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.

The MEOS shows fairly significant increase in net employment outlook, compared to the doom and gloom of older reports, but we have to take into account that the MEOS is forward looking. There are no guarantees that any of this projected hiring will happen. At the same time it is highly unlikely that the projections will fall seriously short of expectations.

Regionally, the story is a little more complex but the basic message is that the government’s push west appears to be working. Companies are shifting factories and offices across to cities like Chongqing and Wuhan because the big cities on the east coast are now too expensive, and the inner provinces, although very far away, are getting the support that they need to attract investment, and jobs.

Labor Market Inefficiency

On the downside, the European Chamber has recently noted a bit of a pullback in the process of opening up the economy. This is potentially troubling because China ranks low on labor market efficiency, especially in terms of firing costs ( china-draft-labor-law-third-edition ).

Institutional memories are long, and companies will remember the high cost of firing in China over the last year. As such they will factor it into their future investments. Let’s hope this current crisis leads to more openness, as similar crisis have done in the past.

Labor Market Efficiency Ranking (CHINA)
7.01 Cooperation in labor-employer relations ………………..60
7.02 Flexibility of wage determination…………………………..53
7.03 Rigidity of employment*………………………………………43
7.04 Hiring and firing practices …………………………………..77
7.05 Firing costs  ……………………………………………………109
7.06 Pay and productivity……………………………………………12
7.07 Reliance on professional management …………………..46
7.08 Brain drain…………………………………………………………39
7.09 Female participation in labor force*……………………….20

The overall ease of doing business ranking for China (below), puts it at or near the bottom of the pile but China does better when compared with other countries in Asia, which is perhaps a fairer comparison.

Market Potential

Where China does really well is on the size of its domestic market, a key factor drawing in Foreign Direct Investment (FDI) (still falling but less than before). The domestic market is already large and open, and has a great deal of latent potential, so it is likely to offer the kind of growth that leads to few downturns, and even fewer mass firings.

Market Size - China Ranking

10.01 Domestic market size index* ………………………………….2
10.02 Foreign market size index*……………………………………..1

This market is more than enough to compensate for China’s low labor market efficiency, and certainly enough to counter the lack of openness and transparency in the labor market. The strength of this market is based on investment and this was dealt with in much greater detail recently by Andy Rothman of CLSA, who showed that Chinese economic growth does not equate to just exports, but is more closely linked to the internal investment rate. China is no longer a location for companies to export from, but a market for them to invest in.

Finally, in simple terms, if investment increases then hiring will increase, and investment is increasing in China. So hiring is about to, and planning for the wave must start now.

Even the suggestion of a worldwide jobless recovery should not reverse the jobs growth in China because international companies have forced their China operations to implement a hiring freeze for over a year now, even as they experienced ongoing hiring need. So we should see latent skills demand kick-in, even if China sales volumes don’t increase.

As we move forward it is becoming more obvious how deep the recession really was, and how much was hidden from view. The South China Morning Post cites a recent China Academy of Social Sciences (CASS) study that says up to 41 million job were lost during the downturn. This flies in the face of the oft-repeated ‘20 million migrants’ figure that has been repeatedly trotted out as the impact benchmark for the recent recession on China.

CASS suggests that over 20 million people in China remain out of work but the good news is that this means that about 20 million have found new jobs in the interim. This illustrates the dynamism of the recession, with both job losses and job gains, gradually turning to recent positive job growth.

The really good news in all that is that even if CASS estimate that approximately 40% of the global redundancies from the downturn were in China, that is history; not current affairs. Positive sentiment is greater than negative sentiment right now, as illustrated by the recent Purchasing Managers Index (PMI). This shows the same growing dynamic from the buying side of the equation (Graph courtesy of CLSA).

China Purchasing Manager Index - August 2009

For HR, the trick is to cut through all the complexity and recognize that the recovery will lead to skills demand. This may not be right-here-right-now for many industries, but it looks like it soon will be. I apologize that I do not have a definition for soon, but every phone call that I currently receive suggest soon is sooner than we think.

