Human Resource Practices of Hong Kong1

Introduction

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 Human Resource Practices of Hong Kong2

Introduction

The term “human resource management” has been commonly used for the last ten to fifteen
years. Previously it was known that “personnel management”. According to Dessler (1991) had
made no differentiation between personnel management and HRM and saw that the latter as a
modern expanded version of traditional personnel management due to technological change in
the work environment and a shift in societal values.

Human resource management practices are an important issue for a business now. Numerous
authors already stated to describe about this practices. Human resource management (HRM)
practices of Asian businesses are now on considerable attention for the explosive growth of the
Asian economies over the past two decades. According to Giresh Sharma, top ten human
resource management practices for an organization are as below-
i. Safe, Healthy And Happy Workplace
ii. Open Book Management Style
iii. Performance Linked Bonuses
iv. 360-Degree Performance Management Feedback System
v. Fair Evaluation System For Employees
vi. Knowledge Sharing
vii. Highlight Performers
viii. Open House Discussions And Feedback Mechanisms
ix. Reward Ceremonies
x. Delight Employees With The Unexpected

Hong Kong is one of the special administrative regions (SARs) of the People's Republic of China
(PRC). Hong Kong is the business base for operation in Asia. Its location makes it a Golden Gate
to almost any Asian country.
Hong Kong’s HRM practices now gradually adopted “strategic HRM” than “traditional HRM”.
Kirkbride and Tang o989a, 1989b) and Fisher and Shaw(987) have described human resource
management practices for both foreign and local firms.

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 Human Resource Practices of Hong Kong3

Background Information

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 Human Resource Practices of Hong Kong4

Features Figure
Total Land 1,104 sq. km (426 sq. miles)
Total Population 7,067,800
Population Increase % 0.9%(2012)
Climate Spring: March to mid-May, Temp 18° to
27°C (64°-80° F); Summer: June to mid-
September, Temp 26° to 33°C (78°-91°F);
Autumn: September to November, Temp 18°
to 28°C (64°-82°F), Winter: December to
February, Temp 20°C to about 10°C (50°F)
GDP (Growth) 2.6% (2012)
GDP Per capita US$ 36,218 (2010)
Inflation rate 3.8%(2012)
Core export items (last 5 year)  Electrical machinery and appliances
 Textiles and apparel
 Footwear
 Watches and clocks
 Toys and plastics
 Precious stones
 Printed material
Total export to foreign country US$456 billion
Core import items (last 5 year)  Raw materials and semi-manufactures
 Consumer goods
 Capital goods
 Foodstuffs
 Fuel (most is re-exported)
Total employees 3,773,700 (march 2012)
Unemployment rate 3.4%. (march 2012)
Foreign investment $83 billion
Total foreign employees 284,901
Total production capacity
Number of Foreign Companies 6,397

Table 1: Background Information of Hong Kong

Source:
www.wikipedia.com
www.gov.hk
www.hkeconomy.gov.hk

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 Human Resource Practices of Hong Kong5

www.economywatch.com
Hong Kong is a small-sized island covering 1,104 sq. km (426 sq. miles). (Wikipedia,

2012) In Hong Kong government website it says that the population of Hong Kong is 7.03

Million and population increase by 0.9%. (www.gov.hk, 2012)

In Hong Kong during in the months of March to the mid-May spring occurs. Temperature

ranges from 18° to 27°C (64°-80° F) and humidity is up to 77 percent. From June to mid-

September it is the time forsummer. Temperatures ranging from 26° to 33°C (78°-91°F) and

humidity level at above 86 percent. In autumn which is from September to

November.Temperatures range from 18° to 28°C (64°-82°F). Humidity averages 72 percent.

Winter, on the other hand, starts from mid December to February. Temperatures can drop from

20°C to about 10°C (50°F). (www.marimari.com, 2012)

In Hong Kong the estimated GDP growth rate is +2.6% as on 2012 and the GDP per

capita is US$ 36,218 as on 2010. Inflation rate was recorded at 5.3% in 2011 and the estimate for

2012 is 3.8%.( www.gfmag.com, 2012) Historically Hong Kong average Inflation rate was 4.6%,

from 1981 until 2012. (Trading Economics, 2012) According to Hong Kong Trade Statistics the

total amount of export was US$456 billion. (Hong Kong Trade Statistics, 2012) In Hong Kong

economics report it is mentioned that as on March 2012 total employees is 3,773,700which 3.2%

higher than the last year is.Unemployment rate is 3.4% as on March 2012. (Hong Kong

Economic Report, 2012)

The total foreign investment of Hong Kong exceeds $83 Billion. (Global Times, 2012) In

Hong Kong total number of foreign employees is about 284,901. (Wikipedia, 2012) During 2009

there were a total of 6,397 companies in Hong Kong that represented foreign parent companies.

