Asia is now considered one of the most attractive places to work in. According to Yan Jun, senior manager of staff management for SPD (Shanghai Pudong Development) Bank’s human resource department in Shanghai, expatriates are flocking to China and Southeast Asia for work opportunities. And he should know.
Having gone to New York, Toronto and Singapore on a three-week recruitment blitz in December to fill five mid to senior-level positions for his company, Jun has interviewed nearly 700 candidates from these cities. With barely a break in between interviews, he has spoken to candidates from all walks of life, ranging from overseas Chinese migrants, Americans, the jobless, career changers and people seeking a new work environment. But that’s just for the preliminary round. Yan expects to receive more resumes in the email account he has set up in Shanghai for this recruitment drive.
But Yan is not surprised by the huge turnout for the inaugural China Job Fair, which was held in Singapore in December. No doubt, the predicted economy recovery is one key factor, he reasons. The other attraction for international executives is that Asia’s financial market is relatively stable, despite the global recession. The reasonable cost and quality of living also gives Asia an international appeal and the statistics back him up.
According to career management service, BlueSteps’ September 2009 survey of 200 senior executives from all over the world, leaders are more responsive to relocating now. Della Giles, director of BlueSteps, says 83% respondents from Asia Pacific (APAC) are also much more willing to relocate overseas for career opportunities, compared to 70% of global respondents. In fact, if given a choice, six out of 10 respondents would consider relocating to China because they see the country as an ideal high-growth market for career advancement. This is a good choice for these senior executives, with 71% of executive search consultants polled in AESC’s 2010 Executive Outlook Report revealing that China would see the greatest need for talent this year.
Hiring expats versus locals
But expatriation is difficult for any executive who wishes to take on a global assignment these days. Even though the recession and smaller budgets are contributing factors to the declining numbers of expatriates in Asia, the truth is that companies prefer to first hire local talent in the countries they have businesses in. Lim Teng Teng, regional HR director for Kennametal in APAC, isn’t kidding when she says the expatriate selection process in the metalworking and tool production company is stringent.
The process is so selective, you could probably count on one hand the number of expatriates Kennametal has in Asia. Unless the business requires specialised talent that is unavailable locally either in-house or within that particular country, then only would Lim look into expatriating Kennametal’s talent from other regions. “We do not have a lot of expatriates because we are very selective and we do our planning in advance,” she says.
Recession or not, the reasons for expatriation remain the same for Microsoft APAC. Its HR director Stephanie Nash says individuals earmarked for expatriation are usually those “whom we believe have the high potential and ability to take on bigger roles within the organisation”. By giving these employees international assignments, the computer technology firm hopes to “increase its level of readiness for that next role”. Nash says Microsoft will also “make that sort of investment in the costs associated with expatriates” when “local talent doesn’t exist yet at the level and the type of experience we are looking for’’. Besides identifying and developing the successor within the host country, the expat leader will be asked to identify and recruit external talent that will boost Microsoft’s growth in that country.
Yan doesn’t view hiring foreigners as a problem even though the recession has curtailed SPD Bank’s recruitment expenditure. Yan says there is no reason why local Chinese should feel disgruntled because there are still plenty of jobs available for them in China. Yan says it is “normal to look abroad if we really can’t find the people we need”. Similarly, local talent can always venture abroad for opportunities. When Yan went to networking sessions with other banks in APAC, it turned out they also hired talent from China. In any case, it spurs competition.
“If you are a foreign talent, and you have local talent to compete with, I will naturally hire you if you are better than him,’’ Yan says.
China’s ideal expatriate
In Yan’s eyes, his ideal expatriate employee would first fulfil SPD’s professional requirements such as having certain work experience and educational background. They would also demonstrate a good learning ability, good communication skills and, at the same time, understand the Chinese culture. While age is never part of the bank’s main consideration, Yan is honest enough to say how a person looks might be important in certain front-end positions.
“In the first place, when I recruit someone, I have never considered if he is a foreigner or local,” he says. “It’s just that I can’t find what I need in China, that’s why I came to Singapore and New York to look for talent.”
But the biggest problem that Chinese employers and expatriates in China face was the language capability. While fluency in Mandarin would give the foreign talent an immeasurable advantage, Yan says they don’t have to be fluent. “But you have to know and understand a bit,’’ he says.
