FLUCTUATION & SALARY

High fluctuation is a phenomenon of the Chinese labor market. If you look for the reasons in income policies, you will only find a part of the truth. Apart from money, status and time are important parameters in the strategy of employee retention.

The Chinese economy is marked by dynamic rise, which has historically not proceeded simultaneously with other socio-economic developments (???). In several phases of varying success, the economic efforts made since the opening of the People’s Republic in 1978 continue to be reflected in high-level growth. By contrast, social standards have developed at a slower pace.

Insurance benefits, parents’ pension schemes and payments for children have not (yet) become matters of course for the Chinese. This background explains many Chinese employees’ urge for continuous improvements of their personal financial and social situations. Job changes are thus always an attempt to climb another step higher.

By tradition, one to three monthly salaries are paid as a bonus on Chinese New Year’s Day. Such incentives are indicators of their middle-class recipients’ status: Coming home with three months of pay, you certainly answer “face-saving” expectations. Bonus payments are a prerequisite. Do understand that you may thus enable your employees to demonstrate their status and secure their loyalty.

Social securities are also a good reason for Chinese employees to stay with their companies on a long-term basis. Consider coinsurance for your employees’ parents for the duration of their work contracts – they won’t get that everywhere. Display courage and occasional generosity, this will help your enterprise minimize fluctuation and thus save on time and money.

Let us assume that you intend to retain two competent employees, a 35-year-old manager with a young family and a 50-year-old manager with children in their late teens. You also have a very promising university graduate among your candidates for a replacement.

While the young father often prefers more time with his family, the older one wants to finance his children’s university courses. The young graduate will see her first steps into working life with an encouraging pay slip as a steepening incentive.

In all three cases, it is important to include the candidates’ personal contexts and life phases: Who considers more spare time to be a personal gain, who considers a higher salary to be an objective and therefore is more flexibly available? With adequate offers on your part, commitment to your company can be reinforced.

As a rule, you may assume that European top managers cost more than their Chinese peers. This is because in top management, costs for childcare, insurances, healthcare, accommodation, etc., are seen as mandatory additional services to be provided by employers. Some of these things do not become effective with Chinese executives.

Bear in mind that money is not the only thing that matters in the upper echelons: Employees in such positions request freedom of decision and discretion. Just like you will thoroughly examine candidates as to the scope of their decisions, they will ask themselves: Does this company consort with me? Can I stir things in this business? Can enough stimulation be provided in terms of content to retain a top manager on a long-term basis? Is the enterprise sufficiently stable so that I would stay there for next three to seven years?