School work

1. IHRLR 6600 Cornell University
Lingmin Li
April 24, 2012

2. Similarities
 Hyper-growth Market
Source: tradingeconomics.com

3. Similarity
 Talent Shortage with High Turnover Rate
- India: 54% in 2010 thinking of quiting VS 26% in 2004;
- China: 34% VS 18%

4. Can Multinational Companies
Treat India and China with
the Same Talent Strategy?
Question

5.  Data Sources
 2011 Mercer “What’s Working” Survey
- Compensation Planning 2012 report
- India: What’s Working Summary
- China: What’s Working Summary
 2011 Community Business - Bring the best of Asian talents
 2010 Hay Group – Rewarding China
 2011 Towers Watson – Incentive Plan Design Practices (Summary Results from
2011 Asia Incentive Plan Design Survey)
 2011 Worldatwork - Leading the next wave of growth in Asia
 2011 Blessingwhite - Employee Engagement Report
 2011 Hewit Consulting – Trends of Global Employee Engagement

6. Talent Strategy
Attracting Talents
Engaging Talents
Talent
Strategy
Rewarding Talents

7. Talent Strategy _ Attracting Talents
Employee Perception of MNCs
India China
 Professionalism: streamlined processes  Flat org, democratic leadership:
and structured organizational hierarchy Advance based on performance
 Emphasis on training and development  Opportunities for training and
Positive for fresh graduates development: fast-track programs for
 Exposure to international practice HIPO staff
 Interacting with people from different  Exposure to international best
cultures and backgrounds practice
 Constant need to educate HQ staff
 Policies made by people without good about China: given that MNCs
understanding of Indian market frequently change staff structure
Negative  Slow decision-making process  Glass ceiling to long-term career
 Training provided through collective success
programs, not by hands-on experience  Sense of missing out the immerse
growth of China

8. Talent Strategy _ Attracting Talents (Cont’d)

9. Talent Strategy _ Attracting Talents (Cont’d)
India China
Clear Preference for MNCs No Clear Preference for MNCs
Gen Y – Choosing Future Employees

10. Talent Strategy _ Engaging Talents
According to Blessing White’s Employee Engagement Report 2011:
Only 31% of workers worldwide are engaged;
India has the most engaged (37%);
China has the least (17%).

11. Talent Strategy _ Engaging Talents (Cont’d)
Employee Value Proposition (2011)
India China
Career advancement Career advancement
Base pay Base pay
Training opportunities Supplemental retirement savings plan
Type of work Bonus or other incentives
Working for a respectable Supplemental medical
organization insurance coverage
Bonus or other incentives Working for a respectable org.
Retirement savings plan Wellness programs
Flexible work schedule Type of work

12. Talent Strategy _ Rewarding Talents
Benefits & Compensation: India and China are quite similar
Rapid economic growth
India
Inflation rate: 9.5% (3/2012)
9.5%
Rapid economic March 2012
growth
Rapid economic growth
Inflation China
Inflation rate: 9.5% (3/2012)
3.6%
March 2012
Skyrocketing Pay Increase
& Pay progression

13. Talent Strategy _ Rewarding Talents (Cont’d)
 Two-step pay progression trends
 Another reason for high turnover: Pay Dispersion
- China: 300% (200% for US)
- India: N/A, but figured third in 2008

14. Talent Strategy _ Rewarding Talents (Cont’d)
Poor Implementation of “Pay for performance”
- No distinct difference in pay between high and average
performers
- Paying poor performers wage increase
* Top companies pay high performers twice the increase as
average performers and poor performance is not rewarded
MNC’s
Challenge “Internal equity” Problem
- Hiring new people at higher wages than most of the loyal
employees receive leads to de-motivation and encourages
disloyalty
- Fair pay between old employees and new hires

15. Conclusion
Common Talent Management practices for India and China
• Ensure Asian representation at senior levels to show the company’s strong
Career/
commitment to Asian market
Leadership
• Localize low/mid-management to create a pipeline for senior leadership
• Market pay alignment is essential to attract the right people in highly
competitive labor market.
• However, to retain people, MNCs need to look at total reward elements,
such as career, work-life balance and benefit.
Comp &
• Increase the pay gap between high performers and average performers to
Benefits
over 20% (the minimum threshold for bonus differentiation to be effective)
• To balance pay-for-performance and internal fairness, MNCs should
manage transparent processes to justify pay differences like job sizing and
grading, and communicate compensation policy openly with employees

16. Conclusion (Cont’d)
Specific Practices for India
• Offer more opportunities of overseas assignments, and build global work
Globality environment to attract Gen Y in India
• Enlarge employees’ exposure to global best practices
Empower- • Allow decentralized decision-making and wherever possible involve
ment local managers in India.
Non-financial • Despite financial factors, pay great attention to employees’ engagement
Engagement factor such as career advancement, meaningful and challenging job,
Factors and training development opportunities.

17. Conclusion (Cont’d)
Specific Practices for China
• Emphasize internal promotion and training opportunities instead of
Internal
overseas assignment, to attract and retain talents
Promotion
• Brand the company with strong commitment to Chinese market
• Provide language and culture training for key local talents
Culture
• Sign long-term expatriate contract
Diversity
• Reflect Chinese culture on recruiting and evaluation standards
Financial • Address financial engagement factors (base pay, retirement benefits
Engagement and incentives) and career prospect to motivate employees
Factors