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CULTURAL FIT: THE KEY TO SUCCESS
WHEN SOURCING NEW TALENT POOLS
Because of the lack of available talent locally, The hiring of returnees also can understandably
there has been a tremendous emphasis on trying lead to some animosity between PRC nationals
to attract returnees and overseas Chinese/Asian who feel that they have earned the right for a
expatriates for posts in China.* But in many cases, promotion and those piloted in, frequently in more
rushed recruitment has resulted in hiring mistakes. senior roles. One hugely credible life sciences
An executive from Medtronic said, There are company actively recruited young managers from
many types of overseas Chinese, such as Hong the top U.S. business schools, but found that when
Kong Chinese, Taiwanese Chinese, American born these recruits arrived in China with great expecta-
Chinese, Singaporeans and Malaysians. As one tions and little experience, they could manage up
would expect, they come with a variety of manage- but not down. At Medtronic, executives indicated
ment styles and expectations and there may be that the return on investment for returnees is gen-
no cultural fit whatsoever. erally slower as they have to adjust to the Chinese
market, and it is estimated that only approximately
one out of three succeeds.
to MNCs.
Those who have this rare combi-
nation of skills are well aware of
In other words, SOEs seek individuals who fit in to their culture,
* According to survey of over 300 CEOs world-
while MNCs tend to seek superstars who stand out above the rest.
wide conducted in late 2006 by Korn/Ferry and
Step by step, the SOEs gradually progress these employees up the the Economist Intelligence Unit, regional expa-
triates from Hong Kong, Singapore, Taiwan and
ladder, rewarding and reinforcing loyalty. This seems to foster a Malaysia are perceived to be the best talent to
more stable employee-employer relationship, with tenures averag- run operations in China by over 60 percent of
respondents.
ing between 7-10 years.
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their market value and have increasingly high ex- fore, it becomes essential for hiring managers and
pectations and demands for prospective employers. recruiters to carefully manage expectations with
One exasperated regional HR realistic numbers, which more
executive said that he had a de- likely would be between 15-30
fined bonus pool for his Country Typical percent.
Managers, but the demands in Compensation In a culture where openness
China for both salary increases
and expected bonus payments
Package for about compensation packages
had eliminated shares for the Senior Locals seems to exist like nowhere
rest of the team in the other else, one executive observed
countries, who had achieved n Base salary: 13-14 months that it seems that people
their targets but had not grown n Performance bonus: up to are always comparing their
as fast as China. How was he 30% of base packagesand it is nearly
going to play fair? Comment- n Standard government benefits impossible to keep things
ing on mistakes that compa- n Housing/transportation/other al- confidential. As one can
nies commonly make in terms lowances imagine, this is any managers
of compensating top talent in n Stock or HR executives nightmare.
China, another executive noted: According to Lau, companies
Companies frequently just copy need to acknowledge that this
what they have at home and openness will not stop and be
then wonder why they fail. transparent with their approach to compensation,
ensuring that it is as equitable as possible so that
Nearly all MNCs in China today are caught in the employees feel a greater sense of trust.
trap of going with the flow to ensure that compen-
sation levels, while escalating fast, remain com- Korn/Ferry is also witnessing unprecedented lev-
petitive. No longer will paying at the median level els of benefits a company car is standard and,
work it is upper quartile salary levels or nothing. to a certain extent, interest-free car and housing
That, in itself, is pushing compensations higher, loans and corporate-sponsored EMBA programs
and while the rest of the world increases by a stan- are popular. As one senior executive told us, Any-
dard cost of living of around four percent, in China, thing that is short-term is acceptable, and pension
the minimum annual increase is 10 percent. and long-term incentive schemes are laughable.
