Leaders of multinational corporations in China are finding it even more challenging to attract the leaders they need to thrive in today's operating environment – the 'new normal' which has been shaped by slower economic growth, higher costs, stricter regulations, the disruptive pressures of e-commerce and China's changing demographics.
"Due to the shortage of skilled workers and high attrition rates, companies continue to cite talent as a top concern,” says Linda Zhang, Partner-in-charge of Heidrick & Struggles' Shanghai office.
When asked to pick the three most crucial factors that make an organization a good place to work, respondents name 'high quality of senior leadership' (57%) and 'attractive corporate culture' (52%) higher than 'a competitive employment offer in terms of salary and benefits' (49%).
Yet, good company brand and reputation, clear personal development and promotion path are seen as less important factors when it comes to the pull factors.
Charismatic leaders are attractive
When asked what attracts them to a company, over 90% of the executives in the survey say that having senior leaders who are charismatic, inspiring, credible spokespeople is very important to their decision in joining a company.
This aligns with the trend of 'CEOs as celebrities', with high-profile, charismatic executives such as Alibaba's Jack Ma and Baidu's Robin Li becoming synonymous with their company's image, and inspiring employees and customers alike.
"Our experience shows that the turnover rate of senior executives in China is roughly 12-15%. As the competition for talent heats up, companies cannot rely on remuneration as the only weapon for attracting and retaining best-in-class senior leaders," said George Huang, Head of China at Heidrick & Struggles.
"Most senior level employees in China would like to follow an inspiring leader with a strategic vision, whether it is to achieve certain business or financial goals, or to disrupt an industry with an emerging technology. The satisfaction that comes from working with inspirational leaders that cultivate a strong company culture is increasingly influencing senior-level executives' employer decision."
Trust and transparency
When it comes to retention, the most important leadership qualities that encourage employees to stay are that senior leaders trust their staff, have a high level of transparency, and foster two-way communication between management and employees.
According to the study, when asked to pick the three most important factors for a company's structure and business model, recognition of high achievers (99%), a friendly and collaborative working environment (93%), and respect and encouragement for diverse thinking and new ideas (91%) are the key building blocks constituting a compelling corporate culture.
These results are similar to those in the Asia Pacific Consumer Markets Report 2015 – a previous Heidrick & Struggles employer branding survey of senior executives across the Asia Pacific region – where 98% of respondents said that diversity of thinking in the workplace is the most important characteristic, while recognition of high achievers was in second place at 97%.
Roughly 31% of executives surveyed say they are currently looking for new job 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.
This finding suggests that employees in China may have less patience with a suboptimal status quo at work than employees elsewhere in Asia. In the previous Asia Pacific survey, just 30% said they were considering leaving their employers, and only just over half of this group hoped to make a move within 18 months.
The survey included senior executives from a wide range of industries at multinational companies in China, including industrial (42%), consumer (19%), healthcare (16%), technology (10%), financial services (5%), professional services (3%), marketing services (2%), education/not-for-profit (1%), and conglomerate (2%).
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, China accounts for more than 10% of their company's global revenue.