With staff turnovers on the rise in Asia, companies are finding alternatives to costly in-house talent management programmes. But do they work?
Chen, an engineer with a foreign IT company in China was lured by a 40% pay jump, greater responsibilities and a glamorous job title to join a competitor. Although his new employers spent considerable time and resources developing him, Chen turned out to be an average performer. Two years on, Chen has done it again – joining yet another competitor for an even better pay package.
This is a phenomenon that has gained traction in fast-growing Asian economies like China and India. While regional HR directors work furiously to stretch their mounting budgets to attract and retain talent, the tremendous amount of cost and energy being channelled into coaching and talent management schemes simply aren’t paying off.
Statistics from Hay Group’s PayNet bear this out. Chinese managers are now leaving their positions after only two years in a job. This compares to an average of six years in Singapore and eight years in Germany. Similarly in India, the retail sector suffers from the highest attrition rate at 27%, followed by construction (25%), and communications (22%).
Singapore companies have not been spared the fierce competition for good talent either. In certain sectors like the chemicals and finance industries, PayNet statistics reveal that junior managers in Singapore are now more eager to jump ship after an average of three years in a position. Middle managers too, are ready to throw in the towel after four years.
When money isn’t everything
Rewarding talent can be a frustrating job. According to Hay Group’s Rewarding India research in 2008, an overwhelming majority (74%) felt that their organisation was effective in linking pay to market rates. Yet the attrition rate is still high. So are we getting enough bang for our reward buck?
When it comes to retaining talent, we believe many companies are missing the opportunity to use salary increments to negotiate for better employee productivity and performance. Simply put, if salary increases twofold, we should insist that performance and productivity to double – at least.
In fact, world-class companies are giving twice, if not three times, as much increment to their high performers than average performers. Poor performers are often given no increment at all. This way, line managers are able to encourage poor performers either to improve or leave.
One company’s talent
shopping ideas
Take the case of an MNC operating in the manufacturing industry for high-end consumer goods in China. Their head of HR has abandoned traditional talent management strategies of training and development or career pathing in favour of talent-spotting and buying.
By maintaining a database of hundreds of professionals with the requisite skills, his staff now focus on building relationships with these potential employees instead of training needs analysis and staff development programmes. What makes this work is the company’s willingness to pay for talent who have proven their worth in the industry. In fact, some talent will have been identified and courted for as long as two years before they are even invited to join the company.
Some companies find such an investment worthwhile as such new recruits are able to hit the ground running. Knowing that the new hire will stay only two years, his key performance indicators are also designed so as to expect results earlier. This way, employers feel that they get the performance they want, while hedging the risk of hiring a wrong person and save on resources that would have been spent talent management initiatives.
Whether in China, India, Singapore or Vietnam, one thing’s for sure – businesses are going all out to identify talents in mission-critical positions within its operations, and sparing no effort to protect these people from poachers and headhunters. Good pay and even better perks are all part of the deal if these can sustain a company’s profit and growth over a longer term.
Take the instance of a global pharmaceutical company who have identified process engineers and R&D specialists as mission-critical staff. Hence the bulk of their manpower budget is spent on retaining these talents. Their attitude is that the other jobs – even HR! – can be outsourced or even put on contract basis without adversely affecting the company’s sustainable growth.
Going back to basics
As companies continue to grapple whether to grow or buy their talent pool, most would agree that the risks of getting it wrong are high, but the returns for getting it right are even higher.