War for Talent?

But if we are looking at increased hiring in China, are we going to be looking at more of the same from before the crisis? Is it going to get really difficult to hire soon?

Probably not.

Even though we are seeing real growth in hiring in China, especially in banking, there is definitely a change in the air. This time round companies are going to be a lot more circumspect about hiring, and about paying for it as a service. Lingering fear is hard to shake off.

It’s not just China. All around the world companies are more cautious because of the pessimism that the recent economic crisis has induced in them. Most are very alert to risk and danger. Kevin Wheeler thinks that one of the consequences of the recession will be that companies will push much more work to outsourcing companies. I tend to agee with his assessment. No one wants to get caught with teams of people that cannot be down-sized when the next precipitous fall comes. Far better to outsource the work and let the outsourcing company take  the risk.

On the other hand, outsourcing won’t work quite so well for hiring itself. Not in China. The outsourcing model is supposed to drive lower costs, and it often does, but in the China hiring market this has never been possible because of the high rate of economic growth, and the consequential lag in the development of local skills and knowledge. There are never enough qualified candidates in China to allow for economy of scale in hiring.

Until such time as the economy slows down its hectic growth pattern (<10%), sufficiently to allow skills to catch up with demand (>5 years), outsourced recruiting will remain nearly as expensive as the executive search model.

Laws & Visas

Then there is also the additional element of the 2008 Labor Law ( china-draft-labor-law-third-edition ).

At the beginning of 2008 the effect of this law was to drive low-end, junk product companies out of China. This was planned for by the Chinese government but the timing couldn’t have been worse because the economic crisis hit China in the middle of that same year. The two strikes combined to drive 40 million people out of their jobs.

Now that the job market is beginning to open again, companies are at least partly framing their decision to hire on the restrictions that the labor law imposes on them. The jobs exit from China was fast but the job return will be slower. Research that ranks ease of hiring & firings now pegs China below countries like France; a country where the perception of a difficult hiring market actually prevents companies from setting up operations there.

One final complicating factor in China right now is that of visas. Companies need to consider new hires in terms of whether a visa will be forthcoming for that person. This is not usually a problem but if the new hire is to manage a new venture or division, and there are other support staff who might need to come to China at short notice, the company has to consider the possibility that the visas might be refused.

The company therefore might decide not to go ahead with the new venture, and cancel the hire.

The narrative of a China market that is enticing spenders to spend, and companies to invest, is now easier to see.

Hotels are currently offering such good deals that people are organising long lunches with large groups of friends and colleagues. Conference companies are taking advantage of low rental costs, and a two year hiatus in conferences & seminars, to build on our latent need to get together and yap-yap-yap. Companies have pared their factories and offices down to the point where they have no choice but to hire again, albeit slowly and very cautiously.

As a committed bear I have a strong tendency to look for risk scenarios where others see nothing but a ‘bright future’. But after a Breakfast Session with Andy Rothman (CLSA), courtesy of the China Economic Review (highly recommended), I have the sense of an at-the-very-minimum temporary respite from the usual pessimism.

Even the stock fall leaves me unfazed. Bubbles burst eventually. Better now than later. It’s not a fall, it’s a necessary correction. You get the picture …

Rothman sells a good China story, which admittedly is his job, but he backs it up with the kind of broad macro data, and deep down diving, that tends to build confidence. His personal knowledge of the Chinese market is deep enough to persuade even the skeptics like me that the long term picture for China is good, and we are just at the starting gates for a real recovery.

