Melbourne, Sept 5, 2006 (ABN Newswire) - Companies in China are struggling to retain their professional and support staff, and face having to pay higher salaries or excessive recruitment costs, according to research by Mercer Human Resource Consulting, a global leader for HR and related financial advice and services.
A survey of over 100 organisations in China, many of which are multinationals, shows that 54% have experienced an increase in turnover for professional staff since last year, while 42% have reported higher turnover for support staff.
The survey also reveals that the average tenure for 25-35 year olds - the age group targeted most by multinational companies - fell from an average of 3 to 5 years in 2004 to just 1 to 2 years in 2005.
"The employment market in China has ignited in recent years, as more multinational organisations 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," National Business Leader of Human Capital at Mercer Aus/NZ, Mr Fermin Diez, said.
"When employees threaten to walk out of the door, many companies respond by throwing more money at them. While this can sometimes work in the short term, more often than not a competitor is willing to pay just as much.
"Companies are starting to realise they need to be more sophisticated in their approach to employee attraction and retention. Those that offer variable pay, promote 'softer' benefits like flexible working and provide meaningful career opportunities, are most likely to keep hold of their best employees," he said.
Benefits
The survey found that 83% of organisations offer healthcare and related insurance, while 41% provide health and fitness plans and 24% offer flexible working. Just 21% offer supplementary pension plans - the majority of which are defined contribution - and 10% provide subsidised loans. But results also show that 44% of organisations believe their employees are dissatisfied with the benefits on offer.
Career development
Offering staff overseas assignments is deemed the most effective tool for developing employees' careers, although only 42% of organisations provide such opportunities. Individual career development plans, offered by 51% of companies, are also believed to be effective. In contrast, mentorship programmes are considered relatively ineffective and are offered by just a quarter (26%) of companies.
"Attractive pay and benefits and opportunities for career development are rated as the most important factors for attracting and retaining employees. Companies that offer structured overseas assignment programmes and individual career development plans demonstrate a willingness to invest in staff, and this can pay dividends," Mr Diez said.
"High-profile multinational organisations with strong employment brands typically provide more career opportunities and better training and mentoring programmes than many domestic companies in China. Employees tend to be attracted to these organisations because of the prospects they offer and the kudos associated with working for them," he added.
Staff replacement costs
According to the survey, organisations report that the average cost of replacing staff at any level is around 25% to 50% of annual salary. "Many organisations in China underestimate the true cost of replacing staff, particularly at more senior levels," said Mr Diez. "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% of salary for senior staff," he said.
Copies of Mercer's China Employee Attraction and Retention Survey 2006 are available at www.imercer.com/chinaattraction
Notes to editors:
The survey covered 114 organisations in Greater China. Of the participating companies, 24% were from the high-tech industry, 19% consumer, 14% chemical, 11% pharmaceutical, 8% automotive, and 6% from the service industry. The remaining 18% were from other industries.
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 organisational culture 7%
Company location 3%
Results indicate a weighted average
Mercer Human Resource Consulting is a global leader for HR and related financial advice and services, with more than 15,000 employees serving clients in more than 180 cities and 40 countries and territories worldwide. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago, Pacific and London stock exchanges. For more information, visit mercerHR.com.
In Asia Pacific, Mercer has over 2,000 employees in 31 offices across 13 markets. Mercer has 300 employees in 8 offices across Greater China.
