SHANGHAI SILK PHARMA, LTD: EMPLOYEE TURNOVER
SHANGHAI SILK PHARMA, LTD: EMPLOYEE TURNOVER
Shanghai Silk Pharma Ltd: Employee Turnover
THE CONTEXT
This case highlights the issues of employee turnover and retention in a Chinese private sector pharmaceutical company. It discusses the reasons of high employee turnover and the company’s approach to retention. While the case shows that individual-company fit and individual-work fit affect voluntary turnover, it also highlights the importance of financial and non-financial incentives and measures to improve employee retention. It also discusses issues of high-power distance and guanxi that are unique to China. Overall, the case brings to light different organisational choices and strategies to address employee retention.
THE DECISION
‘Should I shut down the department and go home?’ shouted Wei Leng, General Manager (GM) of Production, on the phone. ‘Two more operators have resigned today; one didn’t even bother to serve his one month notice. How do you expect me to meet our production targets in this situation?’ With these words, he hung up.
This was yet another tough month for Zhang Xi, GM of Human Resource Department (HRD) at Shanghai Silk Pharma Ltd (SSPL), a leading privately owned pharmaceutical company in Shanghai. This was the fourth such call he had received from the production department within one month (January 2015), and he knew that the challenges faced by SSPL would not vanish soon.
Leng and the production managers in his team had suggested that a significant rise in employee wages (about 25% higher than the market average), particularly in the production department, could help address the issue of employee turnover. However, based on recent exit interviews, Xi knew that non-monetary issues such as work environment and job design were equally at play. ‘The company president would never agree to this increase, and the production managers are too mechanical in their handling of machine operators,’ Xi thought. However, there was no quick fix in sight, and the production charts had already started showing a downward trend.
The next week, the company’s president, Liu Huan called an urgent meeting of all the GMs in SSPL to brainstorm on the issue of declining indicators. The meeting continued for two hours, and it was agreed that the company would hire an external expert to identify the real causes of voluntary employee turnover and offer recommendations to address this issue.
Syed, J., & Wang, J. (2018). Shanghai Silk Pharma Ltd: Employee Turnover. Asian Journal of Management Cases, 15(2_suppl), S55-SS67.
About the Author
Jawad Syed, PhD, Academic FCIPD, is Professor at the SDSB, LUMS. He teaches courses in organisational behaviour, leading organisations, human resource management and philosophy of administrative sciences. He is the co-programme director for the executive programmes on Developing Future Leaders and Communication for Personal and Organisational Effectiveness at the Rausing Executive Development Centre (REDC). His research interests include gender, race, and diversity in organisations, international human resource management, business ethics, and organisational knowledge. He has edited/authored seven books and written more than 75 journal articles and book chapters.