(Guide Me Hong Kong, 2010)

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 Human Resource Practices of Hong Kong6

Factors Affecting HRM

Practices in Hong Kong

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 Human Resource Practices of Hong Kong7

Factors affective Hong Kong HRM practices

a) National Culture & Industrialization of Hong Kong:

Cultural Overview of Hong Kong:

Hong Kong’s people of all races are punctual. People walk fast and impatience is seen in
most circumstances. Punctuality on arrival is also considered important – more so than in
many Asian countries.
People of Hong Kong’s are Money-makers Internationalists and Pragmatists.
If we think about the language of management there are many varieties of Chinese,
though Mandarin is in gradual ascendancy. Cantonese, and Shanghainese are, however,
likely to retain their importance as languages of commerce. Mandarin sounds
authoritative to many Chinese and commands obedience.
Hong Kong’s people are interested to make a big deal with cooking, visit and visit and
visit again.
Maintaining a  Personal connections are the key element of doing business in Hong
Kong.(www.telegraph.co.uk,2012 )

Industrialization of Hong Kong:

If we follow the book called “Industrialization and Family structure of Hong Kong” written by
Fai-Ming Wong we found three separate stages of Industrialization happened in Hong Kong.
1. Pre-Industrialization: Before Occupying by the British 1841 Hong Kong was a small
neglected, rugged island with a population of few thousand Chinese fishermen and
peasants.later within a century it got a shape and became a metropolitan city. later the
process of urbanization and commercialization occurred. The trading port later became a
commercial centre. Shipping, banking, insurance and trading later became very popular.
Communication, transportation and education later got a great shape. Finally, the
industrialization happened through ship building and ship repairing. Other industries like
manufacturing of matches, soap, suger, roapand cement were also developed at this stage.
But for the first hundred years industry was playing a minor role over there.
2. Early Industrialization: The industrialization revolution in Hong Kong took place during
the first post war decade, 1945-55. After the war trade connections were re established
and strenghenened. The industrial growth in the period of 1947-51 can viewed in terms of
national income and relevant magnitudes. In 1947-48 the net domestic products were
HK$ 1600 million. In 1959-52 it increased HK$ 2800 million. The rate of growth
amounted 44% during those four years. In 1953-55 industrial position were widened and
strengthened. During 1948-1956 industries and number of employments were doubled.
3. Towards Advanced Industrialization: After the year of 1956 Advanced Industrialization
occurred. The growth rate of industrialization was increased at that time. The practice of
laissez faire capitalism, an efficient system of banking, insurance and shipping services,

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low tariff rate and trained management worked together to develop the industrial growth
and that was progressed. The national income of Hong Kong was HK$ 3400 million in
1955 and in 1965 it was near HK$ 9000 million. From then the expansion of modern
industrialization continuing and providing a tremendous looks to the Hong Kong.(Fai
Ming Wong,2012)

I. .External Factor:

a) Labor Union: The Hong Kong Federation of Trade Unions (HKFTU) is a pro-

Beijing labour and political group established in 1948 in Hong Kong. It is the largest
labor group in Hong Kong with over 341,000 members in 181 affiliates and 62
associated trade unions.The main slogans of the HKFTU are "patriotism, solidarity,
rights, welfare and participation". The group focuses on the rights and welfare of
workers, supporting the workers in their negotiation with employers and to resolve labour
disputes. It works to amend legislation to protect labour rights and prevent employers
from exploiting loopholes in labour laws. It opposes importation of foreign labours and
calls for legislation against age discrimination. Politically it adopted a pro-Government
stance on many issues but has a pro-grassroots stance on livelihood and labour issues,
such as demanding more measures to reduce unemployment.In addition, the HKFTU also
operates 5 retail outlets to provide discounts to its members in a variety of goods, and
provide training, medical and other services to members at discounted rates.

b) Labor Laws:

 Children who are having age of 15 or less than that are completely prohibited from
Industrial working.
 All Children between the age limit of 13 to 14 may be employed in non-industrial
establishments with a condition that they attend full-time schooling if they have not yet
completed Form III of secondary education and also need to follow the conditions which
ensure their safety, health and welfare. 
 Children who have age of 13 or less are prohibited from taking up employment. even, if
there is a purposes of art and training, the Commissioner for Labour may grant special
permission for children to be employed as entertainers, select to certain stringent
conditions as the Commissioner may specify. 
 There will be a notice for specifying the working hours and rest day arrangement of the
young persons and vetted by the Labour Department should be posted up in a
conspicuous place in the workplace.
 Change of permissible working hours and rest days is not allowed unless prior notice has
been served.

