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Mainland lags behind West in HR excellence

Published on Friday, 19 Nov 2010

After decades of growth, China is showing signs of labour pains, with a shortage of workers on factory floors and, increasingly, a dearth of managers and executives to supervise sales and draw up expansion strategies.

More alarmingly, many mainland companies may not be equipped to handle their human assets to meet the demands of the 21st century. A survey of 100 large companies on the mainland, by consulting firm Aon Hewitt, revealed that only about half the respondents had clearly defined HR strategies aligned with business objectives.

"Our survey indicates that the relatively low maturity of HR functions in many Chinese companies may slow the double-digit growth we have seen over the past decade or more," says Klaus Liu, CEO, Aon Hewitt, Greater China.

The survey asked 114 companies from various industries to rank the effectiveness and efficiency of their HR systems on a six-point scale, with those getting an average rating of 4.5 deemed to be "HR Excellence" firms.

The survey found only 13 per cent of companies belonged to the top category.

Among key concerns of the sample companies are attracting and retaining skilled talent, developing leadership succession, boosting future skills and keeping employees engaged.

The survey also found only 14 per cent of the samples said they used a formal metric framework to gauge the effectiveness and efficiency of HR functions.

"How can HR functions become strategic partners if they are not able to demonstrate the value the function is delivering?" asks Piotr Bednarczuk, corporate transactions and transformations practice leader.

He says this issue is critical as businesses in China require support as they globalise, adding that China-based companies will need to invest aggressively in the next three to five years to boost HR systems and catch up with Western counterparts.

Bednarczuk sees a golden opportunity for HR professionals from Hong Kong to work on the mainland. "They can make HR more a strategic partner than a personnel-administration department," he says.

He adds China will need more business schools and education around HR. "China-based companies can also learn by establishing operations in Hong Kong, piloting new approaches and transferring them back to HQ," he adds. Rex Aguado

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