By Morgan Philips

After years of increasing headcount to match fast-paced growth, employers’ primary focus in 2016 is to find a new breed of talent that is adaptable to change, competitive and productive—not necessarily through pay hikes. This “new normal,” unsurprisingly, poses fresh challenges for businesses. It likely explains why, in 2015, an increasing percentage of respondents to the Morgan Philips Talent Report survey changed jobs without a salary increase—27 percent in mainland China, 28 percent in Hong Kong and 24 percent in Taiwan).

MP Hiring Challenges

Morgan Philips Executive Search (formerly MRIC) surveyed about 2,000 executives in China at from December 2015 to January 2016. The survey explored employers’ key hiring challenges in 2016 and employees’ intentions and motivations. This proprietary industry-leading barometer for the talent sector is now in its sixth year. This year it included probing perceptions into how digital platforms are currently supporting the challenges of hiring or securing new positions.
Competitive and productive, however, does not always mean cheaper. It means being creative and adaptable to new markets and business models. Business and HR leaders face the challenge of scarcity of skilled talent. As such, proven professionals will continue to attract meaningful salary increases.

MP driven by salary increases

It also means that employers must remain focused on their company’s “attractiveness” and overall appeal of a company in the minds of potential or targeted talent. It places stronger emphasis on the selection and cultural fit of candidates.

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These challenges are normal in mature economies with a talent market that has settled for limited salary increases, longer promotion lead time and fewer job opportunities. They are a “new normal” for business leaders and HR practitioners in China, where the pace of economic development has slowed, but markets are not saturated and continue to present great development potential.
Managing that transition is complex.

Employees’ Intentions and MotivationsMP intentions vs moveMP job change 2016

In 2015, employees appeared more stable than in previous years and those who did change jobs were met with lower salary increases. That does not seem to have caused anxiety about a potential hard landing in 2016.

Across the board, priorities have not changed much since 2011. For the majority of executives, the motivation to change job continues to be driven by money, especially in Taiwan and Hong Kong.

In the absence of an improved economy, there will be some alignment between salary expectations and opportunities for actual salary increase. Also, companies can expect more people to stay put at their company.

In addition to maximizing their financial interests, employees gravitate toward benefits that matter to them—career progression, learning opportunities, work-life balance, and company culture.

Morgan Philips’ research provides useful insights on employees’ motivations. There is no single solution for enhancing company attractiveness, since it primarily derives from its own DNA. Nevertheless, it is interesting and important to understand the nuances of what drives different segments of the talent market.

Human Plus Recruiting

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More than 75 percent of survey respondents believe digital channels improve their ability to explore new career opportunities.

But, in 2015, the overwhelming majority of executives who declared a job change had landed their new position offline through direct approach from a recruitment firm, a talent acquisition professional, or through their personal networks.

Employers see digital as a gateway to a broad source of talent that allows cheaper and faster recruiting. They also think that digital is useful to help build their company attractiveness, especially but not exclusively, with younger generations.

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However, employers do not view digital as an effective solution in selecting skilled talent or finding the right person that fits company culture.

Undoubtedly, in 2016, digital lowers the cost and increases the speed of finding talent. Yet, on its own, it does not disrupt the means by which employers and employees find each other. As such, a shift toward the careful selection and use of the now abundant sources created through digital channels is necessary.

The recruitment process may be initiated through digital platforms but it is brought to fruition through human interaction—something Morgan Philip’s calls “Human Plus Recruiting.” Attracting and hiring talent will be a “Human Plus” challenge in 2016 in China. This combines hi-tech sourcing with human interaction from valued professionals and advisers.

Competitiveness and Productivity

Based on survey respondents, employers do not automatically associate competitiveness and productivity with paying lower salaries in absolute terms. However, as their own businesses tackle the challenge of stalled growth, they have become more selective and are only willing to pay more for specific talent with a proven track record.

Slower growth in absolute terms also means less middle management jobs due to less expansion. Regaining productivity in a slowdown also means addressing non-contributing management layers and the related compensation costs.

On the other hand, those companies, which had previously experienced huge growth – fueled by Greater China’s low cost export resources and rapid development – e.g. luxury companies in Hong Kong, electronics companies in Taiwan, international consumer companies in Mainland China, need to rethink and adapt their product and market strategies and so require talent that is adaptable and competitive in a new market environment.

The challenge is that many candidates do not stay long enough in their previous companies and so it is difficult to evaluate their track record and real potential.

