China Labor Law Update
In order to make a decision on any issue you need all the available information. The new China Labor Law has not actually come into effect yet but the data is coming in, and creating a picture of conflict and hope.
Feedback
The first piece of news, courtesy of CSR Asia, is that the Otis Elevator Company, has recently been accused of attempting to circumvent the new law. According to reports on Sina dot com Otis has allegedly requested employees to sign new contracts which cause them to forfeit benefits under the new law. It’s not the only company to be cited for this but it is the only one that has been specifically targeted by Sina. A local company, Huawei, was also found to be doing this earlier on in 2007 but that issue seems to have generated much less interest.
The action by Otis is not necessarily the smartest thing to do when some of China’s legal eagles are looking for carcasses to pick at. Or should I say visible targets with deep pockets that can be mined for gold. Compensation gold.
It reminds me of the old joke about the guy who gets hits by a car and tells his friend that ‘Yeah, it’s hurts, and compensation is setting in’. A culture of entitlement may not be upon us but the signs are that the times are a’ changin’.
Meanwhile other elements in the legal profession are risking life and limb to ensure that the provisions of the law that protect workers are actually implemented. Stereotypes always run the risk of being shot down so kudos to the lawyers with the ‘right attitude’.
Drawback
Rumors of a pullout by Taiwanese companies abound but much of this may be part of the usual bargaining that you see in any situation where some group is going to lose out. China’s top legislators seem to be happy enough to force companies who do not comply with even the current laws to find another place to operate. They feel they have the choices, and in that respect they may just be right.
On the other hand, if these companies really are struggling at present, as they claim they are, the new law may be the straw that breaks the camel’s back. A cut in employment is only a good thing if Foreign Direct Investment(FDI) continues to arrive, China’s internal markets continue to expand, and the factories that are lost are just sweatshops. Replacing them with electronics and car assembly may cause a temporary loss of jobs but the longer term benefits are huge. Certainly worth the short term pain.
Having said this, however, we are not ready for the scenario where jobs are lost in large numbers. Even a less drastic scenario, where lazy workers are emboldened to hang on desperately to their positions, is not a tenable position for a country that must deliver continuous economic growth and development, or risk the consequences of a failure to satisfy rising expectations.
Pushback
Separately, the Dongguang labor bureau has issued a modified version of the national Labor Law. According to the China Herald, the differences are significant:
- Industrial action is equated to criminal behavior and can be reason for dismissal
- Workers must give a reason for leaving their job
- Any work done in dangerous situations is excluded as a condition to terminate labor contracts
The article concludes that we are likely to see more such modifications in the future, and that this is likely to muddy the waters. Not only do I agree, I would suggest that we may see a response from the central government as it tries to put a finger in this particular dyke.
With dissimilar results from the classic story.
:: Source: Talent in China
Mental or Physical Illness–Which is the Bigger Workforce Problem?
I just returned from London, where I spoke to a gathering of European business leaders focused on creating healthier workplaces at the annual Enterprise for Health conference. I won't tell you here how much fun it was, as the pre-dinner keynote speaker, to try to keep the attention of 125 ravenously hungry people while we were cruising up and down the Thames. But I do want to share with you my surprise at what I heard during one of the fascinating panel discussions earlier in the day. Many readers know first-hand about how crippling health care costs are crushing the growth prospects of many businesses
Passing for Competent
Bookish people, who study hard to achieve multiple degrees or other educational certifications, are to be admired for their effort.
As a result of all this work, these perpetual students are competent in a lot of different areas. They know a lot of theory, and are very fluent in the language of their specialization. They are very common in China.
The best of them can be seen as a ‘font of wisdom’ for other members of staff. Unfortunately, some may just pass for competent because they have only immersed themselves in the language of their field. They have the words but not the insight.
We all know that people who study well are not necessarily the people who deliver well. Not unless they can combine that study with practical experience. This is not an anti-intellectual bias. Often the people who deliver are the ones who have stopped studying and gotten busy doing.
You see this at interview where candidates who present with great looking Resumes turn out to be duds. Behavioural interviewing can sort out the wheat from the chaff because it forces candidates to go beyond the language of the industry, and get down to the connections, consequences and relationships between elements of the industry.
At this stage we all know how to write up a behavioral interview , and note the differences between those who talk about ‘me’ and those who talk about ‘us’, between those who say ‘called a meeting’ and those who say ‘told my team what to do’.
Dig Deeper
To take things further I would suggest there are a few other issues that you need to look for in interviewees’ responses.
The first is a willingness to make mistakes, combined with a willingness to admit them. No one has a mistake-free career and if we were to be brutally honest each of us would have to admit to a huge number of mistakes in our careers. If you can admit a mistake it is more likely that you will be willing to learn from that mistake.
Those in possession of high levels of knowledge should be able to challenge the status quo, and to see things in a different light. That is surely what they have been trained for. No industry is so perfect that it runs like a Swiss watch. Trends and currents offer opportunities for those with insight to take advantage. If your candidate cannot see these issues then they only know the words; they spent their time learning more when they should have been trying out what they learned.
The presentation of new evidence should also cause interviewees to change their thinking. Often it doesn’t because the interviewee is deferring to you. But if the interviewee defers to someone that he will only meet for an hour or more, how likely is it that they will challenge their superiors when they are wrong?
One of the ways you can play this up is to act as the outsider, the one who has little knowledge of the industry. Put forward a weak understanding of the industry, and the good candidates will challenge you, and inform you. They will do this in such a way as not to offend.
