The Turnover Trend in China and How to Minimize Turnover for Your China Operations

Even I found it hard to believe. Inflation is now rampant in China. I’m talking about wage inflation. This is especially evident in coastal cities like Shanghai, Guangzhou, Dongguan, Shenzhen, and others where migrant workers and local workers converge.

In the industrial city Dongguan, for instance, you see many hiring signs for low-paying work that no one wants to take. Ten years ago, or even five years ago, you don’t see hiring signs around the city.

So what has happened? On the one hand, we can point to the excess of college graduates in China that can’t find jobs commensurate with their skillset. This same group of students doesn’t want to work at low-paying jobs typically held by migrant workers. Instead, many choose to stay home where they have two parents and at least two grandparents to support them.

On the other hand, migrant workers who used to flock to those jobs can no longer afford to live in the city due to rising housing costs, rising food costs, and such. Instead, many are choosing to stay in their home provinces and find lower-paying work. Not needing to leave friends and family compensates for the lack of higher paying jobs.

Then you have people who are already employed in white-collar positions-office workers, supervisors, and managers at multinational firms. Turnover rate is high. The reason being: Qualified and experienced talent is hard to find, so good employees are constantly being headhunted and recruited to other companies offering more.

So why wouldn’t the college graduates who could not find jobs they like fill these vacancies left by those who are headhunted? The pay offered is still too low. Remember, if there are at least four working adults (two parents and maybe two or four grandparents) to support these young graduates financially, they have no real incentive to get a low-paying entry-level position as an office employee.

So there you have it-the current employment trend in China.

What can multinational companies do in a job seeker’s market? Talent is hard enough to find, and then you also have to worry about qualified employees leaving with the skills and experience developed at your expense.

Well, it breaks down into two main options.

Option one: Recruit qualified talent from another firm who can help you drive your business forward. Offering a fair compensation package will not be enough. You also need to offer a career path for these employees-a road map to success where they know the harder they work, the opportunities for growth and promotion will be there for them.

Option two: Hire not so experienced employees who have a willing to learn, willing to work hard attitude. Of course, this will require some effort from your management team to develop and teach them the skills necessary to do their jobs properly. But you can save significantly on the compensation package, and also give them a career path to grow with the company so they are more likely to stay for a longer period of time.

Without a career path, room for growth for your employees, few would elect to stay if they are tantalized by another offer from a rival firm. Remember, you are not just offering a compensation package in exchange for work-you are also selling them a dream.

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