Lim agrees language is always an issue when Kennametal sends expatriates to China. That’s even though Lim will mobilise the full relocation services, which include language training and culture orientation, once the talent decides to take up the assignment in China.
It depends on how good the individual is at mastering a new language. “If you learn a new language in mid-life or at the start of the assignment, it’s very difficult compared to someone who has learned the language at a young age,” she says. But it doesn’t mean Kennametal selects people based on their language capability. “We have Westerners from Europe and the US in China as well,’’ Lim says.
It also helps that business leaders in Kennametal are fluent in English. “We consciously make an effort to employ people who can speak English because we are a US-based global company so English is one of the languages we use very commonly.”
But Yan knows that providing language courses doesn’t mean Chinese employers
should be “slack” when hiring expatriates. “We also have to improve our language proficiency in English,” he says. “But from our point of view now, we are currently recruiting talent to work in China, so it’s important for the candidate to speak Chinese.”
Yan feels the best solution is having both parties improve their language skills so there won’t be a breakdown in communication levels. But the lack of language skills isn’t as big a challenge as people would imagine. What SPD is most concerned with when hiring expatriates is still the amount of job experience the candidate has. “We don’t want a huge gap between our requirements and the candidate’s qualifications,” Yan says. “As long as the person fits our requirements, chances are we are less concerned about their language proficiency levels.”
Of course, it’s always good having an expatriate who understands and speaks the main language spoken in the host country, say both the Chinese and Singaporean HR practitioners.
“The person can straight away immerse in the work, the culture and the people and break down all the barriers,” Lim says.
But foreign talent should take note warns Yan.
“The chances of us hiring him or her might decrease if there are others who fit both our requirements and the language needs,’’ he says.
Working in China
Contrary to popular belief, not all employees who work in a foreign land will receive an extravagant compensation and benefits package. If they were hired through the recruitment fair SPD is in, for example, they would be considered as localised expatriates. In other words, foreigners would be paid according to their job level.
That’s the standard policy the bank follows. “If you accept our wage structure, please come apply for the job,” Yan says. “Otherwise…”
With more than 18,000 employees to take care of in China and Hong Kong, Yan says dispensing any sort of special privileges is “a form of protection” for the expatriate. Otherwise his or her job security would be affected by the economy and also, possible resentment from local employees.
But the bank will give the expatriate a longer period to adapt and acclimatise to the new work environment. Together with new local hires, expatriates will attend an onboarding program to understand the company’s history and organisational culture. Yan would also hire a tutor to help expatriates overcome the teething period. Help or advice would be provided if needed.
But they might have to look for their accommodation. They would not receive any additional allowances as well. But as Yan explains the bank would include a certain sum for housing in the expatriates’ salary package.
As for other little obstacles a foreigner might face in a new country, Yan is confident that the foreign talent he hires will overcome them. “After all, they are mature adults,” he says. “Moreover, the environment in Shanghai now has become suitable for expatriates. It’s no longer closed up or backdated. It has become internationalised. Its quality of life is suitable for most foreigners.”
Kennametal’s expatriate assignees in China, on the other hand, will be paid according to their home country’s social benefits because Chinese labour laws are not applicable to foreigners.
“If I send someone from Singapore to China, we will continue to contribute to his CPF (Central Provident Fund) because it follows Singapore’s social benefits policy,” Lim says. “Also, it is not mandatory to contribute [in China].”
But companies based in China do have to contribute to local employees’ statutory social benefits such as housing, insurance and medical. There is, however, an area where Singapore and China might differ in expatriation. It’s the matter of providing spousal allowance. “We have yet considered this factor,” Yan says. “In our next step in hiring overseas talent, we are definitely going to face such a problem.”
Yan predicts the spousal allowance issue will be a huge focus for HR professionals in China to consider in the next few years. While it will be dependant on the type of talent Chinese employers hire and how prevalent the issue will be, Yan feels “this is a problem that will emerge soon enough”.
“When we want to hire foreign talent, they might wish to bring their partners over,” he says.
But Yan says this would be a good learning curve for the human resources management standards in China, as well as raising the capabilities of both his peers and himself. “This is good for our profession. We can improve further as HR professionals,’’ he says.
The brainwashing approach
It’s not only in China where companies will be challenged when sending expatriates there on assignments. There are similar challenges HR will face when relocating someone to an emerging market or a non-English speaking country in Asia. China, India and Japan may not be under Nash’s areas of HR responsibilities, but nevertheless, there are similar challenges she would face when relocating someone to an emerging market in Asia, for example, Singapore.
