DONGGUAN, China—After years of offering production bonuses and other financial incentives to boost employee loyalty, TAL Group this year tried an unconventional tactic at its factory here in southeastern China: holding a "Sewing Olympics."
The manufacturer for such companies as Burberry Group BRBY.LN +0.38% PLC and Brooks Brothers Group Inc. had workers race to cut, stitch and fold raw fabric into high-end dress shirts. The 10 winners received small cash prizes and had their life-size images hung at an outdoor location where thousands of workers pass on the way to meals.
Changes Under Way in China
Cheng Pei Quan is a winner of the 'Sewing Olympics' at a factory. Manufacturers are looking beyond bonuses to retain workers and boost production in China.
Chinese people put quite a lot of value on 'face,' " says 23 year-old winner Cheng Pei Quan, who earned the nickname "The King of Collars" because he can sew 95 collars an hour, a third more than average. "This competition gives me a sense of pride that other benefits such as rising wages cannot give me."
After boosting pay to compete with other manufacturers, factory owners are finding money alone no longer is enough to attract and retain a generation of workers that demand a greater work-life balance than their parents did.
Companies are holding "American Idol"-esque singing contests, sponsoring dating events, constructing libraries and karaoke rooms on campus, and organizing small dinners between managers and top workers.
Businesses also are sending postcards to workers who visit their families during the Lunar New Year—when manufacturers can lose 20% or more of their staff—urging the employees to return to work.
The measures are a response to an unprecedented shortage in China's workforce. Demand for workers exceeded supply by a record in the first quarter. China's working-age population, defined as people from ages 15 to 59, fell last year for the first time in decades, a result of the national one-child policy that was implemented in 1980.
While the number of migrant workers in China rose 3.9% last year, manufacturers face stiff competition from construction, mining and other industries for staff. The average monthly wage for such workers has increased 74% in the past four years, to $395 in the first quarter.
For factory owners, the ability to recruit workers is a matter of survival. If plants can't find or replace staff quickly enough, they won't be able to fill customer orders on time. Those that can't will be forced to turn elsewhere in Asia to manufacture goods—or go out of business.
The Federation of Hong Kong Industries, a trade group for manufacturers in China, says about 80% of its members are having problems recruiting workers. A poll this year by Standard Chartered found that 9% of the roughly 300 manufacturers in the industry-heavy Pearl River Delta plan to move production out of China because of tight labor conditions. That was more than double the percentage last year.
"It's not the supply of workers that are running out, but employers have to work harder to get them" and keep them, says Mark Williams, chief Asia economist at London-based consulting firm Capital Economics.
Consulting firm Elevate Global Ltd. says that as long as factories pay competitive wages, the most effective way to retain employees is to improve communication. "Improving the way management engages with workers gives them an opportunity to be something greater than part of a machine," says Ian Spaulding, a senior partner at the firm, which is based in Hong Kong.
At Orans Co., a maker of tubs and toilets in China's eastern coastal province of Zhejiang, executives lined up at the factory gates this year to bow to staff who returned to work after the Lunar New Year.
Singapore-based Flextronics International Ltd., FLEX -0.15% which makes electronics for the computer and auto industries, held an employee talent show in November at its Zhuhai factory in the Pearl River Delta.
While managers watched, more than 600 employees vied for a trophy and a prize of roughly $300, performing folk dances and singing rock numbers like Bon Jovi's "Born to Be My Baby" and the Eagles' "Hotel California."
At its Suzhou factory in eastern China, Flextronics has funded picnics, talent shows and speed-dating events for single workers. The matchmaking has led to five marriages. The company also provides employee perks such as televisions in the break room, a hair salon, a soccer field and a basketball court at its other factories.
"If you are able to get employees connected socially, they're more likely to stay with the company," says Tom Linton, chief procurement officer at Flextronics
Such social connections are especially important because many of China's migrant workers are thousands of miles away from their family and friends and eager to build up support networks where they work.
At TAL's sprawling campus here, workers can let loose in a karaoke room and use a library with Internet access. The company not only reimburses employees for their train tickets home for Lunar New Year but has staff wait in line at the station to buy the tickets.
The company now loses about 10% of its workforce each year after long holidays such as Lunar New Year. Five years ago, it lost up to 40%, says Chief Executive Roger Lee.
"This is clearly what we have to do to be competitive," he says. "It's tough for these young kids because some of them are only 18 or 19 years old. It's kind of like boarding school. You've got to make it fun for them."
