This is China! BLOG

China Hiring Dilemma

A friend is a General Manager (GM) of a small manufacturing company located in the Suzhou Industrial Park. Small in this case is about 30 people. His chief financial officer recently notified him she is leaving his company for another company that is paying nearly 40% more salary than his company. The new company is also a foreign-owned company, a start-up in the Suzhou area.

My friend was clearly dismayed: after all, the CFO was part of his original, core management team, hired a year and a half before. When he asked her why she was leaving, she said 50% new opportunity, 50% higher salary.

I told my friend his company actually beat the statistical norm in China for staff turnover of an average of 15 months tenure at companies before they change companies. He found the stat little comfort, concerned that there may be more fundamental issues at the root of the resignation.

My friend has since considered raising the salary of the individual who will fill the now-vacant role. He is certain he would not raise the salary to the same level as the start-up salary. Still, he has become conscious of how competitive the market has become for English-speaking Chinese professionals. It is a tough market.

He has also become aware he needs to build additional channels of communication between him and his staff at large. At least, we discussed, he would have a longer lead time in understanding an employee’s current condition and their plans for the future.

One way to solve this issue, we considered, was by hiring an HR manager. The best-equipped HR manager in China is one who has several years experience in a foreign-invested company, and who can develop a rapport with BOTH the GM AND the staff at large.

He is concerned hiring an HR Manager for his fledgling company may “corporatize” his small business; however, he does realize he has been carrying HR management responsibilities on his own shoulders for thirty individuals - a tall order by any measure. He knows he still has policies, controls, performance measures and rewards to put into place, but is also concerned that once that work has been done there is not much more for the individual to do in such a small company.

I counseled it would be a good idea to look at his business development plan, at least 2 to 4 years out: where are the inflection points in the growth of the company at which staff turnover could become a huge encumbrance to growth, whether through the time and expense involved in hiring new staff, or in not meeting production quotas because of staffing issues? Then identify where in the plan it would make sense to hire the HR Manager - preferably before the company moved from being within the statistical norm for staff turnover in China to being an extraordinary instance of a troubling phenomenon.

William Dodson
Silk Road Advisors
Suzhou, China