Anda di halaman 1dari 8

Rewarding Vietnam:

Getting off the

The loyalty talent-go-round

deficit:

The employees are restless again

Nov 2012

Asian firms performance continues to be stunted, with more than


a third of employees unwilling and unable to go the extra mile for
their organization. >>

Will the economy dip again? This is the question on the minds
of employers and employees alike throughout Asia, raising
fears of a repeat of 2009 a year of declining sales, tight
credit, and worst of all, staff reductions.
The fallout is that employees in Asia are working harder and
longer hours, having to achieve higher targets, often with
fewer resources.
A 2012 Hay Group study on employee engagement trends
concluded that more than a third of employees across the

2012 Hay Group. All rights reserved

world are unwilling and unable to go the extra mile for their
organization and company loyalty is at a five-year low.
The outlook in Asia is no better. Given the chance, one in
two employees will leave their jobs. The only other region
in the world faring worse in terms of loyalty than Asia is the
Pacific at 45 per cent.
With uncertain times ahead, how to do we re-engage
disenfranchised employees such that they become effective
again? This is the biggest people challenge for senior leaders
in 2013.

The loyalty deficit: The employees are restless again

Startling statistics
In Asia, employee engagement (which represents employees willingness to go the
extra mile) rose by one percentage point to 63 per cent, but this is still below preglobal financial crisis levels (Figure 1).

But this is still below pre-global financial crisis levels.


Singapore performed marginally lower than the Asian
average at 62 per cent. Countries such as China, India and
Thailand, managed 62 per cent, 68 per cent and 65 per cent
respectively. Only India is above the global norm of 66 per
cent.
Although Asia has been relatively sheltered from the Global
Financial Crisis (GFC), the increased uncertainty has taken
its toll on employees. Since the start of the GFC, many
employees have taken the extra working demands in their
stride. However, most of these people consider their efforts

unsustainable, given the strain it puts on their health, families


and relationships. In short, this reservoir of goodwill is rapidly
drying up.
The stagnating employee engagement levels in Singapore
point to an overwhelming focus by business leaders on shortterm results and not on long-term sustainability. To raise
levels of employee engagement, business leaders in Singapore
must give more respect to their employees need for a
healthier work-life balance and give more recognition for their
hard work. Winning the minds and hearts of all employees
will be a key competitive advantage for Singaporean
companies to succeed in the Asian century, observed Stephen
Choo, Regional Director, ASEAN, Hay Group Insight.

Figure 1: Global engagement levels


RISING

STAGNATING

FALLING

63%

69%

EUROPE

NORTH
AMERICA

64%
MIDDLE
EAST

73%

63%
ASIA

63%
PACIFIC

SOUTH
AMERICA

66%
GLOBAL

This map outlines the latest findings from Hay Group's comprehensive database, and is supplemented
This map outlines the latest findings (2011) from Hay Group's comprehensive database, and is supplemented with analysis of the data trends over five years.
with
analysis of the data trends over five years.

2012 Hay Group. All rights reserved

Disloyally yours
Our research highlights that globally, loyalty stands at a low 57 per cent, with Asia
ringing in even lower at 50 per cent (Figure 2).

This means that half of our employees do not see themselves


working at the same organization within the next five years.
Twenty-three per cent are even thinking of leaving within
the next two years - a statistic not conducive to long-term
business sustainability.
In contrast, our research also shows that in high-performing
companies, 71 per cent of employees are with their employers
for the long-term.
Hay Groups research also showed that long-term
commitment is a casualty of low levels of employee
engagement and employee enablement, with commitment
levels falling to a five-year low in every major region.
More than two-fifths (44 per cent) of the global workforce
intends to leave their employers within five years, with more
than one in five employees (21 per cent) intending to leave in

less than two years. Employee commitment is lowest in the


Pacific region, with 54 per cent of the workforce intending to
leave their companies within five years. On the other end of
the spectrum, commitment is highest in North America with
three in five employees (62 per cent) intending to stay with
their employer for five years or more.
In Singapore, 52 per cent of employees have acknowledged
their intent to leave their present organizations within the
next five years, with one in every three people planning
this shift within two years. In India, up to 58 per cent of
employees are making their exit plans.
Asias top talent is highly coveted and it is unfortunate that
organizations mistakenly think that increasing salary levels is
the answer to retaining talent and keeping them effective.

Figure 2: Global commitment levels


RISING

STAGNATING

FALLING

58%

62%

EUROPE

52%

NORTH
AMERICA

MIDDLE
EAST

58%

50%
ASIA

45%
PACIFIC

SOUTH
AMERICA

57%
GLOBAL

This map outlines the latest findings from Hay Group's comprehensive database, and is supplemented
This map outlines the latest findings (2011) from Hay Group's comprehensive database, and is supplemented with analysis of the data trends over five years.
with analysis of the data trends over five years.