China Factories Try Karaoke, Speed Dating to Keep Workers - WSJ.com
The manufacturer for such companies as Burberry Group BRBY.LN +0.38% PLC and Brooks Brothers Group Inc. had workers race to cut, stitch and fold raw fabric into high-end dress shirts. The 10 winners received small cash prizes and had their life-size images hung at an outdoor location where thousands of workers pass on the way to meals.
Changes Under Way in China
Cheng Pei Quan is a winner of the 'Sewing Olympics' at a factory. Manufacturers are looking beyond bonuses to retain workers and boost production in China.
Chinese people put quite a lot of value on 'face,' " says 23 year-old winner Cheng Pei Quan, who earned the nickname "The King of Collars" because he can sew 95 collars an hour, a third more than average. "This competition gives me a sense of pride that other benefits such as rising wages cannot give me."
After boosting pay to compete with other manufacturers, factory owners are finding money alone no longer is enough to attract and retain a generation of workers that demand a greater work-life balance than their parents did.
Companies are holding "American Idol"-esque singing contests, sponsoring dating events, constructing libraries and karaoke rooms on campus, and organizing small dinners between managers and top workers.
Businesses also are sending postcards to workers who visit their families during the Lunar New Year—when manufacturers can lose 20% or more of their staff—urging the employees to return to work.
The measures are a response to an unprecedented shortage in China's workforce. Demand for workers exceeded supply by a record in the first quarter. China's working-age population, defined as people from ages 15 to 59, fell last year for the first time in decades, a result of the national one-child policy that was implemented in 1980.
While the number of migrant workers in China rose 3.9% last year, manufacturers face stiff competition from construction, mining and other industries for staff. The average monthly wage for such workers has increased 74% in the past four years, to $395 in the first quarter.
For factory owners, the ability to recruit workers is a matter of survival. If plants can't find or replace staff quickly enough, they won't be able to fill customer orders on time. Those that can't will be forced to turn elsewhere in Asia to manufacture goods—or go out of business.
The Federation of Hong Kong Industries, a trade group for manufacturers in China, says about 80% of its members are having problems recruiting workers. A poll this year by Standard Chartered found that 9% of the roughly 300 manufacturers in the industry-heavy Pearl River Delta plan to move production out of China because of tight labor conditions. That was more than double the percentage last year.
"It's not the supply of workers that are running out, but employers have to work harder to get them" and keep them, says Mark Williams, chief Asia economist at London-based consulting firm Capital Economics.
Consulting firm Elevate Global Ltd. says that as long as factories pay competitive wages, the most effective way to retain employees is to improve communication. "Improving the way management engages with workers gives them an opportunity to be something greater than part of a machine," says Ian Spaulding, a senior partner at the firm, which is based in Hong Kong.
At Orans Co., a maker of tubs and toilets in China's eastern coastal province of Zhejiang, executives lined up at the factory gates this year to bow to staff who returned to work after the Lunar New Year.
Singapore-based Flextronics International Ltd., FLEX -0.15% which makes electronics for the computer and auto industries, held an employee talent show in November at its Zhuhai factory in the Pearl River Delta.
While managers watched, more than 600 employees vied for a trophy and a prize of roughly $300, performing folk dances and singing rock numbers like Bon Jovi's "Born to Be My Baby" and the Eagles' "Hotel California."
At its Suzhou factory in eastern China, Flextronics has funded picnics, talent shows and speed-dating events for single workers. The matchmaking has led to five marriages. The company also provides employee perks such as televisions in the break room, a hair salon, a soccer field and a basketball court at its other factories.
"If you are able to get employees connected socially, they're more likely to stay with the company," says Tom Linton, chief procurement officer at Flextronics
Such social connections are especially important because many of China's migrant workers are thousands of miles away from their family and friends and eager to build up support networks where they work.
At TAL's sprawling campus here, workers can let loose in a karaoke room and use a library with Internet access. The company not only reimburses employees for their train tickets home for Lunar New Year but has staff wait in line at the station to buy the tickets.
The company now loses about 10% of its workforce each year after long holidays such as Lunar New Year. Five years ago, it lost up to 40%, says Chief Executive Roger Lee.
"This is clearly what we have to do to be competitive," he says. "It's tough for these young kids because some of them are only 18 or 19 years old. It's kind of like boarding school. You've got to make it fun for them."
China Factories Try Karaoke, Speed Dating to Keep Workers - WSJ.com
