• Faculty & Research

    Knowledge creation on China, from proven China experts.

  • Faculty & Research

    Knowledge creation on China, from proven China experts.

  • Faculty & Research

    Knowledge creation on China, from proven China experts.

Friday, August 14, 2020

A Few Thoughts for Private Companies on How to Attract High-potential Talent

By Han Jian and Smilla Yuan

In today’s ‘VUCA’ (volatility, uncertainty, complexity and ambiguity) era, a growing number of managers now realise that the sustainable development of their business relies on organisational capacity and being able to attract the best employees. They are aware that better management needs input from professionals with different backgrounds and experience. MBA graduates with a global vision are considered to be a talent pool with high potential. Traditionally, MBA graduates in China prefer jobs in foreign companies in sectors such as finance and consulting that offer predictable career development paths. However, as private Chinese companies have begun to thrive, more and more MBAs have become willing to join them.

The challenge today is how to maximise the potential of job seekers with the hunger of companies for talent. What are the demands and concerns of job-hunting MBA graduates? Which companies do these highly-trained graduates opt for? And, how can private companies attract high-potential management talent?

In order to answer these questions, CEIBS teamed up with Willis Towers Watson (WTW) at the end of 2019 to launch the Talent Attraction by Private Companies and Ideal Employers for CEIBS Students Survey. Respondents included 178 CEIBS MBA graduates and 61 private company senior executives. Most of the executives came from medium-sized enterprises in the manufacturing, finance and high-tech sectors. The majority of CEIBS graduates had five to ten years of work experience and more than 70% of them served as team managers. Here are some of the results:

Nearly 60% of MBA graduates acknowledged the growing appeal of private companies, especially those in the emerging high-tech sector

Nearly 60% of the surveyed graduates said private companies were more attractive options when seeking employment. According to the CEIBS MBA 2018 Career Report, the proportion of MBA students graduating that year and joining Chinese private firms rose sharply, growing to almost the same number of graduates going to foreign companies. High-tech companies, in particular, attracted 47% of graduates. Moreover, four of the top ten MBA recruiters were Chinese private enterprises.

Business potential, vitality and creativity amongst factors that attract MBA graduates most

Both MBA graduates and executives agreed that the key factors that made private enterprises attractive to talent included business potential and policy outlook, vitality and creativity, competitive pay, personal development opportunity, and a sense of purpose and fulfilment on the job.

Development, in particular, is a trump card for private companies when recruiting talent. Private companies on the fast track of development can provide young MBA graduates with high-level managerial positions that SOEs and foreign enterprises are unable to match, along with competitive remuneration packages. Numerous private companies have invested heavily in recruiting highly quality candidates, or have made generous offers as a result of local policies aimed at capturing high-calibre recruits. One internet company HR director, for example, admitted that, “When recruiting MBA graduates, either from full-time or part-time programmes, we pay them on the same scale as experienced professionals.” The surveyed private company executives also agreed that they were “willing to offer high-flying employees above-average pay and benefits.”

The survey also found that MBA graduates considered that working for a private company could bring a greater sense of purpose and fulfilment, which is an advantage these companies can leverage when attracting top talent. Amongst the many fast growing private companies in China, pacesetters such as Huawei, Alibaba, Midea and Tencent have not only shown strong business performance, but have also placed emphasis on corporate culture and mission-driven values. Younger talent are drawn to these companies because not only do they have their eyes set on economic returns – they also want gain vision and fulfilment from their job.

Major barriers still exist that turn talent away from private companies

Management Style. Forty percent of MBA graduates surveyed thought private companies unattractive because of their arbitrary management style or lack of sound management structure. Some private companies are overshadowed by other modern enterprises in terms of the governing structure and management expertise, which makes them less appealing to MBA graduates.

Cultural compatibility. Private company executives said they hoped to hire top talent from outside to “improve the company’s management and competitiveness”. However, while they valued the competence, experience and vision of international talent, their enthusiasm was dampened by an inability to integrate local corporate culture and a lack of loyalty. Some executives also suggested in the survey that such talent had a higher turnover rate in the short term.

Further analysis of the responses produced more detailed insight about these two barriers:

Cultural diversity. Employers and candidates differed in their opinions on whether members of the same work team should behave and think in the same way. Over 85% of top executives from private companies believed attitudes and approaches should be the same throughout the company, compared with less than 50% of MBA graduates.

