Dissatisfaction with pay, benefits, career advancement key drivers of employee turnover


Employers now have to deal with labour shortages and return to worksite plans, including vaccination policies and worksite safety protocols that are constantly evolving as a result of the pandemic. — AFP photo

KUCHING (October 13): 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.

However, 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.

Employers now have to deal with labour shortages and return to worksite plans, including vaccination policies and worksite safety protocols that are constantly evolving as a result of the pandemic.

Most of the respondents in Malaysia observed a higher turnover rate, especially at the mid-career level when compared to past years.

The survey showed that 57 per cent of the employers listed employee dissatisfaction with pay as the main cause for attrition, followed by limited career advancement (41 per cent) and the employee’s ability to get better benefits at another company (32 per cent).

It also pointed out that 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. About four in 10 of the survey’s respondents experienced moderate to significant difficulty in attracting senior and mid-career hires, compared to recruiting entry-level positions (10 per cent).

Mercer Malaysia Career Business leader Koay Gim Soon commented: “Companies in Malaysia, especially small to medium enterprises, have had to deal with higher turnover and retrenchment rates in these difficult times.

“However, we see more multi-national companies stepping up their recruitment this year to support business recovery and growth. In a market that is still short of skilled workers, mid-career hires are in demand because they have considerable experience as well as the potential to be groomed as future leaders.

“And with factors such as workplace flexibility becoming the expectation, it is not surprising for employees to look for more than compensation and benefits in their next move.”

Looking at factors that influence a company’s ability to retain workers, employers have been using financial incentives such as increasing promotion opportunities (31 per cent), paying higher than market rate wages (29 per cent) and implementing retention bonuses (24 per cent).

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” (77 per cent) helps to attract talent, it is eventually the organisation’s culture (80 per cent) 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, Mercer’s chief executive officer for the Southeast Asia Growth Markets Godelieve van Dooren said: “The pandemic has accelerated the need for employers to reassess their ability to retain talent in the face of a tight labor market and skills shortages.

“Rather than just focus on what’s driving attrition, employers should consider what will make their employees stay.

“While there is a tendency to compete for talent using financial incentives and rewards, it’s not sustainable in the longer term and is easily replicated by competitors.

“More intangible drivers like culture, workplace flexibility and career progression will be key competitive differentiators for companies to hold on to their most prized assets – their people.”