Bangkok--23 Aug--Hay Group
Global firms face a rising talent exodus as economic and labor market conditions improve, according to a new study from global management consultancy Hay Group, conducted in association with the Centre for Economics and Business Research (Cebr).
The Thai economy is on the rise and the labor market is getting more competitive. One of the reasons is due to the government’s policy of increasing the minimum wage. As implementation takes place, many organizations are not just following the policy but also increasing more than the minimum rate so they will be able to retain their best people and compete in the labor market. AEC is another reason that increases competition in the labor market competition as employment is no longer limited to Thailand only.
For global situations, as growth builds and employment opportunities increase, worldwide employee turnover is set to accelerate in 2014, after broadly flat levels in recent years. The number of workers taking flight is expected to reach 161.7 million in 2014 ?— a 12.9 per cent increase compared to 2012.
This trend is set to continue. Average employee turnover rates over the next five years are predicted to rise from 20.6 to 23.4 per cent, and the number of global departures in 2018 will stand at 192 million.
Emerging markets are set to feel the brunt of the turnover spike first, beginning this year, while developed economies will start to see departures with a peak in 2014, when conditions improve.
Thanwa Chulajata, Country Manager of Productized Services Unit at Hay Group Thailand, comments: “Although turnover in Thailand is not so high, the minimum wage policy and the upcoming AEC results in retention of key talent being harder than before. It is easier for high performing employees to leave the organization due to competitive pay and labor market.
“To stop your employees from walking away and attract best people, using only tangible rewards may not be the best solution. Organizations must take a holistic view and design Total Rewards by using both tangible rewards and intangible rewards to create employee engagement and enablement.”
Mass migration
With average turnover rates forecast to be higher in those countries where market prospects are better, Hay Group’s study reveals a two-speed trend.1 For workers in emerging markets new employment opportunities will continue to be plentiful. Employees in the region will be among the first to take flight, while employees within crisis-hit European countries will be slower to make the move.
Asia-Pacific will experience its largest spike in employee turnover levels this year, as employment growth and wealth creation continue energizing an aspirational and mobile workforce. Organizations in the region will also experience the highest increase in turnover rates worldwide, rising from 21.5 to 25.5 per cent over the period 2012-2018 — growth of nearly a fifth.
In Thailand, turnover rate is at 13 percent. Though the rate is not high compared to global, there are signs of increasing of labor market competition due to government policy in increasing minimum wage and free flow of labor as a result of AEC. Thus, retaining your employees will harder than ever before.
Building a supportive work environment
To identify the key factors affecting employee retention Hay Group conducted a detailed analysis of their employee opinion database, which includes information from over 5.5 million employees across the world.
The research reveals that confidence in leadership, opportunity for career development, autonomy, supportive work environment and appropriate compensation are among the most consistent predictors of employee engagement and commitment.
Employees who are planning to stay in their company for more than two years score their employers over 20 percentage points more favorably on these five factors than those employees who are aiming to leave in the same period.
Thanwa comments: “Using Total Rewards through ways such as creating confidence in leadership, offering opportunities for career development, providing autonomy, providing a supportive work environment and appropriate compensation will be key factors that drive employees’ commitment and loyalty. These are essential to prevent employees from leaving the organization.”
Retention and turnover are key issues that organizations are highly concerned about. It is time for organizations to understand the situation and adapt accordingly, so that they are able to attract high performing people and keep employees from taking flight.