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By Robert B. Smith, General Manager, Lowillow Business and Management
Consulting
You are a SME about to take the next step in developing the China market. Your
board or your partner has given the green light, and you are sitting in front
of your consultant or lawyer asking them to make the official
application…when suddenly you think of the people factor.
Human Resources, can't live with them, can't live without them…so you
must hire the best you can, train and nurture them, compensate and motivate
them, and try to hang on to them for as long as possible in a strong and
developing market that provides endless opportunity to the educated,
experienced, career orientated, knowledge thirsty, foreign language speaking
pool of talent.
The pool is large, but not yet deep, so you have to make sure you find and keep
the best talent otherwise the thousands of other companies coming into the
country on the back of China's strong FDI figures will snap them up first, or
out of your fingers just when you think you have them in your grasp.
How do you to find, recruit and hire the best match for your organisation?
For me it is a "simple" answer…use professionals as you would in seeking
legal, accounting or other business advice. There are numerous professional
service firms, large and small, that provide MNCs with search services, as well
as temp/contract services (inclusive of taking care of the recruitment of the
personnel). So I advise you to establish a "partnership" with one of these
service firms, allow them to cast the net into the talent pool, and reel in the
best candidates for the positions you are seeking to fill.
Your worry should not be how to find your future employee, but which service
firm to choose to do it. Of course, if you are already well established in
China and have an HR department with experienced search personnel, then you can
do a lot of the recruitment yourself, but even under those conditions there is
a time and place for outsourced search services (OSS).
Outsourced search services
As I said previously, there are numerous firms offering such services, so you
need to first get a list : start by asking your other professional services
providers (accountants, business consultants, lawyers) for recommendations, but
don't forget the Yellow Pages, and to ask your Consulate's Commercial Section.
In addition, you should continually network with other business people who have
already gone through search, asking them for recommendations on which firm they
choose, why, and how the OSS performed. Even knowing if they did not like the
OSS, and why, can be helpful to you in your own selection process.
[Pit-stop - many of the large multi-national search firms are already well
established in China, and the temp/contract services firms are coming in as
well. Examples of the former in Shanghai and theYRD are Heidrick &
Struggles, Korn/Ferry and Russell Reynolds; and of the latter, Manpower
Business Consulting (Shanghai) and Staff Service (Shanghai)]
While we are on SMEs, don't always think large or international is the best
choice. The large firms certainly have the ability to deliver the professional
services that you would expect, or that their equally large fees would suggest,
and they will often justify their fees on their international "network" of
offices and support systems, but think about it ! Why should you pay higher
fees for a company to have offices in New York, London, or even Singapore and
Taipei if the talent you are looking for is based in China already ? For most
companies, and positions, the ideal candidates will either be a PRC national, a
returnee, or an expat with "extensive China experience", which means they are
more than likely already here. In my opinion it is more important for your OSS
to have the experience and network in China itself, that it is not necessary
for them to also have extensive international networks, and if that results in
a lower fee structure don't always conclude it means lower quality of service.
Being part of the SME community I am all for "self-promotion". However you do
need to do your due diligence when selecting a service firm, so don't hesitate
to ask for, and call, several references of other companies that have used the
services of the OSS you are considering. Current and past clients' opinions are
the best indication of what you can expect in service quality in the future.
What to ask your OSS
There is a range of issues that you need to consider when choosing an OSS firm.
Assess what they propose against these criteria.
Recruitment Methods
The main methods are headhunting and networking, website postings, and
industry/HR newspaper adverts, as well as job fairs. The first two are
proactive searches, the last three are passive, "wait for your luck to show up"
methods. The first three methods are the best. .Newspaper adverts only with
lower level positions based in secondary cities where the OSS has no direct
networkwhile job fairs are OK for again, "mass" recruitments of lower, or
technically specific positions.
