Are salaries sufficient in retaining your employees?

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Employee Engagement
as a key factor of success

Contents

  1. Employee Turnover in Singapore
  2. Is the use of money (through salary and bonus increment) sustainable in retaining employees?
  3. How to retain employees without the use of money
  4. Employee engagement and the benefits it can bring to the company
  5. What is the success rate of employee engagement initiatives?
  6. How can we maximize the effectiveness of our employee engagement initiatives?
  7. Summary

Employee Turnover in Singapore


Singaporean workers have the highest expected turnover rate in Asia Pacific, according to a 2018 study by Workday and IDC. This is not surprising, since “job-hopping” has already been considered as a part of Singapore’s workplace culture. Millennial are observed to be the most prominent part of this culture.

In fact, as high as 1 in 3 fresh graduates leave their job in less than a year, according to a 2017 study by Monster.com, an online job portal firm. The same study revealed that 42% of the millennial cited money as the main reason for leaving their job.

Reasons to why fresh graduates leave their first job within 12 months

(Reference: Monster.com, 2017)

@2019 beyond global group. All Rights Reserved.

This suggests the importance of income to these millennial. Consequently, salary bench marking has become imperative for companies. Setting your employees’ salary competitively to the market standard will reduce these millennial’s’ intention to quit. Yet, such a simple and logical suggestion can be the most difficult thing to execute at times.

Is the use of money (through salary and bonus increment) sufficient and sustainable in retaining employees?


Suppose the company’s business is not doing well and is struggling amid competitive labor conditions. With lower profits, paying out competitive salaries to the employees will not be viable economically. Even in the case whereby the company is performing well, it is not sustainable to provide salary increment on a continual basis in order to keep the employees with the company in the long run. In such cases, is it inevitable for the employees to eventually leave the company?

How to retain employees without the use of money


There must be other things besides money that can “bind” the employees to the company. An example would be providing the employees with the opportunities to grow professionally. In fact, looking again at the graph above, the study conducted by Monster.com demonstrated that “professional growth” prevail over “money” as the top reason why fresh graduates leave their first job within the first 12 months. Coupled with the slowing down of Singapore’s economy, “binding” employees to the company without the use of money has been a critical topic in the recent years.

Other “binding” factors include – flexibility in working time and place, opportunities to acquire new skills and career development, good relationship with colleagues and supervisor, recognition and appreciation, psychological safety (i.e. voicing out opinions without the fear of negative consequences), open communication, transparency and honesty, fairness, excellent management and leadership styles, work-life balance and meaningful work. Does these “binding” factors sound enticing to you? Are you willing to exchange these “binding” factors for a salary that is slightly below the market level? According to several studies, most employees are, in fact, willing to accept a lower salary in exchange for these “binding” factors. For example, according to an academic research in Frontiers in Psychology in 2017, participants who experienced more meaningful work were more likely to turn down higher-paying job offers elsewhere. Similarly, research by LinkedIn, a business and employment-oriented service provider, suggests that 65% of participants would rather put up with lower pay than dealing with a bad workplace environment. Please refer to the references below for more examples*. The above-mentioned factors are some examples besides money that can “bind” the employees to the company, otherwise called Employee Engagement.

Employee engagement and the benefits it can bring to the company


Employee engagement is the emotional commitment that employee have towards their company. Employees who are engaged links personal growth to the company’s growth. This enables them to be more motivated in voluntarily demonstrating their true potential in order to achieve the company’s goal. In fact, a 2016 meta-analysis research by Gallup has shown that employee engagement leads to higher sales, higher profitability, greater productivity, better quality, better customer service, higher retention, greater employee loyalty, greater employee satisfaction and lower absenteeism.

Meanwhile, Singapore is one of the least engaged countries in Asia Pacific according to the 2018 Employee Engagement Trends by Aon Hewitt, a global human capital and management consulting provider. This is aligned perfectly with what is mentioned earlier in this article – Singaporean workers have the highest expected turnover rate in Asia Pacific. These findings suggest the critical link between employee engagement and employee’s turnover rate.

Percentage of engaged employees in different countries of Asia Pacific

(Reference: Aon Trends in Global Employee Engagement, 2018)

@2019 beyond global group. All Rights Reserved

 

What is the success rate of employee engagement initiatives?


Now, employee engagement may sound like a miraculous remedy that is able to resolve most, if not all, human resource-related matters. This is the reason to why increasing the level of employees’ engagement has become a hot topic in the HR industry, not only in Singapore, but also globally. Numerous companies have been putting extensive efforts and budget in hope to increase their employees’ engagement level. However, is such miraculous remedy easily obtainable? Are you sure that it is a reliable prescription customized just for your company?

Despite the extensive efforts and budget placed to employee engagement initiatives, survey by the Right Management reported that 56% were unable to see any improvements. One of the common pitfall is that companies tend to have an oversimplified thinking of employee engagement. For example, in efforts to improve employee engagement, many look up online for the possible employee engagement factors, and plan initiatives to target those factors. However, employee engagement factors found online are general and are not specific to the company. It must be emphasized that engagement factors are unique to each individual and each company. There is no one size fits all when it comes to the factors of employee engagement.