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 The working hour for young labor will be 8 hours a day.

 The probable working time of interval will be 7 am to 7 pm.
 There will be six working days in a week.
 There will be no Overtime employment, night work, working on rest days and statutory
holidays. 
 Underground work in mines and quarries or in industrial undertakings involving
tunnelling operations, and carrying loads unreasonably heavy for the young person's age
and physical development are prohibited 
 If the employment position is in a dangerous location will be strictly
prohibited. (www.labour.gov.hk,2012)

c) Socio-Political Issues:

Hong Kong’s integrated social-political system, the two constituent parts of which are a laissez-
faire bureaucracy and a "self-sufficient," atomistic Chinese society. recently, this system has
operated to keep politically salient issues to a manageable minimum. Secular, asymmetrical
changes have opened up cracks in the system; their disruptive effects have become increasingly
visible. Because of its overly rapid economic growth, the organizational fabric of the Chinese
society has worn away, making it more dependent on the government for need satisfaction.
Together with the administrative imperatives befitting a complex industrial society, this
dependence furthers the emergence of a professionalized and expanded bureaucracy. The
problem of linkage between the government and the Chinese society is aggravated by the
inadequacy of existing intermediary devices. That’s why, a new style of politics is emerging in
Hong Kong, reflecting its troubled structural conditions.(www.jstor.org,2012)

d) Technological Issues:

Hong Kong's economy become a world-class, knowledge-based one just because of the invention
of The Innovation and Technology Commission (ITC) . The aim of ITC was developing Hong
Kong and convert into a regional innovation, technology and design services hub,which strives
to enhance Hong Kong's competitiveness in following way:

 Through Promote and support which need to apply in research and development, as well
as technology transfer and application
 It also have a aim of Fostering an innovation and technology culture in the community,
and promoting technological entrepreneurship
 By Facilitating the provision of infrastructure and development of human resources to
support innovation and technology
 Formulating, developing and implementing the Government's policies, programmes and
measures to promote innovation and technology

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 Promoting internationally accepted standards and conformity assessment services to

underpin technological development and international trade

 Developing high calibre and motivated staff to contribute to Hong Kong's technological
advancement (www.clothingtraining.org.hk,2012)

e) Business Environment:

Hong Kong improves its business environment with the modern infrastructure and
telecommunications that could be expected of the world's 9th largest economy. The territory's
economy is suppose to like a laissez faire economy in the world. The government's policy is
strictly non-interventionist. If we find the result of annual Invest Hong Kong, the Census and
Statistics Department in October 2011,we found the total number of overseas and Mainland
Chinese parent companies running business operations in Hong Kong has recorded its highest
level to date, as, in particular, did the number of those operating regional headquarters.By June
2011, the total number of foreign parent companies with operations in Hong Kong had reached
6,948 companies, a 5.9 per cent increase from 2010. Within that total, the number of regional
headquarters was 1,340, an increase of 4.3%.In case of finance and banking sector
demonstration is the most robust growth and, it was said, reinforced Hong Kong's status as a
world-leading international financial centre. Finance and banking regional headquarters
increased by 5% to 135, while local offices increased by 3% to 622.With regards to country of
origin, roughly half the parent companies came from four countries: the US tops the list with a
total of 1,263 companies, followed by Japan with 1,085, Mainland China with 789 and the UK
with 505. (www.lowtax.net,2012)

II. Internal Factor:

a) Country Management Style:

 Managers in Hong Kong would expect to adopt a fairly paternalistic attitude to subordinates.
Instructions are given and the manager expects them to be carried out without too much
debate. The entrepreneurial nature of many of the local firms means that decision-making is
centralised, fast and flexible - which contrasts with the more measured approach of multi-
national companies. It can be very difficult for employees to carry bad news to their
manager, which may have a severely limiting effect on the amount of information a manager
has to base any decisions upon. This can result in crucial information being withheld at the
vital time with inevitable negative effects accruing. (If basing your decisions on information
supplied from Hong Kong, double check to ensure that all available information has actually
been supplied.Respect will be shown to the manager simply because he or she has the
position of manager. It is the position itself which imbues an automatic right for respect.
Therefore, one should show respect to the appropriate person as this makes you seem an
honourable person and will stand you in good stead in the future.As in other Chinese cultures

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gift giving is endemic. The giving and receiving of gifts is viewed as an element in the ritual
of business relationship development. Although relationships may be less important in Hong
Kong than on the mainland or in Taiwan, much benefit can accrue from cultivating the right
people.It is not necessary to give expensive gifts - it is the gift-giving which is important.
Gifts should be wrapped and are often refused two or three times before being accepted.
They are rarely opened in front of the giver.

b) Hidden factors of Management Style:

The hidden factors of Hong Kong management are given below:

