Companies in China are struggling to retain their professional and support staff, and face either having to pay higher salaries or excessive recruitment costs.

5 September 2006

AMSTERDAM - Companies in China are struggling to retain their professional and support staff, and face either having to pay higher salaries or excessive recruitment costs, new research shows.

A survey by Mercer Human Resource Consulting of over 100 organisations in China, most of them multinationals, shows that 54 percent have experienced an increase in turnover for professional staff since last year, while 42 percent have reported higher turnover for support staff.

Younger recruits with transferable skills are especially hard to hold on to, reports Mercer. 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.

But paying higher salaries to staff on the brink of quitting isn't the answer as competitors are just as willing to up the price, says Brenda Wilson, a principal at Mercer. Wilson believes companies 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," said Wilson.

Of the companies surveyed, 44 percent believe their employees are dissatisfied with the benefits on offer.

Plus, although offering staff overseas assignments is deemed the most effective tool for developing employees' careers, only 42 percent of the companies surveyed by Mercer provide such opportunities, while 51 percent offer individual career development plans. Surprisingly, mentorship programmes are considered relatively ineffective and are offered by just 26 percent of participating companies.

"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," said Wilson.

And companies have good reason to avoid having to replace their best workers. Organisations report that the average cost of replacing staff at any level is around 25 percent to 50 percent of annual salary.

"Taking account of all the elements that contribute to turnover cost," said Wilson, "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."

[Copyright Expatica 2006]