STAFF COSTS ESCALATING FOR MLES

 

Kuala Lumpur 10 April 2008 - Globally, 63 per cent of Medium to Large Enterprises (MLEs) are paying significantly more in staff costs than a year ago according to the International Business Report, produced by Grant Thornton International. China (91 per cent), India (85 per cent) and Turkey (83 per cent) have the highest percentages of businesses reporting higher staff costs. In the case of Malaysia, the percentage of MLEs stating that they are incurring higher staff costs stands at 74 per cent higher than the global average of 63 per cent.

Malaysia member firm SJ Grant Thornton Managing Partner Dato’ N.K. Jasani says, "Significantly, it is the emerging economies that are being hardest hit by increased staff costs. They are facing higher pressures of increasing staff costs due to their rapidly expanding economies. For Malaysia this increase in staff costs and tight job market are particularly pronounced for skilled workforce. For the unskilled sector a substantial portion of the workforce is made of foreign workers. There is therefore, an imbalance in staff costs pressures between the two sectors. “Our Government has taken steps to train more relevant skilled workers. There are now proposals to reduce foreign unskilled workers and have a minimum wage policy. The above, when implemented, will enhance the skills and raise incomes for the lower levels of the Malaysian workforce,” elaborated Dato’ Jasani.

Businesses are more focused on recruitment and retention of staff than they were 12 months ago. The survey found that 59 per cent of MLEs are more focused on finding and retaining employees than they were a year ago. Emerging economies were most focused with Vietnam top with 84 per cent of businesses more focused, followed closely by mainland China (81 per cent).

Dato’ Jasani continues, "Staff shortages and an increasing awareness of the importance of people to competitiveness are driving MLEs to take action on recruitment and retention policies."

64% of IBR respondents are working to improve retention by ensuring that all employees understand the company's core values, making this the most common means of engendering employee loyalty. MLEs are also focused on succession management. Providing training and mentoring opportunities for those on track for leadership positions is reported by 57 per cent of respondents.

 

"Retaining the right employees is important to the long term success of any business but is particularly critical for MLEs. Recruitment is an expensive process and an organisation that continuously hires while losing talent internally will not be able to prosper and grow.

"With a tight market for talent, companies are developing a full portfolio of interventions to attract and retain staff. While organisations have to offer competitive packages, people rarely exit a company solely because of pay. Often it’s because they lose the connection with the work they are doing and/or people for whom they are working. The relationship an employee has with their organisation is just like any other relationship. It is all about believing in what they are doing, who they are working with, the values of the organisation and being treated well," added Dato’ Jasani

MLEs are more likely to feel the consequences of staff attrition than larger multinational organisations.  Reliance on staff is high for MLEs, and as such, they need to have solid retention strategies in place.  Increased workload for remaining staff is identified as the biggest consequence of staff attrition, identified by 41 per cent of businesses globally.  Other consequences MLEs identified included increased operating costs, loss of business and a drop in customer service standards.

 

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