What drives employee turnover in ASEAN?

Faced with a growing shortage of skilled workers and the challenging reality of transitioning employees back to on-site work, companies in Southeast Asia (Indonesia, Malaysia, Thailand and the Philippines) are finding it more difficult to attract and retain talent. Dissatisfaction with pay and benefits, and limited career advancement have emerged as the primary drivers of higher-than-usual attrition levels.

This is according to Mercer’s latest COVID-19 pulse survey that polled more than 850 employers globally, who have had to deal with labor shortages and return to worksite plans, including vaccination policies and worksite safety protocols that are constantly evolving as a result of the pandemic.


Higher turnover but harder to hire mid-career professionals

Most of the respondents in the Philippines observed a higher turnover rate, especially at the mid-career level when compared to past years. 67% of the employers listed employee dissatisfaction with pay as the main cause for attrition, followed by the employee’s ability to get better benefits at another company (52%) and limited career advancement (41%).

With more mid-career professionals leaving their jobs, employers are also finding it more difficult to recruit them, primarily because of the inability to find the right skills at the right price. More than half of the survey’s respondents experienced moderate to significant difficulty in attracting mid-career hires, compared to recruiting senior executives (33%) and entry-level positions (13%).

Teng Alday, CEO, Philippines, Mercer, said: “For organizations to thrive in this new work environment, it is important to look beyond the pandemic and understand what is needed to address workforce challenges. This means that there is a need to review the organization’s trajectory, reset priorities, and redirect attention to key issues that really matter – taking care of the workforce’s needs today and leading on tomorrow’s transformation. Companies can no longer take business, workforce, culture or HR transformation in isolation. The future of work is no longer about gaining a competitive advantage, it is about staying relevant.”


Employees look for more than just financial incentives

Looking at factors that influence a company’s ability to attract and retain workers, employers have been using financial incentives such as implementing employee referral bonuses (48%), enhancing total rewards packages with new benefits (36%) and paying higher than market rate wages (31%). However, the disruption caused by COVID-19 has put the spotlight on factors beyond financial incentives.

Majority of the survey’s respondents felt that while having a reputation of being a “great place to work” (69%) helps to attract talent, it is eventually the organization’s culture (86%) that helps to retain talent. This is why employers have taken action in areas such as enhancing workplace flexibility as well as providing more well-being and mental health support.

Commenting on the findings, Godelieve van Dooren, Mercer’s CEO for the South East Asia Growth Markets, said: “The pandemic accelerated the need for employers to reassess their talent strategies and if a company wants to retain talent, it should focus on understanding why employees want to stay and work on those motivations. If competitors for talent offer more benefits in the same areas, the inertia for employees to stay is weakened, outside job opportunities become more attractive and it will be more difficult to attract and retain talent. Companies must reinforce the right reasons and take a positive approach to managing retention, which will be more effective over the long run than simply reducing turnover.”