In China, employee turnover is excessively high, this for a number of rather well-identified reasons. In some industries, and especially in the high-tech sector, turnover can reach up to thirty, or, sometimes, even forty per cent per year, which, for years, has been one of the main challenges facing domestic businesses, leading to a very significant talent loss and thus to high friction costs, including training.
Although, from a Western perspective, China has mostly been seen as lagging far behind in management and HR practices, and sometimes still is depicted as having a “copycat sweatshop culture”, Tencent, a major Internet firm, surprised the human resources community in 2015 by receiving not one, but three Association for Talent Development (www.td.org) Innovation in Talent Development Awards.
An actively state-sponsored, and ferociously competitive environment, with specific aspects of traditional Chinese culture, including fewer constraints on customer, or employee privacy than in the West, have made tech giants such as Tencent, Alibaba and Baidu in a very short amount of time world class and cutting edge players in the big data and AI fields. It was only a matter of time before these companies would turn this finely tuned skill set to the management of their own workforce, which, in essence, along with data, is their core capital.
As early as in 2015, Baidu launched an internal experiment in which the company used information from a test group of employees for which the probability of departure was calculated (an employee attrition score). The score turned out to be extraordinarily discriminating, predicting well over 95 per cent of employee departures within a few months, enabling the company, in later incarnations of the initiative, to proactively manage employee attrition, and thus limit the loss of competitive talent to Tencent, Alibaba or to the myriad of hungry, and extremely aggressive local tech start-ups.
Tencent has used a similar approach with about a hundred data points per employee, including the content of emails, WeChat chats (Tencent’s own flagship product) and even the frequency of visits to the employee canteen. The company claims that it is able to predict employee departure within a month.
Then again, in the West, due to a similar competitive environment in the fierce war for scarce talent, American Big Tech, of course, is using the same logic in managing its own workforce.
Whether we feel comfortable with it, or not, the future of “human asset management” lies in the use of big data and algorithms, and the pioneers in the field clearly are those companies whose core business is human-focussed big data and machine learning in the first place, e.g. Amazon’s and Netflix’s recommendations, Facebook’s likes, and Google’s search results.
However, before launching such highly ambitious programmes in more traditional businesses, organisational maturity around employee information management, company-internal analytical capabilities, or simply the availability of relevant employee data, as well as the ethical and legal constraints to analyse them should be carefully assessed.
In any case, HR, inexorably, now is fully turning into a technology practice.
About the author
Douwe van den Oever is Head of Domainshift, an advisory boutique specialized in international organizational strategy development and founded in 2002, operating in China and Switzerland. He has worked for many years in corporate and organizational development, including infrastructure development (big data, risk management and distribution architectures) for companies such as Swiss Bank Corporation (merged later with UBS), Crédit Lyonnais/Crédit Agricole and Allianz, either directly or as an advisor. Douwe van den Oever is Dutch, was raised in France and has a MSc in pure mathematics from Leyden University in the Netherlands. He is fluent in English, Mandarin Chinese (written and spoken), French, German, Dutch and Spanish.