Higher Education Inflation

For this blog entry, I would like to tell you about the start of my career. Specifically, I would like to tell you the story of my first full-time role after graduating from university.

It was 2002 and I had just graduated from the University of Hull. After spending four years in academia, I was keen to cut my teeth in the real world. Having finished with a good degree I was expecting to find a well-paid challenging job within a prestigious organisation. I figured this would be no problem. Unfortunately, I was wrong. You see in the late 1990s and early 2000s university enrolment in the UK increased dramatically, just as it has in China in the past 5 years. This meant the UK began to experience something we could term 'higher education inflation'. Suddenly, a degree was no longer worth quite as much as before and, crucially, it no longer guaranteed a great job and a higher starting salary.

This was the situation that confronted me and many of my classmates. We were all expecting to find great jobs, but alas, there were just not enough of these for everyone. The situation was so bad that many of my friends were forced to take low-paying temporary jobs whilst they searched for the perfect role. Eventually, I was lucky enough to find something. However, it was far from being my dream job. It was a role in the sales and marketing division of a major British newspaper company. The position was not quite as senior as I was hoping and the pay was good, but not great. Therefore, I was unsure whether to take the position, but eventually, I was swayed by desire to finally end my job-search and also by the offer of a shiny company car.

The manager who hired me was named Mick Butcher. If I were to describe Mick, I would use the term 'old school'. He had been in the business for many years. Even though this meant that many of his methods were rooted in the 20th rather than the 21st century, he had quickly grasped the changes in the British job-market. He realised that for a job which previously demanded just A-Levels (qualifications taken in the UK prior to attending university), suddenly could require a degree. Mick took full advantage of this, using the shiny company cars to lure myself and two other graduates to his team.

In terms of pure recruitment, this was a master stroke. However, in the longer-term, the plan was found wanting. Fast-forward 18months and all of us had left. Why? The key reason behind this - and a fact that Mick failed to realise - was that with graduate qualifications come graduate expectations. My colleagues and I wanted training, we wanted development opportunities and we wanted the chance to earn more money. None of which we got.

So, how does my story apply to China? The clearest link is higher education inflation, which in China might better be termed better as "higher education hyper inflation". The number of graduates in China is mushrooming. This year, literally hundreds of thousands of graduates will leave university and face the prospect of not finding a job. Possibly the best example of this took place in Zhengzhou in late 2006 when a recruitment fare descended into chaos as hundreds of students stampeded in an effort to get a lead on the best roles on offer. In many respects, this situation is fantastic news. It means that (a) you will be able to fill more roles with highly-educated young people, and (b) you will have a far wider choice of candidate. However, this is only fantastic news if you manage the situation correctly. Getting your graduates aboard should be just be the beginning!

The danger for many organisations is that, because the graduate recruitment market is weighted so much in favour of employers, many companies grow complacent. After all, if there are so many graduates out there, they should be grateful for any opportunity they receive, right? Wrong! Once you have the best possible graduates on board, you need to keep them and, more importantly, you need to develop them. The crux of China's hyper inflation is that you must use it as a way of planning for the future. Currently, we have a situation where experienced talent is scarce, but determined and highly educated young potentials are plentiful. In China as a whole, this situation will not change quickly. However, for your organisation, you could speed things up.

I recently completed two different sets of training at multinationals in Tianjin, which had adopted fantastic approaches to their graduate recruitment. Both had decided to aim high, very high. They had hand-picked their graduates from some of China's top universities. As I began training these graduates, it did not take me long to realise that not only were they well-educated, but their communication skills and English levels were also fantastic. I must admit, I was surprised to meet such young employees with such ability, and I explained as much to the HR manager at one of the organisations. She replied:

"Oh yes, I know. We filtered out hundreds of candidates to find them."

"Oh, really? So you must have high hopes for them."

"Absolutely! We envisage them playing a major role in our organisation over the next ten years. I truly believe some of them will take senior management roles."

"10 years? Wow! That really is long term planning. But, with all the turnover in China right now, aren't you worried about losing them."

"Not really. We are giving them a fantastic opportunity. We plan to provide extensive training, to give the opportunity to work overseas and to enjoy very competitive financial rewards."

It was fantastic to see such a clear vision. The two organisations had certainly not fallen into the same trap as my first employer. They understood the opportunity presented to them and realised that by offering great development opportunities, they could nurture their new graduates to become future leaders. I did, though, have one final question for the HR manager:"Training, good salary and overseas travel - wont that be expensive.""Of course, but only in the short-term. To recruit senior managers is becoming outrageously expensive. In the long-run, if we can grow our own talent, this process will actually save us money!

Drinking from China's Talent Pools

I first came to China in the autumn of 2005, just in time for the National Day celebrations. However, being new to the Middle Kingdom, I had no idea just what the Golden Weeks were like for travel. I had planned to leisurely travel around the country enjoying the fine weather and discovering a fascinating blend of culture. However, as I am sure you can imagine, I found traveling a particularly difficult prospect. The trains were packed to the rafters and air tickets were being hawked at premium prices. Therefore, I spent most of my time stranded in Beijing, before eventually snaring a bus ticket to Shanghai.

My brief stay just over three years ago may have been ultimately disappointing, but it whetted my appetite for China - I knew I would soon be back. And, so it was. Fast forward a few months and I landed in a cold foggy Beijing just in time for Spring Festival. This time though, everything was planned out like a well-oiled machine. My friend Ossie and I were to stay in Beijing for the fireworks and holiday fun, before spreading our wings and exploring the country on a wider scale. We tramped our way around several fantastic cities. However, one I remember with greatest clarity is Hangzhou. We stayed there for two misty, drizzly days admiring the West Lake and the ancient buildings that surround it.

I certainly have fond memories of Hanzghou because of the wonderful traveling memories it provided. However, having worked in the HR field here in China for the past two years, my memories of Hangzhou now also affect me in a different way. The job-market in China right now is a little like Hangzhou – imagine it as a city built around a lake. Actually, imagine it as a city built around two lakes. Or rather, a country built on two talent pools.

The first of these pools is full of fresh graduates in the first year or first few months in the job-market. This pool is deep and overflowing. To give you a practical example of this, statistics in Beijing released in 2007 estimated that over 200,000 would graduate that year. However, just 87,000 could expect to find jobs requiring university degrees. The other pool though, is almost dry. Employees with strong qualifications and – crucially – rich experience are thin on the ground (sorry for mixing my metaphors a little there). A McKinsey Global Institute survey in 2006 estimate that in the upcoming 10 years China will need 75,000 MBA qualified managers, of which – at the time – it possessed just 5,000.

These two frighteningly dissimilar pools are the reason why today organisations in China are fighting one of the fiercest talent wars the world has ever seen. Over my next few blog entries, I will focus on just this – war for talent.