Knowledge Center: Publication
Getting employer branding right in China3/10/2017 Karen Fifer and Linda Ye Zhang
At a glance
What do senior executives in China’s fast-evolving business environment look for in their employers? Our research shows that corporate leaders want to work for employers with the following three characteristics:
1. Charismatic and driven leaders. In an era defined by corporate leaders as high-profile and successful as Jack Ma, Lei Jun, and Ren Zhengfei, employees in China value charismatic and inspiring leaders—even more so than an attractive work culture and a competitive employment offer.
2. A disruptive and innovative business model. With China’s economy being disrupted by e-commerce and the mobile Internet, senior executives want to work at nimble and innovative firms. They favor companies in high-growth industries and those that have a new or original business model with the potential to disrupt or challenge established businesses.
3. Challenge and opportunity, not just money. While money is still important, financial considerations are not the only element that executives in China weigh when considering a company. They want a challenging role, the opportunity to develop expertise in new areas, and a company with the right culture.
In China, as in any market, a company’s reputation for how it manages, rewards, and empowers its employees can have a significant impact on its ability to hire the best people. For multinational companies (MNCs) in China, the importance of their “employer brand” is growing as the evolution of domestic industry titans such as Alibaba, Haier, and Huawei into successful global companies has heightened the competition for top performers.
Conventional wisdom says that employees in China care most about financial rewards. Prestige attached to working for a big brand is also thought to play a major role in their decision making.1 But are these really the most important factors when experienced hires in China are deciding where to move?
Our survey of senior executives in China (see sidebar, “About the research”) finds that while financial incentives do matter, a much broader set of factors influences employee decisions about whether to join or stay with a particular company. The quality of the company’s leadership is a top consideration. Corporate culture is also highly important, as are opportunities for individual learning and advancement. And the rise of disruptive e-commerce and Internet firms is shaking up employees’ perceptions of what makes a company an attractive prospect.
Taking it from the top
Having the right leadership team in place is a clear priority for talented people in China making decisions about a potential employer. When asked to pick the three most important factors that make an organization a good place to work, respondents name “high quality of senior leadership” first, followed by “attractive culture” (that is, one characterized by openness and diversity), and only then a competitive employment offer in terms of salary and benefits (Figure 1).
Charisma and diversity are needed to attract the best . . .
What specific qualities do businesspeople in China value in senior leaders? An overwhelming majority—some 91% of the executives in our survey—say that having senior leaders who are charismatic, inspiring, credible spokespeople is important to their decision to join a company (Figure 2). This aligns with the trend of “CEOs as celebrities” that has been pervasive in recent years, with high-profile, charismatic executives such as Alibaba’s Jack Ma and Baidu’s Robin Li becoming synonymous with their company’s image and brand and inspiring employees and customers alike.
Intriguingly, separate research by Heidrick & Struggles into the leadership styles of more than 1,400 senior executives based in the Asia Pacific region finds that leaders demonstrating such characteristics—namely, “Energizers” who have the ability to inspire and connect emotionally with employees around a common purpose—appear to be more common in the region than elsewhere.2
What qualities did respondents value less? Factors such as senior executives’ tenure with the company and whether they are of local or expatriate origin are considered less important than having a diverse leadership team in terms of nationality, race, gender, tenure, and background. The era of primarily importing international leaders to run operations in China may be gone, but the best leadership teams are not exclusively local either: employees want to see an effective executive team in place with a mix of skills and experience. This echoes findings elsewhere that having diverse leadership leads to better outcomes.3
. . . while trust and transparency will make them stay
Inspiring leaders might make a company an attractive prospect from the outside, but what makes senior executives in China stick around? Retention is important, since rapid churn is a constant worry for many MNCs in China. Research by Mercer showed voluntary workforce turnover at Chinese companies in 2013 was 13%—higher than a churn rate of 11% in India, 9% in the United Kingdom, 8% in the United States, and less than 4% in Germany.4
Leadership, again, appears to be the key to retaining executives. Our survey respondents are most likely to cite trust and transparency as “very important” considerations in their decision to stay with a company (Figure 3). This preference reflects the growing expectation of information sharing within and between departments in an era of rapid information flow and open-access platforms, as well as an ethos of collaboration and teamwork rather than top-down micromanagement. Similarly, the ability of senior leaders to communicate clearly and embrace change, innovation, and technology are also significant retention factors—much more so than having a flat management structure.
The importance of culture
The tone set by senior leadership helps to shape corporate culture throughout the organization, another factor that ranks highly in our survey as an important consideration in employee decision making about job moves. Prospective hires and employees alike in China want to see that the company has a clear vision and mission and strong organizational strategies, as well as that employees’ contributions to company success are valued (Figure 4). Fully 99% of respondents say that recognition of high achievers is important to them, in addition to characteristics such as having a friendly and collaborative workplace (93%) and respect and encouragement for diverse thinking and new ideas (91%). These results are similar to our previous survey of senior executives across the Asia Pacific region, which found diversity of thinking in the workplace is the most important characteristic, with 98% of respondents saying it was important to them, while recognition of high achievers was in second place, at 97%.
Daring to be disruptive
With the rapidly changing nature of China’s economy—particularly the disruptive potential of e-commerce and technology—old assumptions about the appeal of state-owned enterprises (SOEs) and long-established brands are no longer accurate. Indeed, the most talented Chinese employees have not only the Internet giants such as Alibaba, Baidu, and Tencent to choose from but, increasingly, an array of smaller, privately owned domestic firms as well.
