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THE CHALLENGE OF TALENT RETENTION IN

TODAY'S GLOBALISED

ECONOMY
Mohd Hanif Ismail and Adrian Chia
n today's volatile global economy, organisations are struggling to establish and maintain an effective and affordable attraction, retention and engagement

The survey also found that not all employers are taking advantage

skategy. Along with accelerating changes in talent markets and workforce demographics that affect how employers find and keep employees, cost challenges continue to play a major role and will do so in the decades to come. ln fact, for companies in many parts of the world, cost
containment remains the greatest concern.

of opportunities to aitract and retain high-value employees by offering the rewards most important to them. Growing global
competition is resulting in demand for the right talent to be stronger

than ever with the stakes for attracting, keeping and engaging
critical-skill talent heightening.

Never in recent history have we seen such rapid changes in economies and workforce demand and availability. Even as
organisations continue to rein operational costs, many push higher

their expectations for employee and financial performance. As a result, the workforce is often demanded for greater efforts without the compensation of greater rewards. HR Asia looks at several recent surveys and reports on talent engagement and retention to identify the common themes in
coming up with a workable strategies to deal with the issue of talent retention in today's globalised economy.

ln addition, data from Towers Watson's 2012 Global Workforce Study show that employees are experiencing high levels of stress at work. ln the Talent Management and Rewards Survey, more than half of all employers report that employees have been working more hours than normal for the past three years. Nearly as many employers (43%) say they expect to maintain that pace for the next three years as well.

As they shoulder these growing challenges, it's no

wonder employees are increasingly anxious, risk averse and securityminded. ln the Global Workforce Study (GWS), workers continue to express serious doubts about accountability, preparedness for their futures, career advancement and, most critically, rewards for
their performance.

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TALENT MANAGEMENT ANI)

REWT,RDS SURVEY
2012
WorldatWork and Towers Watson, which surveyed 1,605 employers globally found companies having difficulty attracting and retaining the high potential and critical-skill employees necessary to increase their global competitiveness. Almost three in four organisations report difficulties attracting critical-skill employees, and more than half report difficulties retaining them.

2013 Talent Management and Rewards Survey by

The complexities of managing a global workforce - addressing external factors affecting the competitiveness of cost structures, sourcing talent and understanding people across cultures have rendered the work environment unsettling, at best, for both this uncertainty, one employers and employees. And through
constant is the pressure to tightly manage cosis.

According to the study, organisations continue to shift some of their increasing cost and risk burden onto employees, while at the same time try to find a formula to avoid the potential impacts of this strategy on attraction, retention and business performance.

None of which speaks to engagement, which will be threatened if this pace continues. Employers have essentially driven hrgher
performance while at the same time depleting the fuel that powers the engine of the organisation. Asking employees to work so hard for so long is not conducive - and not only to individual employees, but the organisation itself as a whole.

"Employee loyalty has been eroding the past few years due to companies' responses to the economic downturn," said Loree

Griffith, Principal with Mercer's Rewards consulting business in the US. "Actions like layoffs, pay freezes and limited training opportunities have created an evolving employment deal for employees due to uncertainty about what is expected and how
employees will be rewarded. Meanwhile, firms are still aggressively managing people costs while finding ways to re-energise and remotivate engaged employees."

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However, while this report presents a frank perspective on today's work environment, it also highlights the organisations that get the employer-employee balance right and win significant returns from doing so. As employers endeavour to deliver profitable growth in a period of economic volatility, their focus needs to be on crafting and communicating an employee value proposition (EVP) that helps to attract and retain employees with critical skills, and engage all workers by striking a reasonable balance between employee and employer needs.