In case of time orientation Hong Kong people are always provide emphasis on present
time oriented job.
In case of employment Hong Kong management focus on lay off common.
Here organization’s promotion depends on competency and seniority.
They feel better to utilize complete employees.
In case of blue or white collar they maintained a double class.
They feel better to maintain a long term external relationship.
They focus on ownership.
They maintain give & take business relationship.
They maintain a flexible pricing
They feel comfort with less transaction cost.
They feel better with individual decision making.
In case of responsibilities they prefer collective responsibilities.
They maintain a top down communication.
Look for a promotion in other company.
They belive in individual goal.
( www.worldbusinessculture.com,2012)

B) Government Business Relationship with Business sector:

 Hong Kong is acting as a second largest FDI recipient in Asia after only Mainland China last
year, adding that the number of Japanese companies in Hong Kong amounted to 1,085 as at June
2010. Among them 629 were regional headquarters or regional offices.it creates an impact on
investors' confidence in Hong Kong's enduring advantages and their preference for Hong Kong
as a base in Asia from which to oversee their regional operations, The advantages of Hong Kong
possesses the rule of law, a low and simple tax system and a business-friendly environment in
which all firms can compete on a level playing field, as well as an appropriate regulatory regime
to ensure the integrity and smooth functioning of a free market.
Hong Kong, traditionally known as a gateway to China, is the perfect destination for accessing

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the vast Mainland market, especially after the implementation of the Closer Economic
Partnership Arrangement between Hong Kong and the Mainland. Another area of opportunity
lies in the internationalization of the Renminbi (RMB) and Hong Kong's role as an offshore
RMB centre. Hong Kong is the only place outside Mainland China that hosts an RMB bond
market, and overseas companies are encouraged to issue RMB bonds in Hong Kong,

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Existing HRM Practices in

Hong Kong

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Recruitment & Selection

Economically Hong Kong is one of the most unregulated one in the world. Trade and logistics,
tourism, financial services and professional services are the four pillars of Hong Kong’s
economy. Being enjoyed low tax rates Hong Kong possess a strong legal system with less
corruption. Business environment in Hong Kong is conducive.

Recruiting Strategies

Hon Kong uses following means for recruiting employees of different levels.

Newspapers- for recruiting lower and middle level positions this is the most effective way. Some
newspapers like, the Oriental Daily, Apple Daily, Ming Pao, South China Morning Post and The
Standard are mostly famous among the job seekers of Hong Kong to find a job.

Websites- Generally the residents of Hong Kong are internet-savvy and they search internet for
jobs, especially for executive and professional level jobs. But sometimes less-qualified people
also apply through this medium as response comes more quickly from this medium. However
some famous job boards are www.classifiedpost.com, www.monster.com.hk, www.hkjobs.com,
and www.jobdb.com, where the language is English.

Personal connections- In order to strengthen the relation between employer and employees,
Hong Kong put emphasis in recruiting people through personal connection. In this case Hong
Kong is the follower of China, in recruiting people using personal relation networks of business
world. (Ames Gross, HR and Recruiting Trends in Hong Kong Update, 2007)

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RECRUITMENT PROCEDURE
For an open position, the procedures followed in recruiting employees are discussed below.

1.1. Role Definitions and Job Description

After carefully considering the requirements of the job and defining the role the hiring manager
drafts a job description in following ways:
(I) For an existing position, it is required to specify whether an exact replacement is
required or if the requirements are to be revised, the revisions have to be detailed.
(II) For a newly established position, the exact requirements has to be clear, then the HR
Department has to be consulted about drawing up the job description, and also for
suitable salary.
1.2 After the Hiring Manager is done with outlining the requirements of the job, he discusses all
these issues with the Resourcing tem of the HR Department. If required, the HR department does
some revisions on the draft of the job description and job analysis before new recruitment.

1.3 The HR Resourcing team goes for new recruitment after they get confirmation of approval
for hiring new employees from the Principal or Senior Manager of the Hiring Team. (Keith
Tucker, Recruitment Policy, 2009, pp7)

Foreign Employees in Hong Kong

Hong Kong is a cosmopolitan city with close to 8 million populations; and over 500,000
foreigners. There are labors from the Philippines, Thailand, Sri Lanka and India working at Hong
Kong. Some top level executives are also working at number of global firms. For skilled workers
or executives and for professional staffs, it is easier to obtain work permits. Hong Kong
government implemented the Admission of Talents Scheme from 1999. It was for the successful
candidates from other countries who were normally granted for employment entry permits or isa
of 12 months from entry. After successful completion of the stay, the candidates are allowed to
apply for extension of visa prior to expiry of the visa given.

