research paper

China survey summary – September 2011

Navigating the new rules of engagement

UK survey summary 2

About What’s Working™

Mercer’s proprietary What’s Working™ survey, which examines employee views on work, was conducted over the last six months among nearly 30,000 employees in 17 markets, including more than 2,000 workers in China. The survey, last conducted in mainland China (China) in 2004, includes more than 100 questions on a range of work- related topics and reflects the overall demographics of China’s workforce in terms of age, gender and job level. This research is also being conducted in Hong Kong.

China survey summary 1

Mercer research confirms: Careers top pay for employees in China And, one in three is seriously considering leaving his or her organization

New Mercer research shows a mixed picture of the current state of employees in China. While they are less committed to their employers and less satisfied with many aspects of work compared to six years ago, there are signs of great strides in improvement.

On a down note, one-third of employees in China are looking to leave their organization at the present time. At the same time, 65% of employees are proud to work for their organization, up from 55% in 2004. Another concern is apathy: nearly 25% who didn’t commit to staying or leaving are the least satisfied and engaged of all.

So, what do employees want? The two most important elements of the employee value proposition are career and base pay, followed closely by supplemental retirement savings plan, training and bonus/incentive. While base pay is the most important factor for women, workers aged between 35-54 and non-management employees, career advancement is the top value proposition for men, managers and employees aged under 34.

China rebounded strongly after the latest economic downturn and has experienced more than 9% GDP growth for the first half of 2011 with an estimated 9% wage inflation for 2011 (Q1 2011 Mercer China Monitor Report). At the same time, China is facing an acute labor crisis. This is putting pressure on companies to attract, retain and motivate top talent in an environment with double-digit turnover.

As some economies slowly improve and the Chinese economy continues on its strong path, new job opportunities will emerge for employees in China. However, employers in China will face even greater risk of losing valued talent (to local and multinational competitors, to expanding companies in western China and globally) and face productivity and morale

issues among employees who remain. In addition, there is the emerging generational tension as Millennials enter the workforce in growing numbers – more than six million per year – bringing with them wholly different expectations regarding work.

Mercer’s What’s Working™ survey validates what employers have sensed or even seen in their own employee survey data: Employees are not happy, especially with regard to their organization and quality of its leadership. It also confirms that the employment relationship currently resides at a critical inflection point. An engaged workforce is more necessary than ever but, at the same time, more difficult to achieve, due in part to ongoing financial pressures that limit organizations’ investments in potential solutions and to effects from some organizations “throwing money at” talent acquisition.

of  employees  are  seriously  considering  leaving

In  China,  

1 3

Overall, 34% of China’s employees are seriously considering leaving their organization at the present time, up from 18% in 2004. This is fairly consistent across gender, but of those agreeing, 39% are 35-44 year-olds – an important pool of future leaders.

This comes at an important time when companies in China are reporting that talent retention and development is their top concern. Currently, it appears many are losing this battle. According to the Mercer 2010 China Attraction & Retention Survey, turnover for 25-29-year-olds is 70% but still around 40% for all others. In Mercer’s 2010 Q1 China Monitor Survey, the top four reasons for local labor shortages are shortage of local labor supply (34%), company’s rapid recovery/expansion (23%), more attractive base pay in other companies (18%) and labor mobility to other regions (18%).

This highlights the number of serious issues facing Chinese organizations and the importance of understanding employees’ sometimes contradictory attitudes about engagement, careers, pay and more. For example, workers say they have pride in their

Engagement by numbers

Percentage who agree

Among those not seriously considering leaving

Among those seriously considering leaving

Among those who responded “neither”

Personally, I feel that I am treated fairly in my organization 79% 71% 38%

I am proud to work for my organization 76% 70% 38%

My work gives me a feeling of personal accomplishment 79% 75% 47%

I would recommend my organization to others as a good place to work 79% 78% 43%

I feel a strong sense of commitment to my organization 75% 71% 41%

I believe that I have a long-term future with my organization 80% 72% 43%

Apathy also is evident among almost one- fourth of China’s employees. While 34% are seriously considering leaving and 43% said they are not, 23% did not commit to either option. This disaffected group scored lowest on engagement-related questions. (See Exhibit 2)

2China survey summary

20042011

0% 10% 20% 30% 40% 50% 60% 70% 80%

65% I am proud to work for my organization

0% 10% 20% 30% 40% 50% 60% 70% 80%

I would recommend my organization to others as a good place to work

Considering everything, I am satisfied with my job

I am satisfied with my organization

I feel a strong sense of commitment to my organization

55%

71% 62%

69% 70%

64% 72%

66% 80%

Exhibit 1: Engagement scores – up and down

Exhibit 2: Disaffected employees post lowest engagement scores

organization, but when asked about their personal engagement, scores fall sharply in the Mercer survey. (See Exhibit 1)

The takeaway for employers: A clear understanding of “what’s inside employees’ minds” represents an important step in developing a blueprint that skillfully combines existing approaches with innovative ideas to improve engagement, performance and productivity.

