Mid-level management talent issues in China becoming severe

For multinational senior executives, there are a few HR challenges constantly on their minds – attracting the most talented candidates, offering properly-designed training programs that equip new hires to implement localized strategies, and maintaining a high level of employee engagement. These concerns have now become even more relevant in China, where Western multinationals will not be able to execute their long-term growth strategies without capable and stable mid-level managers.

During my research on understanding what motivates mid-level managers in the country, one China General Manager for a foreign company highlighted the importance of managerial talent: “In the next one year, my sales directors can help me hit my target. While in order to meet my next five-year target, which requires a breakneck pace of expansion, we have to recruit, train, and develop 2,000 high-caliber middle managers—the equivalent of one-third of the company’s entire local workforce. To make that happen, we need to work on that now.”

Mid-level managers are key management teams to invest in for MNCs’ China 2020 strategies

MidlevelManagement-China-FrontierStrategyGroup

Source: Frontier Strategy Group analysis

To better attract, train, and retain talent for multinationals, it is imperative to map out the talent landscape in China as the first step forward, and to flag a few important changes of the country’s employment market for middle managers. These include:

1. Foreign companies have become boot camps to train human capital for Chinese firms: 

State-owned enterprises (SOEs) and private-owned enterprises (POEs) have become increasingly appealing alternatives to multinationals by offering attractive compensation packages and platforms for greater career ambition. The high attrition rates among mid-level management staff impose rising pressure on multinational corporations for a more strategic and cost-effective approach to stopping the revolving door of top value-added employees.

2. A younger workforce is more financially stretched due to family-supporting burdens:

In just two decades, the percentage of China’s elderly population – people who are over 60 years old and have moved out of the workforce – has spiked from 8% in 1990 to 12% in 2010. According to the UN, China will become the most-aged society, with its elderly population swelling to 346 million, or almost a quarter of its total population by 2030. A shrinking and much younger workforce must manage the burdens of soaring costs of living and additional family-supporting responsibilities brought by the country’s One-child Policy.

3. Social media influences talent acquisition and employer branding:

With a high mobile penetration rate and an exponentially growing obsession with social media tools such as WeChat and Weibo among the working population, China ranks first in the percentage of population using social media networks when making career decisions. Job seekers have become more informed by social media in career planning, offering great chances for multinational corporations to capitalize on this new wave of talent acquisition support by promoting visibility and accessibility of recruitment channels online. Virtual communities can be effective platforms to boost corporate employer brand.

Despite the various challenges China’s evolving talent market has imposed on multinationals, it has also encouraged effective solutions to be adopted. I will follow up on this human capital topic in a future blog post with some proven practices that multinationals have used to accelerate learning curves and mitigate commitment issues for mid-level management.

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