For the highly skilled Mainland Chinese Talents a second scheme is introduced few years ago,
which is known as the Admission of Mainland Professionals Scheme. It enhances the

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competitiveness among the local companies and also creates possibilities of further development
of Hong Kong. For the foreigners the change of employment is not allowed in the first year of
the employment; but after successful completion of the first year they are allowed to switch the
job. (www.pacificbridge.com, 2012)

Recruiting Trends

People are becoming more interested to work in mainland China, for this purpose one of the
greatest attractions is the higher salary. Average salary increase in China is 25%, whereas in
Hong Kong it is only 3%. Another reason for moving to mainland China for Hong Kong people
is that the expert people from Hong Kong get more salary compared to the local Chinese, and
living cost is also lower over there.

Under Quality Migrant Admission Scheme, initiated in July 2006, foreign talents are attracted to
Hong Kong. Even though it is open to all nationalities, the Scheme specifically targets mainland
Chinese with exceptional skills or academic qualifications. Especially welcomed are those
trained in finance and accounting. (www.pacificbridge.com, 2012)

University Recruiting Universities in Hong Kong generally have very helpful and cooperative
career centers that help match employers and employees. Top universities in the territory include
University of Hong Kong, Chinese University of Hong Kong, and Hong Kong University of
Science and Technology.

MBA Recruiting In recent years, MBA programs with an Asian-focus have become increasingly
popular among Hong Kong professionals. An example is the China Europe International
Business School (located in Shanghai) which runs classes in English conducted by both Chinese
and foreign professors. Many professionals see these programs as a means to acquire more
managerial knowledge, as well as to get ahead in their careers.

Hiring intention in 2012

While public attention is still paid to the turbulent economies in the European Union countries
and the US, where more negative news or results were reported, the labour market in Hong Kong

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managed to remain stable amid such negative global market sentiment. Many employers
indicated that they would continue with hiring. The latest labour market situation was reflected
by the findings in the Quarterly Survey on Manpower Statistics – First Quarter 2012 conducted
by the Hong Kong Institute of Human Resource Management (HKIHRM).
 
Conducted since 2002 to collect data on a quarterly basis, the HKIHRM Quarterly Survey on
Manpower Statistics regularly tracks manpower movement in Hong Kong’s labour market. A
total of 78 companies participated in the Q1 2012 (January to March) survey conducted in April
and May 2012, covering 102,877 employees. Key data obtained from the survey include hiring
intentions, staff turnover, job vacancy, position growth/cut and staff absence rate.
 
Mr Francis Mok, President of the HKIHRM, said, “It is observed that economic growth in Hong
Kong has slowed down. Our gross domestic product increased by only 0.4% in Q1 2012 while
the figure for the same period last year was 7.6%. Still, we find ourselves in a more favourable
position. Our unemployment rate (February to April 2012) remained low at 3.3%. According to
HKIHRM’s Quarterly Survey on Manpower Statistics, both staff turnover and job vacancy rates
dropped in Q1 2012 when compared with the same period last year. However, the decrease was
not significant, which indicated that our labour market is still healthy. In fact, some sectors are
still facing severe labour shortage.”
 

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Key findings of the survey are as follows:

 
Staff Turnover and Job Vacancy [Chart 1]
 
  Percentage Trend

(weighted
average)

 
Staff 3.3%           0.9 percentage point higher than Q4 2011 (2.4%)
turnover
          0.2 percentage point lower than Q1 2011 (3.5%)
 
Job vacancy 4.3%           1.1 percentage points higher than Q4 2011 (3.2%)

            0.9 percentage point lower than Q1 2011 (5.2%)

 
 Staff Turnover
·            Top three sectors with the highest turnover rate:
-          retail (8.5%, a continuous trend since Q3 2011)
-          other business activities (7.0%)
-          community/social/personal services(5.6%)
 
     In terms of employee level, clerical/frontline staff recorded the highest turnover rate (4.1%, a
continuous trend since Q2 2007).
 
Vacancy
·            Top three sectors with the highest vacancy rate:
-          retail (13.0%)
-          community/social/personal services (9.6%)

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-          construction/property development/real estate (5.2%)

 
·            In terms of employee level, clerical/frontline staff recorded the highest vacancy rate at 4.7%.
[Chart 3]
 
 
Position Growth/Cut

·            The net growth in new positions during Q1 2012 was 0.8% (weighted average), 0.2
percentage point higher than Q4 2011 (0.6%) and 0.4 percentage point lower than Q1 2011
(1.2%).
 
·            Top three sectors with the highest net growth in job positions: [Chart 5]
-          construction/property development/real estate (2.6%)
-          retail (2.5%)
-          financial services/banking/insurance and diversified conglomerates (both at 0.6%)
 
·            In terms of employee level, both middle management/non-managerial professionals and
supervisory/officers levels recorded the highest position growth rate at 1.0%.
 