Following are highlights of Mercer’s new What’s Working™ China survey findings, organized into seven content areas that represent the way employees view the employment relationship.

3China survey summary

With wage inflation soaring in recent years, China’s workforce has enjoyed substantial pay increases, which is partially responsible for employees saying that career is now their top value proposition element, especially for men, people in management positions and workers aged below 34. At the same time, however, career development policy is their top reason for voluntary separation, according to the Mercer 2010 China Monitor Q2 Report. In 2008, base pay was the top reason.

While employees in China say their organization has done a better job in providing opportunities for growth and two-thirds of the employees say they can take time to participate in training offered by companies, employees overall say their company is doing worse regarding career management, promotion and developing people to their fullest.

My career

0% 10% 20% 30% 40% 50% 60% 70% 80%

Career advancement

0 50 100 150 200 250

Training opportunities

Bonus or other incentives

Supplemental retirement savings plan

Base pay

Working for a respectable organization

Supplemental medical insurance coverage

Wellness programs

Paid time off

Flexible work schedule

Longer-term leave

Type of work

Tuition reimbursement

Exhibit 3: Employee value proposition elements – a priority ranking for China’s employees

The millennial problem

Younger Chinese employees are most likely to leave their organization, according to the Mercer study, with 39% of employees aged 24 and under and 36% of employees aged 25-34 considering an exit, versus 34% of the employee population overall. But, these younger workers, in contrast, score highest on satisfaction with careers. In this age group, 76% say they have sufficient opportunity for growth and development in their organization (versus 68% overall); 67% say promotions are given to the most qualified (63% overall); 78% believe they have a long- term future with their organization (69% overall); and 60% are satisfied with career opportunities (50% overall).

The younger employees in China are more demanding and less patient. They focus more on promotion opportunities, learning and development, incentive/bonus, the type of work they do and long-term career potential than other age groups. While they may be happy with the organization, they also are quick to leave for the next available opportunity with a higher title, better incentives and interesting work. Young workers also are motivated to leave from watching their peers leave and rejoin organizations with much higher pay and faster promotion. To attract and retain these young workers, organizations must focus more on making work continuously interesting, provide timely acknowledgement supported by China-specific title structures and develop incentive schemes that are in sync with the competitive external market.

20042011

0% 10% 20% 30% 40% 50% 60% 70% 80%

68% I have sufficient opportunity for growth and development in my organization

0% 10% 20% 30% 40% 50% 60% 70% 80%

I am confident I will be able to achieve my long-term career objectives in my organization

My organization is doing a good job of developing its people to their full potential

My organization is doing a good job of retaining its most talented people

Promotions are generally given to the most qualified employees

55%

69% 63%

64% 66%

64% 70%

63% 67%

Exhibit 4: Career development scores mixed

Pay is one area where China’s scores for men and women differ. Women are more satisfied with base pay than men (54%/51%) and also view base pay more favorably as a value proposition element. This is also true for job level, as non-managers view base pay and bonus more favorably in their value proposition compared to their managers and senior managers.

Of those seriously considering leaving their organization, 56% are satisfied with their base pay compared to 66% among non-leavers. However, of those not sure about leaving – the disenfranchised – only 22% are satisfied with base pay.

4China survey summary

Base pay ranks second in importance in the employee value proposition, coming in just below career advancement. Base pay is the most important factor for women and employees between the ages of 35 and 54.

China’s employees cite low satisfaction with pay, as 52% say they are satisfied with their base pay and 51% say they are satisfied with their incentive pay. Regarding pay for performance, employees are less satisfied than six years ago, though their knowledge of pay for performance, pay issues and performance appraisals has jumped.

Of those employees seriously considering leaving, their satisfaction scores on base and incentive pay are 10 and eight percentage points, respectively, lower than those who prefer to stay. There are similar differences on questions about their performance being recognized (12 points lower for those leaving) and workers who felt they were paid fairly given performance and contributions to their organization (16 points lower for those leaving).

Overall, Chinese employees say they are motivated, but their satisfaction drops sharply when asked about their specific pay. For example, though 91% say they are motivated by their incentive plan, only 65% say they are paid fairly given their performance and contribution (down from 70% in 2004); this sentiment about pay fairness drops to 62% when compared with others performing similar jobs, down from 74% in 2004. (See Exhibit 5)

20042011

0% 10% 20% 30% 40% 50% 60% 70% 80%

0% 20% 40% 60% 80% 100%

I have had a formal review or performance appraisal in the past 12 months

I am personally motivated by my incentive compensation plan

I understand how my pay is determined

My performance is recognized when I do a good job

My performance is rewarded when I do a good job

My last performance appraisal was helpful in identifying actions to improve performance

I am paid fairly given my performance and contributions to my organization

I feel I am paid fairly compared to other people performing similar jobs in my organization

