Rising payroll costs and limited staff mean that companies in the mainland will have to adopt a more comprehensive approach to their human resources policies, which must take into account not just remuneration but also other employee needs.
'Focusing on benefits and compensation is not enough,' said Stella Hou, general manager at Hewitt Associates Hong Kong. 'Companies also need to look into people development and training issues. Leadership and company culture are playing pivotal roles in talent attraction and retention.'
Ms Hou said organisations, which were prepared to invest in areas such as leadership development and corporate branding, had a competitive advantage when it came to recruiting and holding on to good employees.
Nonetheless, she said it was still important to offer an attractive compensation package. 'Employees still care about money,' she said. 'If you don't pay competitively, they'll leave you.'
Fuelled by economic expansion and a resulting shortage of talent, salaries rose on average by 8.7 per cent in the mainland last year. According to Hewitt's 2007 survey of the mainland's and Hong Kong's compensation and benefits for locals and expatriates, similar salary growth should be expected this year. This rise has increased pressure on recruitment and overall business costs.
'The whole talent supply and demand situation has not eased,' Ms Hou said. 'This is primarily because the Chinese economy continues to grow, with new companies still coming into China and existing companies expanding.' Data from Hewitt's total compensation measurement (TCM) study for 2001 to 2007 shows that voluntary staff turnover recorded by companies has risen steadily in the mainland. The average climbed from 13.8 per cent in 2006 to last year's 14.7 per cent.