Practice:

  • Recruitment and selection:

Job fairs or talent markets most popular (cheap and large numbers of candidates); newspaper ad less satisfactory (high costs, slow, problems in attracting high level applicants, dealing with large numbers of substandard candidates); personal contacts frequently used (more loyal, but with drawbacks like nepotism and substandard candidates, expatriates have to actively participate in selection to ensure that selection criteria are implemented); recruit directly from universities; some using head hunting service to recruit top managers (expensive and inexperienced);

Interview is the most common selection method. Usually two rounds of interview, first by HR manager and then by the line manager and a top expatriate manager; the importance of drawing on local managers’ input in selection; interviewees usually very nervous. Different tests (psychological test, problem-solving test, technology test, English language test); certificate and references have to be properly checked

Prefer university graduates, employees of other FIEs but not SOE employees; foreign partners of joint ventures suspicious about transferring employees of the domestic partners to the ventures. Prefer females over males;

Demand for able managers exceeds supply; fierce competition for able candidates; offer attractive compensation scheme, sometimes including providing housing or even ‘golden handshakes’

Probation is common and unsuccessful probationers are not rare.

Dang’an is still an issue.

  • Training and development

Training is an important HR development strategy. Technical training used to be emphasized, but now general management training has receiving growing attention.

Internal training is more common and some companies started their own internal ‘universities’, ‘business school’ or ‘management training centre’. The common way for internal training is to use MNC’s own staff. There is a problem with the effectiveness of training, because of a lack of sufficient knowledge and skills on the part of the trainees, and communication and cultural problems. Language problems significantly restrain the learning process; participants are not used to role-playing, discussions and presentations, especially when English is the medium.

Some companies engage in international management training companies to do in-house training. Short external courses and seminars organized by universities and business school is in high demand.

Overseas formal or on-the-job training is an important part of training and development strategy. It is sometimes used to co-opt high-level local managers into accepting certain organizational changes advocated by foreign executives. It constitutes an important reward and incentive. Poaching people who have received overseas training is a problem, as with demand for a significant pay rise by trainees after the training.

There is a strategy of personnel localization, but to development local managers is a challenge. Expatriate managers lack the motivation and ‘shadowing’, coaching and teamwork is not very successful.

  • Appraisal and promotion

Formal performance management system is common and periodic appraisal is routinely used. But it is uncommon for companies to use the performance appraisal system to analyse the training and development needs of their employees.

Objective setting is an integrated part of performance appraisal. The importance in China of the practice to set specific individual and group goals and then to follow up; by operating a system of this, employees’ responsibility for the success of their own can be instilled.

Appraisal is conducted in a way of interview or discussion between appraisees and their superior. But there are the issues of ‘face’ and ‘harmony’. Feedback needs to be positive, constructive and avoiding direct criticism. Chinese managers are unwilling to give their subordinates poor rating.

The ‘glass ceiling’ problem in promotion

Promoting local middle-level managers to senior position in JV is a sensitive issue involving power struggling between foreign and domestic partners.

  • Compensation

There are complaints about salary hike for top Chinese managers. Fringe benefits, like housing, pension, insurance, company cars and overseas training, are used to attract and retain key staff.

Performance based bonus system is common. Individual performance based bonus is widespread among sales people. There is a concern about the fairness of bonus based on subjective evaluation, but companies still see individual performance based incentive being more effective than group or company-based bonuses. Some firms use annual salary increase rather than periodic bonuses to motivate employees.

  • Retention

The retention of managers and professionals is a significant problem and turnover rate is very high. Reasons: study abroad, go back to home cities, work being too stressful, but most common is leaving for a job in another FIE.