[Pit-stop - the first step to getting a successful search started is for the
client to provide their OSS with a clear and precise job description and to
introduce the specific performance expectations they have for the position, as
well as their company's culture. The OSS should in turn understand the client's
corporate culture, what type of people are the most successful in the company,
who the direct manager of the position will be and their personality. It is
always beneficial for the OSS to both meet the direct "boss" and visit the
company's work site/environment if possible – not always the case if the
company has no operations in China]
Qualifying Process
This is about turning applicants/targets into candidates. This should consist
of resumé screening, a pre-qualification phone call to assess suitability and
interest on part of target individual, a phone interview (15–20 minutes)
and a face-to-face interview (45-90 minutes).
Interviewing Techniques
Ask the OSS how they interview. Usually the best method is a combination of
techniques used over multiple interviews, with at least one, but preferably two
interviews, being face-to-face.
In a typical interview one should start by putting the interviewee at ease, so
that they will be relaxed, which tends to make them more communicative and open
in their answers. This may only take five minutes or so, then you move on to
reviewing their resumé, asking them to fill in some of the gaps, or explain the
gaps in their work history, as well as probing for information that may not be
readily apparent on paper. This biographical phase of the interview may take
around 20 minutes, after which a series of questions using the Behaviour Event
Interviewing (BEI) technique produces a good picture of how the individual will
perform for you, gleaned from how they described their past actions under
specific circumstances "created" by the interviewer.
As BEI questions solicit a detailed response this process, depending on how
many questions are asked, could take 30-45 minutes. You wrap up with a Q&A
session of about 10-15 minutes, allowing the applicant to learn more about the
opportunity, as well as to discuss their compensation and benefits
expectations, required notice period, and any hurdles that may be in the way -
they may have a lengthy notice period, or may forfeit a hefty bonus if they
leave early, etc. If you are still interested in them after the interview, and
you get their further commitment to continuing discussions, then they are
short-listed for the client to interview.
Make sure you tell your OSS at what stage of the process they can tell the
applicants your company name. I recommend that the Client's name not be given
out until the Applicant turned Candidate has been placed on the short-list and
approved by the Client – after all, the Candidate should be given an
opportunity to learn about their prospective employer's background (company
details), usually through a brief introduction by the OSS, then a visit to the
Client's website. It is actually, only after they know who the prospective
employer is can they really make a final decision on if they are interested in
pursuing their application further (I have had some turn the opportunity down
after finding out the Client's name!).
Client Interview
The most productive way for the client to interview depends on whether or not
they already have people in China that can represent them and conduct a
productive interview. If they do, I recommend they interview in smaller groups
of, say, two to three people, as the candidates are qualified by the OSS. By
doing the interviews as early as possible (as the Candidates are agreed to),
the Client can give feedback to the OSS and allow them to tweak their search to
hone in on more appropriate matches. If the Client does not have their own
office in China to interview the Candidates, I recommend they either use their
OSS's meeting room, or take out a meeting room in an international hotel (often
the case when the client is flying in for the interviews from a foreign
country).
The client needs to be flexible in the time they interview, as, after all, the
Candidates probably have a full-time job to attend to. Early morning, evening
and even weekend interviews are common. Also, if the Client is flying in for
the interviews they should schedule in a first round at the beginning of their
trip, so they can do additional (second round) interviews of those that they
liked, before they fly back out of China. They can, of course, arrange for a
video conference call/interview at a later date if time does not allow them to
hold a second round of interviews, or if there are other people in their
organization that need to assess and approve the chosen one(s).
Reference checks (on short-listed candidates)
Expect the basic checks such as obtaining or viewing the original graduation
certificates for education, as well as ID, and having them copied, collecting
reference letters from past employers, and at least two or three phone
reference checks with the candidate's previous, line manager when possible, or
other senior manager that interacted with them on a regular basis (HR manager,
operations manager, etc.). If you require more in depth checking of their
background there are organisations that do investigative work.
