Change in employee demographics creates retention problems in Philippines firms

March 31st, 2008 admin Posted in Uncategorized | No Comments »

SOURCE: ManilaTimes
DATE: March 30th, 2008

ARTICLE
Local companies are having problems in terms of keeping their employees in the organization as the demography of workers in the Asia-Pacific region changes, a human resource consulting firm recently said.

In a briefing, Watson Wyatt Worldwide, which has been providing Philippine companies compensation and benefits data and solutions, said that changes in terms of age group of work force in Asia have been proven to be a major factor in retaining employees within an organization. According to Andrew Heard, Watson Wyatt regional practice director, Asia generally has an ageing population as a result of falling fertility and rising longevity.

In Singapore, the proportion of population older than 50 years old is expected to increase from 23 percent to 50 percent over the next 25 years, and many firms in Asia Pacific are now facing a shortage of fresh skilled labor Since more affluent countries like Singapore lack a younger pool of workers, they turn to the younger Philippine population in recruiting more workers to fill their requirements, rendering local firms in short supply of talent. “For employers, hiring and retaining qualified employees is still a perennial task. More Filipinos are going abroad to seek work and better standards of living. Due to the increasing manpower demands especially from the business process outsourcing (BPO)-contact center industry, qualified new graduates are in short supply as well as other younger generation workers,” Watson Wyatt said in a research note. James G. Matti, Watson Wyatt managing consultant, said that 50 percent of those that leave their companies go abroad while the other half are pirated by competitors. To retain its employees, firms have to look into the factors that make employees stay and be flexible about it. The consulting firm found that the number one concern or factor for staying in a company among Filipino workers is the compensation package, followed by job security and third is employee benefits. The BPO or outsourcing and offshoring (O&O) industry has the highest average turnover rate among all other industries which is at 23 percent a year, particularly in the voice-related services which has about 46 to 53 percent turnover rate per annum. Matti said BPO firms have tried the cash-heavy route, like giving bonuses, to entice workers to stay. “However, that didn’t work. Now that things have moved on to a more predictable level, BPO firms are now moving on to offering more health and life insurance,” he said. Employers should also be responsive to the needs of employees in terms of giving them a choice in the type of benefits they receive. Since the Philippines moved from an older to a younger workforce in recent years, especially with the boom of the BPO industry, the choices of employee benefits have changed. Some companies now have given workers a choice of whether to monetize their life insurance benefits, since younger people tend not to worry much about saving and retirement and instead they are more concerned about instant gratification like traveling, gym or spa benefits. Older workers, on the other hand, choose life insurance and medical benefits over tangible material things since they have their families and dependents in mind. “Benefits like iPods and laptops are now fading since it is too costly for companies to sustain,” Matti said. Instead, firms are being flexible with the insurance and medical benefits and the employees choose what is the best package for them. “The Philippines, second to Singapore, has the best medical and insurance programs among the Southeast Asian region. However the challenge is inflation, which pushes medical costs by 58 percent higher annually,” he said.

Mounting inflation aside, Watson Wyatt has been advising companies on how to implement total remuneration and flexible and benefits. By tailoring their benefits to suit their needs, companies have a better chance of retaining employees. The firm claims that 92 percent of firms that adopted the flexible benefits system reported an increase in employee retention

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