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China Struggles to Develop Able Corporate Leaders
China Faces ‘Talent Paradox,’ High Employee Turnover

By J.J. Smith  3/22/2007

LOS ANGELES—While China may boast a huge population, there is a “talent paradox” in which the number of Chinese who are qualified to hold leadership positions in multinational corporations is small, said a researcher who is working on a survey focused on attracting and retaining talent in China.

The data collected from the survey, which is being produced by the Society for Human Resource Management (SHRM) and Development Dimensions International (DDI), of Bridgeville, Pa., have not yet been released, but a preview of the findings was presented at SHRM’s Global Forum Conference and Exposition here March 20. The survey shows that while China has 7 million college graduates, only 10 percent have the skills multinational corporations are looking for, creating China’s “talent paradox,” said

Richard Wellins, DDI’s director of research. In addition, the statistics show that only 8 percent of Chinese workers are engaged in their jobs, he said.

Nonetheless, China’s ratio of economic growth is “amazing,” said Wellins, who added that the survey shows China’s exports will nearly triple from $6 billion in 2004 to $1.7 trillion in 2010. With China’s growth rate of 10 percent per year for exports, “there’s nothing like it before,” he said. The rate of economic growth will require 75,000 more workers to fill corporate leadership positions over the next decade, he added.

Workers Bolting

The survey shows that China’s employee turnover rate demonstrated a wide range, up to 20 percent, depending on the industry, Wellins said. Employee turnover rates increased during the past 18 months, report 38 percent of companies, he said. At least 61 percent of employees surveyed are ready to leave their positions, while 25 percent of employees would leave their positions if they could, he said.

Turnover has become a way of life in China as 73 percent of workers surveyed said they had resigned from their previous job, and 24 percent of workers said they had three or more jobs, and 22 percent said they were likely to leave their jobs within a year, Wellins said. There are plenty of reasons for the high turnover rates; the survey asked Chinese workers and HR professionals why there is such heavy “job flight.” The data shows a disconnect among those groups.

Companies need to start asking where their biggest risk of losing employees is, Wellins said.

That is an assessment Steve Williams, Ph.D., SPHR, SHRM’s director of research, agrees with. Companies need to know what factors contribute to strategies that are successful at attracting and retaining talent.

“Companies with high turnover usually lack a proactive talent management system,” Williams said. Proactive systems focus on identifying, attracting, managing, feeding and developing talent, he said. When it comes to keeping talent, there are common metrics to monitor retention, he said. Those are:

    • Turnover rates.

    • Employees’ job satisfaction.

    • Employee engagement.

    • Promotions.

    • Cost of turnover.

    • Grievances.

J.J. Smith is manager of SHRM Online’s Global HR Focus Area.

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