1 March 2016
There’s No Holy Grail in HR - Stick to the Simple Things
China has entered the era of the ‘New Normal’: higher labour costs and slowing growth rates will have an impact on how we recruit and retain employees in 2016. China Focus interviews Bernard Vanhecke, HR Vice President, North & SE Asia and member of Bekaert Asia’s Executive Committee, who manages the HR activities for over 9,000 employees in China, on what to expect for the Year of the Monkey.
Considering the current market climate, how do employees’ salary expectations compare to the economic reality?
Especially in industries with a strong presence in manufacturing, the brutal reality is starting to sink in for everyone: things are changing. Previously, when China’s economic growth was in double digits, salaries were increasing in line with this. While the general sentiment seems to be that everything is still growing according to target, the overcapacity in China is becoming very clear. As a result, most companies are shifting their focus to increasing efficiency and making maximum use of the resources that are available.
For 2016, I see two general trends: for one, people are expecting their increase in base salary to be in line with the ‘New Normal’ in China, i.e. twice to three time the cost of living, which is still around 4 – 6% but not above 8%. This seems to be the accepted standard among international companies. Secondly, people are working harder and more efficiently than before and companies have to find ways to reward people for doing a great job with high productivity. So people will be compensated but there is a new reality coming. Interestingly, now for the first time in my China career, I have interviewed good people with 10 – 12 years of experience who were out of a job. I have never seen that before, but it indicates that many big companies are restructuring by trying to do more with less people.
How have you increased efficiency in your HR processes?
We have done three things: firstly, we are now focusing on those HR activities that are really adding value to the business. To achieve this, we surveyed our employees and identified the top 5 initiatives to concentrate on in order to address the real needs of our business. The second change we made, was to streamline our HR processes. In certain instances, our procedures were too cumbersome, requiring numerous signatures and the involvement of too many people, making simple decisions a seemingly huge undertaking. We have managed to cut this down substantially. Lastly, doing this also lead us to rethink our entire HR philosophy utilising the considerable advancements in technology. We have, for example, installed a world-wide online training management platform so our staff can manage their own development needs. The idea behind it is that you are responsible for your own career: if you shine, the whole company shines. This bottom-up approach is a complete break from the past.
What are your secrets to success in retaining people?
These days, the most important thing is that people feel they have a future in the company. That means you have to talk to people and listen to them, and also you have to open your eyes and ears. Spend time with your good people and give them a channel to develop their career and voice their concerns. This can be difficult in a big manufacturing company. In the end, people like to feel that they are contributing to something worthwhile, and this is usually a company that respects people and is developing technology to improve the everyday work flow.
Most importantly, the environment you provide should be fun – and fun can have many different faces. Having a solid team and an encouraging boss can make all the difference. Make sure you celebrate important occasions and show that you care. Everyone is looking for the ‘holy grail’ in HR, but sticking to these simple things usually works. Just remember, if you listen to your people, you have to act upon it as well!
What challenges have you encountered when recruiting in China’s third and fourth tier cities?
Even today, it is still quite difficult to find suitable talent in these places. Having a executive search partner such as Fiducia to support you really makes the task much easier. For our plants in third and fourth tier cities, we bring in people from our other locations to support the team there for one or two years. But even in big cities such as Chongqing it is difficult to find suitable talent.
The problem is not the lack of good people, but more that these people tend to be attracted to cities that offer better education for their children and a higher standard of living overall. In my experience, Chinese people make very conscious decisions about where they want to live and raise their children and therefore, big cities like Shanghai are very attractive to them.
In comparison, what is the future of the ‘Expat’ in China?
Very different from before! In the past, expats came to China because they had certain know-how, skills, or capabilities that were not available in China. In the future, expats will come to China to develop capabilities and competencies that they don’t have in the region where they come from. These are two extremes. While I think there will always be a good mix of local and foreign people, the raison d’etre is different. Nonetheless, we still have expats in senior positions who are managing the link to our HQ. However, these days, there are increasingly more foreign, young people who come here because they want to be part of this fast growing market. In addition, we are also encouraging our Chinese employees to become expats abroad, which is quite popular among our younger staff.
What HR trends do you foresee having an influence on foreign businesses in the Year of the Monkey?
Due to overcapacity, I foresee that there will be a shift in labour supply, especially in the manufacturing industry. The battlefield is in marketing and sales. The current China market is no longer about producing but about value management. Companies that are able to attract and develop people with go-to-market competencies will be the winners. For HR, this means getting your act together and focusing on these positions. Remember that it takes time and effort to build the best sales teams in the world!
The days when sales just meant pushing an envelope have come to an end. This market is changing so dramatically that employees will have to learn everything about branding, product management, marketing, and client relationship management to have an edge. Companies that can develop their teams with these skillsets will have an upper hand.