Companies in China struggle to keep staff

HR Magazine, Oct, 2006

A recent Mercer Human Resource Consulting survey of more than 100 organizations in China, many of which are multinationals, found that these companies are having trouble keeping professional as well as support staff. The survey revealed that 54 percent have seen an increase in turnover for professional staff since last year, and 42 percent reported higher turnover for support staff.

In addition, the average tenure for 25- to 35-year-olds--the age group targeted most by multinational companies--fell from an average of three to five years in 2004 to just one to two years in 2005.

"The employment market in China has ignited in recent years," says Brenda Wilson, a principal at Mercer, "as more multinational organizations set up operations there and local companies expand. Individuals with transferable skills have become a valuable commodity, and companies are battling to keep hold of them." As a result, continues Wilson, companies are offering more money, but competitors will usually be willing to pay just as much.

"Many organizations in China underestimate the true cost of replacing staff, particularly at more senior levels," Wilson says. "Taking account of all the elements that contribute to turnover cost--like recruitment agency fees, interviewing time and loss of sales while positions remain unfilled--employers can face bills of over 200 percent of salary for senior staff."

Top Five Methods for Attracting And Retaining Staff in China

Method                                  % of respondents

Attractive salary and benefits package  23%
Opportunities for career development    19%
Meaningful and creative work             7%
Unique organizational culture            7%
Company location                         1%

Source: Mercer Human Resource Consulting.