If he is right, and this really is the beginning of the end of pessimism, HR should be looking at the following scenario:

- Business picks up across the board and companies begin to hire again (happening)

- Companies start to invest in existing and greenfield sites in China (happening across the board)

- Human Resources start to find it hard to bring skilled professionals on board ie. early exits increase (happening a little, especially in the West)

- Candidates find that they have more than one offer on the table again (happening a little)

- Candidates play off one company against another (probably happening a little)

- Retention figures go down as opportunities emerge in the marketplace (happening slowly)

- Expected salaries, for a job change, go back to the usual 25% of annual salary (happening)

- HR gets a new sense of urgency about hiring and begins to push line managers to speed up the process (probably happening)

- The battle for hearts and minds, otherwise known as the War for Talent, starts again (we’re not there yet)

Let’s hope that Andy Rothman is right, and my inner black swan sensing device is not temporarily disabled. If enough of us believe that he is right then it becomes a self-fulfilling prophecy.

But then again, don’t mention the Baltic Dry Index, or unemployment, or exports, or FDI. Damnit!, nearly made it to the bull enclosure.

So close …

Everyone has been trying to predict the point at which the labor market will take off again, and there have been as many false starts as there has been false pronouncements about the resilience of the Chinese economy.

But slowly there is an emerging, tentative consensus that the economy in China may have turned the corner. Once this happens the labor market will follow. The fact that there is some inchoate movement in the labor market already, with pockets of skills shortages, and an end to some hiring freezes, tends to confirm that something is happening.

A positive feedback loop may be underway, assuming no potential for a financial bubble (see Caveat below). At the very least the stimulus expansion might keep us going until the world’s economy picks up again, and exports start to roll. Here’s hoping.

Scout’s Motto - Be Prepared

It’s odd to be talking about a skills shortage when individuals are still losing their jobs, and companies are still going under. After being burnt so badly by the current economic crisis, this time round companies are going to want to build a high-performance, flexible workforce. Many have gone a long way towards by paring down to the top players in the company.

But soon companies will have to work hard at finding skilled staff in a market where professionals don’t want to change jobs, for a while longer anyway. The time to plan for this is now.

The signals are there already. According to Hay, the banking sector in China is already beginning to hire again. This is partly a result of the general improvement in the economic situation but also because many of them are set to get an RMB license next year. Banks need to hire a recruiting team that can bring on board the capabilities they will need, before everyone else is looking that same skills base.

The same logic of building capabilities now for the coming upturn applies to all industries and sectors in China. By the time the market comes back it will be too late to build the skills and performance culture that will deliver on your sales department’s promises.

Only recently candidates were not willing to take the risk of changing jobs, but slowly we are drifting back to the old paradigm, where candidates have to be closed quickly before one of your competitors gets them. When this process is in full swing, most of the high-value, low-cost, available talent will have been taken up.

A Big Caveat: All of the above puts aside the issues of any bubble that might have been created by the Chinese government stimulus package, and the fact that the economy is not yet offering professionals what they want.

The image below is courtesy of Shanghaiist, and comes from a Gallup survey conducted in November 2008. The question it raises for me is: if China is leading the world out of recession, and we are about to enter an economic boom, why are so many Chinese professionals choosing to leave? Maybe they know something that we don’t know.

Online engagement tools appear to take up a lot of time, and cause staff to lose focus as they rapidly switch from one task to another.

But all is not lost. Maybe it’s just a matter of acquiring the skills necessary to do more than one thing at a time ie. multi-tasking. If this is true then we can get better at this, and social networking can be redeemed.

Multitasking Masters

Multitasking is not an innate ability and it can be improved through practice. This is according to research funded by the National Institute of Mental Health in the US. Apparently, we can increase our ability to process multiple streams of information. This appears to contradict the current thinking in mainstream society, where multi-tasking is seen as something that some people either do well naturally, or just don’t.

The key to success is to improve the speed at which the pre-frontal cortex processes information, and this can be dramatically increased through training and practice. This is according to Doctors, Paul E. Dux, M. Tombu, BP Rogers, S. Harrison, F. Tong, and R. Marois, the co-authors of the study.

