Survey by human resources firm reveals companies expect higher voluntary attrition
Companies in Southeast Asia are forecasting a positive outlook for the rest of this year with about 90 per cent in a survey indicating either stabilisation or improvement of business.
The biggest concern for companies in 2010 is retaining employees who are more likely to explore external opportunities, given that the fight for talent is becoming increasingly intense, according to a Hot Topic Survey conducted by Hewitt Associates, a global human resources consulting and outsourcing firm.
The survey, which examined attrition and retention for the past two years, also revealed that about 40 per cent of companies expect higher voluntary attrition this year across the region. Singapore expects to see the highest increase in voluntary attrition with almost 50 per cent of companies expecting higher voluntary attrition as compared to previous years.
Despite the uncertain economic climate in 2009, voluntary attrition in Southeast Asia averaged 11 per cent, which was still rather high. We find that many companies had curtailed retention efforts during the economic downturn, either due to cost containment or there was no sign of attrition. These companies should immediately look into their retention strategy else they risk losing their key talent when the employment market picks up.
"Over the last two years, we saw some high prevalence of lay-offs within Southeast Asia. About 40 per cent of companies had laid off employees and the average reduction in headcount was about 10 per cent. This has two major impacts on organisations today. First, those that laid off employees in 2009 would find themselves with diminished bandwidth to respond quickly to the improving economy.
"Second, the bar of talent within companies has been raised, while talent readily available in the external job market could have dwindled. Companies looking to recruit are therefore likely to look within their competitors' offices. This will be a challenging year for HR," says Surendran Ramanathan, leader of Hewitt's Southeast Asia Rewards Delivery Centre.
According to Hewitt's survey, the key reasons for attrition across Generation X and Y are usually "external inequity of compensation", "limited growth opportunities" and "personal reasons". However, there are a few intricate differences, for example "internal inequity of compensation", "people managers" and "role stagnation" reflect key attrition reasons for Generation-X employees while "lack of recognition" and "further studies" show up strongly as characteristic attrition reasons for Generation-Y employees.
In response to these attrition reasons, companies attempt to devise effective retention measures to hold on to key employees. A few innovative ideas revealed through the survey:
-Fast career track for high performers
-International assignments for high performers
-Mentorship programmes
-Three- to five-year plan tailored for each employee on talent development
"Companies that strive to understand employee needs are generally more successful at generating a winning team. Hewitt's survey showed that designing high-potential programmes for identified key talent is the current trend among these companies," Ramanathan says.
"Currently, about 60 per cent to 70 per cent of companies have a process to identify high performers, and about 10 per cent of employees are typically earmarked as high performers within organisations.
"The survey findings also reveal that companies across the region are expected to provide a higher increase in the next year. In Thailand, the salary increase is projected to be 5.4 per cent this year, as compared to the average of 4.0 per cent given last year. This is a reflection of the positive business outlook that companies are beginning to experience. However, we would need to wait and see the impact of the recent political turmoil on the economic recovery and its implications on the business outlook."
The highlights from Hewitt's survey include:
-Despite the uncertain economic climate last year, voluntary attrition in Southeast Asia averaged 11 per cent, while Thailand averaged 9.4 per cent.
-Across the region, more than 30 per cent of companies expect higher voluntary attrition in 2010 compared to 2009. Companies in Singapore expect to see the highest increase in attrition with 41 per cent of companies expecting attrition to increase slightly and 6 per cent expecting it to increase significantly. Most companies in Thailand expect the attrition rate to remain unchanged.
-Similar trends are seen in the region on voluntary attrition reasons for both Generation-X and Generation-Y. Some key differences in attrition trends are "people managers" for Generation-X and "further studies" for Generation-Y.
-Across all Southeast-Asian markets, "cross-function mobility" and "opportunity to learn new skills in current job" are seen commonly as important ways to retain employees.
-As the economic outlook improves in Southeast Asia, companies are expected to provide higher salary increases. In Thailand, projected next salary adjustment averaged 5.4 per cent. This projection is higher than the previous projection made by companies in September 2009.
The survey was conducted by Hewitt on 265 foreign, locally owned and joint-venture companies in primary research from March-April.