2012 Hay Group. All rights reserved

The loyalty deficit: The employees are restless again

Beyond engagement
Engagement alone is not sufficient to keep employees mentally in the office; support
for success is a crucial component of an employees effectiveness.

Without such enablement, all the discretionary efforts of an


engaged employee can be best described as all sound, no
fury. Guess how quickly this employee becomes frustrated
and leaves? Or worse, remain with the organization and
becomes your resident Typhoid Mary1?
In Asia, the percentage of employees who feel that their
companies provide the right environment for them to
perform at their best, hovers around the 66 per cent mark,
matching the global norms (Figure 3). Only India and
Thailand out-perform the norm at 72 per cent and 70 per
cent respectively.
In China, the fast paced nature of the market dictates that
companies be adept at offensive actions, that is, focusing on
the implementation of business strategy and development,
but often neglect the defensive element, that is, taking
care of people. So employees are feeling a kind of double
low low engagement and low organizational enablement.
However, this double low means more room for
improvement. Chinese companies that take the first-mover
advantage to tap on the engagement and enablement of its
staff will find themselves swiftly outstripping their rivals,
observed Henry Sheng, Head of Productized Services, Hay
Group, China.
What do these three sets of data engagement, loyalty
and enablement add up to? They identify a stubborn gap
between the discretionary effort employees across the world

are willing to put into their work and the level of support
available to help them excel. For organizations looking to
harness the full productivity of their workforce, leaving this
pool of motivation untapped is clearly a wasted opportunity.
To truly drive productivity, business leaders must understand
the role they have to play in enabling high levels of
performance removing the barriers that are holding their
employees and their organizations back.
The situation in Japan can only be described as unique.
Companies here are doing all they can to enable their
employees to succeed and in return, employees are rewarding
companies with their loyalty and discretionary effort. In
particular, companies have done well in terms of removing
red tape and optimizing roles. However, employees still
feel that companies can do more to create a supportive
environment, observed Hisako Kobayashi, Senior
Consultant, Hay Group Insight, Japan.
Gaurav Lahiri, General Manager for Hay Group India
added, It is a worrying sign that Indian organizations,
despite averaging higher engagement levels than the Asia
average, find that only 40 per cent intend to remain loyal to
their present organizations in the next five years. Frustrated
employees are unlikely to persist over the long-term in
this state. Clearly, the opportunities currently available
for organizations to improve the bottom line by actively
engaging the workforce has never been so good and the
time to act is now.

1 Typhoid Mary, or Mary Mallon, was a cook in New York in the early part of the twentieth century. She was a carrier of the typhoid pathogen. While she

displayed no symptoms of the disease, she was able to infect people she had contact with. In the context of an organization, a Typhoid Mary is the employee
who spreads toxic feelings and dissatisfaction to everyone else.

2 A voluntary attrition rate of 8 per cent is a very conservative estimate by Asias standards, except perhaps in Japan.

2012 Hay Group. All rights reserved

The cost of doing nothing


Many business managers and owners protest that they are too busy; dealing with the
tougher business landscape and fighting daily fires. Who has time for intangible matters
such as loyalty and engagement? After all, shouldnt employees be content that they still
have jobs?
No. Our studies show that overcoming employee engagement
and enablement issues have a positive impact on revenue and
cost-reduction.
The financial pay-off
Our in-depth studies show that organizations who rank high
(top quartile) on engagement demonstrate revenue growth
2.5 times that of those who are ranked low (bottom quartile).
But companies in the top quartile on both engagement and
enablement achieve revenue growth 4.5 times greater.
To quantify this, consider an industry with average revenue
growth of eight per cent. A typical company with $5 billion
in revenues would see revenues increase by $400 million. A
company with top-quartile levels of employee engagement
could expect an increase of $1 billion.
And a company in the top quartile on both engagement
and enablement could anticipate an increase of $1.8 billion.
Would any company sneer at an 80 per cent increase in
revenue?

Lower staff attrition


Organizations with high levels of engagement have employee
turnover rates 40 per cent lower than companies with low
levels of engagement. But companies that both engage and
enable employees demonstrate a total reduction in voluntary
turnover of 54 per cent.
Hay Group studies estimate the cost of replacing employees
to be between 50 per cent and 150 per cent of salary. For an
organization with 20,000 employees and an annual voluntary
turnover rate of eight per cent2, the cost of turnover is
approximately $56 million (assuming an average salary of
$35,000).
Reducing the voluntary turnover rate by 40 per cent would
yield annual savings of $22.4 million. But reductions
in turnover through higher levels of engagement and
enablement would yield savings of over $30 million annually,
How would you like to reduce your cost-base by $7.5
million?

Figure 3: Global enablement levels


RISING

STAGNATING

FALLING

64%

68%

EUROPE

NORTH
AMERICA

64%
MIDDLE
EAST

69%

66%
ASIA

65%
PACIFIC

SOUTH
AMERICA

66%
GLOBAL

This map
latest
findings
from
Haycomprehensive
Group's comprehensive
database,
andofisthesupplemented
Thisoutlines
map outlinesthe
the latest
findings
(2011) from
Hay Group's
database, and is supplemented
with analysis
data trends over five years.
with analysis of the data trends over five years.

