Pay rise and Productivity Challenges Plague Chinese Talent Market

November 22, 20168:35 am754 views

Over the past 5 years, salary increases have been driven primarily by strong competition for talent, mandated increases to minimum wages, and rapidly rising costs of living. Expectations for double-digit salary increases became standard, and were used as a primary attraction and retention strategy.

Having the very best people in business should ensure that you outperform your competition, and return strong profits to your shareholders and investors.

Many organisations are realising that this is not always true, instead observing that the rapid increases in salaries have not been matched by rapid increases in productivity and financial performance. The result of this imbalance can be a significant negative impact on profit, quickly forcing business leaders to question what actual return on investment, they are achieving through offering higher salaries. 

“I firmly believe that the potential jobseeker has an important role to play in the process of deciding what salary package is appropriate for a particular role,” says Simon Lance, Managing Director of Hays in China. “The hiring manager and HR must of course be able to clearly articulate the skill requirements and performance expectations of the position. But an individual should also be able to clearly demonstrate the level of performance they will bring to the role.”

Simply “expecting a payrise” and demonstrating that a “payrise is a good investment” are very different scenarios and will produce a very different response from most business leaders.

A 30% payrise with a 100% increase in sales revenue will be a pretty attractive investment for most business leaders. Most importantly however, is an individual’s ability to deliver the results that the higher salary package demands.  

The Value of an Internation Qualification 

Nowadays, there are more graduates who have completed their Bachelor or Masters courses at international tertiary institutions across the world willing to return. But it is difficult to secure their first position, and disappointed to learn that starting salaries are often similar for local and international graduates.

China’s graduate market is extremely competitive – nearly 7 million local graduates and ½ million returning graduates in 2015 alone – so studying a degree that is going to be “in demand” after graduation is a critical decision.

See: HR Candidates with Strong Soft Skills are in Demand by Employers in China

Globally, there is a shortage of STEM candidates at all levels. In 2015 in Australia, just 19% of international students were enrolled in STEM courses, compared with 61% in Management and Commerce. Choosing an appropriate degree, that offers strong employment prospects after graduation should be at the top of every student’s priority list.

“Gaining practical work experience during an international study period is also an exceptional way to differentiate from other graduates. Internships, part-time / casual employment, and volunteer work are all ways to gain valuable work experience and develop your professional skills. Students will also accelerate their cultural-awareness, language capabilities and soft-skills, which are all highly valuable to future employers,” Simon added.

Fresh graduates should realize that the starting salary is far less important than the training, development and experience they will gain in their first 5 years. If they have outstanding performance, your employer will reward based on the result.

Engagement Drives Productivity

Building a culture that creates motivated, committed and engaged employees does not happen overnight – it requires strong commitment from senior management. Business leaders need to recognise that the financial benefits of strong employee engagement are significant, and prioritise the people strategies and initiatives that will develop a strong engagement culture amongst their management teams.

Some of the non-financial strategies are often most powerful in building employee engagement, consider: formal recognition, encouraging open communication, fostering innovation and allowing decision making opportunities.

“In my opinion it all starts with designing a compelling Employee Value Proposition (EVP) and integrating it into every part of the employee lifecycle. As an employer myself, the results of our annual Employee Engagement survey are integrated in our highest priority action plans for the year,” Simon concludes.

Also read: China Sees Co-working Boom Due to Increase in Start-ups and Rise of the Millennial Workforce

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