MAJOR INTERNATIONAL companies in widely diverse industries realise that the China market will dominate their expansion plans for many years to come. To gear up for the opportunities now unfolding, they are putting HR strategies very much to the fore, recognising that getting the people issues right is the secret to success. Nowhere is that truer than in the retail sector, as Eden Woon, vice-president of Starbucks Greater China, confirmed. 'Our stores are our way of interfacing with the public,' he said. 'The entire Starbucks experience depends on the passion and attitude of the employees. Since we don't do any advertising, we really depend heavily on in-store staff.' The company has more than 460 outlets and about 8,000 employees, or 'partners', in Greater China. However, during the present phase of reorganisation and expansion, it often finds itself scrambling to keep up with recruitment and training needs. Part of the reason is that being in the service sector in China was not regarded as highly as being in industry or the government. 'So, it is a constant challenge to find people who excel in this field,' said Dr Woon, one of the speakers at today's SCMP/HKIHRM Human Capital in Greater China Conference at the JW Marriott Hotel. He pointed out, however, that other employers were inevitably chasing the same high-calibre candidates. That meant retention was an ongoing concern, and special care was needed to ensure compensation was in line with market rates. In this respect, the company has introduced a 'total pay system' for company-operated markets. The system takes into account not just basic compensation, but also bonus, health insurance and other benefits such as stock options, for which even part-time staff were eligible. Besides that, understanding national and local regulations governing various employment issues could prove a challenge. 'It is quite a complex landscape you have to weave through,' Dr Woon said. An added complication was that some of the company's markets in Greater China, such as Hong Kong, operated as joint ventures. These had their own HR policies which were 'in sync' with the group's international standards and values. However, as the HR management system evolved, the Greater China headquarters in Shanghai would set the guidelines, while giving local markets the necessary degree of flexibility in hiring and implementation. 'Really, the employees are our top priority,' Dr Woon said. 'We feel if we treat them right, then they will do well with customers.' Jim McIlvenny, president of Asia Pacific and Greater China at The Dow Chemical, believes that people are the key to meeting high expectations and keeping the company's mainland business growing at about 20 per cent a year. That involved adding staff, building manufacturing sites and changing processes, all at the same time. 'China is a very important and very dynamic part of our global business,' he said. 'For us, it's critical, not strategic.' He explained that when things were moving so fast, it was vital to leverage the company's worldwide experience and not to try to reinvent everything. Success was a matter of taking global processes and adapting them to the local environment. To illustrate, Mr McIlvenny said that the company would have about 600 scientists in a research and design centre in Shanghai. They would focus on the needs of mainland customers, but be able to draw on the expertise of the company's R&D around the world. The aim was to innovate in a practical way to meet the commercial requirements of, say, a cellphone or computer manufacturer looking for new materials. 'In China, we can learn from and collaborate with the global organisation. This is a key part of our future.' Similarly, the HR model used in China has been tailored to fit the local situation. For example, while it might be possible for staff in the United States to work 'virtually', the concept does not yet make sense in China. The workforce is younger, less experienced and, in many cases, does not have the option of working from home. Related to this, it was therefore necessary to have more 'people managers' in China to train, coach and mentor. To help them, the company has comprehensive training and development programmes, which set out the steps a trainee production engineer, for instance, must complete in the first three years. It covers technical and personal skills, in roughly equal proportions, to equip recruits to work effectively in high-performance teams. The company uses a variety of metrics to ensure the training and development programmes were providing 'value for money'. Among the factors measured were the job offers accepted by graduates, retention rates, the number of women moving into higher management, and how far expatriates could be replaced by locals. 'Our success or failure will be determined by how we develop local talent,' said Mr McIlvenny. 'It depends on attracting the best people from local universities and how we train and mentor them to take leading positions within the company.' David Sun, chairman and country managing partner for Ernst & Young, China, expressed similar views. 'Our capital and assets are really in our people,' he said. 'Talent is what converts into the bottom line, particularly in a growing economy like China.' This made it important to have good HR policies and to give staff sufficient training to face the challenges ahead. It required putting them through a very structured curriculum to learn the business and build up management skills. 'Something in the range of 5 to 10 per cent of our top line [expenditure] goes into training every year,' Mr Sun said. To monitor the return on this investment, the firm is developing a system to measure performance, productivity and the costs related to staff turnover. It will divide employees into four levels - trainees, qualified accountants, those who work at client premises, and partners who bring in the work - and assess them accordingly. 'In the accountancy profession, it's not unusual to have a turnover of 20 per cent a year,' said Mr Sun. 'If we can raise retention by a few percentage points, it will contribute significantly to our bottom line.' He added that holding on to someone with potential for even an extra year could make a difference to overall profitability. The firm makes a point of building values and loyalty as part of a 'people first' strategy. The focus is on integrity, respect, teamwork and encouraging people to lead and, each year, several 'value champions' are recognised.