FOUR QUESTIONS TO ANSWER ABOUT TALENT RETENTION 2012 CHINA ANNUAL HR CONFERENCE

Transcription

1 FOUR QUESTIONS TO ANSWER ABOUT TALENT RETENTION 2012 CHINA ANNUAL HR CONFERENCE OCTOBER 2012 Mercer Guangdong

2 Most concerned questions about talent retention Buy Buyor orbuild? Build? How Howto toidentify identify&&develop developkey keytalents talentsof ofthe theorganization? organization? How Howdoes doestotal TotalRewards Rewardswork workin inretention? retention? How Howto tocustomise customisethe theoffering offeringto toaddress addressgenerational generationaldifferences? differences? 1

3 Most concerned questions about talent retention Buy Buyor orbuild? Build? How Howto toidentify identify&&develop developkey keytalents talentsof ofthe theorganization? organization? How Howdoes doestotal TotalRewards Rewardswork workininretention? retention? How Howto tocustomise customisethe theoffering offeringto toaddress addressgenerational generationaldifferences? differences? 2

4 20 15 Set the scene China witnessed a highest turnover rate in the APAC markets % China India Philippines Thailand Malaysia Hong Kong Sources: Mercer Total Remuneration Survey 2. Asia Pulse Survey, February 2012, Mercer Singapore Taiwan Australia Japan 3

5 Who are leaving Highest turnover was found with employees within one to three service years Employee of which service length has the highest turnover rate? Overall Manufacturing Non-manufacturing High-tech Industrial Manufacturing & Trading Machinery Energy & Chemicals Automobiles & Components Consmuer Goods Pharma & Medical Device % 25% 50% 75% 100% Less than 1 year 1 year - 3 years 4 years - 5 years Over 5 years (N=354) 4

6 Who are leaving Employees between 25 and 29 years old were the most instable group Employee of what age group has the highest turnover rate? Overall Manufacturing Non-manufacturing High-tech Industrial Manufacturing & Trading Machinery Energy & Chemicals Automobiles & Components Consmuer Goods Pharma & Medical Device % 25% 50% 75% 100% < (N=354) 5

7 Reasons for employees exit Career development and compensation were the most cited exit reasons Executives * Management Professional % % % Career Development 27 Career Development 53 Career Development 74 Compensation 8 Compensation 22 Compensation 51 Company Business Results 7 Relationship with Line Manager 10 Benefits 20 Company Culture 6 Imbalance of Work & Life 8 Imbalance of Work and Life 7 Recognition 5 Company Business Results 8 Relationship with Line Manager 5 (N=251) (N=312) (N=354) * Reasons of executives exits were actually very diverse, others were not listed. 6

8 Reasons for employees exit For blue collars, Compensation and Benefits became more influential factors Para-professional - White Collar % Para-professional - Blue Collar % Career Development 49 Compensation 48 Compensation 44 Benefits 34 Benefits 23 Career Development 21 Internal Pay Equity 6 Working Environment 18 Relationship with Line Manager 6 Inbalance of Work& Life 7 (N=304) (N=284) 7

9 Talent acquisition practice in market The market in general has heavily relied on external hiring to fill vacancies Internal Developing 20% External Hiring 80% Main reasons for BUY No ready internal candidates Internal talent mobility constraints Cultural transformation / drive innovation Value Risks Cost Timing Main reasons for BUILD Higher productivity Higher esteem from fellows More stable /less cultural pitfalls Source: China Corporate Benchmark Monitor. Mercer China Talent Retention Practice Report, Best Practice Case Studies. Mercer. 8

10 A Multinational Food & Nutrition Company Internal talent mobility expands career opportunities for employees CASE STUDY A DYNAMIC INTERNAL LABOUR MARKET - Identify 100+ top talents for the leadership pipeline, directly managed at Asia level - Review meetings regularly mainly focusing on people - Over 30% of every manager s Key Performance Indicators covering people development responsibilities. BREAKING CBU SILOS TO ENABLE TALENT MOBILITY The COE(HR Center of Excellence): - Consolidates C&B policies across all CBUs to ensure internal equity; - Organises cross-cbu talent rotation discussions via Function committee; - Facilitates rotation process. 9

11 Most concerned questions about talent retention Buy Buyor orbuild? Build? How Howto toidentify identify&&develop developkey keytalents talentsof ofthe theorganization? organization? How Howdoes doestotal TotalRewards Rewardswork workininretention? retention? How Howto tocustomise customisethe theoffering offeringto toaddress addressgenerational generationaldifferences? differences? 10

12 How to define key talent Key talents were most often defined with key position holders with critical skills, key decision makers, or top performers Employee with critical skills How do you define key talents in your company? % 80 Key decision makers 59 Top performers 58 Scarcity in talent source 45 Employees on the specific key projects 11 No definition of Key Talents 9 (N=355) 11