After training, our brains working faster for each individual task, and there is more available cognitive resources to tackle other processing tasks. The good news is that it is not necessary to have any knowledge of the structure of the brain for this to work. You don’t have to be a cognitive scientist to get better at multi-tasking.  All you have to do is multi-task more often, and more intensely.

Eventually we just get better.

What the researchers did was to train 7 people for two weeks to select a finger response to an image, and select a vocal response to different sounds. Sometimes the tasks were done together, sometimes they were done alone. What was interesting about the study is that the researcher did fMRI scans of the subjects during the research ie. while they were responding to the stimuli.

What they found was that over time the subjects got better at doing the two task individually, but they also got better at doing them together. This makes sense if you think back to when you learned to ride a bike or drive a car.

What they also found is that our brains do not really do two things at the same time, ever. Multi-tasking is an illusion created by the speed of operation of each individual task, and the blending of one task into another task.

So the answer to multi-tasking?  JUST DO IT! Do it over and over, again and again.

(This post was completed at a morning HR seminar alongside lunch, 2 cups of coffee, 3 SMS conversations, three face-to-face conversations, a read of today’s news on Google, and a casual client meeting. And all with no spelling mistaks. Multitasking is eezy for those of us who practise allot. )

The confidence booster is to be found in the fact that 37% of the 300 European companies surveyed said that China is now a more important market than in the past. Only 3% say China is less important and the remainder see no change. At the same time, almost all (98%) of the European companies had felt a serious short term recessionary impact on their operations in China.

The strategy that companies are taking in response to the economic crisis is also worth noting. Most are looking at increasing sales and market share, which suggests a basic level of confidence in the China market. Clearly, the domestic market is not as big as it should be but latent demand is seen in the China market, and the thinking seems to be that this can be stimulated if the government gives people confidence in the future. The stimulus package does not do this, but it may keep things ticking over until a more nuanced response can be developed.

But let’s not get carried away. While the companies see a better economic situation in China, and an earlier recovery, most do not see China as the driver of the world’s economy any time soon.  48% of them think China will the driver of global growth in the distant future, but a full 78% think it will not happen now.

At the same time companies are not optimistic about their profits in the short team. The worst is professional services, which have been hit very hard. Also hit hard are the makers of industrial products. The respondents in the survey did not feel that the stimulus package was sufficient to the tasking of restoring the market, and they suggest that China needs to change the structure of its industries. Cash will not fix this problem.

Respondents in the survey also had a little advice for the Chinese government. More competition was suggested, with the existing monopolies broken down. Ｉhope no one is holding any breaths.

War’s End

Perhaps as a result of these moves, the companies in the survey also seem to believe that China can recover earlier than other countries. The good news is that they intend to follow the logic of that belief and invest further in the country. This implies hiring, and the restoration of Chinese people’s careers.

The bad news for human resources is that the War for Talent is likely to come back in China faster than anywhere else. Even in a downturn European Chamber Business Confidence Survey respondents are citing a shortage of qualified staff (sic). Anecdotal evidence suggests that the premium for changing jobs is still around 25% for people with a strong skills base. For those who have lost their job there is flexibility, but amazingly many professionals still expect an increase.

At the same time localization of expatriates is a key strategy to reduce wage costs, and the fact that these two issues contradict each other, i.e., the shortage of qualified and experienced local Chinese staff and the need to localize expatriates, is not addressed in the report.

With the two forces in the job market pulling against each other, the worst case scenario is that expatriates get sent home, and a new War for Talent starts. Unlike the previous war, this one would no longer have the option of fixing a skills shortage by sending someone from the head office.

Fortunately, current talent demand can be met with people who have lost their jobs. So serious salary inflation, and the War for Talent, is still a distant threat.

Once the hiring freezes end, and they are ending now, this threat will move closer to home.