Psychometric Assessments
These can be applied to the top one or two possible candidates and are useful
if the right assessments/tests are administered. Have your OSS introduce a
specialist in the field of psychometric assessments, make sure they have
experience in China, and have made adjustments to their battery of tests to
reflect cultural and linguistic differences.
Compensation and benefits (C&B)
Structuring the proper basic C & B package from the beginning is important,
as it will ensure you secure the hiring of your chosen candidate, and that the
relationship starts out "on the right foot". It should take the employer's
fundamental C & B and HR policies into account as the basic framework of
the package, but also consider local practices regarding being flexible on how
fixed cash payments are designated to ensure maximum, allowable (legal)
personal "tax breaks", as well as benefits such as supplementary/commercial
medical insurance.
Ask your OSS for the local market practices, as well as what actual labour
regulations stipulate as far as such things as mandatory Social Insurances,
annual leave, etc. Of course, the best source of such information is from your
legal services provider, as long as they have a person in their organization
locally that is knowledgeable in Chinese labour law (as well as for the
specific city you are hiring in).
[Pit-stop - many of you might think that the cost of employment in China is as
low as it is projected by the media back home, when in actuality it is, for
foreign MNCs, much higher. Why? Simple, because you do not want to employ the
"average" worker. They will have no foreign language skills. They will have, at
most, a high-school education. They will have little or no business acumen, and
typically have no understanding of your corporate social responsibility needs.
At best, they would be under-motivated followers waiting for your specific
instructions on how to move from A to B. So expect to pay between 1.5-3 times
the "local" rate for a position, if you want someone alert, productive and with
a sense of responsibility and initiative, and who can speak your language. If
you will be hiring them away from another MNC, as is the case most often, their
compensation will already be above "average" for China]
Employment Offer Letter
Use your own standard letter, or that of your OSS provider, making sure it is
concise and detailed, and includes mention of following the local labour laws
and regulations, although there is no need to go into detail on that topic in
the offer letter. It should clearly state the offered gross salary (base pay),
any fixed allowances, annual leave, the employment start date, and confirm that
you will provide all mandatory corporate social insurances.. The offer letter
should use the candidate's Chinese and English names, along with their home
address and local ID number. Keep it to no more than two pages, referencing any
additional documents that will be signed to complete the employment process
(i.e., employee handbook explaining the company's work policies and codes of
conduct, or a confidentiality agreement). As the offer letter is not the final
employment agreement, it can be in a foreign language only, but the employment
agreement should be in both Chinese and your foreign language.
Hiring (the employment contract)
If you are a Representative Office (RO), then you need to employ your personnel
through a labour agent such as CIIC or FESCO. If you are a WFOE or JV you can
hire directly, but unless you are fairly large, or will grow rapidly to say
above 25 people, then it is probably more economical to go through a labour
agent or temp/contract services company and allow them to do the payroll and
ensure all relevant social insurance funds are paid into properly and on time.
The local labour agent can act as a low cost payroll service, and at the same
time provide "training" (through observation) to your own HR and/or accounting
people on how things must be done.
[Pit-stop - on top of the labour agency fee, typically around RMB220–250
per month per employee, in Shanghai the mandatory corporate social Insurances
are pension, health, unemployment, housing, industrial injury and maternity
insurance, adding up to 44% of gross salary, but capped at three times the city
average wage in 2005 of RMB6,099 per month (these vary in other YRD cities, see
table elsewhere in this section). Also, don't forget the supplementary medical
insurance that is a standard benefit costing between RMB200-300 per employee
per month. Yes all of this is on top of your base (gross) salary and benefits !
Doesn't seem so cheap over here anymore, does it?]
Conclusion
Find and hiring the right people for your organisation, anywhere, is critical,
and not an easy task. Don't go it alone when there are professionals out there
that will not only make you life easier, but your business more successful by
making sure you do find the best match for the position and your organisation.
We are grateful to Robert B. Smith, General Manager, Lowillow Business and
Management Consulting, for contributing this article. For more information, see
www.lowillow.com.
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