Chinese small firms focus HR policies on retention

Small-to-medium sized companies (SMEs) in China were found to have focused their HR efforts on selection and recruitment, performance-based remuneration and employee involvement in decision-making.

by The International Journal of Human Resource Management
Last Updated: 23 Jul 2013

Foreign-related firms in China use a wider range of HR practices than collective and state-related firms. As might be expected, HR management (HRM) in Chinese SMEs reduced staff turnover and created greater levels of staff commitment.

However, 'social benefit' factors such as social security schemes and the exercise of trade union power did not always have a positive impact on staff, probably because employees associate such schemes with the old regime.

Financial incentive schemes were found to have a better impact on motivation. The study also showed that development and training did not have a significant impact on staff performance.

This may be a phenomenon specific to China. The SMEs covered by the study may not offer effective training (which is expensive for companies this size), which would explain why employees were not motivated by this factor.

The firms in the study may have concentrated on retention policies to secure staff commitment. SMEs in China may be right to focus on such methods to drive their company forward. However, they should also develop good training and develop programmes to improve employees' skills, and thereby drive up performance levels even higher. 

An empirical study of high performance HRM practices in Chinese SMEs
Connie Zheng, Mark Morrison & Grant O'Neill
The International Journal of Human Resource Management, Vol 17 No 10,
October 2006 

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