Retaining your Chinese Employee

Pretty interesting thoughts on keeping employees in China. Mostly focused on larger corporations or businesses in the coastal cities. I would add showing respect, kindness, and paying fairly. Seems obvious but you would be surprised.

From The China Observer:

Be flexible about employee titles

In general, it’s not wise to give inflated titles to employees whose skills and responsibilities don’t match up. While the title may initially satisfy an employee, he or she is likely to eventually consider themselves underpaid for the rank and demand more compensation. However, some companies have found a way around this dilemma by committing to a standard company-wide title and pay grade internally, while granting the employee a more appealing outward facing title on their business cards and in the marketplace. As one Asia Pacific CEO at a leading technology firm put it, “if the regional sales manager for China and Taiwan wants his business card to read ‘Greater China Director of Business Development’ I am ok with it, if that’s what it takes for him to stay in the company and continue to hit his sales targets.”

Think long-term when it comes to incentives

Convincing your local talent to buy into the company vision and stick around over the long-term may prove challenging. Nevertheless, you may be able to increase the likelihood your top employees will stay past the two-year mark by tying their incentives to aspirational purchases. The ideal path for a top graduate on the white collar career track is to graduate, get married, and buy a house. In recent years, a second major purchase typically follows home ownership - a car. Understanding this phenomenon, one company set up an incentive scheme for top sales managers. The company would provide an interest free loan to selected employees to buy cars and match a portion of the payments for 5 years. If the employee leaves the company before five years, they would lose the car and the company’s contribution. For those who stick around, they receive a car at a significantly reduced price. This is somewhat similar to companies outside of China issuing stock option plans, in which employees’ options fully vest only after a set number of years working for the company.

Shatter the glass ceiling

The Asia Pacific CEO at most Western multinational companies is often a foreigner from headquarters. Typically, other key positions such as VP Strategy, VP Marketing, even down to middle-management posts are filled by expatriates. This is unsustainable for a business seeking to localize for the long-term. As soon as a key Chinese employee sees a glass ceiling looming above her head, she will opt to join other firms. Interestingly, an increasing number of mid-level managers are choosing to leave Western MNCs for domestic firms. According to Frontier Strategy Group’s 2010 China Talent Engagement Survey, domestic Chinese firms empower their mid-level managers with greater responsibility than their counterparts at multinationals. On average, the typical mid-level manager (age 31-35) at a Chinese firm oversees 13 direct reports, while those at Western MNCs on average only directly manage 9 employees. It is important for top talent to see a clear career path at your company, or else ambitious employees seeking career advancement with increased responsibility may leave for a competing local firm such as Mindray, Baosteel, Huawei Technologies or Haier where there is more potential for career advancement.