Commissioned by the Beijing Foreign Enterprise Human Resources Service Co., Ltd., (the largest HR services provider in China), the report presents the results of a survey of HR professionals at multi-national and local companies.

1. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
EMPLOYEE REWARD
and RECOGNITION in CHINA
A research report commissioned by the
Beijing Foreign Enterprise Human
Resources Service Co., Ltd. (FESCO)
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2. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
About the Beijing Foreign Enterprise Human Resources
Service Co., Ltd (FESCO)
Contact:
Beijing Foreign Enterprise Human Resources Service Co., Ltd.
(FESCO, www.fesco.com.cn) is the leading provider of Employee
Benefits processing and Human Resource Services in the People
Republic China. Formed in 1979 under the supervision of the Beijing
Municipal Government, FESCO has grown into a top 500 Chinese
company. FESCO provides service to over 10,000 customers from
hundreds of countries and regions as well as 800,000 domestic and
overseas employees working for these institutions. The customer
base include a large number of leading multinational companies,
exclusively owned foreign enterprises, joint ventures of Chinese
companies and foreign companies, and state-owned enterprises.
Beijing Foreign Enterprise Human
Resources Service Co., Ltd. (FESCO)
No.14, Chaoyangmen Nandajie
Chaoyang District, Beijing 100020
+86-10-85692930
FESCO has established over 110 investment companies and
branches across China and formed a service network reaching out to
300 cities and 31 provinces and autonomous regions from its two
centers in Beijing and Shanghai. At the end of 2010, FESCO joined
hands with Adecco to establish FESCO Adecco, a joint venture in
Shanghai .
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3. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Introduction and Methodology
This report summarizes the results of a December 2013 survey of FESCO customers to gather
information about the state of Employee Reward and Recognition in China. We hope to better
understand HR professionals’ perception of Reward and Recognition programs and their current
capabilities.
On December 08, 2013, surveys were sent electronically to 800 Human Resource professionals in
China. Participants were selected based on their job titles and only those with the tile of HR
Manager or HR Director were targeted. The survey closed with 121 responses, about a 15%
response rate.
This is the first survey of its kind in China. The intention is to both expand the scope and the
sample size of the survey next year based on feedback from the HR community and readers of this
report.
For the study, we asked separate questions regarding Reward programs and Recognition
programs. This reflects the fact that today in China, these programs are frequently run separately.
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4. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Table of Figures
Employee Rewards ........................................................................................................... 9
Figure 1: Does you company offer Non-Cash rewards? .................................................... 9
Figure 2: Type of Non-Cash Rewards Offered ................................................................... 9
Figure 3: Type of Reward Programs Offered ................................................................... 10
Figure 4: Type of Rewards Offered by Company Size ..................................................... 10
Figure 5: Type of Reward Programs Offered by Company Size ....................................... 10
Figure 6: Advantages of Non-Cash Rewards ................................................................... 11
Figure 7: Effectiveness of Reward Program ..................................................................... 11
Employee Recognition .................................................................................................... 12
Figure 8: Recognition is Important to the Success of our Business .................................. 12
Figure 9: Type of Recognition Programs Offered ............................................................. 12
Figure 10: How effective is your recognition program?....................................................... 13
Reward and Recognition Program Information ........................................................... 14
Figure 11: Do you have a written strategy document? ...................................................... 14
Figure 12: Number of Reward and Recognition Programs ................................................ 14
Figure 13: Number of Reward and Recognition Programs by Company Size ................... 14
Figure 14: Geographic Coverage of Reward and Recognition Program ............................ 15
Figure 15: Coverage of Reward and Recognition Program by Company Size .................. 15
IT Assessment ................................................................................................................ 16
Figure 16: Does your Reward and Recognition Program run on software or SaaS? ......... 16
Figure 17: Can data be mined from your software platform? ............................................. 16
Figure 18: What data points are available in your software platform? ............................... 16
Figure 19: Interest in a Reward and Recognition Software Solution .................................. 17
Figure 20: Interest in a Reward and Recognition Software Solution by Company Size ..... 17
Figure 21: Intent to Implement a Reward or Recognition Software Solution ..................... 17
Figure 22: Intent to Implement by Company Size.............................................................. 17
Survey Demographics..................................................................................................... 18
Figure 23: Number of People in Your Organization .......................................................... 18
Figure 24: Description of Your Industry ............................................................................ 18
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5. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Executive Summary and Key Findings
Background
In China, the idea of providing substantial non-cash rewards and benefits to employees is not new.
For much of China’s modern history, large State Owned Companies dominated the economic
landscape. These companies were often viewed as communities who provided their workers and
families with the services to lead productive and healthy lives. The term “iron rice bowl” is a
Chinese idiom used to refer employment in this type of organization. These jobs were
characterized by job security, a good rate of pay, benefits, and various other perks.
In present day, large State Owned Enterprises still dominate, but they are modernizing and have
moved away from the “iron rice bowl”. Despite this, certain characteristics remain hard to shake.
