The Battle for Brainpower: How Swedish Companies Retain Middle Managers in China

Abstract: Academic discourse and recent studies suggest that multinational companies in China are struggling to retain employees and that middle managers are one of the most attractive groups on the labor market. This master thesis discusses what measures large Swedish companies in China are taking to retain Chinese middle managers as well as how effective these measures are. Six companies are examined with focus on three main areas: Compensation and Benefits, Organizational Culture and Employee Development. Empirical data is mainly gathered through qualitative interviews in China with Swedish managers, HR-managers and Chinese middle managers. In addition, a quantitative survey is performed among middle managers. In contrast to previous studies, retaining middle managers is not considered to be a significant issue in the companies studied. This is demonstrated by the fact that the middle management turnover levels in these companies are significantly lower than the Chinese market average. Out of the three areas studied, Compensation and Benefits is the least effective retention measure. In general, Swedish companies have market average compensation levels. Employee Development seems to be the most effective retention measure. The companies studied have implemented a wide array of Employee Development initiatives to retain their high-profile middle managers. Finally, the authors discuss why the empirical findings do not correspond to theory and suggest areas for future research.