Our survey shows that the vast majority of respondents (90%) value an office with a good level of autonomy and the ability to implement decisions quickly; meanwhile, 82% of respondents say that being in a high-growth industry makes a company more attractive to join, and fully 70% note that having a new or original business model with the potential to disrupt or challenge established businesses is an important factor (Figure 5). Taken together, these responses (along with our findings on the high importance that executives place on diverse thinking and new ideas) underscore China’s shift to become a more entrepreneurial economy5 and the government’s corresponding push to promote business innovation. Significantly, the appeal of working at an SOE is at rock bottom: just 4% of executives surveyed consider this an important factor in their decision making.
Moreover, just 24% of executives say that having a favorable and famous corporate brand is “very important” to a career decision to join or stay with a company (Figure 6). Even fewer place great importance on a company having a long history, with more than half of respondents ranking this as a neutral or unimportant factor. Much more valued is a company with services or products that are considered superior (92% consider this important) and a reputation as an innovator in its field (87%). Brand is still among the top three, but it is not as dominant a consideration.
Opportunity beats money
As the competition for talent heats up, companies are finding that they must offer more than just attractive compensation. Simply put: growth potential and the opportunity to develop new expertise are more important than remuneration.
Our survey results support the view that companies need a stronger employee value proposition (EVP)6 to attract and retain the best recruits in China. Senior executives appear to place much less importance on some of the other perks that are typically included in a company’s EVP in China, such as overseas assignments and educational sponsorship. This suggests that these attempts by prospective employers to sweeten the deal won’t be as effective as strengthening the core attributes of the job such as the level of challenge, the corporate culture, and career prospects (Figure 7). (For more about creating talent strategies in China, see “Winning the war for talent in China’s ‘new normal.’”)
This openness to risk and challenge and preference for disruptive, innovative companies may also be linked to the disinclination of executives in China to prioritize job stability as a deciding factor. While job stability was considered significant to 74% of respondents, just 16% said this would be a “very important” element of the EVP. In a fast-changing business environment where frequent career moves and high annual turnover are considered normal, other priorities hold more sway.
Fighting employee churn
The relevance of understanding what current and future employees value in an employer is underscored by the continued high rates of turnover. Roughly 31% of executives in our survey say they are currently looking for new opportunities and hope to leave within 12 to 18 months; an additional 29% say they may leave within the next two years if better opportunities are available (Figure 8). This finding suggests that employees in China are liable to have less patience with a suboptimal status quo at work than are employees elsewhere in Asia. In our previous Asia Pacific survey, just 30% said they were considering leaving their employers, and only just over half of this group hoped to leave within the next 18 months.
The indication that many executives in China are in constant pursuit of a better job is also consistent with what they say that they seek from an employer: challenge, new learning, and career opportunities, over stability and financial security.
With a heightened understanding of what current and future employees want, companies can look for ways to identify which elements are already in place and seek to embed others that may be lacking. Building an employer brand is then just a matter of communicating effectively to prospective hires about company values and practices, whether through the company website, social networking sites, or other channels. In many cases, employer branding can also be aligned with consumer branding efforts, with a recent survey finding that around one-third of companies have a strategy that strongly connects the two.7
Many of the ideals highlighted by executives in China in this survey resonate globally, including a culture of trust, transparency, and collaboration among colleagues; senior leadership that inspires and embraces innovation; a challenging yet rewarding role; and the autonomy to take quick action. Building these values into the workplace and employer brand should yield significant returns in recruitment and retention in China.
Heidrick & Struggles surveyed 151 senior executives working at multinational companies in China in a wide range of industries: 42% from industrial sectors such as automotive, chemicals, energy, and construction; 19% from consumer products, retail, and hospitality; and 16% from healthcare. All respondents came from companies with more than 5,000 employees globally, and 79% have more than 1,000 employees in China. For a majority (59%), China accounts for more than 10% of their company’s global revenues.
About the authors
Karen Fifer (email@example.com) is the regional managing partner of Heidrick & Struggles' Consumer Markets Practice for Asia Pacific and the Middle East; she is based in the Hong Kong office.
George Huang (firstname.lastname@example.org) is partner-in-charge of Heidrick & Struggles in China; he leads the CEO & Board and Global Technology & Services practices in China and is based in the Beijing office.
Linda Zhang (email@example.com) is partner-in-charge of the Shanghai office and leads the Human Resources Officers Practice in China.
1 For instance, a 2013 study by Ernst & Young found that working for an “elite industry leader” was more desirable to professionals in China than a company’s rapid growth or financial strength. See Ernst & Young, “How to secure top talent in the BRICs,” January 23, 2014.
2 See Heidrick & Struggles, “Senior executives in Asia more likely to favor a team-focused leadership style than are executives in other regions,” press release, June 27, 2016.
3 For example, see Francesca Lagerberg, “Asian leaders value creativity and intuition more than Europeans do,” Harvard Business Review, June 5, 2014.
4 David Elkjaer and Sue Filmer, Trends and Drivers of Workforce Turnover: The Results from Mercer’s 2014 Turnover Survey, and Dealing with Unwanted Attrition, Mercer, July 16, 2015.
5 See Edward Tse, China’s Disruptors: How Alibaba, Xiaomi, Tencent, and Other Companies Are Changing the Rules of Business, New York: Portfolio/Penguin, 2015.
6 EVP refers to the rewards and benefits that an organization offers in exchange for the performance, skills, and experience an employee brings to the company. It is also called the employment deal.