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CEIBS Knowledge > HR & Organisational Behaviour

Together We Succeed: Effective Ways for Making Core Employees Grow with the Company

2006-12
By Audrey Wu



While the rapid development of China's economy is a blessing for most enterprises, it also leads to war for talents. How to attract, develop and retain the core employees has become headache for many CEOs. Common instruments, such as decent salaries and benefits, promotion, and well-designed training programmes, seem not sufficient for talent retention. Lured by abundant job opportunities in the booming market, talented people seem always ready to jump to the next destination. Is there a way out for nowadays CEOs tortured by endless talent war? A panel comprised of eight business executives from CEIBS EMBA classes shared their experience and insights on the topic on Sep. 15 at a CEIBS EMBA forum.

Talent Management: Different Company, Same Problem?

According to a survey on 200 fastest growing companies in the US several years ago, most CEOs were worried about two questions: how to find talents to serve their companies and how to retain them. Leo Tolstoy, the famous Russian writer, once said, "All happy families resemble one another, each unhappy family is unhappy in its own way." Then, do different types of companies have different problems in people management?

Start-up: Easy to retain, hard to attract

For Zhang Banghui, who started his own company several years ago, the real challenge is not how to retain talented people, but how to attract them. A set of incentives, such as nice salary, dividends, or even stocks to talents (the company is preparing for an IPO), work very well in retaining core employees. His company is composed of researchers who especially value processes and long-term goals, but such people are rare in today's job market. So it has been difficult to find more talents who share the same values. With the expansion of the company, it is also facing the bottleneck of management capability. Since the company has already established eight subsidiaries, Mr. Zhang is now hungry for talents experienced in managing large corporations.

State-owned enterprises: problem of communication

Yang Chuanhua, the General Manager of Shanghai Huaihai Commercial, which owns many brands and outlets along the famous Huaihai Road, one of the major commercial streets in Shanghai, shared his three problems: the top management always complain for the lack of talented people, employees always regard themselves as talents without the recognition of the top management, and the company has failed to keep talents despite long-time investment in them. For example, Huaihai once hired a young man with overseas master's degree, designed a way for him to the top management. Unexpectedly, he decided to resign without knowing that a higher position is waiting for him just two steps ahead, because he felt his growth was too slow and he needed more money to realize his personal value. According to Mr. Yang, many core employees say goodbye to the company because they can not fully understand the company's strategy, culture and the CEO's thoughts, and purely pursue short-term benefits such as money, cars, apartment and quick promotion.

IT industry: challenge of cross-cultural management

"People are the most precious resource to the company" is best reflected in the talent-intensive software industry. The management of core employee in IT industry is full of challenge because of the strong character of IT people and the fierce competition for IT talents. Wang Xingshan used the phrase "the most uneasy" to describe the feature of talented people in this industry. According to his experience, when the company is small, career growth, benefits and interpersonal relationships are the three most important factors for retaining talented people: With the company's expansion and internationalisation, family feeling weakens while cultural difference emerges as a new challenge. His company's experiences shows that cultural difference exists not only in different countries, but also in different regions in the same country. Headquartered in Jinan city of Shangdong Province, the company benefited from the Shangdongness' preference for stability in its early years. Shangdongness do not change their jobs frequently. This is very important for a software company because the knowledge can be easily accumulated if employee turnover is low. As the company expanded to Shanghai and Guangdong, the characteristics of the local employees changed accordingly. The Shandong culture doesn't work for managing Shanghainess and Guangdongness. When the company opened a subsidiary in Tokyo, it encountered more difficulties in managing local staff.

According to Mr. Wang, the head of a subsidiary must be a local person while the technical supports can be sent from the headquarters. Since it is so hard to manage cultural difference, it is more appropriate to emphasise developing internal talents than counting on professional managers from outside the company.

Multinationals: How to avoid paving way for others?

