Cultural Pointers on Retention in China
It doesn't matter if a cat is black or white, so long as it catches mice.
It has been 20 years since reformer Deng Xiaoping's landmark 1992 "Southern Tour" – a series of speeches in South China during which he announced the Open Door reform policy. China has developed rapidly ever since: GDP growth has averaged 9% over the past 20 years. Speaking of the economic and political system, Deng Xiaoping famously proclaimed, "It doesn't matter if a cat is black or white, so long as it catches mice." That statement embodied China's idiosyncratic embrace of free-market economics, and it gave Chinese entrepreneurs carte blanche to start thinking in new ways and pursue new business opportunities.
But the very rapid pursuit of economic entrepreneurial growth has led to a departure from traditional Chinese values. For example, in traditional Chinese culture, loyalty and lifelong service are important values. This is true in Japanese and most other Asian cultures as well. In the past 20 years however, companies have had to adapt to frequent staff turnover as a new class of Chinese workers has pursued financial gain at the expense of all else. The Open Door policy has allowed "a portion of people to become rich first" (also from Deng Xiaoping's speech in South China), but at the expense of traditional Chinese identity.
Today China is caught between the traditional values of the old guard and the boom-times materialistic lifestyle of an emerging generation. This dichotomy presents some unique challenges for employers who want to engage their workforce and develop higher contribution. Chinese workers are also realizing that material gain alone is not leading to higher satisfaction.
Aggressive Wage Inflation
"In China businesses are heavily dependent on talent because the infrastructure and business systems are not ready, while the speed of change is so rapid. The difference in employees' engagement levels sets a business apart," says Roy Gao, Managing Director of ProHR International, a leading executive search firm in China. But MNCs (multi-national corporations) suffer from high employee turnover driven by the aggressive wage inflation in China.
"It is not unusual for people to change jobs for a couple of thousand RMB salary increase," says Gao, which is the equivalent of a few hundred dollars. As a consequence, employers are trying to identify non-monetary methods for engaging and retaining employees.
A Longing for Traditional Values
While the employment and materialistic opportunities are many, there is still a certain malaise among Chinese workers. The quick transition to an open-market economy has generated some deep cultural challenges. "The biggest issue I think is the loss of values in Chinese society in the past 10-20 years. There is nostalgia for the traditional ways. Many people are returning to ancient Chinese culture to rediscover our values, and there is a religious resurgence," says Gao.
This revisiting of personal definitions of success is a factor employers need to pay attention to in their engagement efforts.
The Importance of Relationships
|According to Gao, "The key to engagement in China is the relationship with the manager. We know this to be true across the globe but it plays an even more critical role here since Chinese society is truly relationship-based. This is not a cultural trait of post-WWII China and the communist era, it is much deeper than that – going back thousands of years. You need to have Guanxi (relationship) to be functional in today's society. For example, you will need Guanxi to see a doctor, to do business, to get your child into a decent school, etc."|
ProHR International recently conducted a survey on the subject of employee turnover in China. It concluded that 75% of employee turnover is caused by relationships with managers. Gao explains: "We find that employees are more loyal to their managers than to their companies. In effect, they work for their managers and their career progressions are closely tied." Employees will leave with their manager if that manager joins a new company. "It is not surprising to lose between 3 and 5 employees if one manager resigns. It is common that managers will negotiate with the new employers to bring a few key people with him/her when they change jobs. In Chinese culture, the relationship with one's superior should be 'the superior treats the followers with courtesy and dignity, and the followers should devote themselves with loyalty.'"
Foreign organizations operating in China are starting to learn what Chinese firms appreciated all along: that to be effective they require senior leadership teams that are highly competent at business but also strong on engagement and connection skills. "The leaders we put in critical positions are those who have an entrepreneurial spirit, and we want to align those leaders as much as possible culturally," says Mr. Zhou Wenyue, VP of Human Resources of Fosun Pharma. Fosun has only been around for 20 years yet is one of the largest private companies in China, with businesses in healthcare, steel, real estate, and investment. "Our senior executives spend one third of their time talking with talent – often external talent. They get to know them, hoping to bring the right people into our company one day. Sometimes it takes a few years to bring a good leader into the company."
"In Chinese companies, more so than in western culture, it is hard to distinguish work life from private life," adds Gao. "Work colleagues more frequently become an important part of your private life. We work together, play and have fun together after work, and family members also become friends. It is understandable that if one leaves that community, it is like starting a new life. Employers need to understand this dynamic: that engagement also exists after work. If you think satisfaction is only in the workplace, you are missing out on an important opportunity to connect with employees."
While the fundamentals of employee engagement remain universal, global companies and multi-national corporations would do well to understand the cultural factors at play in each of the countries where they operate – both in the workplace and in society at large. This will allow engagement efforts to be adapted while taking into account the dynamics of the local culture.
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Copyright 2012 BlessingWhite, Inc.
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