Management Grab

In fast-growing China, multinationals are scrambling to attract and retain smart, bilingual executives. Here's how GE does it

Sophia Zhu knows about being wanted. When the Beijing native graduated from the People's University in Beijing six years ago, she was deluged with job offers from multinational companies. An economics and international trade major, Zhu could have picked from a number of Western-based outfits working in China. Instead, she chose General Electric Co. (GE ). What won her over wasn't the pay (other companies offered more). She picked the employer that would help her rise fast in one of the most competitive and potentially lucrative economies in the world. "They talked about development opportunities and gave a very clear path to career growth," says Zhu, now 28. Surprisingly, perhaps, she's still there.

As companies scramble to establish a foothold in China they have encountered a daunting stumbling block: people. There just isn't enough top-tier local talent to fill the escalating need for professionals, technical experts, and managers in Chinese operations. A 2005 McKinsey & Co. study estimates that Chinese companies will need 75,000 business leaders who can work in global markets over the next decade or so. As of late last year, there were 3,000 to 5,000 Chinese executives who fit that bill. Add to that a desire among many Chinese professionals to increase their paychecks and positions as fast as possible, and it's clear that competition for talent will only intensify. In a global survey of 4,500 leaders by consultancy Development Dimensions International, Chinese executives emerged as particularly ambitious. "You see title inflation and raises of 50% to 60% a year," says DDI Senior Vice-President Richard S. Wellins.

China presents unique challenges for foreign employers. Along with the usual barriers of language, training, and cultural fit, China has the added factor of the decade-long Cultural Revolution, which brought the education system to a virtual halt and ended only in 1976. "A whole band of people who might now be considered senior managers tragically had their education cut off," notes Joy Chen, who heads the Global China Talent Project for executive search giant Heidrick & Struggles International Inc. (HSII ). As well, there has been a talent drain to the West in recent years, and government-funded schools haven't focused on skills needed in a commercial enterprise.

When smart, bilingual Chinese nationals come along, they're often snapped up, quickly promoted, and, all too often, stolen away. GE Chairman Jeffrey R. Immelt estimates that executive turnover in China is at least twice the U.S. rate. "We're very diligent about opening up lots of doors for the best people," says Immelt, noting that foreign assignments help build loyalty.

That approach has certainly won over Zhu. She entered GE's financial management program, taking classes and working in spots like Japan. The company also gave her a mentor, leadership training, promotions, even access to Immelt through dinners and groups like the GE Women's Network. Now, she's on an 18-month assignment in Waukesha, Wis., as part of the global planning and analysis team for GE Healthcare. While headhunters have called to offer jobs, she doesn't want to leave. "I know I'll have a bigger role when I go back to China, and I see a great future here," says Zhu.

Because the Chinese market is so hot, she will probably nab the kind of opportunity that a twentysomething employee in the U.S. can only dream about. Heather Wang, who heads up human resources for GE China, says about 60% of the company's salaried employees are under the age of 35. And a position that takes five years to reach in the U.S. often takes only three years to get in China.

In a booming job market, money clearly matters. GE managers often dispense goodies like "a night on the town" -- awards of, say, $100 to take the family out after a job well done. Wang notes that GE staffers are particularly vulnerable to poaching at the three-year point -- after they've soaked up enough training and responsibility to be attractive to others but before they really are loyal to GE. "These people want to be a CEO in a few years," says Wang. Some don't like the culture, which emphasizes independence, multiple bosses, and team projects over a hierarchy with one boss.

What distinguishes GE are the efforts to make promising employees feel stimulated, recognized, and nurtured. "GE's value proposition is the system of things it can do for you," says University of Michigan professor Noel Tichy, who had a hand in developing that approach when he ran GE's Crotonville (N.Y.) leadership center during Jack Welch's era. Under Immelt, GE has opened a large research and training facility in Shanghai.

GE's China operations are filled with young people, but the focus isn't limited to that generation. Albert Xie, general manager for market development at GE Aviation China in Beijing, joined GE in 1997 and, at 45, has risen through several positions. What keeps him there: the people. "Almost every day, we go out to lunch together, and if someone's not ready, we wait," he says. "Money's important, but people are equally important."

Immelt is happy to hear that, as long as teams perform. But "it's almost impossible to stop turnover from being higher than in the U.S.," he says. Mentors, trips, and fun money can't always beat a bigger job and paycheck. "At the end of the day, we have to make sure our pipeline is full."

By Diane Brady and Dexter Roberts

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