Another way to provoke a response is to offer a hypothesis that is unsupported by evidence. Again, the good people will challenge you, and the duds will totally miss the fault in your analysis because they are more focused on looking the part, and forming a relationship with you. If you are given a lot of MBA-speak as your answer, this is sure sign of weakness, unless the candidate has recently finished an MBA.
The final point would be to look for the candidate’s ability to transfer knowledge from one area to another. Narrow specialists learn fundamentals about their broad science or industry, and they should be able to apply these fundamentals elsewhere. This one is hard to plan for because you cannot be sure what knowledge the candidate will present to you.
Proviso
The corollary here is that many of the competent people that you interview are not necessarily able, or ready, to do a dog and pony show for you at interview. If they feel that you do not have the necessary industry skills, or age-related experience, they will often shut-down and give you what they think you want.
So either you have the skills and engage candidates in a deep conversation about your industry. Or you don’t. In which case you use this as a way to get them to explore their industry, as your teacher.
Passing for competent works both ways.
:: Source: Talent in China
Be Generous With Your Network When Times Are Tough
I graduated college nearly 20 years ago and since then I have witnessed many ups and downs in our economy. It has been my observation that when times are good some people are more willing to extend themselves to others than they are when the economy is not so strong.
Recruiting in China: more resumes!
So if you are having trouble finding candidates in China for a specific role and are ready to get beyond the 'candidates are hard to find' stage of recruiting you need to get a strategy and see it through.
We got options in China!
In October 2007 Brian Fenerty wrote about getting creative with compensation in China:
I am happy to report that since I wrote that piece I have seen a lot of clients coming up with more creative ways to get money into the pockets of their employees without breaking their internal equity and by using more advanced compensation plans. Looking forward I would say the days of the base salary times thirteen months packages may be soon coming to an end.
This year he has seen the emergence of the spot bonus, an increase in signing bonuses, and more and more companies getting creative with housing. In the last two months Fenerty has been dealing with several companies that are using stock options to attract talentEven State owned companies are getting into it. The article wrote about some of the more common issues that come up here, and some feedback Fenerty received.
In all Fenerty has heard a great deal from candidates of mine who (for whatever reason) read my blog and the reactions have been mixed. It seems that at the highest levels options are seen to hold good value and be a great want to round out a package that is already well over US$ 150K per year. At the lower levels of management options are viewed with more skepticism. This will change with time and when employers and recruiters have more success stories to point to in the China talent market. But it is still early and the following quote sums up my experience pretty well:
‘Stock options don’t really work with young people,’ explained one HR manager. ‘Saying we’ll give it to you in five years doesn’t fly. They want options and cash.’ Ongoing education about the value of stock options will likely increase their usefulness as a retention tool, particularly in the case of employees who have remained with a company for a few years and have seen the value of their stocks appreciate.
Their efficacy as a retention tool aside, stock options increasingly form part of compensation packages at major multinationals. Corporate policy often dictates who receives stock options; in some companies all employees get options, no matter their level, while in other companies options are reserved for upper-level management. Most companies that give options award them according to position and performance.
- China Business Review (http://www.chinabusinessreview.com/public/0111/melvin.html)
Cash is still king with candidates at the moment and while options may be a great way to round out an already great package they are not, in the current market, enough to attract the best people. Talent is short and candidates have a lot of options when it comes to employers. And at the end of the day what matters most, in my humble opinion, is a comprehensive compensation package that is competitive in the market. Most of the candidates that Fenerty deals with are looking for short-term gains with a long-term potential. With respect to stock options it may take some time for the market here to develop to a point where they are adding value as a compensation tool.
(Brian Fenerty has experience recruiting in candidate-short markets in Asia, North, and South America. For more insights specific to recruiting in China please visit his blog at: www.recruitinginchina.com.cn – or visit Brian on LinkedIn at: http://www.linkedin.com/in/brianfenerty )
:: Source: Recruiting Techniques in China
Make more placements by offering housing in China
Creative Salary Packages in China
The devil is in the details…
The difference between an accepted offer and the frustration that comes with a declined offer can often come down to the details.
As salaries continue to rise and companies scramble to match internal equity and hire the best candidates a little flexibility can go a long way. Get creative to get ahead.
We have been having a good measure of success restructuring offers that are too low into a base + housing package. This has the effect of lowering the base, and thus lowering the tax exposure of the candidate. The candidate must provide an official invoice to the company, monthly, to account for this expense and it must be clear on the offer letter.
The effect on the employer is minimal in that it creates a little more accounting work but they will not complain, our friends in accounting, as this method will also lower the bonus paid by the client to the candidate as it is usually based on the monthly salary.
When this is structured well the savings in taxes will make up for the lowered gross and the candidate is happy, they live in a happy place where their concern is limited to the take home amount they receive. The client will save on the gross and this will make for happy clients and will allow them to do more with the money they have to offer.
This is not rocket surgery but, until recently, has not been used at the manager level to entice candidates. I think we will see more and more of this as the market continues to tighten and I will keep you updated if I see any changes.
I have created an excel sheet that can be used to calculate the net pay available to a candidate when different amounts of housing benefits are applied and I am happy to provide a copy to anyone who needs it.
Make sure that you follow the new labor law when it comes to the offer letter and keep your paper trail and this should be a great technique to bridge the gap between candidates and clients at offer time.
Brian Fenerty has experience recruiting in candidate-short markets in Asia, North, and South America.
:: Source: Recruiting Techniques in China