Compensation. MBA graduates sought more guaranteed compensation while executives put more emphasis on incentive or variable pay. Basic pay was a major concern for MBA graduates when choosing jobs. Seventy percent of them thought the level of their basic pay showed the company’s recognition of their work and personal value. But, 90% of private company executives thought employees should see the bigger picture and that, “Incentives are more important. The more profitable the company is, the more you will get paid.”

Job responsibility. Executives want recruits to be as entrepreneurial as they are, but MBA graduates mostly saw themselves as professionals rather than owners of the company. Eighty-two percent of executives thought staff should take the initiative to go beyond their assigned responsibilities. That partly explained the obscurity of job descriptions we found so common amongst private companies. At the same time, less than half of MBA graduates thought they should take on more responsibilities beyond their assigned duties.

Personal growth. MBA graduates and executives were divided on career development. More than 70% of executives held that employees should rely on themselves to improve their skills instead of relying on company training. But the majority of MBA graduates wanted companies to provide a well-planned training system. With regards to career development, 90% of graduates wanted to see a clear career development path and promotion mechanism, while most of executives put performance above everything else and said that “top performers will naturally get promoted”.

Recommendations for private companies on how to attract talent

Private companies are an important driving force for China’s sustained and healthy economic development. In 2019, China’s private sector contributed over 50% of the country’s tax revenue, 70% of its technological innovation and 80% of its urban employment. More and more private enterprises have become role models for effective management. In this time of uncertainty, we hope that this report will inspire growing private companies to better attract, develop and retain talent and achieve high-quality development.

  1. Build a sustainable human capital management mechanism

Develop a talent management system. Our survey found that problems such as “a lack of a sound system” and “arbitrary management” were the main reasons why MBA graduates hesitated before joining private companies. The past four decades of rich market opportunities and a demographic dividend unleashed by China’s reform and opening up policy enabled many private enterprises to thrive on a wave of positive factors despite a lack of sound internal systems. As the economy slows and the business environment becomes more complex; however, corporate management faces fresh challenges: a growing cohort of Chinese companies have come to recognise that a strong organisational structure and a solid talent management mechanism are essential for long-term stable development. To be competitive in the market, it is also necessary for companies to align their human capital management model with market laws and talent needs. Executives need to integrate talent management into general company policy and daily management to create a positive environment that will encourage talent to make long-term contributions.

Refine talent selection and evaluation mechanisms. A number of company executives claimed that best talent emerges from competition rather than careful selection. While top performers at their current position should be rewarded, their skills or personality are not necessarily suitable for managerial roles. Basing promotion solely on personal performance whilst overlooking other aspects such as a candidate’s values, personality, career motivation and comprehensive ability, is a fractional approach that hurt the foundation of a talent evaluation and development mechanism.

Define talent selection and use professional evaluation tools. High-performing organisations usually have valid and reliable methods of talent selection. Candidates with the best potential are usually chosen on the grounds of past performance, in association with evaluation tools to assess skills suitability for different positions. The ultimate objective of any mechanism is to find a way to systematically match positions in the organisation with suitable candidates, but such matches take time. One of post-survey observation is that companies should give employees time to settle and grow into a role before setting performance goals.

  1. Nurture an authentic, inclusive and stimulating corporate culture

Recast stereotypes. When recruiting, companies have to make it clear when their own model does not correspond to usual management stereotypes. For example, many job seekers assume that private employers run a “996” system (i.e., that they demand that employees work from 9am to 9pm, 6 days a week), whereas our survey showed that only 11% of company executives actually agreed with this work approach. Of the surveyed management, 61% actually encouraged staff not to work on weekends, while a further 60%-70% of them supported the idea of “work-life balance”.

Inspire personal engagement. While pursuing commercial ends, private companies also need to encourage high-flyer ‘personal engagement’ and ensure a climate of respect. Company management need to realise that external incentives, such as pay, are not the only drivers for highly-skilled employees. Seventy percent of the surveyed MBA graduates, for instance, valued opportunity for future development more than current pay and benefits.

Deliver on promises. Private employers have occasionally been accused of exercising arbitrary management and some job seekers may wonder if an employer’s promise about reward or career development will be fulfilled once in the company. To dispel these doubts, private companies and their management simply need to deliver on promises made when recruiting these valued candidates and demonstrate their integrity.

Han Jian is a Professor of Management at CEIBS. For more on her teaching and research interests, please visit her faculty profile here. Smilla Yuan is the CEO of Willis Towers Watson (WTW) Greater China. Sipeng Sun, WTW Senior Partner of Talent & Rewards, and Jiaxin Wang, WTW Senior Consultant of Talent Insight, also assisted in the survey and results analysis for this article.