High staff turnover is a major challenge across China's IT industry, straining HR administration and payroll teams. Companies must raise their game to address the underlying issues.
The IT industry in China has suffered high employee turnover rates for many years, making HR administration in this sector one of the greatest challenges of doing business in China. The response has been to increase salaries at far higher rates than in developed markets but is this the answer?
Top issues driving high employee turnover rates
Money is certainly not the only issue. Research has shown that 35% of employees leave companies in China due to lack of career progression, with 22% seeking a new challenge and only 13% moving to seek more money.
Further factors come into play, with major domestic companies setting an effective age limit on software engineers, favouring workers under 30 . If workers have not progressed into management roles by then, they are often dispensed with, further exacerbating turnover. On top of this, the 996 working pattern we discussed recently and operated by the major domestic IT companies, leads to a conflict with personal life once workers get married and start a family, often leading to software engineers seeking a role in less demanding environments.
The impact on HR administration
High employee turnover puts considerable strain on HR resources. Recruitment is a time-consuming function and a continual process in larger companies. Due to the increased workload that this imposes on HR staff, onboarding new staff and induction planning is often badly managed, demotivating staff from day one. At the other end, exit processes are often skipped and reasons for leaving not gathered and understood. If morale in HR departments in low, it is likely to be low across the company. Investing in local professional administrative services, particularly through peak periods, can help to correct shortcomings.
Learning lessons to manage for success
Onboarding: First impressions are crucial to setting the tone for the future, so HR staff need to focus their onboarding processes to be welcoming, informative and encouraging for new joiners. Wherever in the world the onboarding takes place, the best programmes find the right balance between global technology and local representation.
A local presence is essential for country set-ups, ensuring all the relevant corporate, HR, payroll and benefit forms are completed and new employees are registered with the proper regulatory agencies. Stay focused on the human factors by reaching out and engaging employees. A local HR professional can make the impersonal, personal – from relocation to onboarding to professional development. Engaged employees are more productive, passionate and loyal.
Formalised exit: A good exit process not only reduces legal and security risks, it helps you gain honest feedback on where to improve the organisation and it leaves the door open for departing “star” employees to return. In the case of voluntary departure, it’s important to learn why an employee is leaving. Exit interviews are a critical step in gaining such knowledge and most effective when done in person.
Family friendly policies
Firms should consider offering family-friendly policies and take advantage of the stresses imposed on workers by companies that employ the 996 model. Experienced IT staff seeking a better work life balance are valuable assets and firms can gain an advantage by adhering to the Labour Law on working hours and by extending some benefits that cover families. Experienced IT staff understand project lifecycles and can readily retrain as technical skills need to change.
High turnover rates in the IT industry are not just about money. HR teams should take the lead to reduce high turnover rates among highly skilled IT personnel by carefully planning onboarding processes, developing lifetime career plans for workers and taking feedback from leavers. HR administration is sometimes treated as being solely about compliance with labour rules and regulations. Far from it, it is about creating a working environment that is supportive and encourages staff to want to commit to the company for the long term. Companies need to invest in their HR teams, whether in-house or with the aid of a professional services provider, so that there is time to achieve positive gains across the business and drive business success.
Talk to TMF Group
TMF Group can help you to implement policies and procedures throughout the HR and payroll functions from onboarding through the full lifecycle to employee exit and help you to understand your responsibilities under the Labour Law. TMF China has a team of experts ready to help with all HR and payroll, accounting and tax, corporate secretarial and regulatory issues. Want to know more about our services? Talk to us.
As a global leader in administrative services, TMF Group assesses jurisdictions for business complexity each year. Although China has improved since our last review,it remains one of the most complex countries in which international companies do business.
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