“While the cost of living and the cost of salary are relatively high, the tax is relatively low [in Singapore]. It means generally speaking people can have a nice quality of life,” Nash says. To move someone from such an environment to an emerging market can be challenging from not only a lifestyle perspective, but also an affordability perspective. “People want to see their base pay and their [compensation] package stay the same or increase, while actually it costs less to live in some of the emerging markets,” she says. “So it can be hard to attract people from a compensation perspective to move from Singapore into emerging markets.”
Preparation also has to be done in advanced. Communication between the intended expatriation candidate and the company has to start “at the very early stages”, because expatriate assignments are very expensive and the company must ensure the right person is being selected, explains Lim. Kennametal recently sent two employees, one from Europe and the other from another part of Asia, to China on a two-to-four-year assignment. The moves were completed only after one and a half years of planning, starting from the twice-a-year global talent reviews and succession planning.
After forecasting the number of expatriates her company would require to fill the talent gap, Lim would begin regular conversations with star employees about their development plans. She would propose some possible overseas assignments with the candidate and talk to them about why going for these assignments would help them advance in their careers.
“We try to ‘brainwash’ people that if you want to be successful, you need to have some global experience or overseas assignments,’’ she says.
Nash believes in using the candidate’s personal career goals in the art of persuasion. Microsoft would explain to the selected candidate how the international assignment fits into the individual’s career plan and where it believes realistically their longer term potential is going to take them within the organisation.
“We look at the right job to accelerate their readiness and development for that ‘aspirational’ position and if that move includes out of the home country,’’ Nash says.
Family first
The selected candidate might be willing to relocate to an emerging market in the APAC region, but HR professionals must always take into account how the candidate’s family might react to the move. The family’s happiness could make or break the success of the international assignment planned for the employee. “The only thing that will affect the person’s success [when relocating] is not the employee themselves,” Lim says. “It’s always the family because they couldn’t adapt to the new environment.”
Nash agrees with Lim that this is a challenge. “It is always a challenge to find people at the right stage of their life to accommodate and be willing to make a move,” she says. Nash understands the difficulty seeing she was sent over from the US to work in Singapore only year ago. “There is a lot of dependency around children and spouses who may have jobs which they are committed to,” she says. “So the timing is really important as well as the location and the package.”
Whenever a family is unsupportive of the employee taking up any global assignment, Lim will encourage the employee to follow the family’s wishes. “Or they will be torn apart,” she says. Having experienced a relocation case where the expatriate had to return to his home country because of family unhappiness, Lim says Kennametal has always placed its employees’ families as top priority during any relocation talk. “We always encourage them to bring along their families even though it is very expensive,” Lim says. “We believe that in order to be successful, you need a family’s support in a foreign land so they can have a peace of mind.”
Once language issues and family concerns are sorted out, the expatriate will have no problems adapting overall because they will be working for the same company with similar practices and organisational culture.
Seeing the bigger picture
The fact of matter is the amount a company pays for top talent hasn’t been reduced because of the recession. But sending talent on international assignments remains a costly affair. Full expatriate packages would always be offered to candidates whom Microsoft believes have “potential for bigger roles” or to fill the talent gap in the particular market. “People that are really top talent have remained the top and they command top dollar. We continue having to recruit and pay for talent,” Nash says.
Likewise, senior managers in China take home roughly the same salary amount as their counterparts in Singapore, Hong Kong, the US and Europe, says Lim, because there is a talent shortage in China. What she saying is it doesn’t mean you get to pay an expatriate manager less simply because you are transferring them to a perceived lower-cost country.
It’s ensuring the total compensation and benefits package given reflects the expatriate’s new responsibilities in the host country and is sufficient in supporting the expatriate and their families’ lifestyles over there as well. “So even though we may be moving somebody from a higher cost of living location to what they may perceive as a lower cost of living location, what we would offer someone still allows them to enjoy a lifestyle and earning potential within that local market. We don’t just ‘throw more money’ at them,’’ Nash says.
There are, of course, employees who are interested in taking on overseas opportunities and would initiate the move themselves. In that case, they would receive localised packages.
Whatever the reason for expatriation, Nash says it’s important for companies to maintain “an ongoing, but very purposeful investment in the retention, motivation and the development of top talent”. How you manage your portfolio of people now, she says, could be crucial for the future.
