The Future of Talent in China

ChapmanCG recently hosted six events in both Beijing and Shanghai, to discuss the importance of strategic workforce planning in a market like China’s. Each session had a slightly different angle on this broad and thought provoking topic. Hosted at Danone, DuPont, IBM, Jones Lang LaSalle, Pfizer and Standard Chartered Bank, the events provided an insight into how some of these ‘best in class’ companies are approaching their talent strategies for the future. There were some interesting presentations from a range of speakers including Kamali Rajesh, APAC Head of Talent at Ford Motor Company, who is based in Shanghai. She talked about the Buy, Build, Borrow, Bond strategy, which is used at Ford, and which underpins the company’s strategic workforce planning strategy. These four areas raised some compelling questions, which led to an interesting discussion around how organisations in China are approaching talent.

Buy

There is no doubt that organisations in China will have to continue to ‘buy’ in external talent from outside the market as they grow. However, it is increasingly difficult to compete with top payers, which incidentally are more commonly the Chinese businesses. Therefore the focus has to be on building an attractive Employee Value Proposition (EVP), promoting the culture and the long-term career {nolink}benefits{/nolink} of joining that organisation. According to Queen He, former HR Director for China, LVMH, “We shape the brand, even the strategy, to attract talented people into the retail organisation.”

We are also seeing more companies ‘locking in’ talent with long-term incentives, retention and loyalty bonuses. In the more regulated industries like pharmaceuticals, some are changing their models to increase base salaries and Long Term Incentive Plans and reduce short-term variable pay for both internal and external hires. There is the hope that whole industries might shift the way they pay their workforces to ensure consistency, loyalty and a less short-term battle for talent.

Build

In China today, building effective talent pipelines is an area HR teams are highly focussed on, because it is a major challenge to retain high potential employees, even when they are considered ‘top talent’ and so are ‘looked after.’ The market is such that at any time staff may leave for a better opportunity, increased pay, or even a bigger title. Overseas and functional rotations provide one solution, but are not foolproof, as we’ll explore below. The key has to be continued development of the individual, in order to keep him or her motivated and moving forward within the organisation. Creating a culture of stability, retention and development where leaders themselves are long-term employees can help. When this is visible to high potentials who can see the best people remaining in the organisation and moving to the top, it can be motivational.

This is not an easy thing to foster but as Lilly Liang, HRD Diageo Greater China suggests, “Organisations need to be more aggressive and proactive in rotating and progressing key employees. At Diageo we have built a talent engagement team, which assesses both internal and external talent — we are making a conscious move to shift the strategy from buying to growing. We reduced the pool of critical talent, and then looked at which specific roles could benefit from an external hire, and which can be plugged internally to really satisfy our key employees.” Taking this a step further one company is taking the focus off the roles themselves, and thinking more about the individual employee and how that person can benefit and develop from moving into a certain role, rather than focussing on what or who the role ideally needs. Clearly there has to be a careful balance, so as not to negate performance.

Borrow

There was significant debate throughout the week on how effective overseas rotations are in China. Some of the concerns were that when top Chinese talent is rotated overseas, on return there are either no roles to move into, or the employees become even more attractive to other organisations and leave. Likewise some organisations were finding that high potential Chinese talent overseas was being ‘marked down’ a level when relocating to a market like Australia. This had also caused employees to eventually leave organisations, as it stalls their progression. There are clearly still cultural differences in terms of what constitutes valuable talent in different locations, and this has to be taken into consideration to ensure that key employees are cultivated across different markets. The solution may be to use a more bespoke global assessment to evaluate talent when it comes to international moves. One HRD mentioned that his company doesn’t allow other overseas departments to downgrade the employee, unless the original manager approves the downgrade. It was noted, though, that for technical roles this might be different.

Gyorgy Endes at BMS commented, “When we consider global relocation, it’s not just for the purpose of building the technical capability of the employee, it’s to give them a different angle and provide additive learning through different cultural experiences. This can be very powerful in someone’s development as a leader.”

Danone is certainly embracing more cross-fertilisation of talent and has a practice of regularly rotating critical talent into different divisions, functions and geographies. Like many companies, one problem Danone faces in China is defining just how mobile people are. This is because there is sometimes a reluctance to move to other tier two and tier three cities, or other developing countries, yet the employee may be open to move to more developed markets. If employees are not mobile at Danone, they can still be a valued part of the organisation, but they go into a different pool. This flexible approach is beneficial, as it is important to be agile when it comes to mobility. Employees’ mobility levels are fluid and can change all the time depending on personal circumstances, even when a hiring decision is made based on future mobility. One attendee, a Director with a human capital consulting firm commented: “It is important for organisations to decide whether to create a culture of mobility by investing in it, or not to prioritise. Initially, there will be many failures but it is critical to highlight and celebrate the success stories. It can take time, but gradually the culture will change and the success stories will increase.” Short-term six-month assignments can also be a solution, rather than a full two to three year assignment, but ultimately return on investment is hard to measure.

The mobility topic led to an interesting debate around the long-term exportability of China talent. One attendee asked why there weren’t more Chinese leaders overseas in multi-national organisations, and whether this would change in the future. Clearly this is evolving as more Chinese gain exposure outside of the country, both in terms of education and work experience. On the flip side, as Chinese companies become more international, they look to foreign talent to add value and a new dimension. Some of the technology companies like Alibaba and Baidu, as well as smaller companies and start-ups, are embracing high quality leadership from outside of China. In May, Alibaba appointed Jim Wilkinson, a former senior PepsiCo executive and advisor to the U.S. government, as the Head of International Corporate Communications. The company also hired Google’s Head of Investor Relations, based in California. Chinese web services company, Baidu has hired a number of high-level researchers in Thailand, Brazil, Egypt and Japan. This trend toward the convergence of cultures looks set to continue, and these Chinese MNCs will increasingly appeal to the talent pool in China that was traditionally more used to European or U.S. MNC cultures.

Bond

So the buy, build, and borrow are all important, but the bond is perhaps the most critical. Crea
ting a stable, diverse and engaging culture to bond key talent to the organisation must be top down, and encouraging all managers – including the CEO – to be accountable is beneficial. Going one stage further, formally assessing business heads on an ‘engagement’ KPI can help ingrain this top down approach. According to former LVMH HR Director, He, “All managers — starting with the Managing Directors — are accountable for strengthening their employee talent pool.” Ultimately there are no guarantees, but a strong employer brand, value proposition and progressive culture can help with creating this bond beyond the chequebook.

The China HR Networking series was another great success, and we’d like to thank all the hosts and the attendees for such valuable sessions. We look forward to reconvening with these groups in 2015.