Monster’s ChinaHR in HR Standoff 中华英才网陷入裁员风波

Chinese employees are quickly discovering that working at a major foreign firm doesn’t necessarily guarantee lifetime employment, even when that firm is a top global name like online employment specialist Monster Worldwide (NYSE: MWW). Less than 3 months after announcing plans to exit the China market through sale of its local subsidiary, ChinaHR, Monster is quickly discovering that many of its Chinese employees hardly expected that they could ever be laid off and are refusing to accept the company’s plans to offer them severance packages. (English article)

The case is similar to one last year involving former cellphone giant Motorola, where a group of senior engineers in Nanjing refused to accept layoff packages, saying they wanted to continue working for the company. These kinds of stories could only happen in China, where high expectations of big-name foreign firms combined with lingering images of lifetime employment at big state-run companies lead many people to believe that a job at a big-name foreign firm equates to a lifetime employment guarantee.

Of course this is far from the truth, and anyone who has lived outside China knows that big-name western firms regularly go through this kind of overhaul and retrenchment, which is one of the reasons they can maintain their status as global leaders. But that reality has yet to enter the consciousness of most Chinese, with the result that many are shocked and go into deep denial when they get lay-off notices from their major western employers, even when there were numerous warning signs that such lay-offs were coming.

Let’s take a closer look at this latest human resources nightmare, which is ironically occurring at a company that’s supposed to specialize in HR. Media are reporting that ChinaHR has implemented a plan to lay off about half of the workforce at its Beijing headquarters, with employees being offered severance packages based on how long they worked at the company. The layoffs come after US-based Monster announced a major overhaul in November, which included plans to sell most of its global assets as it focused on improving performance at its core US business. (previous post)

At the time, Monster said it was specifically looking to sell ChinaHR, a company it began buying in 2005 through a series of stake purchases. It ultimately bought the entire company for a total of $225 million, though ChinaHR was reportedly still losing money when Monster announced its intent to sell the unit late last year.

Fast forward to the present, when this latest round of layoffs is clearly designed to quickly move ChinaHR into the profit column as Monster seeks to find a buyer for the company. The only problem is, some 200 ChinaHR employees have refused to accept the buyout packages they were offered and began a sit-in at the company’s office on Tuesday evening to protest the decision to cut their jobs. Some of those simply didn’t want to leave the company, while others wanted more money. What’s more, the employees reportedly detained a top ChinaHR official and a top Monster official sent over from the US to deal with the layoffs, and refused to let the 2 men go.

Of course every country has these kinds of labor-related issues, especially when layoffs or salary cuts are involved; but that said, this kind of sit-in to protest lay-offs and detention of top company executives by unhappy employees seems like a particularly Chinese phenomenon. The reports don’t say if the impasse has been resolved, and it’s quite possible that the unhappy employees resorted to their extreme tactics simply to get a better severance package.

Still, this kind of development highlights the very real risk that foreign employers face in China when they try to implement unpopular moves like layoffs or salary cuts, as they face potentially strong resistance from employees who don’t expect such actions from their big multinational employers.

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