Turnover of young professionals in China: how companies retain graduates

The German companies in China surveyed named job hopping as the most frequent reason for dissolving employment relationships with young Chinese employees. For the first two years after hiring, the study gives a share: 25 percent of the employment relationships with young professionals dissolved in this period ended because the young employees resigned to take up another position.

The report describes the Chinese labour market of the time as strongly shaped by turnover. According to the report, changing employers, sometimes across industry boundaries, was particularly common among young employees. They knew about the shortage of qualified junior staff and used it for career opportunities and salary jumps.

The study does not state how many of their young professionals the companies lost overall. It asks about the reasons why employment relationships ended within the first two years, not about the share of hired graduates who left during that time. A turnover rate therefore cannot be derived from the figures.

The study does not give an amount. It does, however, describe the environment in which every separation means starting over. One third of the companies surveyed were unable to fill all the positions they had advertised for graduates in the two years before the survey, especially in technical areas and in research and development. Companies often had to compromise on the qualifications they wanted. According to the report, competition for the few talents drives salaries up and makes recruitment and employee retention more difficult.

When a young professional leaves after one or two years, the company therefore loses more than a worker. The search starts again, in a market in which some positions remain unfilled anyway. Onboarding also starts again, and whatever the company has invested in the person's development up to that point goes with them to the next employer. The report notes that turnover makes personnel development more difficult.

In its introduction, the report points out that finding and keeping qualified staff, alongside rising labour costs, has for years been described as the greatest challenge for companies in the Chinese market. For the workforce planning of a subsidiary, this means: retention belongs in the same calculation as recruitment and onboarding.

The study distinguishes between two kinds of reasons for separation, and for retention it is worth looking at them separately. In the case of resignation for another position, the initiative comes from the young professionals. In the case of poor performance, the employment relationship ends because expectations and performance do not match.

For this second case, companies mainly cited a lack of specialist and methodological knowledge (23 percent). Less frequently cited were a lack of social skills (14 percent), a lack of confidence in practical work (13 percent) and personal competences (12 percent). Companies cited intercultural problems least often, at 7 percent. The report lists these shares individually; it does not contain a complete breakdown of all reasons for separation.

Separations for performance reasons can be addressed through selection and onboarding, because that is where the causes companies cited lie: a lack of method, a lack of confidence in practice and a lack of social skills. Which competences take priority in the first months is described in the article on onboarding of Chinese graduates. Why cultural explanations fall short here is shown in the article on error culture in Chinese teams.

The report names two motives: career opportunities and salary jumps. Both are linked to the shortage of qualified junior staff, which, according to the report, young employees know about and use to change jobs.

On salary, a company competes with all other employers looking for the same talent. The report describes this competition as a driver of rising salaries. Anyone who seeks retention through salary alone enters this competition without setting its rules.

The career perspective, by contrast, is something a company shapes itself. This includes young professionals recognising what development is possible in the company, what they need to learn for it and who supports them along the way. The study did not examine how much such a perspective reduces the willingness to change jobs. It does, however, show where development can start: companies saw learning competence and commitment as comparatively well fulfilled, and responsibility, problem solving and decision-making as clearly weaker.

The study contains no results on this. It surveyed the importance and fulfilment of 37 competences, satisfaction with the graduates hired, problems in recruitment and the reasons for separations. Whether and how companies retain their employees, and what works, was not part of the survey. Statements about the effect of individual measures cannot be derived from the figures.

The study was carried out by transformis and East China Normal University (ECNU) in Shanghai, with support from the German-Chinese Business Association. From 7 September to 2 October 2015, 3,500 German companies operating in China were invited to an online survey, and 218 data sets were included in the analysis.

The report was published in 2017. The figures describe the situation at that time. The study does not measure how the labour market for young professionals in China has developed since then. Methodology and individual values are presented in the article on the employability of Chinese university graduates.

The following approaches describe how transformis works, not results of the study. In its research cooperation with ECNU, transformis designed a programme combining leadership development and the development of junior staff. It is intended to help Western companies find suitable junior staff, integrate them into operational work processes and retain them in the long term. Retention thus stands at the end of a chain that begins with selection.

Finding is about fit. Recruitment methods from other countries differ significantly from Chinese practice. transformis supports companies in achieving the best possible fit between their own requirements and the competence and personality profile of the candidates.

For integration, transformis relies on its own onboarding concept for young Chinese professionals and on the analysis of junior staff potential. Using a concept developed in the cooperation with ECNU, managers identify this potential. transformis enables them to build on it a development plan aligned with the requirements of the organisation and to evaluate its effect regularly. This makes it recognisable to young professionals what development the company has in mind for them.

In transformis' approach, the manager is a central lever for retention. Certified ZRM® coaches enable managers at the first, second and, where necessary, third level to develop the self-management competences of employees and especially of young professionals. This is done through an individually tailored sequence of systemic analyses and coaching sessions. In action-oriented workshops with elements of the German dual vocational training system, managers learn to link the development of junior staff with value-adding activities.

In transformis' understanding, working together improves the relationship between managers and junior staff. This is the programme's contribution to retention: it helps to retain high potentials and talent in the company in the long term. Elements of sùzhì, a holistic educational approach derived from Confucian educational teaching, strengthen working relationships because managers and young professionals learn through acting together.

For the management of a subsidiary, this raises a question of responsibility. In transformis' approach, retention is not a task carried by the HR department or the salary budget alone. It arises where young professionals work every day, in their collaboration with their manager.

transformis has had its own office in Shanghai since 2011 and has worked with ECNU since 2013. For subsidiaries in China, transformis supports the recruitment of skilled staff, analyses the potential of junior staff and offers the programme for leadership development and the development of junior staff as well as an onboarding concept for young professionals. The full offering is described on the page China consulting.