The economy in China, and the hiring market, appears to be in an intermediary stage where we’re over the worst of the economic crisis, but not yet in a rapid expansion phase. The decline in China exports is slowing and the local market has taken up some of the slack from the lost exports.

Things are definitely looking up.

If so there must be very little for HR to worry about yet, and the future should be smooth sailing. Talent demand should only be an issue next year when demand really kicks in. A nice steady increase in talent demand seems to be the order of the day.

Unfortunately for this dream, professional worriers management consultant firm Accenture recently suggested that company’s inhouse skills base is still a big issue. More than two thirds of the worldwide executives they surveyed are deeply concerned about not being able to recruit and retain the best talent.

So there is still time, and strong justification, for HR making the effort to think through what its contribution to the recovery will be.

Home Truths

Let’s start by looking at what is not true, and what should not be done. It is not true that employees in China are just happy to have survived the economic crisis. Their demands have gone down, but not to zero.

Yes, they are grateful to have jobs (some of their friends are out of work) but not sufficiently grateful as to be 100% loyal to their current employer. The phones are starting to ring now, and opportunities are on the table. So let’s not make any assumptions about increased levels of loyalty.

The recession is also more of a problem in China than anyone is willing to admit. Surprisingly, this is good news; for HR. The recent Manpower Talent Shortage Survey (2009-talent-shortage-results-manpower), shows that about 30% of employers all around the world are still experiencing skills shortages, despite the availability of staff. But in China only about 15% of employers are saying that they have difficulty finding skills. Companies in China have kept the people they want, and their current needs are for strong individuals who can provide very specific skills that they lost through attrition.

What is also not true is the idea that heavy cuts in training and development budgets has led to an overall skills reduction in companies. Nothing could be further from the truth. The overall quality of in-house talent has increased over the last two years because the survivors of the economic crisis are, by definition, those who were kept on ie. because they already had the skills that companies wanted to keep.

The survivors of the economic crisis have gone through factory flexing, re-engineering programs, layoffs, cutbacks, re-alignments and other strategic processes that have made them even stronger than they were a mere two years ago. They have learned the real way; by trying, doing, failing, evaluating, refining, trying again, succeeding.

For many staff in China this was the first time they had ever been challenged in this way, so what they have learned in the last two years will be remembered for a long time. This is another reason why skills demand can be held at bay for a short while.

Time to Prepare

So if we still have time in China to prepare, what should the time be used for? At the top level, HR should ensure alignment between their talent practices and the company’s mission, objectives and strategies. This is only possible if HR is on the board.

If you are not on the board, get there now. If you cannot get on the board, seriously lower your expectations, or find a new position. Contribution is not just a matter of creating ideas; it needs authority to implement them

For those who have the power to make decisions and actually implement them, you need to be looking at developing some sort of a talent culture ie. one that openly values staff contributions. It may sound trite but it is not a simple matter of changing the bonus scheme.

At minimum, it requires a comprehensive job evaluation process that identifies the core knowledge and experience that is associated with success for every role in the company. It means searching for people who have those skills, as opposed to people with the same title as the previous job holder and the right degree. It also requires a performance management system and a succession planning process that leads staff towards the challenges that they seek.

Most of all it means making sincerity the modus operandi for the company. It means everyone operating in good faith with everyone else around them. Anything less is like an empty promise with a nice process wrapped around it. It looks good on the outside but everyone knows there is nothing inside.

Once you have made the decision to really develop a talent culture, and you have made a commitment to it, you will need to put organisational development systems that support this decision. You have a job of work ahead of you to get them up and running.

Best to start swimming before the tide comes in.