Mercer's 2012 Attraction and Retention Survey examined the challenges, strategies and tactics organisations are using to promote employee attraction, retention and engagement, The
survey included responses from more lhan 470 employers across all industries throughout the US and Canada. Turnover is another factor contributing to the attention erlployers

Achieving these objectives requires focusing scarce programme resources on the key drivers of sustainable engagement, and sharpening and differentiating the organisation's EVP for critical
employee segments. Some companies are more effective at this than others. The result? Organisations that have segmented the workforce and that deliver customised EVPs for critical employee segments are nearly twice as likely as companies with more tactical and less integrated EVPs to report financial performance substantially above their peer group.

are placing on employee engagement. Almost 60% of participating organisations are anticipating increases in voluntary turnover as the job market and economy continue to improve. Additionally, Mercer's survey shows that certain positions are more soughtafter than others because of skills shortages and market demand. These "hot jobs" include information technology, R&D/scientific engineering and executives/top management. "Employees with the 'right' skill sets are in demand," said Loree. "Despite the increase in hiring, many firms are experiencing talent shortages due to critical gaps between skills employees possess and skills businesses need. Now more than ever, firms need to engage and develop their high potential employees and critical workforce segments."

Key findings from the survey: Attraction i:( Almost three-quarters of survey respondents (72o/") cile
problems attracting critical-skill employees.

)i( About six in 10 have difficulty attracting high poterrtial and topperforming workers (60% and 59%, respectively). )ia

ln addition,
populations.

43o/o

have problems attracting diverse employee

Rewards, both cash and non-cash are continuing to play an important role in fostering employee engagement and retention, particularly in times of reduced base pay increases and smaller bonuses. According to Mercer's survey, merit increases are back, with the large majority (95%) of organisations providing some form of increase lor 2012.
However, cash rewards are not the only consideration. As of 2010, organisations today are continuing to enhance the use of non-cash rewards to drive employee retention and engagement, particularly during times of limited merit budgets. The most prevalent non-cash reward programmes implemented by organisations over the past 1 8 months include: communicating total reward value to employees (offered more by 25% of participating organisations), use of social media to boost employees' work experience (25%), formalised career paths (22%), internal/external training (22%) and special recognilion (22%).

Retention
,i.. Almost six in 10 companies report difficulty retaining critical-skill employees; similar proportions have difficulty retaining highpotential employees and top performers. ;* More than four in 10 respondents also cite issues retaining employees with tenures of 18 months to three years.

Sustainable Engagement ,ii Employers that have segmented the workforce and deliver
customised EVPs for critical employee segments are more than

four times more likely to report that their employees are more highly engaged than organisations with more tactical and less

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integrated EVPs. More than three times as many employees (58% versus 16%) are highly engaged at companies that have highly effective EVPs than at companies with low EVP effectiveness.

Many of these programmes are consistent with those used two years ago. However, more organisations are using programmes such as social media and team building events to enhance the work experience. ln addition, the provision of training programs
has expanded since 2010.

2OI2 ATTR.H,CTION AND RETENTION SURVEY

According to Mercer's 20l2Attraction and Retention Survey, more than 40% of participating organisations are expanding their overall workforce in 2012 compared to only 27% in 2010. Moreover, fewer organisations today than two years ago are making selected

Although use of non-cash rewards continues to grow, top reward elements that organisations expect to have the biggest impact on employee engagement and retention in 2012 are base pay
increases (reported by 50% of participating organisations), followed by vertical career progression (47%) and leadership development (46%). Other reward elements that are viewed as moderate impacts on employee engagement and retention include variable pay, health care benefits, work life programmes, performance management, time off programmes and training.

reductions to their workforce (16% versus 25%, respectively) Yet despite this positive news, almost twice as many organisations

today are reporting reduced levels of employee engagement

compared to two years ago (24o/o versus 13%, respectively).

"While non-cash programmes like work ltfe initiatives and formal career paths are important for employee engagement all the time, employers must revisit pay in light of the changing business

)k A majority

to stay competiiive, retain their top-performing employees and ultimately buy or build required skills for the future," said Jeanie Adkins, Partner and Segment Co-Leader of Mercer's Rewards consulting business in the US.
environment

(42%) of respondents who have been seeking new employment believe their job does not make good use of therr skills and abilities" Moreover, surveyed employees who are planning to switch companies cited a lack of career progress (37%) and a lack of challenge in their jobs (27%) as the two top factors influencing their career decisions.

