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COMPANIES IN THE mainland risked undermining the country's competitive strengths unless they hired more university graduates.

Two of the biggest headaches for mainland businesses were recruitment and retention, according to Jessica Zhang Beizhi, Greater China consulting practice leader for Hewitt Associates.

However, these problems could be fixed by taking on graduates and establishing clear lines of communication, Ms Zhang said at a recent seminar hosted by the human resources consultancy firm.

She said intense competition had forced companies to go headhunting for experienced personnel, and this had pushed up wages.

Average salary increases in China reached a record 9 per cent by the end of last year. As a result, some professionals were earning more than their direct counterparts in India, and some remuneration packages were approaching levels offered in South Korea.

Ms Zhang said the expectations of mainland employees remained high, and some were asking for salary increases of 20 per cent.

Hewitt's research indicated that the demand for talent pushed average staff turnover to 14 per cent last year, 5.7 per cent higher than in 2001. The rate for positions in HR, sales and marketing was well above the average.

However, many firms failed to take advantage of the large pool of talented graduates around, Ms Zhang said.

It would be more to the point to dip into this pool than to go headhunting among rival companies to find staff, a practice that only increased salaries without improving the overall quality of personnel, she said.

'Fresh graduates are very motivated because they want to break into the job market,' she said.

She advised employers to look upon graduates as a valuable, less expensive addition to the company. The possibility of losing a graduate as soon as he or she had acquired some experience was not a valid reason for not hiring in the first place, she added. When recruiting on campus, companies should make sure the candidate's goals and qualifications matched the firm's requirements.

'Graduates tend to send their CVs to each and every company, and for every position available. Employers should sift through these carefully,' Ms Zhang said.

In the face of numerous HR-related problems, companies tended to go after those with qualifications and experience in the relevant field.

The demand for people to fill sales, marketing, finance and research and design positions was also running well ahead of supply in most parts of the mainland.

One consequence of all this was that mainland firms were eyeing Hong Kong middle managers and senior executives. Over the past few years, the city has come to be regarded as a reservoir of ready-made executive talent. And the supply of well-paid opportunities looks set to continue.

'The Hong Kong labour market is heating up. The increased demand from China and Hong Kong is likely to put upward pressure on wages,' Ms Zhang said.

Discussing benefit packages and asking staff why they wanted to leave were ways of retaining staff, she said.

In many cases, employees were in the dark  about their entitlements and the reasons for their various levels of compensation, and this could result in discontent and disillusionment.

Companies should also be aware that remuneration was not the only reason for staff to stay or move on. Employees also appreciated performance-related incentives and opportunities for career development.

Ms Zhang cited the example of an employee in a large computer hardware manufacturer who quit, saying he had received no bonus since joining the company. He had overlooked the fact that his basic salary had been more than doubled in the meantime.

'A well-informed employee will compare total packages, rather than just look at single items.'

She said one company used its marketing department to inform staff about their salaries. This helped to clarify the wages situation and kept pay separate from other HR issues.

Chinese employees tended to view career status and wealth as yardsticks of life achievement, and were likely  to move on if they saw no room for advancement.

For this reason, the HR team and line managers should make sure staff were aware of all available opportunities, and whatever else there was that could improve their career and overall prospects.

'Employees who know the company will invest in their future are more likely to tell a headhunter: Thanks, but no thanks,' she said.

MAKING THE GRADE

Graduates tend to send out CVs for a wide range of positions.

Moving operations to second-tier cities will not necessarily reduce wage bills.

Make sure staff are clear about benefits and opportunities for promotion.



Graduates are way forward