He added, Most companies expect change, and
Stanley Lau, General Manager of Baxter Health- service in a company longer than five years means
care China, added that a promotion could involve that people start questioning the employees ability
up to a 30-50 percent increase. Equally alarming is to adapt.
that some of the top executives seek a 50-100 per-
cent increase when considering a new job. There-
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To address the growing trend in healthcare manu- Shanghai is viewed by many executives as the
facturing to base senior positions in cities outside place to be in China, with more than 65 regional
of key centers like Beijing or Shanghai, Gary Wang, headquarters for established MNCs across all
VP, HR, J&J Medical, advised that companies offer industries based there already, and more arriv-
temporary assignments of two to three years in ing every day. As a result, persuading Shanghai-
second and third-tier cities, with a promise of a bet- based candidates to take an assignment in other
ter role thereafter if they perform well. At the same parts of the country is problematic and often only
time, he cautioned that placing top executives in the realistic if a guaranteed return is part of the deal.
provinces, even temporarily, exposes them to being Baxters Lau advised that expectations need to be
poached, as the talent pool there is still significantly carefully managed, with a clear plan of how and
behind that of Beijing or Shanghai. when the executive can come back to Shanghai.
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the average age of employees is late 20s to early that it is these middle managers who are not neces-
30s, it may seem irrelevant to discuss the impor- sarily as skilled at managing subordinates as their
tance of company culture, or take proactive mea- Western counterparts and as a result, the culture is
sures that help create a sticky work environment. one where people are generally uncomfortable giving
But culture and tradition are an important way of critical or constructive feedback. There is an aversion
life in China and to lower employee turnover, it is to conflict; it is easier to tell as opposed to teach
critical for MNCs to understand this. Many Chinese someone, especially in a scorching, fast-growing
still hold traditional values, such as employer loyalty, environment like Chinas. Managers are continually
close to their hearts. People dont leave their jobs, dealing with a range of pressing and challenging
they leave their boss so teaching management issues and have limited time to nurture and properly
skills is an essential step in retaining talent, said train new staff, but they must learn to make this a
one executive. priority for the health of their team and organization.
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CONCLUSION
In tracking the evolution of the business environ- MNCs in the life sciences industry will have new
ment in the Greater China Region in recent years, talent management hurdles to overcome, driven by
similarities seem to exist between China today and new indicators including but not limited to:
1.
North Americas Silicon Val-
ley in the mid- to late-1990s. The entry of Asian conglom-
The intense level of recruit- Recruiting erates into China. These new
ment, the steep escalation players will be recruiting the
of compensation levels and
in China same small group of talent,
the associated cost of living Special thereby putting even greater
increases these factors Considerations pressure on the market.
were all present during
the dot-com era. Naturally, 2. The privatization of health
the unprecedented rate of 1. Always conduct education and care, requiring administrators
to oversee the operations of
growth that China is expe- reference checks
riencing cannot last forever 2. Avoid employing job hoppers groups of hospitals.
but one hopes that when it (many locals believe they
should change jobs at least Whatever the outcome, there is
does inevitably begin to level
every two years) no question that this is a remark-
off, companies will not have
to confront the same difficult 3. Try to identify true motivation ably complex, challenging and
for moving exciting time to do business in
business decisions that their
China. According to Keller Phar-
American predecessors did.
ma Consultings Keller, Over the
In this context, we believe next 10 years, China will become
that proactively working to foster and develop a a knowledge-based economy, not a manufacturing
stable workforce should be the top focus of HR one and it will have an unbeatable advantage. If
practitioners and CEOs alike. We envision that in the challenges of hiring and retaining talent are met,
the next five to ten years, Chinese companies and these words may very well ring true.
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Cheryl Buxton
(cheryl.buxton@kornferry.com)
is Global Managing Director of
Korn/Ferrys Life Sciences Markets,
based in Princeton, New Jersey.
Ling Li
(ling.li@kornferry.com)
is a Senior Client Partnerand Re-
gional Leader ofKorn/FerrysAsia
Pacific Life Sciences Markets,
based in Hong Kong.
Helen Tantau
(helen.tantau@kornferry.com)
is a Senior Client PartnerofKorn/
FerrysLife Sciences Markets,
based in Shanghai, China.
About
Korn/Ferry
International
Asia Pacific
Korn/Ferry International, with more than 70 offices
in 40 countries, is a premier global provider of tal-
ent management solutions. Korn/Ferry was the first
major U.S. executive search firm to operate in Asia
Pacific when it opened its doors in Tokyo in 1973.
Today it has 15 offices in key business centers
throughout the region, including: Auckland, Bang-
kok, Beijing, Hong Kong, Jakarta, Kuala Lumpur,
Melbourne, Mumbai, New Delhi, Seoul, Shanghai,
Singapore, Sydney, Tokyo and Wellington.
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