Absence Rate

Among the 78 participating companies, 50 companies provided data on staff absence. In the
survey, “absence” is defined as unscheduled absences of one or more than one day including sick
leave (paid or no paid), emergency leave and casual leave.
 
·            The absence rate in Q1 2012 was 1.9% (weighted average), same as Q4 2011.
 
·            Top three sectors with the highest absence rate:
-          manufacturing (2.6%)
-          community/social/personal services and other business activities (both at 2.3%)

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·            In terms of employee level, the clerical/frontline staff recorded the highest absence rate at
2.1% (a continuous trend since Q3 2009).
 
Hiring Intentions in Q2 2012

Among the 78 participating companies, 76 companies provided data on their hiring intentions in
Q2 2012.
 

Hiring Intention % of Companies Trend (higher or lower than Q1 2012)

remain hiring as of Q1 2012 57.9%          2.9 percentage points higher

increase hiring 25.0%          3.7 percentage points higher

freeze hiring 14.5%          5.5 percentage points lower

reduce hiring 2.6%          1.2 percentage points lower

 
·            Sectors with the intention to increase hiring are: [Chart 10]
 
-     construction/property development/real estate (50.0%)
-     other business activities (50.0%)
-     diversified conglomerates (33.3%)
-    transport/services allied to transport (storage) (30.0%)
-     wholesale, import/export, trading, distribution (27.3%)
-     financial services/banking/insurance (27.3%)
-     community/social/personal services (16.7%)
 (http://www.hkihrm.org/ihrm_eng/ih_pre_01.asp?id=152)

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Training & Development

Employees’ training and development needs were greatly addressed with a higher average
number of training hours and continuous corporate commitment to training budget, according to
the 2011 Training and Development Needs Survey by the Hong Kong Institute of Human
Resource Management (HKIHRM), which has been conducted annually since 1999 to identify
the overall training and development needs of employees as well as the most important training
topics during the year.
 
A total of 121 companies, employing over 139,000 full-time employees, joined the 2011 Survey
conducted during the period from June to August 2011. Key findings of the survey are as
follows:
 

Training Hours
 
100 companies provided data on this area. The average number of training hours per employee
per annum rebounded from the record low of 17.9 hours in 20101 to 19.9 hours this year. (Chart
1)
 
89% of respondents indicated that their employees received on average more than five hours of
training per annum. (Chart 1)
 
The retail sector provided the highest number of training hours (28.3 hours), followed by
business services/professional services (26 hours), and transport/logistics (21.1 hours).
 
Investment in Training and Development
 
119 companies provided information on their company’s training and development budget, 95
companies (80%) indicated that they had a training and development budget for 2011.
 

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The proportion of training and development budget to total annual base salary was 2.7% on
average (reported by 80 companies), 0.1 percentage point lower than that in 2010 (2.8%). (Chart
2)
 
The construction/real estate/property development sector allocated the highest budget (5.9%).
The wholesale, import/export, trading, distribution sector reported the lowest budget (2.1%).
(Chart 3)
 
 
“The survey results showed that companies realised the importance of employee training by
continuously spending on development programmes while the average number of training hours
per employee per annum bounced back this year. We can see that employers put much emphasis
on providing appropriate training for staff,” said Mr Francis Mok, President of the HKIHRM and
Co-chairperson of its Learning and Development Committee.
 
 
Training Topics
 
Talent development programmes continued to focus on “development of high potential
leaders/managers” (80% of 90 responding companies) and “development of high potential
employees” (70% of 90 responding companies).
 
“Ethics/conduct/corporate governance” remained one of the top five important training topics for
all levels of employee.
 
This year, “developing talent” was identified as one of the top five important training topics for
senior management, first time since this topic was first tracked in 2010.
 
“Greater focus on talent development and staff potential indicates that in a global war for talent,
there are increasing difficulties in recruiting top talent. Companies tended to strengthen their own
workforce by exploring staff potential across different work levels. It is important to maintain a

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well-trained and high-performance workforce who can help with their employers’ sustainability
under different economic situations,” said Mr Chester Tsang, Co-chairperson of the Learning and
Development Committee of the HKIHRM.
 
Key Challenges in Formulating Training Plans
 
The top three challenges indicated by 117 responding companies are:
 
1.          training and development priority overshadowed by other business priorities (49.6%)
2.          lacking a systematic process to survey training needs (39.3%)
3.          soliciting full support and championship from management (34.2%)
 
Judging from the top three challenges, it is found that management support and the ability to
identify training needs are important factors affecting staff development programmes.