Yu Hua from Adidas pointed out that sports product and retailing are among industries most hungry for talents. It is hard to find experienced people who can start working immediately. If recruiting from other industries, the employees will need lots of training. The challenge in China's talent war is to find experienced people who fit into the company, recognise the values and culture of the company and have team working sprit. Another challenge is that the growth of the company is faster than that of core employees. Therefore, companies should find ways to develop its people fast enough to catch up with the growth pace of the company. Many companies may feel that they've employed so many people but capable people seem to be always only a few. Companies must realise that it takes time to train and develop core employees.

Another headache for multinationals is that the talented people they trained will soon become the targets of head hunters in the market. As these people often have high self-expectation, they are more likely to change their jobs if their current employers could not offer something special to retain them.

Brainstorming on Countermeasures

Corporate culture and training & development are effective means for employee retention and the growth of companies, although different companies may face different challenges in retaining talents. The CEOs attending the forum shared their own experiences in addressing the problems mentioned above.

Yang's theory for core employee

Yang Chuanhua elaborated his theory for core employee management. In his opinion, core employees should have three elements: loyalty, value to the company, and high potential. Three elements will be useful for making core employees grow with the company: common incentives such as stocks, bonus and welfares, career opportunities including skill improvement and promotion, and necessary competition to keep core employees with a sense of crisis to make progress.

In addition, Mr. Yang also suggested three stages of the growth of core employees. In the first stage, a core employee will be gradually promoted to the top management. In the second stage, a core employee will leave the company for other opportunities if they feel unsatisfied with their current employers. A core employee will have to retire in the third stage which means the end of his/her career life cycle.

The "marriage" between the company and talents

Huang Jiwei from Getronics mentioned that though there are a variety of management tools available, few companies could use them effectively due to the inappropriateness. Many implementers don't fully understand the function, performance, and usage of these tools, and use inappropriate tools in inappropriate time. Therefore, companies should not blindly believe in the effectiveness of various tools.

As to the case mentioned by Mr. Yang in failing to retain a talent, Ms. Huang described the relationship between the company and the young man as "marriage". Failure of a "marriage" could be caused by the lack of enough understanding before getting married, other after-marriage problems that make employees change their minds, or the appearance of a third party who lures the employees for another job. The HR structure of Huaihai seems to be pretty sound and mature. But why are there still conflicts between the top management and core employees? And why did the master change his mind? Ms. Huang suggested that it is true that environmental changes could be part of the reason, but the key lies in whether the company keeps emphasising and instilling corporate culture, and whether it has the right measures to test that the corporate culture has been effectively accepted by all employees. Lack of effective communication will often lead to "having different dreams in the same bed". There would be a different ending, should the company have told the leaving master earlier about his career plan.

According to Ms. Huang, HR should act as the "wife at work" or working partner for the CEO. However, many CEOs are usually too busy to communicate their thoughts with HR department effectively. It is not good for creating a culture of effective communication in the company.

Use both hard and soft hands

Yuan Lingzi from Watson Wyatt Consulting gave a prescription for companies troubled in "HR illness", i.e. "well aware of the reality and use both hard and soft hands".

One feature of the current Chinese talent market is the frequent flow of talented people. According to Watson Wyatt's survey, China's employee turnover rate has been the highest in Asia-Pacific region during the past three to four years. China's economic development has brought lots of opportunities not only for companies but for talents. Under such circumstance, it is no surprise that talents seem disloyal to their employers, which may be the major reason for all the problems in talent management.

Another feature is that demand for talents exceeds supply. China's current education system and environment are still unable to produce a large number of talents who meet the needs of corporations, not to mention experienced people who can start working without training. In general, the capabilities of Chinese talents are lower than those of the Indian, including language ability, working skills, etc. On the other hand, lack of transparency in talent market and asymmetric information make it harder for employers and employees to find the right target for "marriage".