Shortage of Skilled Talent

The economic environment gives some relief to employers with ‘Meeting hiring targets to meet 2016 budget’ ranking 8 out of 19 in importance in Mainland China, 10 in Hong Kong and 13 in Taiwan respectively. But the shortage of skilled talent still ranks 4 or 5 on employers’ hiring challenge list in Hong Kong and in Mainland China.   

In recent years, vocational skilled education could not cope with the volume demanded by many Greater China sectors. In addition, the transformation of Mainland China, Hong Kong and Taiwan economies towards the higher end of the global value chain – higher added value product content, automation in manufacturing, growing share of services industries, digitalization and e-commerce – pose talent shortages as every employer struggles to find the required competencies.

Mainland China companies also emerge as credible competitors for top skilled talent in the region and globally. Together with Chinese government support, they even go out to attract foreign talent to meet their R&D and hi-tech needs.

Selection rather than Sourcing

It is interesting to note that sourcing enough candidates remains a relatively important concern, but less so, than selecting the best and right ones. Historically, staff turnover has been extremely high in Greater China fueled by many job opportunities and a less disciplined approach to qualified recruitment; inexperienced candidates willing to try out on the job and hiring managers/HR departments willing to recruit them under pressure of meeting hiring numbers.

In 2015, among those who declared a job change, 16% of men and 22.5% of women changed jobs after less than one year. Reasons given were higher salary and clearer career path for both groups, as well as better work-life balance for women, and company direction for men. Taken together with complex labor laws and high severance costs in Mainland China, this represents significant wastage in human resource management

As businesses now adapt to slower growth, employers are being forced to look for more sustainability in their talent pool.  

Company Attractiveness and Cultural Fit

Company attractiveness remains a top eight concern of employers, irrespective of generation in Mainland China and Hong Kong, more so for younger generations in Taiwan. This particular challenge was a hot issue during the boom years with its hyperactive job market when in reality recruitment was driven by speed of hiring and money.

In a more stable environment, increasing company attractiveness may represent a genuine opportunity for employers to meet their other top challenge of a better cultural fit. Hence, employers should pay increased attention to articulating their company’s culture and direction more clearly when seeking to attract good talent in 2016.

As highlighted in Part 3, changing job for a better company culture is equally an important motivator for potential candidates. However, younger professionals and women seem to be more driven by specific culture issues. That suggests an attractive company culture must be both holistic and open to consider the specific needs of each part of its workforce.

Sourcing is the top benefit of digital in recruiting  

In all markets, respondents see sourcing as a top benefit of digital. Digital helps to increase the reach of candidates (‘sourcing enough candidates’). It is, probably for that reason, also seen as providing a solution to one of the employers’ top challenges – to find competitive and productive talent.

MP Digital Hiring Challenges

Digital, and in particular social media, opens up a world of possible prospective candidates to employers and recruiters. An increased and broader reach gives alternatives to a limited network of local referrals and databases.  

Sourcing Skilled Talent

Although digital helps with cheaper and faster sourcing, in Greater China, employers view digital as not particularly useful in solving the challenge of a shortage of skilled talent. The main reason is due to the ‘passive’ nature of skilled talent (as defined by the HR profession).  Therefore, while it is relatively easy to identify those suitably qualified via social media networks, it does not necessarily help to attract that desired talent pool to another employer.

Company Attractiveness

Employers see their company attractiveness as one of their top challenges. In Mainland China and Hong Kong this relates to all employees, while in Taiwan it is mainly a challenge for the younger generation probably due to the unique overseas relocation appetite of young Taiwanese that has created supply issues at home. Employers believe that digital can help solve this challenge, especially with young generations. Our results show the following: 68% of survey respondents aged below 35 years see digital as generally improving their ability to secure a new role, with 63% aged 36-45 years and 57% aged above 45 years.

So, while the younger generation is more accustomed to digital also as evidenced, for example, by the much larger number of those aged below 35 years who applied for a job through a mobile device (34% versus 18%/16% for the older groups), digital now permeates the entire society. Employers should, therefore, consider it as an employer brand-building tool for all generations.

Selection and Cultural Fit

Employers are not confident that digital alone can help them select the right people. Qualifying technical skills is the simpler part in recruiting for expert recruiters.  Successful hiring depends on another key factor called ‘chemistry’ i.e. will we approach situations and problems, when they arise, with a similar point of view driven not only by knowledge and experience, but also by behavioral principles and values (such as inclination for risk, result orientation, compliance mindset and so on).

Although the future may bring technological advancements in data analytics and artificial intelligence, offline and online assessment tools, have only been partially predictive of fit with a role and a company, and, as such, they remain a helpful tool in decision-making rather than an independent decision-making tool.

