Firing staff is an emotionally charged task that many HR and management staff are being asked to perform right now in China.

Some cases of firing are simple responses to the economic downturn but HR should be aware that not everything is what it seems. There are many ways to skin a cat.

Set out below are some of the tactics that should be considered around the theme of firing. Many are being used right now. Some methods have hidden agendas, and others deliberately hide layoffs:

A … Ban overtime, reduce pay or limit production to 3 days a week. If you have not introduced a ban on overtime, or reduced the number of shifts you operate, consider yourself lucky. You must be working in an industry that has somehow weathered the economic storm really well. Pay cuts for management and staff are an easy choice to support as they can be sold as a means to a business end: survival.

B … Replace existing junior staff with part-time staff, interns or more junior staff that will not look for so much salary. Universities in China have produced millions of unemployed graduates this year. They are entering a market where there are few jobs, and fewer choices. The smart ones will accept almost any job offer given to them. The not so smart ones will take money from their parents, and wait for a ‘well paid job’ to come along.

C … Another option that is being seen in the market is for companies to ask staff to take prolonged unpaid leave. This avoids the prospect of a labor dispute, and obviates the need for redundancy payments. It should be covered by the new labor law under the rubric of major changes in objective circumstances.

This ‘leave’ can range from one month to one year, and it is likely that many of the people who take the one-year leave option will not come back. This is especially true for production workers from the West of China, who may simply never return to the East Coast. Some will find work back in their home town, others will take an offer in another company in a different city at some later date.

Note the use of the word ask in relation to unpaid leave. If the employee does not accept the option of unpaid leave, and they are not subsequently paid, then they have been fired, and compensation is likely to be demanded. From their labor lawyer.

D … Bring forward a decision to move inland. This is a very high risk strategy but it will cause a push-back from many of the professional staff, who will refuse to move. In some cases, this is the likely agenda of the management as the staff’s only option is to find a new job. In the past this was the worry, now it appears that sometimes it’s the strategy.

This will only work for companies that produce goods with a viable market ie. one where consumers are still buying. It works for products that are very price sensitive, and company can capture market share by reducing their price. It certainly does not work for companies that produce a product for which there is little existing demand. There is little point in moving to Chongqing if your customers have stopped buying plastic shoes or christmas tree lights.

E …. Some companies give the impression that they are responding to economic conditions when they fire, but the suspicion is that they are taking the opportunity to fire people who have not performed adequately well. Until recently, the balance of power was in favor of the employee because companies wanted to have someone, anyone, in any given position. This is no longer the case.

You can’t blame companies for this change in attitude. China’s economic success has created a generation of younger staff who have known nothing but multiple job offer, and who are just plain ‘precious;. A lot of this generation may be in the process of realizing that you have to offer value-added in return for that salary at the end of the month. Sitting and waiting doesn’t cut it.

F … Some companies are clearly putting pressure on staff, and waiting for them to make their own decision to resign. What is surprising is how little pressure is needed to get this result with the current generation of professionals. It appears to be a combination of an unwillingness on the part of the employee to face difficult challenges, combined with the escape route of a new job, and the honeymoon period that this provides before the employee is found out again. There is much more to this than but that is for a different post.

G … Many companies are firing expatriates and replacing them with local PRC staff. This has been going on for years, but the speed right now can be astounding. Foreign managers are suddenly not in attendance at their local church, or basketball practice, and by the time questions are asked they are already winging their way back to their home country.

H … One little surprise is that companies are now beginning to fire Returnees, and replacing them with, of all people, foreigners on local packages.

The logic of this is that over the last few years Returnees were among the people who got the most out of the economic boom. They were the winners, but their salaries drifted up and even exceeded that of some expatriate staff. Now they are just as vulnerable to cost cutting measures as their expatriate brethren.