Monday, December 3, 2012

Finding Talent in Asia - Shanghai vs. Tokyo

image: Speedhawq

Frank Mulligan is an experienced HR and Executive Search professional with over 17 years in China.  He has interviewed and placed hundreds of Chinese professionals in China and abroad. Currently he is teaching China Human Resources at China's premier MBA school, the China Europe International Business School (CEIBS).  I had an opportunity to ask him a few questions regarding Recruitment and Talent Acquisition in China.

How has the Executive Search business been in China recently?   

Frank:  Over the years the business has become both more sophisticated, and more competitive. Each factor leads in a different direction, so for example you see the increased sophistication in the deeper recruiting process that companies are running, and this leads to better assessment of candidates.
At the same time there is huge competitive and price pressures that push people to take shortcuts, such as skipping stages in the recruitment process or hiring cheaper, less-experienced staff to do the search and assessment of candidates. In some ways it's a very schizophrenic market here in China, so it's nice to be on the other side of the fence, teaching human resource issues to China's elite HR and non-HR professionals.

Howard:  I see, yes, that`s very refreshing to hear.  In Japan I think a handful of companies are trying to pursue the same hiring and performance model by implementing some sort of intellectual and behavioral testing to see if the candidate is the “Right Fit” for the company.

How does it compare to when you first started recruiting in China?   

Frank:  No comparison whatsoever. Fees were high, and companies were desperate to hire. We used to say that all you needed to get a job was the ability to speak English, and a pulse. Now things are very different for 3rd party recruitment companies. Now they have to find candidates who can deliver for the hiring company. If they don't, somebody else will.

Howard:  To some extent, I think the same is true in Japan.  You`ve seen a slight drop in fees for companies working with agencies, around 5 - 10% drop over the past 5-years.  I believe this is partly to do with other countries charging lower fees, and, the ability to reach out to candidates directly on Linkedin and other Social Media sites which obviates the need for Recruiters completely in some cases.  You did not have this prior the boom in Social Media and sites like Linkedin.

How have you sourced for candidates in the past in Shanghai, and, what methods have worked for you in terms of filling critical roles for your clients?   

Frank:  In the past everyone sourced the usual way, with target lists, networking, advertising etc. Recruiters tended to be the kind of people who were able to create a large social networks. But these networks tended to be smaller, and based on strong ties. Now the big change is the use of social networking sites, and this extends the recruiter's ability to develop more weak ties. Of course weak ties are the ones that deliver on information issues, such as people's names, title, phone numbers etc.  The other change is the use of Sourcing Teams that plan ahead and hire before time. They use social media sites quite extensively.

Howard:  In Japan, I would say its more industry specific.  There is a growing population of mainly technology professionals who are using Social Media.  Other industries like Pharmaceutical, Manufacturing or Insurance, etc. still prefer networking the old way, with, as you say, target lists, networking, advertising, which makes it challenging and time-consuming to source and find people for searches.

Do you think that recruiting has changed in China since the advent of Social Media?  According to William Chin, who runs the AsiaHR Blog, there has been a marked increase of Branding and Advertising of Jobs through Social Media in China.    

Frank:  The biggest change in China, and pretty much everywhere, is clearly the use of social networking sites, especially Linkedin. You can see that companies are now dis-intermediating recruitment firms with Linkedin. I mean, why pay a search fee when you can buy access to over 100 million middle-class professionals on Linkedin? The whole site is built around a Resume so when you want to search it is surprisingly easy to go from 100 million people to that one Program Manager that you are looking for. If, like some of us, you have a very big network on Linkedin, you don't even have to pay for that access. Coincidentally, social networking is the subject of my PhD, so I have been looking at the impact of social networking/social media on business outcomes.

Howard:  Interesting, yes, I think what you say is true.  I`m interested to see how this develops and changes HR and Talent Acquisition strategy as a whole.  My belief is that recruiting still requires time investment, so, it behooves companies to hire, train and retain people who are capable of going through the entire Recruitment Lifecycle if they don`t want to rely on 3rd-party recruiters in the future.  Its and issue of time and education, does the SVP, VP or hiring manager have time to do his or her own recruitment?   

What recommendations would you give to Foreign Capitalized companies who are looking to expand and ramp up their workforce in China in the future?      

Frank:  As the Hitchhiker's Guide to the Galaxy says, 'Don't Panic!'.  The Chinese economy is likely to move very soon to its next phase of growth, with lower percentage GDP growth and an emphasis on high quality in that growth. So the chaos in the hiring market is likely to abate. I would even suggest that the shift is happening now, but the real change will come after the big meeting in Beijing, when the leaders feel confident enough to make the necessary changes. They want to move from 'Made in China' to 'Innovated by Chinese' but that will take enormous changes in terms of social, technological, economic, and yes, even political issues. Those decisions have to be made at the top.
In respect to ramping up workforces, China is not that different from any other country, no matter what people in China keep telling you. The same rules apply. So, start by spending the time to specify the job clearly. Writing a JD on the spot doesn't cut it. But broadly, companies need to anticipate their hiring need and incorporate the high turnover in China into those figures. Then they need to assess candidates in some detail. 

I'm not a big fan of interviews because the correlation with on-the-job success is not that high, but I think a number of companies do a better job here. These companies bring the candidate, or candidates, in for full day assessments of their skills and fit. Some have a blackball system where one person's negative vote rules the candidate out. Others just agree the best candidate. Whichever way they do it, the advantage that I see is that they spend time with the candidate, and see them 'in the wild' so to speak. Interviews are notoriously biased, and can be gamed by people who's only offering is the fact that they interview well. It's hard to game the system when the 'interview' is taking 8 hours, and involves 4-6 'interviewers'.

Howard:  Very well put and said.  I think blackballing or making a judgement or fitment of an individual based on one-person`s perception or views is very wrong.  They need to take a cross section of past workers, people in the industry and combine that with assessment testing to see if the candidate will work well or not regardless of which country you`re in.

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