Chinese employees value companies with a clear vision and leaders they can admire and trust.
In today’s knowledge economy and environment of economic globalization, corporate culture has become an important competitive force in recruiting talent. Although corporate culture does not produce direct economic benefit, it is a key factor in the prosperity and sustainable development of an organization. As economist Yu Guangyuan said: “As for development, third-class enterprises depend on production; second-class ones, marketing; and top-class ones, culture.”
Corporate culture is not just a set of beliefs; it is comprised of values, patterns of behavior, and accounts and narratives that reinforce those values. It is essential for culture not only to be defined, but also to be expressed through business operations, management communication, and employee recognition. While a successful culture can motivate employees, there is often a disconnect in how employees from different countries perceive the role company culture plays in their organization.
This is particularly true in China where similarities, but also sharp distinctions, exist between Chinese and non-Chinese employees. The MRIC 2013 Talent Report (PDF), the third in a series from MRIC (formerly the MRI China Group), a leading executive recruitment organization in China, surveyed more than 5,000 professionals and managerial talent across Greater China and Singapore to find out what matters to them, including their perception of company culture.
Understanding the needs and expectations of Chinese workers in terms of corporate culture helps foreign companies to cope with workforce challenges in competition for talent with other foreign companies and with local firms. In the past, competition for talent was mainly among Western multinational corporations (MNCs). However, recent trends show that candidates are increasingly being lured by local enterprises. Privately owned companies and state-owned enterprises (SOEs) are growing and maturing rapidly, making them look increasingly attractive when compared with Western MNCs in terms of career growth and development. These employers are also able to draw on strong nationalistic sentiments within the Chinese workforce because of the pride associated with working for a Chinese company—especially one that is seen as progressive and technologically sophisticated with good career opportunities—and the perception of no glass ceiling for Chinese employees. Because organizations often give their top jobs to leaders from their country or region, many Chinese employees would prefer to work for Chinese firms.
Conversely, the talent pool in in China is more educated and well-informed on business strategies, products, the management team, and the work environment at foreign companies. Employees increasingly look into the breadth of the platform of products, the commitment to growth and investment as well as the adaptability of these companies to market requirements and the local cultures. Even big brands are under closer scrutiny.
A good company communicates a clear vision
MRIC research confirms that employees value a clear vision of company direction, believing that a good understanding of where their company is heading can assure them of job stability and support their own career advancement.
Employee retention by way of business direction and career advancement is reinforced in research conducted in August 2012 with a client in Mainland China. MRIC studied the tenure of 41 professionals and managers it had recruited for the client from 2002 to 2006. The average tenure was 5-6 years. Of those 41 professionals, 16 were still employed in August 2012 with an average tenure of 8.2 years.
Within this group all but one had been promoted at least once. These tenure rates are very high for China, where staff turnover rates above 20 percent are common. This research shows the correlation between employee tenure and promotion opportunities that are created through business expansion and business success.
Foreign companies tend to fare better than local companies in ratings of transparency and corporate governance. Nearly 47 percent of respondents rate their companies as good, compared with a good rating of 37.9 percent for those employed by local companies.
This remains an advantage for foreign firms. However, in the area of clear vision of company direction it is interesting to note that local firms and foreign firms rate about the same.
Previously, in a double-digit growth economy, foreign companies were investing aggressively and developing fast-track promotion schemes in China to help keep their existing talent. However, with the recent market slowdown and rising costs, people now realize that foreign companies do not necessarily offer broader roles or greater job security. Even the most talented professionals have been burned by short-term strategies or delayed manufacturing and investment projects. Candidates are now looking for realistic answers to questions about long-term growth.
As the market stabilizes, an increasing number of professionals will be looking for employers who demonstrate commitment and effective business strategies for the Chinese market. They have also become increasingly knowledgeable and sophisticated in making choices among potential foreign employers. Local companies, also gaining in product sophistication and market share, now draw talent from foreign companies.
From the MRIC perspective, in order to continue to attract new talent effectively, foreign companies will have to invest extra effort in:
- Sharing information about their strategy, unique differentiators, and plans for growth in China.
- Involving senior leaders in recruiting strategic talent at every level.
- Communicating career paths and development opportunities during the recruitment process.
Chinese professionals want leaders they can admire and trust
Delving further into the most important aspects of company culture for Chinese and non-Chinese language speakers, the MRIC Talent Report also showed that Chinese-language respondents report greater focus on quality of leadership while Western-language respondents place greater emphasis on company values and their colleagues.
As the mindset of the modern Chinese workforce has evolved, leadership needs have also changed; the new generation of leaders must have more than strong relationships and length of tenure to command respect. In the past, leaders only had to have hard analytical skills like accounting and engineering. Now the skills that help leaders deal with people—teamwork and communication—are equally valued and encouraged. This approach remains a challenge for local companies and thus an advantage for foreign employers.
However, authoritative leadership is still highly rated by Chinese respondents. It fosters a prescriptive, clear, controlled environment and can be reassuring for younger middle management and the professional workforce that is not yet comfortable in dealing with the complexity of business management in a Western-style, consensus-driven, and matrix-based environment.
When we look at the most important aspects of culture to Chinese employees—clear vision of company direction, respected leadership on one hand, transparency, governance and, more specifically for the younger generation, the belief in fairness and promotion on merit—we begin to build a picture of the expectations that are placed on foreign employers and their senior leadership teams to attract and retain their talent in China today.
Foreign companies must foster a balanced leadership style and strength to be able to build and grow a business where talent can thrive and to deliver the organization’s vision in a way that allows employees to follow a clear direction, respect their leadership within a clear authority framework, and fulfill their aspirations for evolving career and lifestyle goals.
From the MRIC perspective, foreign companies must explore ways to implement the quality of leadership and transparency their employees are looking for, which can include:
- Attracting and developing leaders, foreign and local, who are able to deal with China’s cultural complexity.
- Creating greater clarity about roles, accountabilities and reporting lines.
- Ensuring that employees receive regular reviews and have a clear understanding of their career development opportunities.
Today both foreign and local companies in China are under enormous pressure to build new capabilities and expand their customer base while still maintaining growth and profitability. At the same time, employees are becoming more sophisticated and more demanding—and competition is fiercer than ever. In the face of such mounting challenges, the key to achieving sustained success in China is to focus on building an attractive company culture. Companies that are able to simultaneously demonstrate a clear strategy and commitment to China and adapted leadership are far more likely to achieve their goals.
[author] Christine Raynaud ([email protected]) is the CEO of MRIC, the MRI China Group, which provides executive recruitment services across China, Hong Kong, Taiwan, and Singapore. She is based in Hong Kong. Angie Eagan ([email protected]) is the Managing Director of MRIC in China. She is based in Shanghai. [/author]