13 How to define key talent Mercer s approach The most valued employees are often found with key persons on key positions Key Position The key talent Key Person A certain level or above Position is key to business strategy realization Must be filled by capable, high performing people Needs deep specialist knowledge Requires a succession plan Highly valued person in a position, which is critical to business strategy realization Requires a succession plan + retention plan Usually no more than 20% of total employees Someone who makes a significant contribution to current business success Someone identified as having high potential Has unique critical skills, capabilities and/or knowledge that are difficult to find elsewhere May have a retention plan 12

14 How to Define Key Talent Key positions are often highly correlated with strategic priorities of the organization EXAMPLES Strategic Priorities Key Positions Maximize existing strategic products Regional Sales Manager Group Product Manager Brand Manager National Distribution Manager Accelerate New Product Preparation, Launch and uptake Pricing Manager Mktg. Strategic Capabilities Director NPP Manager Marketing Research Manager Develop world class affiliate capabilities National Regulatory Manager IT Managers Financial Controller Senior Manufacturing Manager Find, develop and keep great people Influence the external environment National Sales Training Manager HRBP Employee Development Manager Industry & Political Manager Corporate & Product Communication Manager 13

15 How to Define Key Talent Key persons Talent Map Potential Marginal contributors Superior contributors Progression potential Performance Superior Performer Outstanding performer Potential to move higher Poor contributors Sound contributors Sustained sound performer At level potential Outstanding performer At Level potential Manage and Resolve Engage and Develop Retain and Grow 14

16 Visibility Report 1:Talent Map Talent development plans Assessment of Leadership Potential High Potential Growth Potential Stable Potential Continuing Investment People who were recently promoted often receive this rating and usually require some time and expense. High investment, help improve performance Help them improve their performance, set stretch goals and encourage innovation. Continue to invest highly in their development. Fully Effective High investment and/or promote /give more responsibility These stars are ready for an assignment at a higher organizational leadership level. Keep them learning and growing; can handle steep learning curves. Monitor Continuing investment High investment, accelerate skill development Determine why they have the ability to grow but aren t applying the skills. Help them improve their performance. Provide opportunities for continuing development. Accelerate development of skills needed for next level. Given stretch assignments and build breadth of experience through crossfunctional projects. Monitor Continuing investment Minimal investment but challenge, reward,and retain Monitor carefully and demand performance improvement. May be working at wrong leadership level and should be reassigned or terminated. Below Expectations Challenge and retain. Provide sufficient coaching or development opportunities so they can improve performance and potential. These seasoned pros should remain at their current levels with recognized contribution. Challenge and retain by involving them in training others. Exceptional Assessment of Performance Record need to review continuously 2-3 performance cycles 15

17 HR strategies for talent retention Do you have a centralized budget for key talent` retention? Does your company offer a more competitive compensation to key talents? Does your company set a target turnover rate for key talents? No 47% Yes 53% No 24% Yes 76% No 73% Yes 27% (N=214) (N=323) (N=323) Do you have any programs to retain key talent? Do you have a dedicated role for talent retention? No 34% Yes 66% No 84% Yes 16% (N=323) (N=214) 16

18 A World Leading Pharmaceutical Company Effective talent review and succession planning CASE STUDY KEY TALENT IDENTIFICATION Key talents of the organization are identified and pinpointed on a pyramid-shaped talent map: - Top talents (with potential to take senior management roles in 3-5 years); - Key talents (with potential to take senior management roles in 5-10 years); - Early talents (high potential professionals). DEVELOPMENT PLANNING -The key talents identified become highly visible to the top executive committee -Succession planning is reviewed twice a year with involvement of people managers. - Individual capability analysis, and talent development plans for each talent 17

19 Most concerned questions about talent retention Buy Buyor orbuild? Build? How Howto toidentify identify&&develop developkey keytalents talentsof ofthe theorganization? organization? How Howdoes doestotal TotalRewards Rewardswork workin inretention? retention? How Howto tocustomise customisethe theoffering offeringto toaddress addressgenerational generationaldifferences? differences? 18

20 Mercer s point of view of talent retention Total Rewards Critical, but easy to copy My value today Compensation Benefits Total Rewards Careers Work / Life My future value Potential for Differentiation My financial security / protection My quality of life 19

21 Prevalence of Career Development practices for Professionals International Assignment more popular among Auto and Machinery industries, more Pharmaceutical companies have Future Leader Dev. program Career Development Programs for Professional By Industry Educational Assistance Future Leader Development % International Assignment Job Rotation Overall High-tech Industrial Manufacturing &Trade Machinery Energy & Chemicals Automobiles & Components Consumer Goods Pharma & Medical Device (N=208) 20

22 Retention programs most valued by staff (as observed by HR) HRs gave quite diverse answers regarding the most valued programs - proving there was no one-size-fits-all solution Ranked by % of companies indicate the most valued program Executive Management Professional 1 Long-term Incentive (LTI) Retention Bonus Retention Bonus 2 Retention Bonus Long-term Incentive (LTI) International Assignment 3 Future Leader Development Future Leader Development Fast Track Program (N=213) 21

