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back to index backGLOBALtalk May,  2007


Asia Continues to Battle Rising Attrition Rates

External Inequity of Compensation Cited as Primary Reason for Changing Company, According to Hewitt Study.

Employee turnover is at an all-time high in Asia, according to a new study from Hewitt Associates, a global human resources services company. Organizations throughout the region experienced a 16% attrition rate in 2005, up from 14% in 2004.

Andrew Bell, head of Hewitt’s Talent and Organization Consulting practice in Asia, commented, As Asia’s dynamic growth agenda collides with the demographic trends of an aging population and an immediate need to attract more skilled workers, turnover is clearly on the rise in most markets in the region. In high-growth markets, it’s now easier than ever before for employees to move from one company to another, and so the complexity and cost of keeping the right people in an organization increases."

Hewitt’s Attrition and Retention Study Asia Pacific 2006 revealed the number one reason for attrition in the region is inequity of compensation, with 21% of participating organizations saying they had lost employees to organizations offering higher salaries. Limited growth opportunities and role stagnation ranked second and third respectively.

The study reports that the top retention strategy adopted by organizations in Asia is to pay above market. They are also increasingly providing the opportunity to teach their employees new skills and provide a favorable work-life balance in their bid to retain key employees. This demonstrates that companies are taking steps to address the top three reasons why employees leave an organization.

Nishchae Suri, head of Hewitt’s Talent and Organization Consulting Analytics practice in Asia, said, Pay has emerged as a popular and effective lever for attracting premium talent, and organizations are now offering increasingly lucrative packages that people find difficult to refuse in today’s highly responsive employee market. This has led to dramatic salary inflation and rising talent costs, which are cause for serious concern throughout the region.”

Attrition in Asia
According to Hewitt’s Attrition and Retention Asia Pacific Study 2006, the banking and finance sector saw the greatest employee turnover at 25%, which is likely brought on by stable economies, growing markets and increased retail investor confidence. At 23%, attrition was also high in the outsourcing industry, which has experienced unprecedented levels of growth in recent years. The lowest turnover was recorded in the manufacturing sector at 11%.

Across all industries, more than a third of participating companies (36%) agreed sales is their most vulnerable function when it comes to employee turnover. As companies compete for new business and customers, organizations are increasingly attempting to attract salespeople with strong incentive schemes.

From an employee perspective, turnover was highest at the professional/supervisor/technical level at 39% of total attrition and lowest among senior/top management at just 0.5% of total attrition. Interestingly, attrition among employees identified as high performers was considerably lower than other employees, indicating that most organizations are successfully retaining their top performers.
Suri continued, Employee retention is critical to the long-term health and success of any organization; however it is becoming increasingly difficult for companies in Asia to attract, motivate and retain key talent. Attrition rates are still on the rise, and as the war for talent becomes more intense each year, it is becoming increasingly important for companies to ensure they keep the right people in place to drive future business success.”

About Hewitt’s Attrition and Retention Asia Pacific Study 2006
Hewitt’s Attrition & Retention Asia Pacific Study 2006 surveyed more than 170 foreign-owned, locally-owned, and joint-venture companies from China, Hong Kong, India, Japan, Korea, Malaysia, the Philippines, Singapore, and Thailand, analyzing information from more than 230,000 employees.

Source: Hewitt Asia - GAI


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