Recession HR in China Part 2 — Recruiting in tough times
Yesterday we talked about the importance for expat bosses in China to do everything possible to hold on to key managers. Now let’s take a look at what the recruiting and hiring process will look like in a post-boom China.
Isn’t the China HR market on sale now? Can’t you hire from the ranks of the battered MNCs with hiring freezes and orders to slash headcount? Yeah, but remember — your cash flow is low, your profit sharing plan is underwater and commission levels are depressed. Your ability to make big hires is going to be as restrained as any other major prospective expense. Expat entrepreneurs with a help-wanted sign in the window (or on 51Job) are going to be getting the best CVs they have ever seen in China. But that doesn’t mean you’ll be hiring experienced Wharton MBAs for rmb 5,000 per month.
Just because they decided to hold a global recession doesn’t mean your China HR challenges are any easier.
China HR market will get looser and less rational in a recession
Most Chinese still see the global slowdown as someone else’s problem. It’s possible that migrant factory workers in Shunde and Dong Guan are stressing out about their prospects — but the Starbucks set in Shanghai is still gliding along with their head in the clouds. They like feeling like they hold all the cards at the HR table, and they show no sign of moderating that view. The recession is an unfortunate event happening to someone else, somewhere far away — and it’s probably their own fault or the result of a character (or cultural) deficiency. Sad, but not a China problem. Nothing to worry about — and certainly no cause to change expectations about salary, title or perks.
Don’t be surprised if that optimism persists even as MNCs start reducing headcount and medium sized businesses start declaring bankruptcy. The new “China HR Thing” that those damned bloggers talk about just may be the disconnect between the dismal economy and the outrageous demands for gold-plated compensation packages from unemployed managers with 8 months of experience.
Who is selling whom?
Lots of owners and HR managers will walk out of job interviews feeling very confused. Your attitude is that you control the last seat in the last life-boat on the Titanic. The guy sitting across from you is acting like you are damaged goods. China was already feeling more confident and self-assured BEFORE the Dow started spelunking - but now Chinese yuppies will start regarding westerners like the Ancient Greeks. Very sophisticated in their day — but that day is now long past.
So where does that put the expat owner who wants to make a strategic hire?
Chinese still prefer large, famous, international companies that pay well, promote fast, train often, and look impressive on the business card. Small and medium sized firms are even more suspect now than they were before the economy went to hell. It may seem like they are interviewing you. What can you do to make sure that your post-boom recruiting is the silver lining in this crisis and not another drain on your finances, resources and mental health?
Don’t oversell. Just because the Chinese interviewee doesn’t think that the recession is his problem doesn’t mean he thinks its not YOUR problem. This is no time for bravado. Remember, unless you are a Fortune 500 household name the kid across the table is 99% certain you will go bankrupt in a week. If you are expecting him to beg and plead for a spot on your team, you may be very mistaken.
Create a compensation plan that makes sense. If you think you can get away with the same salary that you offered last year — but effectively no commission, profit share, bonus or other variable compensation plan, then think again. One of the hardest thing for owners to understand is that workers who used to get bonus and profit share worth 25% of their base salary now feel that they are suffering from a pay cut. This is probably a great time to revisit your compensation plan for the entire team — because if your new hires get better treatment then you are going to have an enormous morale problem.
Don’t bad-mouth anyone. Chinese are much more team-oriented than westerners. You may be stressed, panicked and bitter about your shattered plans, but your interviewee isn’t. Keep the conversation professional, focused and upbeat. Entrepreneurs tend to get defensive about their business — but explaining why there is a vacancy in your shop shouldn’t be about character assassination. If you had to let someone go — or if they moved on because of falling real compensation (or falling real confidence), then explain it quickly, clearly, and move on. Remember — in slow times, team morale is critical
Focus on long-term The next couple of years are likely to be pretty dismal. Don’t hide from that, but don’t make that the central theme of your company description. Focus on your long-term prospects, and talk about where you expect to be in 3 - 5 years. If your guy finds a 3 year planning horizon unrealistic, then maybe you don’t have an appropriate candidate in front of you.
Use delegation, visibility and titles to make up for constrained funds. You may not be able to pay out big salary and bonuses, but you can make up for that with impressive job titles, highly visible projects and other signs of power and status. Don’t count on this erasing the salary issue completely — but it will help.