2012 Hay Group. All rights reserved

The loyalty deficit: The employees are restless again

Fixing the frustration factor


Businesses and managers cannot ignore the revenue, performance and cost-saving benefits
to be gained from engaging and enabling their staff. But how can they ensure that roles and
work environments allow employees to channel their extra efforts productively? Here are six
practical steps to increase engagement and enablement in your organization:

Performance management: Were all good at handing


out work, but were not so great at helping employees
prioritize tasks or at pulling away non-essential work.
Fix: Tell pressured employees which tasks are the most
critical, have the greatest impact on the organization, should
be done first or absolutely must be done. Dont make them
struggle to determine that on their own.
Authority and empowerment: If you think youre
empowering your employees by stepping completely out of
their way, you could be wrong. The absence of boundaries
is not empowering; its limiting. Employees who dont
understand how far their authority reaches will be fearful of
overstepping it.

Fix: Clarify the scope of employees authority. With specific


freedom to act, employees can make decisions without worrying about going too far.
Work structure/processes: Theyre meant to help
employees accomplish their routine work as efficiently as
possible. But as business conditions change, work processes
might not be relevant anymore.
Fix: Since efficient execution is only helpful if directed at the
right targets, evaluate work processes regularly to ensure that
theyre aligned with changing work demands.

Fill staff vacancies as soon as possible so you make use of


all allocated positions. Cross-train employees so they can
cover for each other to minimize the impact of absences.

2012 Hay Group. All rights reserved

Resources: There is a lot individual managers can do to


affect the resources available to their employees. People need
information, and often these can be met with a managers
diligence and attention. Increases in physical resources may
require budget approval, but managers can still have big
impact. For instance, while their hands might be tied on the
size of the staff, theres plenty of leeway elsewhere.
Fix: Fill staff vacancies as soon as possible so you make use
of all allocated positions. Cross-train employees so they can
cover for each other to minimize the impact of absences.
And, finally, evaluate whether you have the right people on
your team and are focusing them on doing the right things.

employees will not have the skills they need to keep up with
changing work demands.
Fix: Remember that the skills and knowledge that made an
employee successful in the past might not be what makes
him or her successful today. Treat training as a continuous
process.

Training. Organizations tend to emphasize training for


new hires and those who are changing roles. Too often, they
overlook the value of ongoing training for all employees. Your
organization is changing and evolving. Without training,

Fix: It is critical that organizational cultures, performance


management systems, and hiring and promotion processes
reinforce the need to balance local concerns with broader
team and organizational needs.

2012 Hay Group. All rights reserved

Collaboration: Effective teamwork requires strong


working relationships within teams, and clarity of roles and
accountabilities across teams. But in environments where its
all a manager can do to meet his or her own departments
goals, its hard to focus on bigger, companywide needs or
helping another team.

The loyalty deficit: The employees are restless again

Unleash the potential


Low engagement and enablement levels are depressing company performance in Asia.
While the global economic uncertainty has reduced
staff churn, there is a build-up of restless and frustrated
employees, which now amounts to about half your
workforce.

A small improvement in the economy and the labour market


is likely to provoke a dramatic rise in employee mobility.
Unfortunately, it is often the best-performing, highestpotential workers who are prepared to vote with their feet if
they do not feel enabled to succeed.
In short, do not let the frustration drag your company down.

About the study


The study is based on information from Hay
Groups Insight database, which includes
information from 351 organizations, representing
approximately five million employees worldwide.

Contact us

About Hay Group


Hay Group is a global management consulting firm
that works with leaders to transform strategy into
reality. We develop talent, organize people to be
more effective and motivate them to perform at
their best. Our focus is on making change happen
and helping people and organizations realize their
potential. Contact your nearest Hay Group office at
www.haygroup.com.
About Hay Group Insight
Hay Group Insight, Hay Groups survey research
division is a global leader in employee opinion
research. Through customized survey programs
focused on organizational objectives, we partner
with clients to attract and retain talent, improve
operating efficiency, manage change more
effectively, and enhance employee commitment
and organizational performance.

2012 Hay Group. All rights reserved

ASEAN
Dr Stephen Choo
Director, Insight (ASEAN)
E| Stephen.Choo@haygroup.com
China
Henry Sheng
Head of Productized Services
E| Henry.Sheng@haygroup.com
India
Amer Haleem
Country Manager, Productized Services
E| Amer.Haleem@haygroup.com
Japan
Mikito Ichikawa
Head of Hay Group Insight
E| Mikito.Ichikawa@haygroup.com
Hisako Kobayashi
Senior Consultant
Hay Group Insight
E| Hisako.Kobayashi@haygroup.com