Attrition rate increases 14 p.c. in Asia

HONG KONG: Employee turnover is at an all-time high in Asia. Organizations throughout the region experienced a 16 per cent attrition rate in 2005, up from 14 per cent in 2004, according to a study from Hewitt Associates, a global human resources services company.

Andrew Bell, head of Hewitt’s Talent and Organization Consulting practice in Asia, commented, “As Asia’s dynamic growth agenda collides with the demographic trends of an aging population and an immediate need to attract more skilled workers, turnover is clearly on the rise in most markets in the region. In high-growth markets, it’s now easier than ever before for employees to move from one company to another, and so the complexity and cost of keeping the right people in an organization increases."

Hewitt’s “Attrition and Retention Study Asia Pacific 2006” revealed the number one reason for attrition in the region is inequity of compensation, with 21 per cent of participating organizations saying they had lost employees to organizations offering higher salaries. Limited growth opportunities and role stagnation ranked second and third respectively.

The study report that the top retention strategy adopted by organizations in Asia is to pay above market. They are also increasingly providing the opportunity to train their staff to retain them. This demonstrates that companies are taking steps to address the top three reasons why employees leave an organization.

Nishchae Suri, head of Hewitt’s Talent and Organization Consulting Analytics practice in Asia, said, “Pay has emerged as a popular and effective lever for attracting premium talent, and organizations are now offering increasingly lucrative packages that people find difficult to refuse in today’s highly responsive employee market. This has led to dramatic salary inflation and rising talent costs, which are cause for serious concern throughout the region.”

Attrition in Asia

According to the study, banking and finance sector saw the greatest employee turnover at 25 per cent, which is likely brought on by stable economies, growing markets and increased retail investor confidence. At 23 per cent, attrition was also high in the outsourcing industry, which has experienced unprecedented levels of growth in recent years. The lowest turnover was recorded in the manufacturing sector at 11 per cent.

From an employee perspective, turnover was highest at the professional/supervisor/technical level at 39 per cent of the total attrition and lowest among senior/top management at just 0.5 per cent of the total attrition. Interestingly, attrition among employees identified as high performers was considerably lower than other employees, indicating that most organizations are successfully retaining their top performers.