Thursday, November 1, 2007

Staff turnover hurts Thai firms


High employee turnover in Thailand will cost the country in terms of human resource development and reduce the nation's global competitiveness, says Tayat Sriplung, managing director of Watson Wyatt (Thailand).

The company conducted a survey that questioned 195 companies in Thailand and found that the average voluntary turnover rate for next year was projected at 11.75%.

The highest rate of 18.21% was in the property sector and the lowest rate of 6.54% was in banking and finance.

In the manufacturing sector, the survey shows that textiles would have the highest turnover rate of 19.73% and automobiles the lowest rate of 3.9%.

The survey reveals that 1.03% of total respondents had more than 50% of employees resign _ the main reason was the companies' financial situation. Almost 20% of respondents had about 20% of employees resign due to job security issues as employees were hired on a contract basis, Mr Tayat said.

Thailand has seen more than a 10% average turnover rate for several years. The country lacks consistent human resource development practices to maintain knowledge capital, making it difficult for Thai companies to compete in regional or global markets.

High turnover can either benefit or harm employers, depending on the quality of resigned employees.

''If high performers resign, then companies will be the losers as they have invested in training. ... If bad performers resign, companies will be the winners and it indicates that they apply the right methodology in handling employees who do not meet expectation,'' said Mr Tayat.

He said money was not the first priority for high performers as they tendered their resignations because the boss overlooked their work performance or were unhappy at work due to the corporate culture or colleagues. These employees may want to return if there are changes in the organisation.

''Don't recruit back employees who are willing to come back for money. These employees are only average performers, not high performers,'' said Mr Tayat.

Watson Wyatt found that the petrochemical industry could retain employees, even though the salaries were not as high as in other industries, because companies in this industry usually have good financial performance, high investment in training and good welfare packages.

Developed countries have an average turnover of about 5%. Bubphawadee Owararinth, Watson Wyatt's business development director for Asean, said Asia Pacific countries had an average turnover of about 10% but India and China had a higher rate of 16.2% and 26% respectively.

She said India was good at providing outsourcing to multinational companies for works such as call centres, translation, animation, medical analysis and reseach and development. Therefore, there is high demand for employees in this sector causing turnover of 40%, as of September of this year.

Mr Tayat said Watson Wyatt's survey on salary increases showed an average increase of 6.06% at the end of this year with the property sector offering the highest pay rise of 7%, followed by professional services at 6.89% and consumer products at 6.83%.

The company found that the average payment for variable bonuses would be 2.25 months and 1.42 months for guaranteed bonuses.

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