Faced with lacklustre demand from developed markets, moderate GDP growth forecasts and rising salary costs, employers on the mainland are looking for innovative, but sustainable, ways to reward and retain employees.

Alan Pang, Aon Hewitt head of talent in China, says the pressure on companies to deliver strong revenue growth and profitability, mixed with high staff turnover rates, is prompting a review of talent-development strategies. “With rising salaries and staff turnover a major concern, employers are looking closely at the return they get from training and development,” he says.

Although there has been a notable slowdown in both salary and staff turnover rates, the recently released “Aon Hewitt Human Capital Intelligence Report” reveals an average mainland salary growth of 8.5 per cent and annual workforce turnover of 14.3 per cent – the highest in Asia-Pacific. And while China’s economy is still expanding, growth in 2013 is expected to be the lowest in 20 years. 

For 2013, Aon Hewitt’s data on turnover rates in the highly volatile sectors of retail, high-tech, and consumer products were 30.3, 23.2, and 19 per cent, respectively. The growing dominance of e-commerce is also pushing up salary levels and talent turnover. Currently, this sector is gripped by a talent war for product managers, mobile application engineers, data miners and analysts, designers, and platform developers. According to Aon Hewitt, the average salary growth across e-enterprises for 2013 was 9.8 per cent, while turnover was 29.6 per cent.

The survey covered over 4,000 firms in 40 industries, including high-tech, real estate, finance, medicine and medical equipment, automotive, consumer products, retail, chemicals, logistics, and manufacturing, in Guangzhou, Shenzhen and northern Guangdong, as well as in other second- and third-tier cities.

Pang also notes that foreign companies have become even more stringent in their efforts to control salaries, while domestic companies, which focus on the Chinese consumer market, are enhancing their salary competitiveness. Consequently, the salary gap between foreign and domestic companies is gradually narrowing.

“We are seeing the increments of pay scales for performance and bonuses in domestic companies becoming more aligned with those of non-domestic companies,” Pang says.

Employers are also revising training and career-development strategies, Pang adds, with more focus on areas with critical shortages of high performers and in-demand skills. These include marketing, R&D, customer service, market research and market planning.

Employers are also offering deferred bonus payments and incentive packages to promote loyalty. To boost productivity, firms are sending high-performers on short-term overseas assignments to learn soft skills, Pang says. “Companies are seeing the advantage of having people who can handle conflict resolution, solve problems and welcome challenges, instead of seeing challenges as a trigger to close a door,” he adds.

Baniel Cheung, an online marketing specialist and adjunct assistant professor at the University of Hong Kong’s School of Business, agrees that talent turnover is a major headache for the fast-moving consumer goods (FMCG) sector.

He says that while pay remains a crucial factor, employers are also focusing on work-life balance and career development opportunities to keep staff. “Employers are realising the importance of managing both short- and long-term employee expectations. Career development must offer tangible short-term and long-term advantages.”

Cheung notes that some FMCG firms are offering health benefits, courting staff feedback on workplace practices, and setting up sports and recreation facilities at work to boost retention.

“Companies that clearly demonstrate respect and employee appreciation also tend to build stronger engagement and staff loyalty,” he says.

As FMCG firms expand into third- and fourth-tier cities, they need to build a reliable “pool” of talent, Cheung adds.

To maintain a sustainable workforce, companies can use incentives to move experienced staff from first- and second-tier cities. While these top employees initiate operations, firms can nurture local talent to take over eventually.

“If employees see the companies they work for have a clear vision and provide them with career and work-life-balance incentives, they are more likely to show loyalty,” Cheung says.