It’s the best thing that has happened to me for a long time," said a recent victim of corporate head-count cuts in China, who asked to remain nameless. "I got a redundancy payout and found a new job with a smaller company in the same field. Several of my former colleagues have also joined."
Job losses might be sweeping the corporate world in the US and EU – 693,000 private sector jobs were lost in the US in December 2008, according to a survey by human resources services company ADP – but the situation in China appears more stable.
A recent survey by global recruitment firm Hudson of senior China executives at multinational corporations (MNCs) found that just 8% were planning to cut jobs in the first quarter of 2009, up from 2% in the fourth quarter of 2008.
On the hiring line
For those white-collar workers who face the chop, small firms with low overheads and big ambitions may be ready to pick up the talent discarded by their bigger rivals. Hudson found that 34% of firms surveyed intend to increase their head count in the first quarter of 2009, down from 44% in the previous quarter, but still better than in the EU or US.
According to Ulf Bosch, principal consultant and director of Watson Wyatt in Shanghai, MNCs seizing the opportunity to snare top talent have got it just right.
"Foreign companies need to remain visibly committed to the future of their key people, and take opportunities to bring in some of the talent left searching for a position by the economic downturn," he said.
Overseas players often find themselves hamstrung by a dearth of management and research talent on the ground in China. Expatriate managers have long complained that local graduates’ strong technical skills are not matched by soft management, initiative and people skills.
At the same time, luring talent away from the US, EU, and even from closer to home in Japan and Korea, is difficult. Overseas-educated Chinese with fluency in both Mandarin and English are in short supply.
"The benefits of getting it right are enormous, but getting there is tough," said Martin Daffner, group director for product technology and innovation at Avery Dennison, which operates a large R&D facility in Kunshan, Jiangsu province. "There are challenges in recruitment, in overcoming cultural barriers, and in designing the right incentive structure for staff."
Now, with local labor markets taking a downturn and job losses sweeping the corporate sector in the US and EU, MNCs may find the economic crisis has solved many of their human resources problems.
"If Shanghai wants to become an international financial center, it needs to attract top talent – the current crisis is an opportunity to do that," said Dr Gao Yan, assistant professor of finance at the China Europe International Business School.
Shrinking graduate employment opportunities could also benefit MNCs with an eye to the future. According to the Ministry of Human Resources and Social Security, there were 1.5 million recent graduates without jobs at the end of last year. A further 6.5 million graduates are expected to enter the workforce in 2009. Foreign companies will be able to pick from the cream of the crop.
"My friends are finding that getting on graduate training schemes is not easy," said Su Lizhen, who graduated in 2008 from East China Normal University in Shanghai.
"Lots of people are continuing with a masters qualification or language training, aiming to look for employment when the economic situation is a bit clearer."
As companies try to attract the best, however, they will do well to remember that reeling in talent is not the only human resources issue as China operations become more important.
"They need to think more about longer-term strategic issues such as systematic competency development, leadership development, company culture and employer branding," said Watson Wyatt’s Bosch.
Less than half of the participants in a recent Watson Wyatt MNC survey are trying to improve their corporate culture, enhance work-life balance or enable employees to work toward on-the-job qualifications. Their inactivity could cost them.
As talented employees find worthwhile job alternatives, investment in incentives to recruit and retain skilled staff will become increasingly important. MNCs that use the economic crisis as an excuse to ignore longer-term strategic human resources issues do so at their own peril.