When it comes to "people oriented", we should be aware of the gap between slogans and realities. Owing to the lack of clear messages from CEOs, HR department often find it difficult to set criteria for selection, retention and incentive of talents. Many CEOs are talking about the importance of people, but would spend millions of dollars in advertisements while refuse to invest one million in HR project. For many Chinese companies, in fact, there is still a long way to go to reach the stage of being really "people oriented".

In the light of the reality of China's talent market, Ms. Yuan assumes that the right solution is to use "both hard and soft hands".

First, a company should establish a clear "employer brand". It is difficult for companies, especially small and medium-sized companies, to attract talents. Capital strength alone is not enough, since talents often consider multiple factors when they decide which company to join. Companies should establish "employer brand" and a good image in the job market just as what they do with their product brand.

Second, a clear talents identification system is indispensable. Some companies can't find the right talents because they don't have a clear definition of what kind of people they are looking for.

Third, use both hard and soft hands to maximise the value of talents. Hard hands include proper incentive system and favourable working environment. A well-designed incentive system will be very helpful for motivating and retaining talents. A healthy working environment includes not only sound benefits, but also well-established working procedures, which allow employees work more smoothly and flexibly and then obtain more sense of achievement. On the other hand, negative environmental factors such as bureaucracy and corporate politics, should be driven away. Soft hands refer to managerial abilities. Companies should invest more in training managers because many employees resigned due to the incompetence of their superiors. To sum up, a company should pay attention to hard hands--incentives and environment--and soft hands--managerial abilities.

Fourth, companies should, in the final sense, retain people with corporate values. In order to retain talents, most companies keep optimising their salary system again and again. However, according to Ms. Yuan's experience, what keeps people stay in the long run is corporate values. Given the fierce competition for talents in China, companies should not place a high expectation on talents retaining. A survey from Watson Wyatt shows that it is good enough for an employee to work for a company for three years. People who choose to stay may not be the best in terms of capacity but they recognise the corporate values and will grow with the company.

Last but not the least, developing people inside the company is more important than smart recruitments, given the shortage of experienced talents. After all, god helps those who help themselves. In fact, large corporations such as Motorola and HP all have long-term training programmes. Training means investment, which might not bring revenues in short term but will surely benefit the company itself in the long run. Therefore, CEOs, who control resources, should pay more attention to the investment in HR, which is of great significance for breaking through the bottleneck of talent shortage.

CEO's role as a bridge

Gu Qing, leader of Shun Tak's China business, described the role of CEO in talent retaining in three phrases: serving as a link between the upper and the lower levels, horizontal integration and "pulling up seedlings to assist their growth".

The first phrase means that a CEO should convey and implement the decision from shareholder meeting and board of directors to subordinates, and "fight" against the shareholder meeting and board of directors on behalf of staff when necessary. Mr. Gu defines himself as a coach whose responsibility is to train his managers and establish a favourable environment for them. "Horizontal integration" refers to the coordination with headquarters and other departments/divisions and integrating various resources to facilitate employees' work. "Pulling up seedlings to assist their growth" means to think in others' shoes. Asking core employees to make decisions from the perspective of top management level will not only serve as a good opportunity to assess the core employees' potential but give them more psychological satisfaction and sense of being recognised.

Regard talent as comrade-in-arms

Deng Hua shared his experience from Longcheer, a high-tech company. The mission of the company is to become a respected company in the industry through ten to twenty years' efforts. In line with this mission, Longcheer regards core employees as comrades-in-arms fighting together and thus establishes strong cohesion in the company. Its staff work hard when the company is in good situation, and will not change their minds in difficult days. Mr. Deng agreed that corporate values are very important to retain talented people. When a person wants to start his own business, he should think over the mission of the company; when a person joins a company, he should find out the exact values of that company. Though there are many methods for talent management, it is the CEO who makes difference in HRM, because HR department is only an instrument. When recruiting, Longcheer puts great emphasis on the match of values between the company and the candidate. The company sends senior executives to EMBA programmes and has established comprehensive training system.



The article, originally in Chinese, is translated by Wang Jiahui, Audrey Wu and Gary Liu.