Canadian Management Centre's Training Blog

HR Professionals May Not Understand Retention in China

As reported by HRI, organizations' effectiveness in retaining workers in China is likely hampered by HR professionals' misunderstanding of the factors driving retention for employees there, notes a 2006 report from the staffing firm Manpower, Inc. The organization notes that 70% of the HR practitioners they surveyed for The China Talent Paradox report said that workers in China leave employers to find better-paying jobs, while only 15% of employees cited compensation as a reason to change jobs. Conversely, 68% of employees in China said that career advancement options would lure them away from their employers. Fifty-seven percent of HR professionals said that workers would leave to pursue career growth. China's HR practitioners should gain a clearer understanding of the factors driving retention and act to address them, the report concluded. (Global HR News - Asia [Smith], October 2006)

Ratings of Leaders Skills in China are Lukewarm

As reported by HRI, in China, more than half (57%) of 400 survey respondents rated business leaders' overall skills "acceptable," while 23% rated them "weak" and only 20% rated them "strong," according to the respondents to a 2005 survey by Development Dimensions International (UK). Those polled for Leadership in China: Keeping Pace with a Growing Economy included managers at all levels of the organization (first-, mid-, high- and senior-levels) and HR professionals in primarily multinational firms.

Ratings of leaders' individual skills were not particularly high in China, either. The managers rated leaders' skills as "strong" in the following areas: delegating for results (32%), building winning partnerships (29%), motivating others (26%), building an environment of trust (25%) and valuing differences (24%). The HR professionals rated leaders' skills as "strong" in these areas: building winning partnerships (23%), rapid decision-making (19%), making meetings work (16%), building an environment of trust (14%) and motivating others (14%).

The report grouped leaders' skills into four main themes and, while the majority of leaders in China were rated "acceptable" in each broad area, a larger proportion were rated as having a developmental need than as having a strength in three of the four areas, as shown in the table below.

Ratings of Leaders' Skills in China, 2005

Leadership Themes Developmental Need Acceptable Strength Relationship management 20% 58% 22% Coaching and developing 24 58 18 Getting results 27 58 15 Managing performance 28 60 12

Source: Development Dimensions International, Inc. (UK)

(Leadership in China: Keeping Pace with a Growing Economy [Bernthal, Bondra and Wang], 2005, pp. 2, 7-9, 16)

Chinas Business Leaders Need Specific Skills

In China, business leaders need skills in creating an environment of trust, motivating employees, retaining talent and leading high-performance teams, according to the more than 400 respondents to a 2005 survey by Development Dimensions International (UK). Those polled for Leadership in China: Keeping Pace with a Growing Economy included managers at all levels of the organization (first-, mid-, high- and senior-levels) and HR professionals in primarily multinational firms. The proportion of business leaders and HR professionals, respectively, who selected those top four responses follow: building an environment of trust (80%, 77%); motivating others (80%, 72%); retaining talent (75%, 72%); leading high-performance teams (68%, 70%). Other leadership skills rated high by leaders included building winning partnerships (57%), delegating for results (55%) and leading change (53%). Other leadership skills rated high by HR professionals included coaching for success (58%) and setting performance expectations (56%). (The China Business Review [Hulme], March/April 2006, p. 24)

Swedish Job-Seekers Understand Corporate Strategy

As reported by HRI, More than two-thirds (68%) of surveyed European job-seekers say they know their organization's corporate strategy, but 22% say they don't think their employer has one, according to research from StepStone, an online recruitment firm. StepStone polled 9,760 career Web site users in Europe and found that those in Sweden were best informed and those in Italy least informed about corporate strategy. Following are the survey results by country.

European Job-Seekers' Responses to
"Do you know the corporate strategy of your employer?"

Country Yes, couldn't do job properly without it No, don't need it for my job Don't think company has one Europe overall 68% 10% 22% Sweden 79 7 14 Norway 77 9 14 Netherlands 75 10 15 Germany 69 7 24 Denmark 67 10 23 Belgium 66 12 22 France 65 10 25 Italy 62 13 25

Source: StepStone

(StepStone News & Research, July 20, 2006)

Customers Bring About Global Complexities

As reported by HRI, the various complexities associated with serving customers across borders surface as some of the greatest challenges managers see in successfully operating a global firm in the next three years, according to a survey of 555 executives from 68 countries presented in the Economist Intelligence Unit's 2006 CEO Briefing. Respondents said their biggest challenge was having a good understanding of customers in multiple territories (45%), but other customer-related challenges showed up in the top 10 responses, too. Building brands that can be effective in multiple regions (28%) was the fifth most frequent response, followed by ensuring consistency in product and service quality (22%). (CEO Briefing: Corporate Priorities for 2006 and Beyond [Economist Intelligence Unit], January 2006, pp. 2, 18)

