Talent Shortage in China

Nov. 8, 2006

Despite China’s population of 1.3 billion, a critical talent shortage has multinational corporations struggling to retain their management and employees, according to a recent white paper from Manpower Inc. (www.manpower.com), a Milwaukee-based employment services provider.

“The United States is the biggest investor country in China, yet many of its companies are struggling to generate the growth they want because of people issues,” says Jonas Prising,
president of Manpower North America. “Recruiting the right people, retaining the best staff
and developing leaders of the future are difficult tasks in any market. For foreign companies
operating in China, there is the added difficulty of understanding how to adapt talent management strategies to the country’s unique business culture and values.”

Management shortage

The white paper, titled “The China Talent Paradox,” reports that rapid economic and social change has spurred a skills shortage that is expected to escalate in the next few years. The labor shortage in China is even more problematic than in other nations because it is most severe among managers, Manpower says. Two in every five companies find it difficult to fill senior management positions. Mid-level managers are also in short supply, particularly
those who are Chinese nationals and can interact with local people.

Competition is stiff for this elite group of employees, and high turnover compounds the issue. Management-level attrition rates in China are more than 25 percent greater than the global average, and replacing a high-performing manager can cost 300 percent to 2,000
percent of that individual’s salary.

The white paper details Manpower’s proprietary Workforce Optimization Model, which offers practical strategies to improve employee attraction, engagement and retention
in China. The Model provides five practical steps for employee attraction and retention:

Create a learning organization

Appoint competent leaders

Establish an appropriate organization and culture for China

Provide competitive compensation and benefits packages

Select the right people.

The white paper, “The China Talent Paradox,” is available at the Research Center on
Manpower’s Web site at www.manpower.com/ResearchCenter.