Chinese companies are still required to provide generous mandatory benefits. For example,
“Housing Fund” contributions are made by employers to help employees purchase their first home.
Looking at our survey, the most common Non-cash Reward Program is “Holiday Gifts”, which are
given to employees at different Chinese traditional festivals like the Spring Festival (Chinese New
Year). These Non-cash Rewards are not viewed as a bonus or a performance incentive, and are
sometimes described as employee “welfare”.
Prevalence of Non-Cash Rewards Indicate a Large, Growing Market
Does your company offer Non-Cash Rewards?
Against this background, we found large numbers of
companies providing Non-cash Rewards to their
employees. In our survey, 88% of companies provide
some type of Non-cash Reward.
This fact, combined with the growing salaries of
Chinese workers and the increasingly competitive war
for talent have created a very large market for
Employee Rewards.
A conservative estimate puts
spending on Non-Cash Rewards at 8 billion per year
and rising.
Attitudes Towards Recognition Have Evolved
Recognition is important to the success of our business
To date, the accepted narrative regarding treatment
of workers in China has not been positive. Stories
of low wages and mistreatment of workers dominate
the media. The fact is, China has seen tremendous
improvements in working conditions and opportunity
in the last 20 years. Workers now have an
unprecedented amount of choice when it comes to
their employers. Our survey shows HR leaders at
Chinese companies have taken notice and realize
how important Recognition is to retaining their
employees and motivating them to achieve higher
levels of performance.
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6. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Lack of Innovation Despite the Shift in Attitude
Despite the stated importance of Recognition, most
corporate programs are not evolving to reflect this new
reality. The majority of companies are running very
few programs and these typically are not aligned with
strategic goals. The most common programs are basic
“Employee of the Month/Year” or “Holiday Gift”
programs.
Does your Reward or Recognition program run on
software or SaaS?
The primary reason for this discrepancy is the
absence of software infrastructure to build and
manage programs. In our survey, only 15% of
companies were running software for Recognition
programs and 12% for Rewards programs. This lack
of software has also created a lack of data to evaluate
program performance, which is further impeding
change.
HR Professionals Poised to Upgrade Their Programs
Our survey clearly showed HR leaders are ready to innovate. Of the respondents, 87% expressed
“Interest” or “High Interest” in a software solution to manage their programs and 74% intend to
implement a software solution in the immediate future.
By improving their capabilities, HR
professionals are looking to a future where Reward and Recognition programs play a central role in
building and retaining an engaged, motivated workforce.
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7. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
EMPLOYEE REWARDS
Non-cash Rewards are a fixture at the
vast majority Chinese companies, with
88% offering them to employees. As
competition for talent increases and
employees become more valuable, Noncash Rewards should only gain
importance in the coming years.
Figure 1: Does your company offer Non-Cash Rewards?
Regarding “Types of Rewards” (Figure 2),
the survey showed “Merch” was the most
popular. This category includes seasonal
as well as general merchandise. Gift
cards were the second most prevalent. It
is important to note gift cards, like the
ZeHeXin and Carrefour cards, have been
frequently used as a cash compensation
substitute (in addition to their use as a
Reward), because of the tax benefits.
Points are only offered by 10% of
companies. As mentioned previously,
very few companies are running software
which can generate and track points.
There is a trend, however, towards
“Reward Choice” and points-based
catalogues, so an increase in this
category is expected in the near future.
Figure 2: Type of Non-Cash Rewards Offered
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8. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Figure 3: Type of Reward Programs Offered
The range of Reward Programs offered
in Chinese companies is narrower than
more developed countries.
Holiday
Gifts, (seasonal items given to
employees around large Chinese
festivals like Chinese New Year) is the
most popular program and is offered to
all
employees
regardless
of
performance or seniority. Peer to Peer
programs are rare, primarily due to the
lack of technology to manage such a
program and the cultural differences in
largely hierarchical Chinese companies.
Figures 4 & 5: Type of Rewards and Programs Offered by Company Size
The survey showed Chinese
companies both large and
small offer similar types of
rewards. The exception was a
higher frequency of travel
rewards and points programs
in larger companies.
Not reflected in the survey is
the lack of digital rewards
specifically music, movies or
iTunes gift cards.
Digital
music and movies are largely
available for free online
(pirated) and therefore have
little value. Further, Chinese
tastes in reward programs
tend to the practical or
seasonal.
Holiday Gift programs and
Performance Incentives are
much more prevalent in large
companies. This is partly due
to the legacy of the “iron rice
bowl”. The higher level of
Performance Incentives in
these larger organizations
indicates a more strategic use
of
Non-cash
Reward
programs.
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9. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Figure 6: Advantages of Non-Cash Rewards
Figure 6 shows HR professionals in China have a sophisticated understanding of the value of NonCash Rewards with “flexibility” the most cited advantage. Interesting to note is the category of
“Reasonable Tax Avoidance”. In China, Non-Cash Rewards are used as a salary supplement,
because in some cases they are non-taxable. This increases the prevalence of Non-Cash Rewards
and also raises their level of importance.