Compensation & Benefits

Wages and Compensation

Wage levels in Hong Kong are customarily fixed by individual agreements between employers
and employees. There is no statutory minimum wage except for foreign domestic workers.

Salaries for local professionals are similar to or greater than those in the United States. This is
mainly due to the high cost of living, especially in terms of housing. Almost half of Hong Kongs
population lives in rental housing, and there is a high demand for quality apartments and houses.

Companies in Hong Kong generally give out Chinese New Year or 13th month bonuses. The
amount is generally equivalent to one months salary or more, and is usually paid in January or
February. If a bonus is mentioned in a contract, it must be paid unless specifically noted as
discretionary. If an amount is not specified, at least one months salary is standard.

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Other Benefits

Hong Kongs Mandatory Provident Fund Schemes Ordinance came into effect in December 2000.
It covers all employees between 18 and 65, including part-time workers and foreign employees.
Under the scheme, employers and employees each contribute 5% of the employees monthly
salary. The fund is transferable and can be carried to an employee’s new job in the event of a job
switch.

There are two main types of medical benefits government subsidized benefits and private health
care plans. Under government-subsidized benefits, services are available at relatively low costs.
Right now, no contributions are required from employers, but this situation might soon change,
given the territorys rising health care costs.

Under private health care plans, employers usually cover the full costs of coverage, although
cost-sharing plans are also becoming more common. Generally, employees must help pay the
cost of dependent coverage. Some larger companies in Hong Kong also make it a point to
arrange contracts with local clinics or medical chains to provide medical care for their
employees.

Disability and life insurance benefits are not mandatory. However, many companies include
these benefits as part of their medical insurance policies. As for maternity leave, less than half of
the companies in Hong Kong pay full salary during this period. Even if full salary is not paid,
maternity leave must be granted for a minimum of ten weeks.

While expatriate packages were common in the past, they have become less so in recent years.
There is currently no great disparity in the salaries of expatriates and locals in senior positions.

But for expatriate positions, housing, education and home leave can still add up to a high
compensation package. Indeed, the pollution in Hong Kong has become so severe that more than
half of Hong Kong-based companies have been forced to increase their offers to expatriates put
off by rising pollution. Firms either had to offer a higher salary package or disburse higher
housing allowances.

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Base Pay Adjustment in 2011

A total of 98 companies from 17 sectors, employing 131,406 employees and making base pay
adjustment between 1 January to 1 October 2011, confirmed their pay adjustment during the
survey period (January to October) and provided relevant base pay adjustment data for the
survey.
 
The overall average base pay adjustment recorded for the 98 companies was 4.2% ,
(weighted average)

2.3 percentage points higher than the figure recorded for the same period last year (1.9%). All
companies offered a base pay increase as compared to 95.3% in the same period in 2010.
 
By business sector (of those that provided sufficient data for analysis), companies from the
financial services sector offered the highest pay increase (5.8%), followed by the banking and
construction sectors (both at 5.2%).
 
In terms of employee numbers, 88.6% of employees received a base pay increase while 11.4% of
employees had no pay adjustment. One employee received a pay cut.
 
“An overall upward base pay adjustment in 2011 can be explained by strong economic
momentum and a buoyant job market in the first half of 2011. We saw rise in base pay by all
surveyed companies. This fully reflects the active labour market in the early period of the year,”
said Mr Lawrence Hung, Chairperson of the Remuneration Committee of the HKIHRM.
 
Bonus Payment for 2011

Of the 99 companies providing data on bonus payment, 48 companies reported that they had a
guaranteed-bonus plan, indicating that 36.5% of the total surveyed employees are eligible for a
guaranteed bonus. Among those employees awarded a bonus, the overall average bonus size was
1 month of base pay.
 

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Data collected in the past ten years illustrate a decreasing trend in both the number of companies
maintaining a guaranteed-bonus plan (from 80.8% in 2002 to 46.6% in 2011) and the proportion
of employees eligible for a guaranteed bonus (67.3% in 2002 to 36.5% in 2011).
 
Meanwhile, a total of 99 companies reported that they provided a non-guaranteed bonus plan
with 87 companies providing data on the size of bonus payment in 2011. Of their eligible
employees, 84.8% were awarded a non-guaranteed bonus, with the average bonus size being
1.43 months of base pay. This compares with 79.6% of eligible employees actually awarded a
non-guaranteed bonus of 1.21 months of pay last year.
 
“An increasing number of companies with a non-guaranteed bonus plan and more employees
covered by such plan have become a prevailing trend in the last decade. Against a backdrop of
economic uncertainty, a performance-based reward system provides employers with greater
flexibility when incentives will be offered based on individual performance and corporate
results,” remarked Mr Hung.
 
