from Eurobiz Magazine

Feburary 2010 issue

by Bill Dodson
The global financial downturn of 2008-2009 forced companies with projects in China to, as one expat General Manager (GM) put it to me, “reduce costs and increase revenues.” What this meant for a lot of businesses in China was laying off staff and having those remaining on board work longer hours to cover the resource deficit. With economic statistics showing China fared relatively better than Western economies during the downturn, and with pundits, politicians and managers projecting a GDP growth rate of above 10%, for 2010, companies will increasingly find themselves in an employment bind. Employees who felt bolted to the company during the downturn because of the lack of employment opportunities are going to look toward Spring Festival to make some employment and lifestyle changes.

A couple of patterns to keep in mind: one macroeconomic, one traditional. Typically during a downturn in any country hiring freezes take hold and employment dynamics trend toward job losses. In general, if the rebound is robust enough, companies begin hiring anew as markets open up again with fresh opportunities. Employees who felt welded in place in their jobs, especially in environments that encouraged a kind of “Death March” mentality, in which the only way forward is for everyone to sacrifice something, will naturally begin looking beyond the confines of their cubicle or factory floor at fresh opportunities at other companies.

Traditionally in China, employees look forward to collecting their “13th month” of salary by way of bonus, or red packet, just before Spring Festival begins. Spring Festival is a time of renewal for Chinese staff, and many who had been accustomed to changing jobs every 12 to 18 months during the go-go years preceding the Downturn will be champing at the bit for greener pastures. A British plant manager at a foreign-invested company with hundreds of employees recently told me he’s already noticed a lot more staff taking half-days off – ostensibly to interview.

2010 then will be a more challenging year than 2009 in managing employee expectations, especially as infrastructure projects in China’s interior begin bearing the fruits of a greater economic activity: already fewer workers are gravitating to the East Coast for work, finding ample opportunity in their hometowns or larger cities like Chongqing, Wuhan and Xi’an. And it will be natural for employees who worked hard for the company during the Downturn to explore other opportunities. The seeds for greater retention of key staff would have been sown in late 2008, when it was clear the economic course ahead was a difficult one.

Companies that did not make the work environment onerous during the down-year should not have much problem with employee retention. Companies that shed workers or reduced work time or salary will need to move beyond the mentality that states, “Well, at least you still have a job.” Bright, talented people want more than jobs, and they like to be appreciated for their work and for any sacrifices they and their families may have born during the Downturn. So, before Spring Festival identify the staff that’s important to your company’s turn-around in 2010, have a good talk with them to understand their plans for the future, and show them – don’t just tell them – how they’ll be rewarded for the hardships they may have born for the good of the organization. If you as a manager remain miserly toward your talent business conditions improve, you may find your company is unable to capitalize on the economic upturn as fully as it could have if you’d just shown your thanks.

Copyright ©William R. Dodson, 2010