SOE reform spurs migration of talent

Beijing's plans to reform compensation for senior management at state-owned enterprises and make them more market-oriented by encouraging them to join forces with private firms will open up opportunities for them to attract private sector talent.

But such a migration of talent would take time to become a trend and some managers would have a hard time adapting to SOEs' corporate culture, executive search professionals said.

In late August, the Communist Party politburo approved a plan to reform compensation for executives at central government-owned firms, but details have not been released.

The People's Daily quoted vice-minister of human resources and social security Qiu Xiaoping early last month as saying that most state-appointed executives faced pay cuts, and that their pay should not exceed roughly 13 times the average salary of ordinary staff - the prevailing pay gap in current years.

The reform would see executives of central government-owned firms split into two groups: one appointed by the party Organisation Department to represent state ownership and the other professionals hired to run them.

The role of top bosses at big state firms is currently blurred, as they have both managerial roles and supervisory roles as representatives of the party or state. For example, chairmen of central government-owned enterprises also enjoy the rank of a vice-ministerial-grade official.

Bosses appointed by the party are cadres who are sometimes transferred from SOEs to government jobs and vice versa.