Figure 7 illustrates HR professionals’ ambivalence with the performance of their programs. A lack
of data to evaluate program performance and the software infrastructure to collect and analyze this
data are the primary reasons.
Figure 7: How effective is your Reward Program?
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10. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
EMPLOYEE RECOGNITION
Figure 8 illustrates the most
important finding in our study. It
clearly shows HR leaders in
China believe Recognition is a
strategic imperative and signals
Chinese
companies
are
adopting a new attitude towards
Recognition programs.
Figure 8: Recognition is important to the success of our business.
HR
professionals
have
expressed a desire to manifest
these ideas by improving their
Recognition programs. Figure 9
shows that despite this attitude,
most companies have not
moved
beyond
basic
Recognition programs such as
Length of Service. Only 28% of
companies have implemented
Peer to Peer programs.
Figure 9: Types of Recognition Programs Offered
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11. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Figure 10: How effective is your Recognition Program?
A minority of HR professionals believe their Recognition programs are effective across a number of
measures. Besides better tools and data, HR leaders have identified building support for
Recognition programs with other departments in the organization as essential to program
improvement.
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12. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
REWARD & RECOGNITION PROGRAM INFORMATION
While a majority of companies
have a strategy in place for
Rewards and Recognition, there is
a surprisingly low number of
programs being run in these
companies. Based on feedback
from the HR community, this is
primarily due to rudimentary
program mechanics which make
program management difficult.
Figure 11: Do you have a written strategy document?
Recognition program honorees
are typically nominated and
determined
by
Managers.
Nominations are based on more
subjective opinions rather than
data, and typically do not include
input from peers.
Figure 12: Number of Reward & Recognition Programs
Figure 13: Number of Reward &
Recognition Programs by Company Size
Figure 13 shows there are a
low number of programs at
large and small companies
alike.
This reinforces the
point that larger companies
lack an adequate software
infrastructure
to
manage
multiple
Reward
and
Recognition programs and to
apply
these
programs
strategically throughout the
business.
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13. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Figure 14: Geographic Coverage of Reward & Recognition Programs
The majority of survey respondents were
multi-national companies operating in China.
Despite this, 90% of companies surveyed
are running “China only” programs. This
highlights for vendors the importance of local
capability to design and deliver programs for
China operations of global companies as
well as large local companies.
Figure 15 further emphasizes the local
nature of China’s Reward and Recognition
market. Only 6% of companies with over
1000 employees are offering “Global Only”*
programs. This compares to 40% of smaller
companies (most likely smaller branches of
Multinational companies). These findings
clearly show “China-only” programs are a
very large and most likely the largest
segment of the market.
*Global only” is a program which is an extension
of a centrally sponsored corporate program run
across all countries of operation
Figure 15: Geographic Coverage of Reward & Recognition Programs by Company Size
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14. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
IT ASSESSMENT
Figure 16: Does your Reward or Recognition program run on software or SaaS?
Figure 16 illustrates the biggest opportunity
for HR professionals and vendors alike. Only
12% of companies are running Reward
programs and only 15% are running
Recognition programs on a software platform.
This lack of software infrastructure is
negatively impacting Reward and Recognition
programs in a number of ways. It is affecting
the overall number of programs, the
applications for these programs, and the data
that can be mined on these programs. Most
importantly, it is affecting HR’s ability to
demonstrate program effectiveness to other
C-level executives.
Figures 17 and 18 reflect the subset of companies who answered “Yes” to the question “Does your Reward or Recognition program run on s software or SaaS?”
Figure 17: Can data be mined from your software platform?
Figure 18: What data points are available in your software platform?
Even within the subset of
companies running software
solutions,
our
survey
showed
HR professional
wanting more. Only 62%
are able to pull data from
their software platform.
Looking at individual data
points, 54% are able to
identify top performers; but
most other key data points
are available to only a small
percentage of respondents.
These findings accurately
reflect what is happening in
the market.
Current
software platforms are basic
Ecommerce platforms that
enable
employees
to
choose from a range of
rewards. These platforms
are evolving, but are
rudimentary at best and
lack features such as social
recognition, peer to peer
nominations and have little
application
outside
the
ordering of rewards.
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15. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
Figures 19 & 20: Level of Interest in a Reward and Recognition Software Solution
HR professionals have made it
clear they are anxious to
upgrade their capabilities, with
87% of respondents indicating
“Interested” or “High Interest” in
a software solution. In larger
companies, 63% expressed a
high level of interest.
The results were similar when
respondents were asked if they
intended to act on this interest.
A full 74% of respondents
indicated an “Intent” or “High
Intent” to implement a software
solution in the near future.
Again, the number was higher in
the larger organizations.
Figures 21 & 22: Intent to Implement a Reward & Recognition Software Solution
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16. Beijing Foreign Enterprise Human Resources Service Co., Ltd.
Employee Reward & Recognition in China
SURVEY DEMOGRAPHICS
Figure 23: Number of Employees in Your Organization
Figure 24: Description of Your Industry
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