No one wanted to be on the redundancy list last time around, and no one wants to be on the list next time round. The worst of it seems to be over, but the current rise in demand in China is suspiciously like a financially-driven bubble. There still is the possibility of another, smaller round of layoffs later. Everyone is hyper-aware of everything to do with the economy and the job market.

In this kind of an environment, empathy, which is defined as the ability to recognize and understand the states of mind and emotions of others, is a scarce commodity. Unfortunately, empathy is a vital element of a successful business culture, so long as it does not become the driver for everything else. Understanding others should not replace productive work.

The advantages of an empathetic culture are clear. Empathetic people can put themselves in other people’s shoes, and can avoid unnecessary conflicts, just by being able to understand what the other person does, or might, want. Empathizers can more easily identify how to motivate the other person to achieve shared goals, and strengthen their relationship with that person over time.

(Not) Understanding Others

The opposite of empathy is mind-blindness, and this all is part of the Theory of Mind (TOM). This starts with the fact that other people’s minds are not directly observable to us. In any situation, but especially in the artificial world of work, we cannot be sure what someone else is thinking. The natural tendency is to project our own thoughts, either positive or negative, into other people’s minds.

Of course it is not so simple. To an extent, we can observe our own mind and communicate with others through language, and other forms of communication. From the feedback we get from this process, surprise surprise, the majority of us gradually discover that other people have thoughts; and beliefs; and desires; and intentions; and that these are different from our own.

If we mature sufficiently we get to the point where we can acknowledge that sometimes other people can even have ideas that are better than our own. Anyone who understands that other people have a different mind are said to have a Theory of Mind (TOM). However, not everybody has a strong TOM, and the absence of one is the defining characteristic of someone who is autistic. This is where the notion of mind blindness comes from; a notion first developed by Simon Baron-Cohen.

But again, it’s not so simple. Mind blindness and empathy are not just an on/off switch. People have varying levels of empathy, and so varying levels of understanding of other people’s mental states. The ability to understand other people’s mental states is on a scale, and we can swing back and forth somewhat.

Lack of Empathy

Stress is one of those issues that seem to cause us to put aside our understanding of others, and to focus entirely on an insistent what-I-want-to-say!, or what I-want-you-to-know!; irrespective of how that will affect our relationship with the person on the receiving end.

In a tense environment, like the current economic crisis, a degree of mind blindness is a strong possibility because our own thoughts are often very negative, and can crowd out the need to think of others. Our minds can easily default to a zero-sum mentality where the modus operandi is; if he wins I lose, and if I win he loses. Other people exist in so far as they are part of my game.

But if people are negatively affected by the current economic crisis, and their ability to understand each others’ motives is diminished, how would this mind blindness manifest itself? Business managers and staff don’t come out directly with criticisms of each other. That would be too obvious, and counter productive for them.

At the very least you should see an increase in office politics. You should be seeing more people coming to your office to tell you about the deficiencies of others. Beyond telling tales, individual behaviors should also change. For example, you might observe staff suddenly adhering to higher standards of behavior or performance, and surreptitiously pointing out how others are not reaching those newly-acquired standards.

At worst, the level of suspicion and self-centredness can increase to the point where business meetings no longer function effectively. In some cases members of your team will effectively switch off, and cease to contribute. This is happening in offices and factories all around China right now.

Empathy Culture

A lack of empathy is not the only possible cause for an increase in conflict or a communications failure in your office or factory, and TOM training would not be magic bullet. But the TOM is a great way of viewing relationships and communication. Knowledge of TOM raises the level of understanding one level higher, and puts everyone in the same boat, facing each other. It adds deeper context to other people’s actions, and shifts the focus to hating the sin and not the sinner.

But why stop with training? Conflict coaches tell us that the way to resolve a conflict is to focus on the situation and not the people involved. HR can improve the situation further by adopting a culture with a higher standard of behavior, based on a deeper knowledge of human interaction.

