By Samir Bedi, Broad-based Compensation Practice Leader, Aon Hewitt, Southeast Asia

In this article Attrition Retention Training & development budget Projected salary increase High performers and high potentials Contact us  About the survey

Companies in Southeast Asia have identified the retention of the right talent and the creation of a pipeline of leaders as their primary people challenges according to a Hot Topic study on Talent Challenges and Compensation Budgets in Southeast Asia conducted by Aon Hewitt. With organizations predicting a healthier business outlook as compared to 2010, management has to ride the momentum and aggressively drive business objectives. At the same time, HR professionals must focus on talent retention and Leadership development.

Attrition

The 2011 employment landscape, shaped by a more positive economic outlook, presents opportunities for employees who may be seeking alternative pastures. In 2010, voluntary attrition was higher across all employment levels with overall attrition at double-digit levels in Philippines (14.8%), Malaysia (14.4%), Singapore (14.1%) and Thailand (10.5%). Indonesia was the lowest (9.8%). (See Figure 2.) 

External inequity of compensation, limited growth opportunities and personal agendas are the most common reasons for voluntary attrition. The Sales function experienced the highest attrition rate in Southeast Asian countries, except in the Philippines where Finance and Call Center functions experienced the highest attrition. Our findings also showed that differences exist between Generation X and Generation Y when it comes to their reasons for attrition. Gen X employees indicate role stagnation and the lack of work life balance as their reasons, whereas Gen Y's explanations are based on wanting to further their studies and coping with ineffective people managers.

Retention

It is no surprise that the retention measures adopted focus on the factors that cause attrition, but are not limited to them. Employee engagement is an ongoing process driven by multiple factors that have an effect on the employee's work experience. As an average across the five countries, retention measures with the highest prevalence include:

• opportunities to learn new skills in current job,
• cross-function mobility,
• leadership accessibility,
• work-life balance, and
• separate discretionary incentives for high performers.

Notably, when questioned about the types of retention measures undertaken by their organization, participants typically selected multiple responses that cut across factors impacting an employee’s work experience.

Training & development budget

The majority of organizations in Malaysia, Philippines, Singapore and Thailand are keeping their 2011 training budgets unchanged from 2010. However, most companies in Indonesia have budgeted higher on training as compared to 2010.

Projected salary increase

While the projected average salary increase is expected to rise from 2010 to 2011, the wage rise is still not projected to reach the pre-economic downturn levels (2008) in all markets. The salary increase projections for the next cycle in Indonesia is at 9.4% followed by Philippines 7.5%, Thailand 6.0%, Malaysia 5.8% and Singapore 4.5% (see Figure 3). With continued optimism on economic growth in the region, the salary budgets are being revised upwards.

Figure 3: Projected salary increases

	Indonesia	Malaysia	Philippines	Singapore	Thailand
Percentile 25	8.3%	5.0%	6.0%	4.0%	5.2%
Median	10.0%	6.0%	7.4%	4.4%	6.0%
Percentile 75	10.0%	6.0%	9.0%	5.0%	6.5%
Average	9.4%	5.8%	7.5%	4.5%	6.0%

 

High performers & High potentials

The ability to define high performers and high potentials is key to the success of an organization. Across Southeast Asia more than 60% of companies have a process to identify high performers, of which at least 10% of the employees have been identified. In addition, more than 40% of companies have a process to identify high potentials, of which at least 7% of the employees have been identified. The key message is 1) to get high performers to feel motivated and have a sense of achievement; and 2) for the high potentials to feel they have been recognized for their skills and talent.

Rewarding talent appropriately based on the employees' contributions through variable pay in addition to the organization's reward strategy is a critical enabler to retention. Companies have moved away from times where broad approaches to managing talent still work. Today, they need customized approaches targeted at different categories to make a difference.

Contact us

For more information about Aon Hewitt's broad based compensation solutions, please contact Samir Bedi, Broad-based Compensation Practice Leader in Southeast Asia at +65.6645.0123.

 

About the Survey Aon Hewitt released its first-quarter Hot Topic study on Talent Challenges and Compensation Budgets in Southeast Asia. A total of 223 companies were surveyed between March and April 2011 across Indonesia, Malaysia, Philippines, Singapore and Thailand (see Figure 1). We examined the talent challenges faced in the market, how the competitors for talent are reacting, and evaluated retention measures and compensation budgets of the market. The full Talent Challenges and Compensation Budgets in Southeast Asia report is available at USD$300 per copy. Click here to order your copy now! Figure 1: Survey participation Country No. of Companies Indonesia 16 Malaysia 74 Philippines 28 Singapore 46 Thailand 59 Total 223