80% 36%

91% 91%

80% 79%

79% 73%

61% 65%

94% 85%

70% 65%

74% 62%

Exhibit 5: High scores but decline in satisfaction with performance management

My pay

5China survey summary

Supplemental medical insurance coverage ranks sixth for employees among value proposition elements, and employees’ satisfaction with benefits has decreased sharply. Their relative low level of importance may be attributed to the fact that benefits only account for about 5% of total compensation, and many organizations fail to adequately communicate their role and importance. For example:

51% agree that the benefits provided by their organization meet their needs

52% say benefits played a significant role in their joining the organization

55% say they play a significant role in their continuing to work there

A total of 50% rate their benefits program/package overall as good/very good, down from 58% in 2004; and 53% say their benefits are as good as, or better than, those offered by other organizations in their industry, down from 69% in 2004. On this last question, scores range from a high of 63% for those 55-64 to a low of 48% for those aged 35-44.

As benefits increase in importance and organizations look to improve employee satisfaction, organizations can expect a rise in employee demand for more flexible benefits plans that can address individual needs. In fact, 50% to 60% of participants expressed their willingness to reduce the value of some benefits received and increase the value of other benefits, or even to use some of their own money to pay for improved or new benefits that are important to them. This has become apparent in the decreased satisfaction levels for current packages: an eight percentage point decrease in satisfaction with the current benefit package and a 16 point decrease in perceived benefit competitiveness.

My benefits

Supplemental retirement savings plan today ranks as the third most important element of the employee value proposition for China’s employees. Although those in their later years place particular importance on this element, younger employees express similar opinions. While many other markets in the Mercer survey show greater concern for retirement prospects in older workers, this is reversed in China. Ongoing problems with the retirement savings status quo in China are receiving more attention in recent years from industry, the public and government – further underscoring the survey results.

This is at a time when benefits, as a whole, are playing a more important role in terms of both attracting and retaining employees. Employees give credit to their employers for communicating information about benefits (66% in 2010, up from 61% in 2004), however, satisfaction with retirement benefits is quite low. (See Exhibit 6)

Of those seriously considering leaving their organization, 62% feel their organization is doing enough to help them prepare financially for retirement. However, of those not sure about leaving, 21% say their company is doing enough.

My retirement

0% 10% 20% 30% 40% 50% 60% 70% 80%

0% 10% 20% 30% 40% 50% 60% 70% 80%

They agree that they are doing enough to financially prepare for retirement 57%

They are satisfied with their retirement benefits

45%

They agree that their organization is doing enough to help them prepare for retirement

41%

Exhibit 6: Retirement readiness in doubt

6China survey summary

My job Employees in China give good scores to their organization for tools and training opportunities: 66% say their manager actively encourages them to participate in training provided by their organization, up from 54% in 2004; and 91% say they have the equipment or tools to do their job well, up from 86% in 2004.

When their own managers enter the equation, scores drop drastically from 2004:

68% today say their department/work group is well-managed, down from 77%

76% say their manager has authority to effectively manage their department/group, down from 86%

59% agree that managers demonstrate concern for employees’ wellbeing, down from 72%

My company Two-thirds of China’s employees believe that quality of leadership is very important in motivating and retaining employees. While 71% say they would recommend their company as a good place to work, up from 62% in 2004, other questions – specific to senior management – saw a marked turn for the worse. (See Exhibit 7)

20042011

0% 10% 20% 30% 40% 50% 60% 70% 80%

85% In my organization, teamwork and cooperation are encouraged

0% 20% 40% 60% 80% 100%

In my organization, teamwork and cooperation are rewarded

I trust senior management in my organization to communicate honestly

Senior management of my organization does a good job of confronting issues before they become major problems

I believe the organization as a whole is well-managed

80%

70% 66%

65% 66%

67% 74%

68% 75%

Exhibit 7: More team work, poor management performance

Of those seriously considering leaving their organization, a greater number have concerns about their company’s ability to compete in the future, to serve its customers and to deliver high quality. (See Exhibit 8)

Percentage who agree

Among those not seriously considering leaving

Among those seriously considering leaving

I am confident that my organization will be successful in the future 86% 74%

I believe our current strategy/direction will make us more competitive in the future 82% 75%

My organization has established a good reputation for quality of products 86% 77%

I believe that I have a long-term future with my organization 85% 76%

Exhibit 8: Leavers have concerns about company’s competitiveness

Flexible work schedule did not even break the top 10 value proposition elements for employees in China, and while satisfaction and importance scores relating to work-life are respectable, they are also substantially lower than in 2004.

Sixty percent say their organization provides them with the opportunity to work flexibly; 71% agree that they are able to maintain a healthy balance between work and personal life, down from 75% in 2004; and 66% agree that the amount of work they are asked to do is reasonable, down from 81% in 2004.

My life

7China survey summary

UK survey summary 9

For more information, or to see What’s Working™ survey findings for other markets, visit www.mercer.com/insideemployeesminds.

Key contacts

Miranda Shu Shanghai [email protected]

Liqun Liao Beijing [email protected]

Kate Bravery Hong Kong [email protected]

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