For example, as part of the stated business values, management could refuse to accept Ad Hominem attacks as a valid argument, so they have to cease as open tactics. HR could back this up with training on such issues, with the goal of introducing a higher standard of intercourse in the office/factory. This would complement TOM training, and deeply influence business culture for the better.

Eleanor Roosevelt said it better than I ever could:

“Great minds discuss ideas. Average minds discuss events. Small minds discuss people”.

Who’d work in human resources?

Managers block for a variety of reasons. They may feel threatened by a strong candidate, or it may just be that in their honest opinion they don’t think they need a particular position filled. So what do you do if you are representing the HR department, and you have such a manager sitting beside you?

1. The first thing is to stay-calm!. If you haven’t had time to talk to the manager about his attitude to the job or the candidate, and you are walking into the bear trap interview, it’s too late now.

Accept the fact that the manager is going to go a little bit off the deep end, and ask questions that suggest offense, or just should not be asked. You have to be the one that keeps the interview on a professional level, and represent your company well.

2. You should also try your best to set the tone with the candidate when you initially meet them. Make sure your attitude is very warm and engaging, even if the line manager’s is not. By reasons of contrast, this will make it more difficult for the line manager to play the bad cop.

3. Keep this attitude during the interview. Whenever the candidate says something that supports his candidacy, feed it back with something along the lines, “So what you are saying is …”, or “If I hear you right you were in charge of …” Line managers are not stupid, and it may be possible to bring him round to a different point of view, if he can see what the candidate can do for him.

4. During the interview take every opportunity to paraphrase what the line manager says in a positive way. Expand on blunt questions by giving them some context, and take the edge off them. If the line manager asks the candidate a pointed question about why he left a previous company, explain how answering this question will give you both some insight on the candidate’s motivations, and will help his candidacy.

5. Take every opportunity to add in statements like, “What people like about working here is the teamwork/camaraderie/development potential.” or “We feel that an environment focused on cooperation delivers for our customers.” If it begins to sound like a lecture, stop.

6. If you are fortunate to have a strong value system in your company, you might want to cite these values to bring the line manager back in line (excuse the pun). If you hammer this home after the interview, he may come back to a more reasonable way of thinking.

7. Emphasize to the line manager how his performance evaluation is made on the basis of how well he hires, and how well he develops staff. Drop this fact in during the interview. If the candidate in front of you both is a strong candidate, paint a picture of how, in your company, hiring someone good can be the best thing for a line manager’s career.

8. If possible keep notes on the questions that were asked during the interview and gather information to protect yourself or the candidate in front of you. You might even want to signal the fact that you are taking notes on everything that is going on. This could limit the damage by encouraging a little self-censorship from the line manager.

9. Attend all interviews for a particular position if possible. Create a spreadsheet of the advantages and disadvantages of each candidate, and ensure that this overview is shared with other, more senior, managers. As far as you can make it as difficult as possible for the line manager to refuse a good candidate.

10. All of the above techniques are much more applicable to the hiring of junior level staff. If you hiring a senior manager, like a GM or an Asia Pacific Finance Director, you will have to anticipate problems and deal with them long before the interview. Most of the above techniques will be too transparent for an experienced player not to see straight through them.

If none of these techniques work, consider taking the gloves off.

They’re not, but resignations hurt, and this makes it easy to be judgmental.

For a multitude of reasons there is normally a high level of attention to retention statistics among human resources professionals, but this is done at the expense of understanding why people leave. So, why do people leave?

Here are a few non-standard suggestions as to why someone might leave you soon (I know you have read all the 10-Point articles about the how to retain staff.):

- Research shows that employees with less than two years’ service are the most likely to resign. So the focus should be on why this is happening, and on attempts to retain new employees. This begins with the process of bringing them on board.

The research suggests that many staff are oversold on what they will get in a new position, in terms of career development and learning, and their morale declines much faster than long-term employees, who have internalized the reality of the company’s over-selling. If someone is still in the company they have come to terms with the natural failure to meet high expectations. The longer you keep people the longer they are likely to stay.