As such, in addition to being low cost, it is likely why recruiters continue to prefer networks and referrals, as the trusted source of finding talent. Those who refer usually know more intimately who is hiring and who could fit. Ultimately, it is the art of identifying motivational and cultural fit that is the best way to select and retain long-term talent.

Mild deceleration in job changes and salary increases in 2015

The 2015 job changes declared were slightly below the intentions stated in our previous year’s survey. Yet, in Hong Kong, 21% of the respondents still changed jobs. In Mainland China, 17% of the respondents actually moved, a decrease from the intended 21% in 2014. Taiwan actually closely matched actual moves (19%) compared to their stated intentions (20%).

Significantly, there were increases in the proportion of those changing jobs without any pay rise – 6 percentage points increase in Mainland China, 8 percentage points more in Hong Kong and  percentage points higher in Taiwan. Notably in Mainland China, there was also a significant decrease in the higher salary brackets of hikes of 31% or more.

Salary Expectations remain high for 2016

Move intentions continue to decelerate in 2016. Unsurprising, only a small minority would change jobs voluntarily for no salary increase. Economic realities will determine lay-offs and restructuring and the ability of such employees to bounce back at a higher level.

On voluntary moves, while new employers will be selective and cautious, it is to be expected ‘small salary increases’ may not be enough to lure top talent out of their current employer and therefore more talent may stay put. Even so, it would still be advisable for employers to identify and invest in their proven top performers.

Job Finding: Digital + Human

Digital is widely perceived by over 75% of respondents as a very useful tool to explore a career change.

The opinion is slightly more balanced on the ability of digital to help secure a role with just over 50% of respondents in Hong Kong replying positively.

It is interesting that all age groups are overwhelmingly positive on better exploring a career change through digital. The lowest percentage being 68% for those aged above 45 years in Hong Kong.

On securing a role with the help of digital, Mainland China and Taiwan respondents are the most confident overall with, in Mainland China, 71% for those aged below 35 years, 69% for those aged 36-45 years and still 59% for those aged above 45% giving positive responses. In Hong Kong, there is a big difference between those aged below 35 years (69%) and those aged 36-45 years (51%) and those aged above 45 years (45%). In Taiwan, there is a lower confidence rate among the younger professionals (58%) versus over 72% for the other groups that we cannot explain well.

Overall, employers’ views that digital can help increase their attractiveness is validated by candidates who see this tool as a way to explore career opportunities.

Demographics of Survey Respondents Suggest Growing Female Representation

Our database of talent from which we drew the survey respondents is a good reflection of the executive workforce due to the consistent types of role hiring we have performed over the past 18 years. Our demographic analysis of respondents showed the following. 

  • The younger professional workforce has a higher female proportion but still in the minority.
  • Male respondents are 79% (Mainland China), 72% (Taiwan) and 62% (Hong Kong).
  • In Mainland China, women represent 39% of below 35-year old respondents and represent only 10% of above 45-year old.
  • In Hong Kong, women represent 45% of below 35’s survey respondents and in Taiwan 35%.
  •  These percentages are higher, especially in Mainland China, than the overall gender mix of survey respondents in total.
  • Under-representation of women in senior management but over representation in middle management.
  •  22% of female Greater China respondents versus 41.5% all respondents declare being in a senior management role.
  • 39% of women who completed the survey declare being in a middle management role versus the average of 35% from all respondents.

The under-representation of women in the professional and management workforce overall and senior management in particular, is not new. Their active presence in middle management ranks is interesting. Taken together with other findings in this survey on motivations, our findings contend that women’s needs and management style will grow in influence within the corporate sphere in the future – provided that women also take on senior roles.  

Change drivers: money, advancement but also career path, culture and more security

The comparison of talent motivations changing job late 2011 and 2015 is not like for like since two criteria have been added in this survey: compensation was split into two clearer elements of base salary and variable compensation. Also, leadership/strategic direction was divided into leadership and company’s direction. Taking this change into account, the top, mid and low reasons to change job in late 2015 remain broadly the same as in late 2011 with the following worth noting.

Cultural Differences

The key observation is that all respondents, regardless of origin, rate similarly what makes a good employer: good leadership, primarily with high integrity, clear vision and business direction and a culture of trust and respect for employees; also good company values and corporate governance.

Westerners tend to be slightly less humanistic and more systematic. Clear business direction is more important for them as well as a capable leadership and a clearer organisation and management structure.

Interestingly Westerners also tend to rate innovation and recognition for new ideas higher. Is this a reflection of a less hierarchical way of working and exchanging in Western companies?

