Curbing job-hopping by Asian managers: The challenge for U.S. multinational companies
Chapel Hill -- Job hopping by Asian managers at rates of 15-18 percent a year costs U.S. multinational companies (MNCs) in the region time, money and key business contacts, according to a recently released study by management professors at the University of North Carolina at Chapel Hill's Kenan-Flagler Business School.
"The costs to companies of high turnover go far beyond those of attracting scarce managerial talent," says Kenan-Flagler's Dennis A. Rondinelli. "A Thai executive often takes several other subordinates when he or she leaves a firm, perhaps requiring the company to reconstitute an entire management or operating unit.
"And in Thailand and Singapore, where business success depends heavily on interpersonal social networks and business contacts, companies can lose valuable relationships not only among managers within the firm, but also with customers and supplier," he said. "Thais and Singaporeans generally dislike doing business with people they do not know, and might switch their business to another company when a familiar and trusted executive departs."
A mix of targeted recruitment tactics, training, rewards and recognition may help multinational firms stem the tide of job-hopping executives.
Rondinelli and colleague William J. Bigoness studied the economic, social and cultural factors underlying high managerial turnover at MNCs in Thailand and Singapore where retention problems are most acute, and identified tactics adopted by some MNCs to solve the problem. Their research included interviews with chief executives and human resource managers at 17 MNCs --in Thailand and Singapore, including Microsoft, Burson-Marsteller, Johnson & Johnson, AT&T, Bechtel International, Dow Chemical Company, Mobil Oil, KPMG Peat Marwick & Suthee and 3M.
Causes of Turnover
Asian managers switch jobs for a variety of reasons, the study found.
"Younger, educated Thais and Singaporeans see job-hopping as a jump start to leading the good life," said Rondinelli. "Often they can at least double their compensation by switching jobs, which allows them to attain the material indicators of success--a car, an apartment of their own and the financial ability to marry--that have become important in their consumer-oriented societies."
Job switching often is motivated by the desire for more responsibility and a higher level title, which gives them the status and prestige that are crucial to Asian managers' self-esteem. In addition, many young Thais and Singaporeans join MNCs to get experience and "learn the trade" before joining their family businesses. They use the MNCs as training grounds and to build contacts before leaving to join existing family businesses or to start new companies.
Other factors include the lack of satisfying social relationships within the company, insufficiently prestigious perks, the belief that career ceilings exist for local nationals within a foreign company, and a preference for working for national companies.
Tactics to stem the tide
Many of the U.S. MNCs studied have adopted tactics to retain host-country managers. The following are among the most frequently-used methods:
* Targeted recruiting. Several companies have adopted targeted recruitment tactics, such as using employees' contacts, friends, relatives and school-mates to find candidates. Mobil provides scholarships to Thai universities from which it asks faculty to identify promising students who can later be recruited. Other companies participate in job fairs in Thailand and the United States to identify potential Thai recruits who are familiar with American culture and business. Dow Chemical hires new graduates from Thai or foreign universities and trains them for specific positions. AT&T recruits Thai students in the United States with technical expertise and provides on-the-job managerial training. Microsoft, which recruits on the basis of competency testing rather than on experience, seeks people with knowledge of information technology and who are passionate enough about the industry to want to stay with a market leader.
* Education and training. Nearly all of the U.S. MNCs studied offer education and training, which young managers view as crucial steps on the career ladder. Johnson & Johnson brings in consultants to offer courses and provides about 10 in-house training programs a year to managers. Mobil Oil arranges for managers to take English courses on company time. Thai managers working at Dow Chemical have the chance to work in Hong Kong or Singapore if they seek broader global experience.
* Career ladders. Demonstrating well-defined career paths gives young Asian managers confidence that they can advance quickly to the top levels in foreign-owned companies. Some companies offer compressed career ladders in which the "manager" title can be conferred on young recruits after six to nine months, and in which they can attain increasingly impressive titles every 18 to 24 months.
* Job autonomy. Young professionals seek responsibility and autonomy as indicators of status, value and potential. As a result, some companies are developing job requirements that give Thai managers responsibility and autonomy in job assignments at early stages in their careers. IBM in Singapore emphasizes the entrepreneurial opportunities in its operations throughout Asia and structures jobs to encourage entrepreneurial initiative.
* Performance rewards. Thai and Singaporean professionals thrive on recognition and rewards. They also are very sensitive to negative feedback and critical performance assessments. In response, U.S. MNCs set up programs that give overt signals to managers about their value to their companies Mobil Oil created a "President's Award" for outstanding contributions by Thai managers. Because the "manager" title is extremely important for young Thai professionals, many MNCs confer the title on people working in sales, technical and administrative positions as quickly as possible.
* Team building. Because both countries' cultures place a high value on "family" work environments, Mobil Oil, AMROP International and Hewitt Associates encourage managers to treat their colleagues as part of their extended family. Mobil Oil and Microsoft use team-building to develop bonds among managers and with workers. Mobil also encourages managers and employees to work together on outside activities that contribute to the economic and social development of Thailand. It provides opportunities for managers to participate in the Thai Business in Rural Development in which businesses "adopt" a rural village and help develop or improve small businesses and other economic activities. Managers participate enthusiastically, and the work with the village builds bonds among them and with Mobil. Several U.S. MNCs in Thailand recognize the need to create a more relaxed working environment than they would in the United States. The Thai concept of sanuk defines a congenial workplace as one in which managers and workers do their jobs in a social environment in which they can socialize, laugh, joke and gossip. Overly stressful, restrictive or tedious work environments can lead Thai managers to seek jobs in companies that better understand sanuk.
* Competitive compensation. Companies offer attractive compensation packages, staying above the median, offering attractive bonuses and raises and providing fringe benefits that meet or exceed the country's standards. Tradition in Thailand and Singapore dictates paying managers a 13-month bonus, but many MNCs pay additional bonuses when profits are good or when there is a danger that valued managers might be lured away.
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Copies of the study may be obtained by contacting Rondinelli, director of the Center for Global Business Research at Kenan-Flagler's Frank Hawkins Kenan Institute of Private Enterprise, 919/962-8201.
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