2012 Base Pay Adjustment Forecast

87 participating companies will have base pay adjustment in the period from January to April.
Among them, 54 companies indicated that they had already confirmed their budgeted adjustment
and provided data.
 
Of these 54 companies, 98.1% indicated that they would have an overall budgeted pay increase.
The overall forecast adjustment by all these companies is 5% . Meanwhile, 1.9%
(weighted average)

anticipated no pay adjustment while no company projected a pay reduction.

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Discussion

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 Human Resource Practices of Hong Kong28

Discussion:

For making an effective analysis on the HRM practices in Hong Kong I provided a look on the culture of
that country where I found them as nation like other Asian countries. Still they have Chinese involvement
in case of language and some attitudes. They feel very happy to spend their time by travelling and
cooking. They feel very happy to maintain good relation with others people of their surroundings. Again
when we looked towards the impact of industrialization in Hong Kong we found three separate periods of
industrialization and its impact to get this modern Hong Kong where development happened all the stages
of industrialization. People who are engaged with working specially the labor have a separate entity of
labor union to work according to the standards of that organization. In case of labor law they are very
much strict about the children working and having a flexibility of working for the young labor as well.
laissez-faire economy and self sufficient thinking and the impact of Chinese society established
themselves as a standard one in the world. Technological advancement is developing the country in such
a way where the day is not so far where we will identify the country as an standard one. Its efficient
business structure and telecommunication sector reach the country in such a place where the country is
expecting its position of world’s 9th largest economy. Just because of paternalistic management style
employees are very free to work according to there own. Country government also provided a helping
hand for the development of business sector.

Regarding HR practices as a whole we can see that Hong Kong is a financially strong country,
but in some cases people are becoming more interested to move to mainland China for better
opportunity and career progression. But the Hong Kong organizations are becoming booming in
recruiting local people by providing career progression opportunity through intense training
programs for the employees. Training and development through it certainly strengthens the skills
of the employees.

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Lesson learn and

Recommendation

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Lesson learn:

 From cultural perspective we found that people of Hong Kong are very punctual in case of doing
their work and they feel better to spend their time in cooking and traveling.
 We must identify them selves as a business oriented guy if we analyze their industrialization
history.
 The country still has an impact of Chinese economy if we analyze the country in a proper way.
 Though they are very much workaholic but they are very much strict about children labor and
their working.
 Technological advancement are happening in a very rapid way as a result the country is moving
towards the world 9th largest economy.
 Paternalistic attitudes towards the subordinates from the managers develop a nice working
mentality between the employees.
 Government of that country are playing a good supporting role for the business sectors and that’s
why number of local & multinational organizations are increasing in a rapid way.

Recommendation:

 Chinese cultural influence has a great impact in Hong Kong culture yet what they should avoid
and try to maintain their cultural activities according to their own.
 Different period of Industrialization affect developed the country economically with different
industrial improvement and this developmental chain should be continuing in such a way.
 Country should very strict regarding child labor where there will be not single child labor aged
below 15.
 Continuous research and development is necessary for new innovation and technological
advancement.
 Business environment with modern infrastructure and telecommunication must need continuous
improvement.
 Paternalistic attitudes must need to apply to the all organization over there.
 If country need development in case of business sectors government must need to provide a
helping to private sectors and only then overall country development will be possible.

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REFERENCE:

Wikipedia (2012). Hong Kong

Retrieve from http://en.wikipedia.org/wiki/Hong_Kong

Marimari.com (2012), Hong Kong General Information

Retrieve from http://www.marimari.com/content/hong_kong/general_info/geography/main.html

GovHK (2012), Hong Kong: The Facts PDF

Retrieve from www.gov.hk/en/about/abouthk/factsheets/docs/population.pdf

Hong Kong Country Report (2012), Data on GDP and economic information

Retrieve from http://www.gfmag.com/gdp-data-country-reports/258-hong-kong-gdp-

country-report.html#axzz21Q495uVs

Trading Economics (2012), Hong Kong Inflation Rate

Retrieve from http://www.tradingeconomics.com/hong-kong/inflation-cpi

Hong Kong Trade Statistics (2012), Export Trade Statistics

Retrieve from http://www.tid.gov.hk/english/aboutus/publications/tradestat/wmtexp_text.html

Hong Kong Economic Report (2012), Chapter 5: The Labor Sector

Retrieve from http://www.hkeconomy.gov.hk/en/pdf/er_12q1.pdf

Global Times (2012), Hong Kong attracts record high foreign investment in 2011

Retrieve from http://www.globaltimes.cn/content/719467.shtml

Guide Me Hong Kong (2010), Hong Kong a popular base for foreign companies

Retrieve from http://www.guidemehongkong.com/story/company-law/hong-kong-remains-a-

popular-regional-base-for-foreign-investment

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