HR on the Hot Seat in China

By Ed Frauenheim

Mar. 9, 2007

China these days, human resource leaders are on the hot seat—in more ways than one.

Not only do HR departments at multinationals face intense challenges when it comes to leadership talent matters, but HR executives themselves are among the most sought-after professionals.

Helen Tantau, senior partner with executive search firm Korn/Ferry International in Shanghai, says HR leaders and procurement officers are at the top of the list of the managers that companies in China need most. She says that overall, local Chinese leaders with good track records can expect salary increases in the 10 percent to 20 percent range. But talented HR managers are seeing raises of 20 percent to 30 percent.

Part of the reason is a dearth of good business-focused HR professionals in China, Tantau says. Another factor is that companies are locating their Asian headquarters in China, and need regional HR executives. “Even for just the China roles, there are not enough good people to go around,” Tantau says.

Trouble finding and keeping capable HR execs exacerbates tricky leadership-related tasks at China operations—jobs that typically fall to human resource departments. Last year, the American Chamber of Commerce in Shanghai surveyed 274 U.S.-based companies with operations in China and found that the No. 1 business challenge in China was “human resource constraints, including attracting and retaining managers and workers.” In the survey, 43 percent of respondents said the issue of recruiting capable Chinese managers had a strong negative impact on their business operations in China.

Not only do HR departments confront a tight labor market for quality leaders, but educated Chinese professionals aren’t very willing to move around the country to take new roles, says Avrom Goldberg, managing director for the Asia-Pacific and Middle East regions for relocation services provider Sirva. Limited mobility means HR managers must come up with more creative recruiting and succession strategies, he says.

Another challenge, Goldberg says, is managing changes in the use of expatriate executives. He says more and more companies are sending expatriates beyond Beijing, Shanghai and Guangzhou and into less prominent cities with fewer amenities, such as Chengdu and Dalian, thereby requiring more HR savvy and support. “HR’s going to have to be on top of their game,” he says.

For a sense of the way HR officials can be run ragged in China, look at Alex Chiang.

Chiang is director of human resources for the Yintai Center, a new development in Beijing that includes office space and the Park Hyatt Beijing. With the luxury hotel slated to open in the latter part of this year, Chiang has been busy hiring a staff of about 1,500 people, including 20 senior hotel managers. For him and the heads of other hotel divisions, preparations for the opening have meant long hours. Chiang often works 100 hours or more a week, and this intense schedule has lasted for months.

In this climate, a premium is put on the quality of the HR department. But the HR field in China is in some respects far from Western standards. Much of the investment by multinationals in China has occurred just since the mid-1990s. And traditional Chinese enterprises have not had much in the way of market forces to push them to acquire recruiting chops or develop talent dedicated to improving the bottom line.

Signs of China HR departments’ lack of maturity can be seen in a recent study from Mercer. The HR consulting firm reviewed management practices at 11 multinationals in China and found that while all the organizations undertake some form of assessment, only six of the 11 linked results to development planning.

Brenda Wilson, who leads Mercer’s Hong Kong human capital practice, says human resources departments at many organizations in China often begin piecemeal talent and leadership programs without taking the time to create a comprehensive strategy. HR organizations also are responding in misguided ways to China’s leadership labor crunch, Wilson says, by prematurely promoting managers and giving them “imaginative titles.”

“Titles can often be made-up and inconsistently applied across the organization, causing internal confusion with roles and responsibilities, internal equity issues and wage inflation,” she says.

But there are organizations and individuals in China that stand out for their HR sophistication, observers say. Ken Hui, human resources director at furniture design company Haworth for the Asia-Pacific, Middle East and Latin America regions, says “very good” HR managers are emerging in China. “I have seen tremendous growth in the competency of HR people in China over the last 10 years,” he says.

One reason for improvement is the arrival of multinational companies, which brought international HR skills, Hui says. Another factor, in his view, is the difficulty of being an HR manager in China, which can serve as a trial by fire in such areas as recruiting and retaining talent. “It provides very good training for anybody who wants to learn about HR,” Hui says.

In some cases, HR programs with roots in China are being used elsewhere on the globe. That’s the case with a leadership training effort at mobile phone maker Motorola that was originally designed for rising stars in China. And Angel Yu, vice president of human resources and administration at Adidas for mainland China, Hong Kong and Taiwan, is playing a leading role in a number of worldwide HR initiatives at the sports clothing firm.

Yu, a Shanghai-area native who has been an Adidas HR manager since 1999, is contacted by headhunters weekly. For his part, Alex Chiang of Hyatt has turned down recruiters several times in the past year.

The 10-year Hyatt veteran says he’s remained with the company partly because he appreciates the trust his superiors have invested in him. “The people-driven management style that I learned from them, and they show to me, keeps me in the company,” he says.

As Chiang’s mature approach to career development indicates, at least some professionals in the field are handling China’s HR hot seat by keeping their cool.

Ed Frauenheim is a former Associate Editorial Director at Human Capital Media and currently works as Senior Director of Content at Great Place to Work. He is a co-author of A Great Place to Work For All.

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