Multinational corporations and domestic companies in China are struggling with staff retention problems, particularly with highly sought-after well-educated young professionals, according to a new study.
Mercer Human Resources Consulting said its latest China data show an increasing trend in retention problems, with larger, well-known companies that focus on better compensation packages and more and creative benefits winning the battle. Overall, most companies are beginning to recognize that to compete in China, they need to become more "sophisticated" about attracting and keeping employees, said Mercer's Brenda Wilson.
Wilson said the labor market in China is becoming more competitive every year, as more multinationals set up shop in the country and domestic companies grow increasingly competitive with their compensation and benefits packages. Variable pay, flexible schedules, and opportunity for growth and advancement are proving to be key to retaining qualified professional and support staff, the study found. Moreover, young Chinese workers are often looking for positions with companies that might allow them the chance to work overseas.
"High-profile multinational organizations with strong employment brands typically provide more career opportunities and better training and mentoring programs than many domestic companies in China," Wilson said in a news release accompanying the survey. "Employees tend to be attracted to these organizations because of the prospects they offer and the kudos associated with working for them."
The survey polled 114 companies in China, both international and domestic, from a cross-section of sectors. Of the companies polled, 54 percent reported experiencing an increase in turnover in their professional staff over a year earlier, while 42 percent reported an increase in turnover with support staff during the same period. The study revealed particular problems with employees 25-35 years of age, where average company tenure per employee dropped from three to five years in 2004 to one to two years in 2005.
Retention problems are costly, the survey found, with the price of replacing staff estimated at 25 percent to 50 percent of annual salary. At senior staff levels, the cost of replacement can be double an employee's annual salary.
The survey said companies believe the top five methods to attract and retain staff are: offering attractive salaries and benefits, providing opportunity for career advancement, providing meaningful and creative work, having a unique company culture, and being in a desirable location.
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