23 From Employee Survey Education assistance and international assignment Overall the interest rate for both Education Assistance and International Assignment quite high. Level of Interest in Education Assistance With a 2-3 year service binding contract Level of Interest in International Assignment With a 2-3 year service binding contract % % Overall Overall Age < Age < Age Age Age > Age > Very interested Interested Neither nor Not so interested Not interested at all Very interested Interested Neither nor Not so interested Not interested at all * From employee survey (N=820) (N=820) 22

24 Supplementary Benefits Valued by Employees Housing, Medical and Pension were the supplementary benefits that employees cared the most (Ranked by % of employees rate it as important) Age Group < >40 1 Supplementary Housing Fund Supplementary Housing Fund Supplementary Housing Fund Supplementary Pension Insurance 2 Housing Allowance Housing Allowance Housing Allowance Enterprise Annuity 3 Housing Loan Enterprise Annuity Supplementary Pension Insurance Supplementary Housing Fund 4 Enterprise Annuity Housing Loan Personal Car Assistance Housing Allowance 5 Supplementary Pension Insurance Supplementary Pension Insurance Enterprise Annuity High-end Medical Insurance (N=820) 23

25 A World Leading Beverage Company Total rewards package CASE STUDY Compensation Competitive pay under a structured salary scheme that strikes a balance between internal equity and flexibility as well as breadth to attract the right people. Development & Career Fresh graduate fast track program Leadership development program Learning and development Career opportunity and paths Tuition reimbursement Mobility and global development opportunities Experiential rewards Critical, but easy to copy Total Rewards Potential for differentiation Benefits Supplementary medical Life / travel insurance Accident coverage Housing subsidy Supplementary pension (Enterprise Annuity Plan) Job-related perquisites Work Lifestyle Time off / leave practices Wellness programs Workplace flexibility Workplace facilities & perquisites Non-financial & status recognition 24

26 Most concerned questions about talent retention Buy Buyor orbuild? Build? How Howto toidentify identify&&develop developkey keytalents talentsof ofthe theorganization? organization? How Howdoes doestotal TotalRewards Rewardswork workininretention? retention? How Howto tocustomise customisethe theoffering offeringto toaddress addressgenerational generationaldifferences? differences? 25

27 Satisfaction ratings Gap of satisfaction rating between different age groups is clearly visible, especially around pay and career % Satisfied & Very satisfied Satisfaction on Different Aspects by Age Group Below Over Compensation Recognition Benefits Career Non-cash Reward Work-life Balance Below 30 Years Old Years Old Over 40 Years Old Below 30 Years Old Years Old Over 40 Years Old Working Environment* * Working environment includes relationship with line manager and peers, as well as staff community activities (N=820) 26

28 Important drivers to employee engagement Aged below 30 CATEGORY ITEM IMPACT WORKING ENVIRONMENT A lot of interesting social activities in my company High COMPENSATION WORKING ENVIRONMENT I receive a fair pay relative to my performance/contribution Get along well with line manager CAREER COMPENSATION My company cares for staff s career development The incentive plan (ie bonus) is motivating Low Younger generation staff attach a particularly higher importance to sociability at workplace, interesting social activities are found very effective to improving their engagement, followed by internal compensation equity and relationship with line manager. * Impact scores were calculated by a regression analysis. 27

29 Important drivers to employee engagement Aged CATEGORY ITEM IMPACT COMPENSATION I receive a fair pay relative to my performance/contribution High COMPENSATION CAREER The incentive plan (ie bonus) is motivating My company cares for on staff s career development CAREER WORKING ENVIRONMENT CAREER In my company most capable staff get promotion in general Get along well with line manager I can receive necessary assistance when I plan my career Low Compensation and career appear almost equally important to staff of aged * Impact scores were calculated by a regression analysis. 28

30 Top three factors when considering a new job Q: when you consider a new job, which factors are most important to you? Age < > 45 1 Career Development Compensation Compensation Stability 2 Compensation Career Development Career Development Compensation 3 Benefits Management Style Company Culture/ Management Philosophy Teamwork Environment (N=820) 29

31 A World Leading Personal Care Manufacturer Addressing employee career aspirations CASE STUDY TRULY RESPECT STAFF CAREER INTEREST - Regular One-on-one conversation between employee and line managers - Employees voicing their own career interest and analyzing where their true potential lies. ENPOWERING MANAGERS IN PEOPLE DEVELOPMENT People relationship rated high by employees Defining the jobs in the organization empowering the managers 30

32 Key take-aways Internal talent development remains as a key strategy for many leading companies. While a total rewards perspective being well taken, career development represents a significant proportion of companies investment in people. Highly prevalent tools aren t always the most effective ones or the best fit for all employees. Understanding employee aspirations at different life and career stages and customizing the offering mix are key. Generational differences in employees career motivations need to be understood and subtly addressed. 31

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