China struggling to hold on to its managers

Nov 12 2007 by Nic Paton Print This Article

The retention of senior and middle managers is starting to become a real headache for Chinese employers, with the country's red-hot recruitment market meaning that talented and ambitious managers are much more likely to switch jobs than other workers.

A study by HR consultancy Development Dimensions International and the U.S Society for Human Resource Management has found that rapid turnover of talent is posing a growing challenge for organisations across China.

Middle management and executives indicated a higher likelihood of leaving their organisation within the next year than individual employees, the poll of 862 employees and 215 HR professionals reported.

Senior managers were also more dissatisfied with their company and indicated less loyalty than others.

But it was not solely financial greed that was making people move. In fact, money and general compensation was way down the list of reasons for moving, coming in at 14 out of 20.

A quarter of the employees polled had already had three or more jobs in their career and while many of the employees surveyed were new to their organisation.

Across the board, one in five said they were likely to leave their positions in the next year.

"Job hopping has become a culture for Chinese workers," Rich Wellins, senior vice-president of DDI.

"They're staying for a short time, gaining some experience and jumping to the next opportunity. They're not looking for longevity – they're trying to climb higher and faster and changing jobs helps make that happen," he added.

"China's rapid economic growth has created more job opportunities than qualified workers – a significant misbalance for businesses," added Steve Williams, director of Research at SHRM.

"This study illuminated the fact that organisations need to rethink their retention strategies to hold onto the most talented workers."

The survey found that Chinese companies were putting a lot of focus on financial retention strategies such as rewards, bonuses and compensation to keep employees.

Yet three out of the four top factors inducing employees to stay with an organisation have to do with leadership.

"Raises may be a way to get someone to change a job, but it's not going to be a primary reason for staying. Companies just need to be competitive with compensation – employees aren't basing their entire decision to stay or go on the money," Wellins pointed out.

According to what the employees said, companies needed rather to focus their retention efforts on having quality managers, providing opportunities for accomplishment and recognising individual contributions, as these were the top three retention drivers.

While HR and employees agreed that the top public reasons for employee turnover was lack of growth and development, better career opportunities elsewhere and insufficient compensation, HR underestimated the importance of interesting work for employees.

When asked to rate its importance, HR ranked it near the bottom of the list at number 14, while employees put it near the top at number four.

"There's a real disconnect between employees and organisations on the reasons behind turnover – and organisations can't solve retention problems without understanding the reasons behind it," Wellins said.

The stated reasons often obscured the underlying reasons. For example, HR overrated the importance of "external factors," like going back to school, which might be hiding more sensitive issues.

At the same time, HR put "poor relationship with the manager" much higher than employees did, which could be attributed to the fact that the Chinese culture considers speaking badly about one's manager as "washing dirty linen in public".

In an effort to retain more people, organisations were trying a wide assortment of retention strategies – but not doing much measurement to see what was actually working, the survey suggested.

And when asked to rate the value of 32 different retention methods as well as their own use of them, it was revealed that organisations weren't using some of the strategies rated among the most valuable, including career planning and treating retention as a corporate objective.

"It's amazing that the majority of respondents are not seeing retention as a corporate priority," Wellins said.

"There is no silver bullet for retention – but you need to measure what motivates your employees to stay and address those areas, because your solution should fit your organisation's specific needs," he added.