the implementation of Human Resources strategy in order to improve the management of Human
Resources and assist long-term development by exploring human resources, for example, the
combination of Human Resources strategy and business development strategy, perfection of
organization structure, optimization of allocation of Human Resources, provision of competitive
payroll system and training system suitable for business strategy development, establishment of
perfect performance evaluation system and scientific career development plan.
Nowadays, the rapid development of knowledge economy has driven organizations to gradually
migrate its focus from capital control to culture cultivation. As one of the measurements evaluating
the status of Human Resources in organizations, employment turnover ratio reflects the status of
company culture. This article points out the misunderstanding in theory and implementation when
small and medium-sized private organizations solve the problem of key personnel turnover. One of
the most serious challenges in such organizations is how to decrease the turnover rate of key
personnel and attract them staying and contributing to organizational development. Key Personnel in
Small and Medium Business (“SMB”) indicates those important, irreplaceable employees whose
performance will directly impact the business. Their irreplaceability can be explained in two aspects:
The first aspect is the rareness in labor market. An old saying states “A thing is priced if it is rare”.
The rareness in market supply leads to the fact that some employees will become, to some extent,
irreplaceable in certain operation period or environment; the second aspect is indispensability in
organizational operation. Some roles may not be as important as they seem to be, or they do not
have direct contribution to business growth. However, absence of such roles may result in
consequential or severe losses. Those are the key personnel, who cannot be replaced or replaced
within a certain period of time. The value of such key personnel is that their expertise is different
from other employees’ and cannot be easily copied. They are able to bring extra surplus value to the
organizations. Such expertise differentiates them from other common employees in social position,
organization position, personal value and personal return aspects. They are more sensitive than other
common employees and care more about respect from the organization.
Many SMBs have wrong concept in using key personnel. They hold the opinion that “Visiting
Monks Give Better Summons”. Therefore when there is any vacancy in key positions, they firstly
think about external enrollment but never think about internal promotion. They do not value
development or utilization of internal human resources. In such SMBs, usually there is no education
or training system or rules to motivate key personnel. In fact, external enrollment is very
disadvantageous to the development of SMBs. The first reason is that it is very risky to hire key
personnel through external channel. If their value cannot be combined with the organization’s
culture, they cannot display their ability or expertise to the full extent which will seriously affect the
development of the organization. The second reason is that they will increase the organization’s cost.
During its operational management SMBs usually ignore individual difference and lack horizontal
communication. It is very critical for such SMBs to design a scientific and efficient career
management system to attract key personnel. However, the career development channel and
objective designed by many SMBs is single and cannot reflect individual difference. The key
personnel cannot display their potentials to the maximum extent. In addition, SMBs always use
traditional payroll system focused on economic compensation. It is proven by many facts that the
marginal utility of material incentive decreases progressively and cannot be used as a long term
incentive method. As the key personnel, they will think more about individual growth, career
development, appreciation by supervisors, recognition by colleagues, enjoyment from the work and
chance to undertake important task solely.
The Author presents her unique insight with regard to the theories, reasons, disadvantages of high
turnover rate of key personnel and establishment of stable systems. She takes the actual turnover rate
of key personnel of Shanghai Inoherb Cosmetics Co., Ltd for the year of 2009 as the case for
research and finally provides suggestions for improvement in establishment of a stable system for
the key personnel.
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