can take place in 2-3 years and take them to first-line management roles within this time frame.
• Specific learning programs should be designed to develop business acumen and strategic thinking.
• Monitor and adjust individual development plans based on progress. Be transparent when communicating progress to individuals. Exit employees out of high potential programs if they are not flourishing.

7. What are Key Points to Consider for Strategic Workforce Planning?

Strategic workforce planning should be closely aligned with business plans. HR should forecast and quantify staffing gaps for achieving business objectives in the next 3-5 years, both in terms of quantity and number of staff. The following needs to be considered when planning for future hiring:

• The anticipated quantity of future employees may change due to M&A or divestitures.
• If company needs are to have leaders in the short-term (12-18 months), it may make sense to hire talent. However, if the business needs are longer term (3-5 years), it may make more sense to grow talent.
• Workforce planning needs are highly variable according to industry. For instance, in the high-tech industry, it is impossible to plan too far in advance as workforce needs are highly dependent on market fluctuations.
• Most HR leaders continue to use Peoplesoft, SAP (HRIS) and Excel as strategic planning tools. There are few companies that can provide workforce planning tools that allow predictive modelling.
• The movement towards global standardisation of recruitment processes among MNCs may initially cause resistance among Talent Acquisition leaders due to fear of redundancy and of learning new processes.
• MNCs in China are facing more competition from local companies to attract top talent as the opportun
  ity to get promoted, gain pre-IPO stock, and be more highly compensated is greater at Chinese State-Owned and private companies. It used to be the case that MNCs could attract Chinese talent by offering the opportunity to work overseas. However, as economic growth has moved to Asia, Chinese nationals are no longer as interested in working abroad.
• Talent Acquisition leaders cannot achieve objectives without supportive HR Directors who are willing to influence the business leaders on their behalf.
• While the advent of LinkedIn has enabled Talent Acquisition specialists to reach out to more quality profiles for open roles, internal recruiters must be able to “sell” the company and position to attract these possible passive candidates.

9. Solutions for a Successful Staffing Practice Included:

• Utilising the internet creatively to market the company to attract top talent. Ideas included using LinkedIn to publish content about the company and send information through the recruiter’s own network.
• Attracting only candidates with specific needed skillsets or who are truly passionate about the role/company by making it more challenging to apply. For instance, an IT or Creative company could require that candidates submit a video about themselves using Slide Rocket. Resulting applicants would at least be tech savvy and most likely creative.
• Training internal recruiters to be able to sell a company and role to attract passive candidates.

This summarises the key points presented at these sessions. Thank you to all the HR leaders who attended and shared during these sessions. We look forward to seeing you in June for our Quarter Two APAC HR Leader sessions in Shanghai and Beijing. Invitations will be coming soon!