- Junior level staff leave because of junior level problems. The fact that senior management do not use  public transport should not inure them to the importance of this to low level staff, who often have to spend in excess of 2 hours per day on public transportation. Trying not to hire junior staff from the other side of your city, or financially supporting their efforts to live closer to your plant/factory, is a good idea.

- It is obviously true that job losses can make you physically ill, or at the very least negatively affect your psychological state. But just being in an environment where other people are losing their job, and where you could be next, is bad for the health. Being in bad health can affect performance and cause sudden exits. The easiest way for the employee to take off the pressure is for them to take a new job.

There is also the risk that comes from hiring someone from a company that has been close to bankruptcy for a considerable amount of time. It appears, again from research, that when staff exit stressful environments their stress level does not go down for some time afterward. Watch out for people who have been on the edge for too long. 50/50 joint ventures are an obvious risk environment here.

- People are leaving jobs now to take advantage of the low-cost-of-everything. If you have money, the right idea, and the patience to ride out the recession, then this is the ideal time to start up a new business. It’s not a big tide of people but they do join in with newly redundant professionals who have little to lose by starting their own company.

As a result of the recent economic crisis there is also likely to be a tide of skepticism among employees regarding the security that large companies actually deliver to them. Many professionals have seen good people lose their jobs because it was a necessary decision for the survival of the company. They are only too aware that it could easily have been them on the chopping board. Bad things can happen to good people. Watch out for the high potentials with a strong Guanxi network in your industry.

- For the past year or so companies in China have enjoyed the luxury of knowing that no one was going to resign. Advantage-To-Employer. It is still a weak job market out there but there are signs that you will have to spend time on retention issues soon. The job market is gradually coming back.

For professionals with strong skills the job market has remained relatively strong, even at the worst of the slowdown, but new jobs are slowly trickling in for professionals with weak skills.

When the weaker staff finally leave, you can put on your Oh!-No!-You’re-Leaving face. Most managers have had a high level of experience faking the appearance of loss. It’s been a necessary pose for the last year. “Resigning? Sorry to see you go. No, there won’t be a counter-offer. Thank you. Bye-Bye … Phew! One step closer to break-even.”

Not all exits are equal. Losing your chief Technologist or your Asia Pacific Logistics Manager is not the same as losing your Production Intern or your Marketing Assistant. Many of the people that leave you should actually leave you. Having been denied this option for a year, it may come as a relief that it is coming back.

- There’s a zero-sum mentality in your office that many expatriate and non-Chinese are completely unaware of. This says that if someone else is doing well, I must be doing badly.

It is particularly strong among the younger generation, who feel they have the responsibility for the world on their shoulders (this is mostly true). A zero sum culture means that factions arise, and conflict is higher than it should otherwise be. The more factions you have, the higher your resignation rate. Factions want to grow internally, and to have other factions decline. Sudden resignations are a natural outcomes of this infighting. Do you know who your primary factions are?

- The reason people stay is not necessarily the same as the reason they leave. People join organizations but they leave their managers. For a year some staff have had to put up with weak/overbearing/inept/conniving superiors, but now that the job market is picking up some small issue may become the straw that breaks the camel’s back.

The Hay Group has found that people stay because of career potential, challenging work, opportunity to make a contribution, the chance to contribute to a team, a good manager or boss, recognition of work done well, and a sense of control over work. People leave because of a lack of challenge, limited growth opportunities, low standards/expectations, lack of appreciation, ineffective co-workers, lack of leadership, too much red-tape and non-competitive salary.

For the past year these issues have been put aside, and replaced by a desire for a secure, permanent job. Even the government became attractive as an employer. Now that the market is coming back we will all have to ensure that we satisfy the factors that encourage retention, and avoid the factors that encourage resignations.

Back to basics.

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