Trisha Kanjirath, CAHRS Graduate Research Assistant
Leveraging talent is a major focus area for all businesses, and this is no different for companies with major operations in China. Given the complexity of the new challenges and rapid expansion of markets that drive the global economy, it is absolutely imperative that HR professionals in China are equipped to support their company’s business strategy. The high demand for qualified and talented HR professionals means that companies are required to invest in employees through training and development programs, both to invest in employees’ skills and knowledge and manage their career aspirations. This paper discusses the methods that several multi-national companies in China are using to source, develop and retain HR professionals.
Much of the research for this paper was obtained through interviews with individuals currently working in HR roles in China. These individuals represent eight CAHRS-sponsor companies, five of which compete in the manufacturing industry, two in the pharmaceutical industry and one in the technology industry. Seven of the eight companies are headquartered in the United States and rank in the Fortune 500; four are specifically in the Fortune 50. The remaining company ranks in the Fortune 100.
Developing A National Workforce
Under Mao Zedong’s regime, there existed a system of guaranteed lifetime employment in state enterprises. The Communist Party and government officials controlled all aspects of a Chinese worker’s life, in an arrangement often referred to as the Iron Rice Bowl. In addition, what should be produced and how it was to be produced was decided by the Government and communicated to industrial managers. The entire system meant that there was little scope for rewards or consequences for poor performance or little control over wages and benefits. Overall, there was no human resource management system between 1949 and the 1990s because there was no need for it. China began to open up its markets in the 1970s and since then, the situation has been slowly changing. Initial steps in giving managers control included being able to hire and fire employees as well as create restricted bonus plans. In 1988, the Enterprise Law was issued and subsequent modifications in policies made it easier for workers to change employers. It is clear to see why the HR field is still emerging and is only just beginning to come into its own. Although these were staggered steps, they were a step toward increasing the scope of human resource management.
However, in addition to its own indigenous challenges, there are several other issues with which China’s emerging HR function must contend. To begin with, a large portion of China’s labor force lives in rural areas, out of which over 106 million people are expected to move to metropolitan areas between 2003 and 2010. In order to manage such a huge migration, the Chinese government has policies that restrict the mobility of labor. It has also not developed a robust enough recruitment infrastructure that would be able to handle such volumes. As a consequence there is a severe shortage of labor that extends to all functions and industries. 16
Furthermore, there is a scarcity of managerial talent, and the number of candidates that want to explore a career in HR is even smaller.
The government in China is still extremely influential throughout society and in allocating resources. This is not surprising considering that approximately one-third of the GDP is from state-owned enterprises. Since the Communist Party has historically been responsible for these enterprises, there has traditionally been no HR function. The Party’s responsibilities have often been quite far-reaching and are comparable to social services or welfare departments of other governments. Subsidiaries of foreign corporations tend to have HR departments that are similar to corporate...