Salary Increases in China Were Steady from 1999 to 2005

Average salary increases in China remained relatively flat from 1999 through 2005 at about 8%, according to data from Hewitt Associates. Increases in China's first-tier cities such as Beijing and Shanghai averaged 8.1%, and were not as high as those in the second-tier cities where the average was 9.9%. The second-tier city of Chongqing led the way with an average 11.4% increase, while first-tier city Shenzhen was at the bottom with an average increase of 7.4%. In first-tier cities, sales managers fared best, with those in Shanghai seeing an average increase of 8.8%. Operators in Shenzhen had the smallest average increase at 5.4%. According to Watson Wyatt Worldwide, 64% of foreign-owned companies operating in China offered supplementary medical insurance to their employees. Other supplementary benefits offered included education assistance, life insurance and housing benefits. The rate at which Chinese employees voluntarily resign rose sharply in 2005 to 14%, and the number- one reason cited for leaving was an offer of a better compensation package. (chinabusinessreview.com, March-April 2006, pp. 26-28)

Copenhagen Has Highest Net Real Wages

According to a 2006 study of wages in 71 cities on six continents, global finance company UBS says that Denmark's capital city, Copenhagen, boasts the highest net real wages in the world. Northern European cities dominated the top of the list, with Oslo second, Zurich third, and Geneva fourth. New York was the highest-ranking U.S. city at number five, and Chicago was seventh behind London. India did not fare as well, with Mumbai ranking 67th and Delhi coming in at number 70. The highest-ranking city in Asia was Tokyo at number 18, while the rest of the Asian cities ranked below 30. ("2006 UBS Study 'Prices and Earnings'" [UBS AG], press release, August 9, 2006)

Indian Salaries Rose by an Average of 14%

Salaries in India rose steadily in 2005, with increases similar to those seen in 2004. This represents a leveling of off the growth seen in previous years. According to a survey by Hewitt Associates, India's strong economic growth pushed wages up an average of 14.1% in 2005. Domestic companies have joined the fight for talent sparked by multinationals, increasing wages by 14.7%, while foreign-owned companies had an increase of 13.8%. The strongest wage growth was found at the professional/technical level, with these workers seeing an increase of 15.4% in 2005. Asset management companies provided the highest increases, with an average of 17.1%, while nonprofit organizations increased the least with 9.5%. Almost all of the companies surveyed (99.5%) indicated that they have formal performance management platforms, and 89% reported the use of variable pay plans. These results indicate a strong move toward tying pay to performance. ("Salaries Stabilize in India" [Hewitt Associates], press release, February 7, 2006)

What Motivates Japanese Workers

A researcher has found that Japanese workers tend to be more motivated by promotion opportunities than by wage increases. In a study of 1,823 workers from 75 companies of Toyota Group, researcher Kiyoshi Takahashi attempted to find out how much motivation was provided by variables like wage levels and promotions. He also studied the effects of job characteristics on motivation, such as the range of responsibilities, the range of discretion, the skills required and the opportunities for development. Not surprisingly, wage increases motivated the workers, as well as having a wage level higher than that of co-workers. Takahashi also found that a promotion incentive was a strong motivator and that when the promotion system was perceived to be fair, it was a stronger motivator than wages were. One interesting find was that when workers perceived that promotions were difficult to come by, it did not reduce motivation. As for the aspects of the job itself, jobs requiring a lot of skill or knowledge that had both wide ranges of discretion and development opportunities provided strong motivation. Jobs that had a wide range of responsibilities, however, provided no additional motivation. (Career Development International [Takahashi], February 2006, pp. 193, 195-199)

Global Teams Need to Be Managed Better

Global teams are becoming an integral part of most businesses, and researchers from consultant Deloitte Touche Tohmatsu suggest that companies need to adopt a strategy that encourages and supports these teams. Deloitte Touche Tohmatsu senior executives James H. Wall and Lynda Spielman suggest that first there needs to be a commitment to managing global teams; simply gathering a group of people and telling them they are on a team is not enough. The inherent diversity in global teams requires management in order to maximize the creativity diversity can create. Wall and Spielman say that global team leaders need to be selected carefully, as it can be much more difficult than leading a traditional team. Ideally, the leader would have some global experience. Many companies have employees that have worked in other countries and could apply that experience to a global team. Global teams need the proper tools and adequate resources, as well as clear communication on expectations. Cross-cultural training is imperative for team members. Once a team is assembled and the work has begun, the team needs time to work together before producing results. Hurried deadlines can lead to unmanageable conflict and poor performance. Trust and understanding need to be developed, and that takes time. A Deloitte study says that 67% of team members believe that most learning takes place while working on the task, and only 10% indicated that they learned the most when someone was explaining something to them. (China Staff [Wall and Spielman], March 2006, pp. 8-10)