It's Amazing How Emphasizing One Word Can Change the Way People Work

DIANA CHIU, TALENT VICE PRESIDENT - NEXT HORIZON

Diana Chiu has successfully run human resource departments for multinationals in China - but don't call her an "HR Vice President". Disdainful of the word "resource" and its implication of staff as commodity,this US-educated native of Beijing, instead sees herself as a "talent manager."

It may be just semantics to the cynic, but Chiu's sensitivities, firmly rooted in her training and education as a career counselor, have a proven payout: In her most recent position running HR for a fast growing finance & accounting service business set up by a global management consulting firm in Guangzhou, employee turnover ran consistently at half the industry average.

"THE WORKPLACE DOESN'T HAVE TO BE MONEY-DRIVEN AND
HYPER-COMPETITIVE TO WHERE PEOPLE ONLY THINK THEY
CAN GET AHEAD BY STEPPING ON TOP OF EACH OTHER"
- DIANA CHIU

"The workplace doesn't have to be money-driven and hyper-competitive to where people only think they can get ahead by stepping on top of each other," explains Chiu, who also has a masters degree in economics. "At Next Horizon, we are creating an environment where people feel they have a stake in building something meaningful. In places like China, we are breaking new ground in terms of employee participation plans and professional staff development."

The decision to set up a multi-client finance service center in China was an easy one for Next Horizon. Not only has its management team developed time-tested tactics to attract and retain staff in China and counter the notoriously high turnover, but they view the Middle Kingdom as a bottomless talent pool, with five million university graduates in 2007, 25 percent more people than New Zealand's entire population.

The Best Recruiting Grounds in the Universe

In addition to Guangzhou's proximity to Hong Kong, Next Horizon choose the Pearl River Delta to set up shop for its concentration of educated people, high standard of living, and the province's historically outward-looking nature.

The Pearl River Delta Region contains 85 million people, which puts it ahead of Germany in terms of sheer size. What makes the region even more attractive is the fact that it contains an extraordinary wealth of foreign-language speakers as a result of the region's colorful economic and colonial past.

"The region contains the former British colony of Hong Kong and the Portuguese colony of Macau - which is remarkable in itself." says Reilly. "Both cities are magnets for workers from around the region and around the world. This coupled with the solid industrial and educational foundations in Guangzhou, also known as Canton, makes this a very attractive labor market."

"BOTH CITIES ARE MAGNETS FOR WORKERS FROM AROUND
THE REGION AND AROUND THE WORLD. THIS COUPLED WITH
THE SOLID INDUSTRIAL AND EDUCATIONAL FOUNDATIONS IN
GUANGZHOU,ALSO KNOWN AS CANTON, MAKES THIS A VERY
ATTRACTIVE LABOR MARKET." - TOM REILLY

Amongst China's 22 provinces, Guangdong is the wealthiest and also has one of the highest concentrations of universities. China-wide, the number of annual college graduates, according to the Ministry of Education, has grown 20 percent since last year, and for 2007 is expected to reach five million people.

"In terms of labor cost the region is also very competitive, principally because the annual supply of university graduates in China far outpaces the demand", adds Reilly. "Guangzhou is one of the 'big 3' cities that students want to move to. Shenzhen, about 45 minutes from Guangzhou by Train, is another student magnet."

"Our office is smack dab in the middle of the best recruiting grounds on the planet," continues Reilly. "Today, China's workforce is highly mobile, and many are attracted to the province's high standard of living."

Reilly also notes that Guangzhou natives possess an open mind, having traditionally sought opportunity outside, products of their history. That's because Guangzhou - unlike the typical China city experiencing only recent hyper growth - situated on the Pearl River and courtesy of its deepwater port, has conducted business with the West for the past four centuries.

"Hong Kong's abundance of strong middle managers is also a key to the success of the region. These are people with truly world-class experience," says Reilly. He points out that Hong Kong natives are perfectly suited candidates, both exposed to best practices at multinationals and culturally equipped to work in China. As Guangzhou is only an hour and a half commute away, it's no small sweetener for managers to be able to work in China yet maintain their home and family in Hong Kong.

Recruiting the Right Stuff and Optimizing the Workforce

In such an abundant labor market, sifting the most talented of graduates is no simple endeavor. Chiu emphasizes the importance of the person as much as the piece of paper, the resume. It's about finding young persons with the gift of character. "On paper, college graduates can all look the same," she says. "The personality is as important as the education."

Diana's approach has her structuring interviews more like a casual conversation than a checklist of cliched questions. Combining her profound academic knowledge of human behavior and proven experience of having put into practice her ability to understand and motivate people over the past 15 years in her "talent manager" role, she seeks insights of the bigger picture. "How do you become who you are?" she asks. "I'm looking at the factors that impact human development."

Chiu: Conduit to Corporate Cohesiveness

While Chiu's approach may be unconventional to some, her results are similarly exceptional: Annual employee turnover approaching single digits in an industry that can exceed 50 percent.

Chiu, whose master's degree in counseling concentrated on career counseling, also serves as the link between management and staff, a conduit to corporate cohesiveness. "My role is to be out there among the workforce, to be in tune with their emotions, to monitor what they're reacting to, and then ask the relevant questions - on a daily basis."

