How to employ talent in China
No two businesses are the same but there are many common
challenges. And high on that list is hiring. Because no matter what
industry you are in, finding the perfect candidate is never easy. Sifting
through resumes can feel like a minefield at times, and that’s often
only half the battle. As well as possessing the right degree of
knowledge and expertise on paper, the perfect candidate must also
be personable, able to see your company vision, and fit in with its
culture and ethos. With so many factors at play, hiring new employees
is never going to be an exact science – and that’s precisely why so many businesses admit to getting it wrong. On top of these universal challenges, there are those that come specifically from hiring in China – in the form of standard work contracts, understanding labor law, differing stipulations depending on employment contract type, and whether your business is a Representative Office or a Limited Liability Company. Let us get into what exactly you need to know when making a hire in China:
1. Finding the right talent:
Naturally the first step in making a great hire is to hunt down the right talent. Who is out there? The China labor market is as rich as it is varied but does still lack in certain areas. Highly skilled workers and specialists in certain industries are under-represented. Keep this in mind during your search and don’t settle for a candidate who doesn’t meet your criteria. To get some help, it is advisable to select a recruiter who can assist you with some of the legwork – either by getting your job advertisement out to a suitable audience or screening employees before they make a formal application. Fortunately, here in China, there are many such recruitment services available. No talent search can begin until the roles and responsibilities of the job in question have been thoroughly laid out and everyone involved in the recruitment process has a comprehensive understanding of what’s expected from a successful applicant.
2. Picking the right candidate:
There are two key parts to this process – candidates must be screened for both aptitude, attitude and language capabilities – particularly if you are looking for a bilingual or trilingual candidate (minimum Chinese and English language skills). The most effective way to tackle the first of these is to work to a checklist. Note down the key skills that the right candidate must have, then tick them off as you review their application. Any candidates who pass this stage can then be invited for interview where the second part, attitude, can really be examined. Consider employing differing interview techniques in China to see how your candidate responds – testing is important, and this is one of your few chances to see their reactions in a ‘live’ situation and more importantly in a face-to-face meeting (frequently HR managers or investors are not going to be based full-time in China). Keep in mind that this person will have to work day in, day out within your team. Even the most qualified of candidates can cause problems if they are not a good fit. Ultimately, you need to be confident either that the person you are interviewing could slot right into your start-up organization in China or that they are adaptable and affable enough to take on your company culture, which may be completely foreign to them, rather than bucking against it. This can be tricky to judge but asking about relationships with previous colleagues and employers – as well as time spent in previous jobs – can be a good way to get a read on how well a person adapts to “a new working environment.”
3. Sifting through the China employment laws:
You have found a candidate you think will be a great fit for both the role and your China company. Congratulations, the hardest part of the process is behind you. Now we get to China’s strict employment laws. Tackling employment law in any country can seem daunting, however if you follow the rules there is nothing to worry about. The main factor to consider here in China is that once you make a hire it is down to you to obtain your new hire’s signed employment contracts, work permits, residence visas (if applicable).
4. Draw up the contract and handbook:
All employees are required to sign an employment contract in China. The terms and conditions of this contract are governed entirely by the China labor law. This contract covers most aspects of employment, including hours of work, additional benefits and, for foreign hires, repatriation (if applicable). In terms of hours, China labor law stipulates a maximum of eight working hours per day up to a 40-hour week for most professions. A flexible working-hour contract is permitted for employees working in specific professions but must be applied for with the Labor Bureau. As for benefits, it’s important to understand what the norm is for local Chinese employees versus foreign employees (that are either seconded or hired on local contracts). There is one other important point to note regarding employment contracts. There are two standard types: limited and unlimited. A limited contract has a set commencement and completion date (though it can be renewed) and sees both parties fully compensated if the contract is terminated early by the other party. An unlimited contract, on the other hand, has no completion date and is therefore not for a specified period, and can be terminated for a justified reason at any time providing that 30 days’ notice is given. Employee handbooks are extremely important to have staff read and sign (albeit it is not required by law). The employee handbooks stipulate company policy and the rules that government behavior within the organization.
5. Social Insurance requirements in China:
Chinese law mandates employers provide their employees (Chinese or Foreign) “certain mandatory benefits”, including social insurance. China has five types of social insurance: pension, medical, unemployment, maternity and work-related injury insurance. The specific types of social insurance employers must provide and their contribution formulas vary depending on the employer’s location. Many foreign employers in China do not realize that failing to make full payments on required social insurance gives their employees the legal right to unilaterally terminate the employment agreement without providing any prior notice and then turn around and sue the employer for damages. Always pay the social insurance!
6. Helping your new employee settle in:
Always remember that the hiring process doesn’t end on your new employee’s first day. Nor is it ‘mission accomplished’ after the successful completion of any probation period. Settling into a new company takes time, especially for a new expatriate residing in China for the first time or a local Chinese employee that has never worked for a foreign investor before. It’s not surprising that some employment experts believe it can take over a year for a new employee to be fully productive. Of course, you’ll want your new starter to be performing a lot sooner than that. And, in most cases, they will be. But that is only possible if you have committed to giving them all the training, guidance and support they need in those all-important early stages. Because once you have overcome one of the biggest challenges – hiring new staff – you move straight on to another one: keeping them. To keep them it is recommended for senior employees to be trained in the head office to gain a sense of country, culture, philosophy and mission as well as meeting with colleagues that they will be working with daily albeit from a distance. Invest in your employees and they will invest in you!
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DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.