Does Your China Operation Have a Staff Retention Plan?

This article was originally posted on the China Solved Weblog. It describes the ways in which a foreign company operating China ca better retain their employees.

One of the single biggest challenges for China-based managers is building and maintaining a high quality, well-trained staff. Many senior ex-pat managers have found that as soon as they train one of their local staff members, they leave for new positions with the competition - or worse, they try to set up their own competing business.What goes wrong?

Western managers believe that rational people will act in their own self-interest. Furthermore, their collective experience teaches them that the best workers are eventually rewarded with the best compensation and opportunities. Nothing works like success. It’s the Great American Dream.

Chinese managers have a completely different set of experiences and expectations. They haven’t seen anyone climb the corporate ladder – or even retire comfortably after a stable career. The history of free-market economics is too short to see the benefits of cultivating a stable career with a single firm. The Great Chinese Dream is still largely rooted in building a successful self-owned business. Barring that, many Chinese success-stories have involved job-hopping.

So what can an ex-pat manager in Beijing or Shanghai do to retain staff? We have 3 ideas you can start implementing right away:

1) Management Development Program.
Make it formal, and stress career paths. Many young Chinese do not understand the concept of the career ladder. Design a mentoring program where your more experienced managers can coach and develop new hires. MD programs work best when they are not open to all employees. A little exclusivity can go a long way – especially in China.

2) Intrapreneurship.
US hi-techs were faced with a similar problem of “brain-drain” in the late 1980s and 1990s. One of the responses they experimented with was known as “intrapreneuring”, where the company helps key staffers achieve greater autonomy and start their own business units while still cooperating on some level. These can be done in several ways. First, you can actually fund or otherwise support a break-away staffer or group, and negotiate mutually beneficial terms. Another approach is to give special operating unit autonomy to start their own business within the framework of your existing company. Of course you will have to deal with compensation, profit sharing and equity issues. This approach may not suit every situation, and will work much better if the system is put in place BEFORE your key staffers have already bolted with your client list and trademarks.

3) Project management.
Face facts and deal with the problem head on. Sometimes no matter what you do, you will be burdened with the high costs and dislocating effects of high turnover. Pull your head out of the sand and take steps to minimize damage. Try to organize as many tasks as possible into short-term projects that terminate with a de-brief and a set of practical deliverables. Your company only holds on to salesmen for an average of 9 months? Make sure you have a systematic means of capturing their client information. Your low-level HR people leave after 6 months? Assign them projects like compiling a directory of value-added consultants and trainers. These measures should be designed to build up the institutional knowledge at your company, so that you can be effective even if there is high turnover. The more you can systematize the project, the better. Again, consider using bonuses and other incentives to encourage compliance.

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