Re-levelling the Talent Field: Retaining Top HR Talent in China
Originally published in February HR Magazine.
Historically, foreign multinational corporations (MNCs) have enjoyed a big advantage in attracting and retaining HR professionals in China, but now the advantage is shifting and a growing proportion of high potential Chinese HR professionals view domestic employers as a better bet.
With the perks that once helped make foreign MNCs preferred employers for HR professionals becoming less attractive, non-Chinese multinationals need to revaluate their HR professional employee value proposition with strategies that make them feel they are an integral part of the organisation, with the career opportunities to match.
For many years, foreign multinationals were viewed as the employers of choice in the Chinese market. However, there has been an increasing trend towards top HR talent transitioning their careers across to rapidly growing Chinese multinationals. The “great recession” spawned by the global financial crisis about ten years back was dubbed “global”, but throughout this economic slowdown, the Chinese economy continued to burgeon. China remains the fastest growing, and second largest, economy in the world behind the United States, with predictions it will overtake the United States in the very near future.
With the resulting growth in Chinese multinationals, there has been an increased globalisation drive, and a significantly higher employee head count to manage. Strong HR leadership that accommodates both Chinese business culture and western-style HR practices has become highly sought after. Foreign multinationals are now competing head-on with local Chinese companies for the best HR talent — and Chinese multinationals appear to be winning.
Empowerment and visibility
Often, Chinese multinationals can offer HR leaders a more strategic role, greater exposure to the board, and therefore more clarity on the longer-term business strategy. Foreign multinationals frequently develop global initiatives that simply do not mesh with China’s diverse and ever-evolving talent landscape. Working at the headquarters of a Chinese multinational (rather than at an outpost of a foreign one) can provide significantly more opportunity to exert influence on the board compared with working for a foreign multinational, where HR leaders can quickly find their role overwhelmed by implementation work. Going forward, the key for foreign multinationals is not only to give their China HR leaders a clear path to top leadership, but also to ensure that global leaders listen to, and then take on board what is said. An “assimilation” approach will not work for this market or for the HR leaders who operate in it. China’s HR leaders have options, and being listened to is a key priority for them.
Quicker decision-making and speed-to- market
With Chinese multinationals, their global headquarters is literally on the doorstep, which means fewer reporting layers, a greater pace for resolving critical decisions, and a huge competitive advantage in terms of speed-to-market. HR leaders operating in Chinese multinationals can often implement outcomes and strategies with greater efficiency than at their foreign multinational counterparts. Foreign entities operating in China will have to concede a certain degree of control if speed-to-market is a business priority for them. The challenge remains finding HR leaders who not only know the business, but also understand the intricacies of the local market.
Continually, there are numerous examples of foreign multinationals struggling to embrace Chinese social philosophy and adapting to Chinese business conduct etiquette. Whatever technological advances are made, business transactions still require personal interaction at some level. And, it is only human nature that as individuals we more readily connect with people whose ideologies and cultural backgrounds align with our own. Applying this approach in a business context, it is vital for foreign multinationals to be knowledgeable about and, immersed in, Chinese business culture from the grassroots level in order to be successful. An example of this is the concept of guanxi (defined loosely as the system of social networks and influential relationships which facilitate business), and this is fundamental to seamless business relationships in China.
Organisations and their HR leaders need to be acutely aware of the significant limitations a lack of knowledge in this regard will place on a foreign multinational’s ability to conduct its business efficiently. A strong brand name can only take foreign organisations so far in this market. Core brand values such as quality, service, and reliability should not be compromised. But adaptation is a necessary business strategy for successful market penetration.
Viable career paths
There are success stories of top Chinese HR leaders enjoying secondment opportunities at their North American or European headquarters. Some progressive foreign multinationals also appoint global HR roles in China, but this is still not happening enough. With China being one of the largest and most important markets, foreign multinationals must be proactive and do more to de-centralise their global HR leadership teams. This will keep ambitious HR talent engaged and allay concerns that career progression necessitates relocation to headquarters.
With the challenge of international time zone differences, often China/Asia-based HR leaders with foreign multinationals are required to attend frequent global conference calls that take place late in the evening or early in the morning. The need to be extensively available outside a standard working day can have a negative effect on the health and well-being of even the most resilient individuals. This western-based “convenience” is yet another reason why top HR leaders in China are lured towards local multinationals.
One way to mitigate this is to avoid always favouring the European or North American headquarters’ conference call arrangements. Take turns to share the burden across time zones. If a global conference call is scheduled for the convenience of the US or European business function, next time plan the conference call during the day for the team member based in China or Asia. This goes a long way in creating mutual respect.
With all employers vying for the best HR leadership talent, Chinese multinationals can often pay well above the range of their foreign counterparts, offering stock options and huge signon bonuses that are not restricted by “bands” or “pay grades” that exist in more established and formalised organisations. Whilst compensation is obviously a significant consideration for HR leaders, there are other non-cash incentives that foreign multinationals can use to retain their top talent. Flexible working practices, exemplary training programmes/professional development, mentorship and participation in high-profile global projects could help retain HR talent who are looking at employment in terms of the “whole package”. Such non-financial benefits send a message to HR leaders that they are valued as a trusted partner and the relationship is considered a long-term investment.
Retaining HR leaders in an environment of aggressive recruiting tactics from Chinese multinationals is challenging. Having a reputation as a good employer may entice top HR recruits, but keeping them requires innovation and a certain degree of autonomy. Demonstrating a willingness to build this kind of trust in China-based HR leaders, and to invest in their long-term future, will help strengthen foreign multinationals’ market position and re-level the talent playing field.