"COMPANIES MAKE THOUSANDS OF DECISIONS YEARLY YET
STAFF WON'T CHIME IN OR DISAGREE. THAT'S HOW
COMPANIES GET INTO TROUBLE." - DIANA CHIU

"Communication in companies in China happens through informal networks," explains Chiu. "People ask questions informally - not as in town-hall meetings but more through small groups or one-on-one among peers. Companies make thousands of decisions yearly yet staff won't chime in or disagree. That's how companies get into trouble. "

Precisely in Chiu's role of part career counselor, part ombudsman, part shoulder to lean on, does Next Horizon CEO Tom Reilly recognize and appreciate her true value.

"Most companies hire a 'HR Manager' in China who knows the rules. They focus on hiring a HR head who is an expert on China labor and wage law, which is an approach that only perpetuates employees' fixation on wages," Reilly says. "In lieu of a policeman to enforce rules, we have Diana instead focusing on staff communication and development."

"The key is to focus on the whole person and encourage them to grow, rather than the typical China trap of focusing only on pay," explains Reilly. "It's about communicating a clear career path for people and demonstrating this through upward mobility, ample training opportunities, and a work environment that is inspiring, respectful and fair."

Training Programs: Building Competencies and Commitment
While an ambitious survey conducted on 10,000 Chinese staff of multinationals in the mainland by consulting firm Watson Wyatt a few years back shed light on the fact that pay was merely a "hygiene issue", in that every company needs to have it but it is far from a key determinant to employee commitment, HR departments haven't necessarily been listening.

"Most of the foreign companies in China miss the boat," says Reilly. "They talk about training but then don't pay enough attention to it. Education is deeply valued in China and employees respond very well to career development. They jump at every training opportunity. We treat people like they have a career, a future." Next Horizon for instance puts its holistic philosophy of helping staff professionally mature into action by sponsoring employees to obtain their CIMA (The Chartered Institute of Management Accountants) credentials, by both providing time off and offering to pay for the course. "Education is of paramount value in Chinese culture." says Chiu. "Staff members view training as an important part of non-salary compensation and are extraordinarily motivated by training opportunities - to an extent not appreciated by many Westerners."

Softening the Impact of High Employee Turnover

While in China's major cities, annual turnover at multinationals can exceed 50%. Reilly and his team have consistently operated at a quarter of that. Even so, much of their corporate strategy is designed to handle high turnover.

"You have to plan for it, to budget for it," says Reilly. "Best to manage it, not to try to stop it. Staff turnover can actually be managed in way that helps avoid wage creep and constantly brings new ideas and energy to an organization. We've use some very simple techniques to make this happen."

For one, Next Horizon measures two categories of turnover. Turnover for "preferred employees", those identified as management material, is targeted at 0 percent. As one means to earn employees' allegiance, Next Horizon fast-tracks preferred employees out of clerical roles within two years. The remainder of staff are meanwhile budgeted at 25 percent turnover.

Not only is turnover built into the business model, but Next Horizon strategically manages the timing of the turnover. Yearly bonuses are handed out end-April, coinciding with the early May graduation of next year's college crop. In anticipation of the fact that employees typically tender resignations after receiving their year-end bonus, Next Horizon is afforded the 30- days notice to plug the hole with the new talent pool.

Avoiding Mindset Creep: Staff as People, Professionals, Not! Factory Workers

For Next Horizon, the treatment of staff is borne of the philosophy of how the company fundamentally perceives itself. "Many outsourcing firms and their clients have a preconceived notion, an incredible bias, about the work that is done, that it's all rote, menial tasks," says Reilly. "The analogy is that we're equal to a factory - that's why a site visit or office tour is called a factory tour.

"IT'S A REAL CREDIT TO OUR STAFF. THEY HAVE A REAL
ENERGY AND EXUBERANCE - LIKE ANYONE STARTING THEIR
CAREER. THEY WANT A LONG-TERM CAREER PERSPECTIVE
AND DIRECTION IN LIFE IN GENERAL, SO THEY RESPOND TO
DIRECTION IN THE WORKFORCE" - TOM REILLY

" Unfortunately, when you're hooked on the wrong analogy, it not only gives the wrong idea but it creates a mindset that can influence how one treats the staff. People assume the workers are low skilled when in fact they're highly educated in their field and also happen to possess strong language skills."

"(Overseas) Visitors are blown away that we're like an accounting department anywhere in the world," says Reilly. "It's a real credit to our staff. They have a real energy and exuberance - like anyone starting their career. They want a long-term career perspective and direction in life in general. So they respond to direction in the workforce. Ignore it, and you're at the mercy of the annual planning cycle."

As Reilly sees it, Chiu's ultimate role is to optimize the workforce. "Foremost, Diana understands people's desires and she knows what career paths are available for people who are part of Next Horizon," he says. "So when it comes to recruiting for example she's able to select those with the right ambitions and desires and then channel a tremendous amount of raw talent in the right direction ."



For More Information:
E: diana.chiu@nexthorizon.com
T: +852-3105-3168