Written by: Stephen Grassi
This blog post is based on The China Business Review article “The Key to Retention: Committed Employees” by Jim Leininger.
An Emerging Market
In the emerging business market of China, companies face the double-edged sword of high turnover and high salary increases. In this increasingly competitive market, employers struggle to keep their employees. While traditional business logic indicates that the salary increases should be enough to ward off high turnover, this is simply not the case in China. Human Resource Management by Mathis and Jackson states on page 160 that turnover in the United States alone costs businesses billions of dollars each year. This is a situation that companies in China want to avoid, and a unique solution must be implemented. Jim Leininger has found that in order to combat high turnover and to retain top talent, a company must offer programs that inspire employees to a deeper commitment to the company.
Talent Shortage in China
In a land of over a billion people, it seems silly to think that there would be a talent shortage in China, yet this is the reality. Only in the last 20-30 years have the Chinese put an emphasis on business. Because of this, only the younger generation has the talent and tools necessary to perform in the international world of business. Young workers who have strong business acumen and technical skills are in high demand by both international companies and local Chinese firms. By recognizing that there is a talent shortage in the highly competitive Chinese market, it is a little bit easier to understand why turnover is so high and so problematic.
These workers are leaving their companies because they want better pay, better opportunities, and better training. These reasons for leaving align with traditional business logic, but because of the market conditions in China, the issue of high turnover and talent shortage cannot be dealt with in a traditional way. Because salaries are being increased by businesses across the board, companies must find a way to differentiate themselves from their competitors when it comes to attracting and retaining top talent. Companies must attain this by achieving long-term employee commitment.
We have now discovered that employee commitment is the most effective way to curb high turnover in this unique business market, but what can be done to ensure employee commitment? Leininger offers several solutions:
1) Clear communication
- As discussed in my previous blog post, open and honest communication between management and employees is critical. Management must be clear about their expectations for employees, and employees must clearly state their goals and needs in the work environment. When both management and employees have a clear understanding of each other because of open communication, employee commitment will be increased.
2) High job satisfaction
- People who are satisfied with their job are likely going to be more committed to it. This seems to be an obvious fact, but job satisfaction isn’t always a straightforward thing. It is highly subjective and requires a large amount of work for a company. It stands to reason, though, that if high job satisfaction can be achieved, high turnover rates will then be reduced.
3) Inspired leadership and management
- Company leaders who encourage employees and inspire employees to do their best will likely reduce the high turnover rates. Having managers who motivate employees to success will also help build the loyalty and commitment of employees.
4) Effective performance management
- Establishing clear, objective goals and performance measures for employees and pay for performance initiatives are both helpful in improving employee commitment.
5) Positive work environment
- Employers who provide safe, healthy working environments and give employees the tools they need to succeed are likely to experience higher employee commitment. This factor goes hand-in-hand with job satisfaction.
Conclusion
In the highly competitive business environment in China, companies are fighting to attract and retain top talent, but the talent shortage and high turnover rates in China are keeping companies from achieving this. Leininger contends that employers must do something more than simply increase wages. He concludes that companies must take strong action to ensure that employees have a long-term commitment to the company. By taking the steps proposed above to improve employee commitment, companies can ensure that they will be able reduce high turnover and be able to attract and retain top talent.
“The Key to Retention: Committed Employees”
Jim Leininger
The China Business Review, Vol. 31, Issue 1 (January/February, 2004), pp. 16-17, 38-39
Published by: U.S. China Business Council
Article Stable URL: http://huaryu.kl.oakland.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bft&AN=510329789&site=ehost-live
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