Different companies are made up of different people that have different background, job, and personality. These differences play a critical role in forming the company’s unique culture. Therefore, employees in different companies will have different perceptions on what are important, and what are redundant to them. Let’s consider the scenario in Company A for further understanding.

Company A’s background:
Company A is a relatively big and growing company. The employees of company A have been given salaries that are beyond the market standard. However, internal conflicts are often occurring, and despite the inaccessible company location, the working hours starts from 8am. Lateness is strictly frowned upon.

In the recent years, the employees’ turnover rate in company A has been increasing drastically. As the turnover rate is affecting the company’s performance, the management has decided to implement initiatives with aim to retain their employees.

Through an extensive search online, the management learned the below findings:

1. Increasing the employee engagement level can reduce up to 59% of employees’ turnover rate, according to Gallup, an analytics and advisory firm.

2. Rewards and Recognition are the most important factor in increasing the level of employee engagement, according to “2017 Trends in Global Employee Engagement” by Aon Hewitt, a human capital and management consulting firm.
Having understood that both Gallup and Aon Hewitt are globally reputable firms, the management considers these sources as highly reliable and decides to channel the budget into increasing the employees’ salaries and bonus.

Now, the questions here are:
– Do you think that this initiative will help improve the situation in company A?
– Do you think that this initiative will be sustainable in the long run?

How can we maximize the effectiveness of our employee engagement initiatives?


The most important take-away message from this scenario is that – initiatives that are targeted generally might not be able to improve employee engagement. Even if they did, those initiatives will not be able to yield the greatest return on the effort and resources.

In order to maximize the effectiveness of your employee engagement initiatives, the first step is to identify the engagement factors that will have the greatest impact to your employees. Employee engagement survey is one of the most powerful tool that can identify these factors, especially when conducted anonymously. Based on the identified factors from the employee engagement survey, you will be able to develop customized initiatives to improve employee engagement. In this way, you will be able to effectively maximize the Return of Investment (ROI) of high employee engagement level.

Summary


While having a competitive salary might help in retaining employees temporarily, it is not sustainable in a long run. Increasing the level of employee engagement is a more sustainable approach that companies can take in order to retain their employees. Companies with high level of employee engagement not only have low turnover rate, but also high productivity, high profitability and low absenteeism rate. The first step in ensuring successful, and cost-effective employee engagement initiatives is to accurately understand what factors matter the most to the employees in your company. Implementing employee engagement initiatives that tap on these factors will benefit from maximized Return on Investment (ROI).


About employee engagement survey:

beyond global Pte. Ltd. is running a special campaign of complimentary employee engagement survey now. The survey only takes a short amount of time (5-10 min), and the results will benefit your company greatly. We have proven track records of companies that have employee engagement improvements through initiatives designed based on our survey results. If you are interested in participating, please do not hesitate to reach us at:

info@beyond-g.com

About beyond global:
“Let’s create the next generation of organization for tomorrow”.
beyond global support companies who wish to achieve high engagement with their employees and create synergy among the employees to maximize their business opportunities as well as value to the world.

We provide consulting services in the fields of training, talent development, and organizational development and HR technology to help companies reach their goal.

We also support companies in diagnosing their internal health situations through organizational diagnosis and employee engagement surveys. To make it even more comprehensive, we also provide services in personality and behavioral assessments of employees, potential hiring candidates, as well as promotion candidates.

With offices based in Singapore, Japan and Thailand, beyond has provided numerous services to both local and overseas companies.


*References:
– Qualtrics (2018): Salary is not the key factor of satisfaction among Singaporean employees. The main factors of satisfaction are confidence in the senior leadership, sufficient training, helpful manager in resolving work-related issues. Personal relationships at work are more valued compared to salary increment.
– Qualtrics (2017): 75% of millennials are willing to take salary cut in exchange for flexible office hours. 67% of millennials are willing to take salary cut in exchange for good mentorship opportunities.
– Frontiers in Psychology Journal Article (2017): Participants who experienced more meaningful work were more likely to turn down higher-paying job offers elsewhere.
– LinkedIn (2018): Employees would rather put up with a lower pay than deal with a bad workplace environment.
– Fidelity Investments Evaluate a Job Offer Study (2016): Millennials are willing to take a pay cut for an improved quality of work life.
– Robert Half Salary Guide (2017): 69% of Singaporeans are motivated by more than just pay. They consider work-life balance options to be more attractive than higher pay.
– Glassdoor (2015): 79% of employees would prefer new or additional benefits to pay increase.
– Harvard Scholar (2016): Average worker is willing to give up about 8% of wage in exchange for working from home.
– Association of Accounting Technicians (2014): Relationship with colleagues and boss, good commute, and enjoying the role are more important than salary.

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