Employers in China who are fretting about surging salaries on offer to talented staff may be encouraged by evidence that employees are looking for more than a fat pay packet.

While job-hopping is rampant amid a talent shortage, there are growing signs that many mainlanders would be happy to stay with an employer if staying meant career development and a good working environment.

“Clearly the China market is hot and people are changing jobs for better pay. But pay is not the be-all and end-all,” said Gary Burnison, chief executive of U.S.-based recruitment firm Korn/Ferry International.

“People want to feel they are treated well and that they belong.”

In China, people often leave a company because they cannot get on with their immediate boss or feel they have no role to play, Burnison said.

Now some companies are making employee relations a big priority.

Nanfang Lee Kum Kee, maker of sauces and health products in Guangdong province, has introduced a “happiness index.”

Any time a manager meets a member of staff he’ll ask how happy the employee feels on a scale of one to 10. “If the number drops the supervisor needs to find out why,” said Sammy Lee, managing director of Nanfang.

“We want to make sure everyone is happy.”

This approach may be unusual in China but Nanfang enjoys a staff turnover rate of less than 10 per cent — in manufacturing where turnover rates of 50 per cent are not unusual — and was voted among the 10 best employers in Asia this year by global human resource company Hewitt Associates.

“Pay is not the key issue,” said Lee. “You’ve got to pay the market rate if you want to be competitive, but you also have to encourage staff to engage in their work and be happy.”

In a Hewitt survey, conducted every two years, career prospects replaced pay this year as the top motivation for employee engagement at 154 foreign and local companies in China.

“Compensation is critical in attracting staff but in terms of retaining people in China other things such as working environment, training and career opportunities become more important,” said Heather Wang, head of human resources for General Electric in China.

As a global company, GE can offer long-term careers in a variety of industries and countries but says it faces a challenge in developing staff quickly to keep pace with business expansion in China.

“We want people in China to get to the next level a year earlier than we would in more mature markets,” Wang said.

Career development requires investment in personal skills because Chinese workers often are held back by a rote-learning-based education system that stifles creativity, employers say.

GE says its China leadership program puts more emphasis on training in negotiating skills and working on projects outside an employee’s normal sphere of business.

A survey of multinationals by Korn/ Ferry shows a lack of innovation and creativity as the biggest challenge to finding leadership talent in China, after lack of international experience and poor ability to adapt to Western corporate culture.

Lee at Nanfang advocates “invisible leadership” that forces staff to take initiative.

He says he probably spends more time on the golf course, where he can think about strategy, than at work; delegates staff to deal with his e-mails; and does not possess a Blackberry or a computer, even in the office.

If the company is entertaining clients or holding events, staff decide how it will be organized.

“In most companies managers make the decisions and employees follow. We try to turn that upside down,” Lee said.