Mainland China and Asia respondents seem to place, comparatively, greater importance on human dimensions of company values and care for employees.  

In terms of leadership, capability is less important than integrity and a paternalistic view of leading for Mainland China respondents. Please refer to MRIC Talent Report 2014 for more research on this matter. This may prove a talent management challenge for Chinese companies when seeking to internationalize.

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Gender Differences            

Top priorities for men and women are the same: base salary and career advancement.

But, Mainland China women tend to be more pragmatic on ‘what else’: they rate benefits, location, training and a good relationship with their manager more than the corporate dimensions of company culture, leadership and company direction. Some of these traits, such as training or more interest in their direct manager, could be a younger generation trait, though, more than a female one given the larger proportion of female in the below 35 group.

Men are more stable than women in Greater China

In 2015, among those who declared a job change in the past 12 months, 16% of men had been in their job for less than a year and 22.5% of women; 39% of men had been in their former job for 1 to 3 years and 41% of women; and 26% of men declared being in their former job for 3 to 5 years and 22.5% of women.  

One important reason but not the only one (higher salary and career advancement were also mentioned) given by women who had left their job last year was work-life balance.

A leadership that displays high integrity, a culture of trust and respect for employees, and a clear vision for the business are the common denominators that define a good employer across Greater China. These transcend both geography and generations.

When asked about their motivations for changing jobs, young professionals display relatively low interest for concepts such as company culture, leadership and company’s direction. However, in their assessment of what is a good employer, they rank highly leadership and clear vision of business direction almost similarly to their seniors.

They also show us some elements that matters more in their definition of a good employer namely a fair promotion process and comparatively a culture of trust and respect for all employees. In Mainland China they also voice their appreciation of better benefits as an important main reason to change job.

In Taiwan, young professionals seem to voice more strongly their need to be more recognized for their ideas, a more transparent communication and a clearer organisation structure.

It is worth noting that, in all markets, similarly to their seniors, young professionals are not that sensitive to work environment, social activities and company’s brand image. Meaning they also know to make the difference between the fundamentals and good to have in an employer.

Unfortunately all age groups continue to show lack of priority, relatively speaking to other factors, in a company’s commitment to community, environment or social responsibilities. These barely make it into the category ‘good to have’ and rank among the lowest of the low at any age.

Work-life balance versus work-life blend

One intriguing finding in these comparative rankings is about work-life balance in Mainland China. We saw that women and men tend to rate work life balance similarly, at mid-range of their preoccupations. Looking at age differences, we note that the importance of work life balance seems to grow higher in China together with age to reach a similar higher ranking to Hong Kong and Taiwan.  We may conclude that work life balance is a demand that grows with wealth overall and does not represent – as assumed by many – a younger generation appetite for less work.

Instead, young professionals’ focus is more on training and learning opportunities as well as a good relation with their direct manager that we may qualify of good work life blend rather than work life balance.    

Relocation

Young Hong Kong professionals are notably higher on relocation than their seniors. While Mainland China professionals of all ages are notably low, a surprising finding after much coverage in the media these past years on the appetite for emigration of people from Mainland China.

Relocation in Taiwan is weighted relatively high in the younger and older age group. Salary levels in Taiwan are still comparatively lower as is cost of living.  Many young professionals try to find a job overseas, also for international or regional exposure. Older Taiwanese professionals, with grown up children, continue to be available for senior full time or project assignments in Mainland China.  

 

Methodology

Morgan Philips Executive Search (formerly MRIC) surveyed 2,935 professionals at the end of December 2015 and early January 2016, among which 1860 respondents were from Greater China, who comprise the primary focus of this report. Participants were junior to senior executives and managers across a wide range of industry groups and functions.The percentages in the report have been rounded to one decimal point. The aggregate percentage may not always add up to 100%. Some respondents’ sub-groups have a lower base sample (below 80 but no less than 50) so it should be noted that figures and rankings may be only indicative of market trends. In certain instances, respondents did not complete all questions this is why the sum of sub-segments may not reach 100% of total respondents.

 

 

 

ABOUT MORGAN PHILIPS EXECUTIVE SEARCH IN GREATER CHINA

Morgan Philips Executive Search is a direct approach search firm specializing in the recruitment of executives and experts. With a strong presence in the region since 1998, our consultants understand well the unique business challenges faced by our international and local clients who trust us to find the best talent to succeed with their company plans and market strategies. Combining the innovative digital techniques put in place by Morgan Philips Group with our proudly maintained high quality local consultancy, we offer BETTER, FASTER, and CHEAPER services to our clients.

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