TALENT

2O2O

REPORT

The economic turbulence of the past few years has created a talent paradox: amid stubbornly high unemployment, employers still face challenges filling technical and skilled jobs. Deloitte first uncovered this modern contradiction from the employer side in its report, The Talent Paradox: Critical skills, Recession, and The lllusion of Plenitude.

Focus on "turnover red zones": Turnover intentions appear to be concentrated among specific groups of employees at certain points in their careers, creating "turnover red zones" or employee segments at high risk of departure. Effective retention strategies should be aligned with the needs and desires of critical talent, especially when'they belong to groups with a high risk of turnover.

a better understanding of the latest employee attitudes and emerging talent trends, Deloitte Consulting LLP teamed with Forbes lnsights to conduct a survey of employees working at large companies worldwide. The September 2012 repod, the fourth in Deloitte's Talent 2020 series, surveyed 560 employees across virtually every major industry and global region. ln this new Talent 2020 report, Deloitte turn its focus to the employee perspective on the talent paradox.
To help employers gain
Through the lens of the employee, this paradox produces some interesting findings. ln Deloitte's most recent global survey of employees, B0% indicated they plan to stay with their current employers in the next year-a significant 4S-point swing compared to its 2011 survey. Yet, at the same time, nearly onethird (31 %) of
surveyed employees reported they are not satisfied with their jobs. These findings highlight the fundamental question in the employee talent paradox: Are employees truly satisfied? Or are they simply

;,l' Employees with less than two years on the job expressed the strongest turnover intentions, with 34% indicating they expect to have a new job within a year. Keeping high-performers and high-potentials beyond two years appears to increase their
likelihood to pursue a career company.

or part of a career

with your

*a Just over one-quarter of all Millennials surveyed (26%, age 31 and younger) reported that they plan to leave their employers
at some time in the next group.

year-the highest of any generaiional

When

it comes to retention, employees are telling us that leadership matters:

accepting their fate by "making do" with their current employers because of a difficult job market?
Companies seeking to thrive given today's challenging competition for talent cannot give way to complacency in the face of seemingly high retention numbers. Nor can they neglect iheir talent and retention strategies based on the erroneous "employees have few options in a tight job market" sense of security.

A workforce is far more engaged and committed when it trusts its leadership, receives clear communications about corporate strategy, and believes its leaders have the ability to execute that strategy. In other words, employee retention is not simply a HR function; it should be driven by business leaders.

More than six in ten employees (62%) who plan to stay with their current employers reported high levels of trust in their corporate leadership, while only 27o/o of employees who plan
to leave express that same trust. ln addition, 26% of those who

plan to leave their jobs in the next year cited lack of trust in
leadership as a key factor of their departure. From the various surveys and reports pertaining to the topic, it is clear that the challenges of crafting effective employee retention strategies are definitely complex and multi-faceted. The strategies of employee retention are definitely not restricted to only salaries or non-cash incentives, but also encompass the aspect of trust and respect of and by the management, clear career direction and ample growth opportunities amongst various others - many of which perhaps lie outside the realm of traditional HR. Sentiments of being undervalued, lack of decision making power and lack of coaching and feedback are some of the most popular reasons for someone to leave an organisation. Tackling the challenge of talent retention through compensation alone may work on a shortterm basis; but ultimately, not holistically addressing the issue will only result in the demise of the organisation in the long run. lll

lnstead of addressing broad concerns with turnover as seen - targeted employers now face a more challenge. They need to adjust their talent management initiatives

in previous surveys

to focus on retaining employees with critical skills who are at a high

risk of departure and the capable leaders who can advance their companies despite continuing global economic turbulence. Based on the survey results and on Deloitte's analysis of the talent market, Deloitte has identified three emerging challenges:

Engage employees with meaningful work...or watch them walk out the door: Employees value meaningful work over other retention initiatives. Survey respondents who reported companies using their skills effectively were found to be more likely to stay with their current
employer.