Best Practices: Human Resources: Strategies for Recruitment, Retention, and Compensation
Focus on skills
For managerial and technical
positions, cost differences between expatriates (expats) and local hires are
shrinking (see p.3, “Compensation and Benefits”). When searching for
potential recruits, companies should look for sets of skills rather than
whether the ideal employee would be a local Chinese citizen, a foreigner, or a
returned Chinese.
Verify employment history
For any senior hire, formal
background checks by experienced external consultants should be standard
practice. Due diligence is important for fraud prevention and intellectual
property protection, among other reasons. It is important to look for such
things as links to competitors, potentially conflicting ties to regulators, and
whether the prospective employee has a history of switching jobs regularly.
Evaluate total work experience
Experience at a foreign firm does
not automatically translate into deep knowledge of daily business operations.
Evaluate the quality of a potential hire’s total experience rather than whether
or for how long a candidate has worked at a foreign firm.
Retention and
Training
Talented
employees frequently cite two reasons for their departure from a company: a
higher salary or more career opportunities elsewhere. Certainly, salary levels
are important, but recent surveys indicate that a better work environment or
career opportunities are also heavily factored into a Chinese employee’s
decision to switch jobs–or, conversely, to stay in a current one.
Companies with
successful retention programs focus on expanding training opportunities in
house–and then tying these training opportunities back to compensation.
Companies should also solicit employee input when devising career development
and training programs.
Compensation
& Benefits
Gone are the days
when companies seeking skilled managers could save substantial costs by hiring
local Chinese employees. This is particularly true of compensation for
employees that possess technical talent. Best practices regarding compensation
and benefits include the following:
Link
compensation to retention
Institute
transparent, performance-based incentive structures, such as bonuses or savings
plans that, in turn, encourage retention (see Recruitment and Retention
sections above).
Design pay
packages and raises according to a mix of both performance and skill
development. Clearly communicate opportunities for skill development and how
taking advantage of those opportunities is linked to compensation.
To the extent
possible, avoid having different pay scales for local, foreign, overseas
Chinese, and returning Chinese employees doing the same job. Salary levels
should be based on specific skill sets, levels of experience, and performance
once on the job, regardless of what passport the employee carries.
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