Foreign banks thirst for local talents
Sun Minjie, executive vice-president of Bank of East Asia in Shanghai, was happy that he didn’t have to offer too much money to find suitable staff for the newly opened Qingdao branch a year and half ago. An auditor he poached from an accounting firm in the city demanded only 5,000 yuan ($714.29) a month, compared with about 30,000 yuan for someone with equivalent experience and qualifications in Hong Kong.
Last month, that person quit to join another bank in Shanghai although Sun tried to keep him by hiking his monthly pay to 25,000 a month.
“What a difference 18 months made,” sighs Sun. But this is far from being a unique case. Job-hopping has become common among the local staff of foreign banks and other financial institutions.
“There are many cases like this one (among foreign banks in China),” says Sun.
The fight for qualified talent in the financial sector, especially in Shanghai, has initialized a massive restructuring of executive pay scales that are extending to many other sectors.
Following the full opening of the nation’s banking sector in late 2006, overseas lenders are embarking on a rapid expansion in China, but the race for qualified and experienced workers might slow their pace.
In a survey by PricewaterhouseCoopers last year, 40 overseas banks polled said that finding and retaining good personnel was the second-most difficult job in the Chinese banking industry.
Twenty-five banks will more than double their China staffs by 2010, according to the survey, while six plan to add more than 1,000 employees over the next three years, and three will hire 3,000 people.
Of the 40 banks that polled, 35 percent recorded annual staff turnover rates between 15 and 20 percent. Only a small group of large international banks have been able to keep that rate below 5 percent.
It’s not hard to find someone with lower qualifications in the market, Sun says, though what the overseas institutions really need are experienced and trained workers to support their rapid growth.
Yet for large international banks, frontline workers are among the most needed. But rather than an ample supply of young graduates, experienced people are what banks really need because they are supposed to work in a sector that not only stresses innovation but also risk management and control.
“There is an escalating need for staff, especially frontline workers, to support our fast-expanding retail banking business,” says Paula Ko, head of human resources at Standard Chartered Bank (China) Ltd.
“The demand is so fast and huge, and happens across the country,” says Ko, whose bank doubled its China staff from about 2,000 in 2006 to its current 4,000.
To handle the need for proper personnel, the London-headquartered bank has transferred some workers from its corporate department to retail banking.
But for the long run, Standard Chartered’s China consumer banking head Christine Ip says the bank will rely on both campus recruitment and poaching from the market.
In addition to those who have direct contacts with the customers, skilled personnel are acutely needed for new businesses that foreign banks are carrying out, bankers say.
Personnel familiar with wealth management, private banking, credit cards and treasury departments are all needed.
HSBC, one of the largest financial groups in the world, made the race for private banking professionals more intense by launching offices on March 31 in Beijing, Guangzhou and Shanghai.
The bank expects to grow the number of its private banking managers from 9 – all local Chinese – to 18 by the end of the year, and to about 40 shortly after that.
What HSBC needs are mature, intelligent professionals who have a lot of networks in China, says Yvonne Hsin, deputy chief executive of HSBC’s private banking for Asia.
Declining to comment on how much the bank is willing to pay or at what the talent shortage in China is costing the bank, she only says HSBC will stick to “benchmark prices” on the market and stresses that people the bank hires will be trained in both China and overseas.
Foreign institutions are taking steps to find and retain their best employees with diversified recruitment drives and significant salary boosts.
Standard Chartered keeps a close eye on salary fluctuations in the job market to keep salaries for its own employees competitive.
It has also diversified approaches to recruit candidates from universities, head-hunting agencies and job fairs, while enlisting the ones recommended by colleagues and people from outside of the banking industry.
At smaller overseas banks, which are at a disadvantage when competing with larger rivals, measures are being taken to counter the personnel gaps on the Chinese mainland.
“It is critical to build a pool of talent as we grow our business in China,” says Leong Wai Leng, chairwoman of OCBC China, a Singapore-based bank.
“People are our most valuable asset.”
Aiming to grow its China staff from 300 to over 1,000 by 2010, OCBC uses a three-prong approach to attract and retain talents.
For starters, the bank recognizes and rewards employees for outstanding performances, as well as grooming them for leadership roles in the bank.
“Our compensation package is geared towards rewarding our high performers through differentiated incentive compensation schemes, where we offer our high performers performance-based bonuses and various other incentives in addition to the market-oriented and competitive base pay,” Leong says.
To attract employees, OCBC started several programs to allow employees to pursue a career in different divisions in order to help employees evaluate their strengths during their first 3 years with the bank.