Grow Your Business

Each year, close to 3,000 people—a significant percentage of them skilled workers and professionals—leave the Philippines to migrate or work abroad. This is a nagging concern that can hurt the competitiveness of small and medium enterprises (SMEs), considering that they usually don’t have the resources to compete for talented staff and make them stay.

Here are some pointers on how to retain your employees.

1. It’s not really all about the money

There are a lot of studies now that say it’s not money that attracts people to a company. In fact, when I was still working with a multinational human resource company, we did a survey among information technology companies and found out that salaries and compensation are not the No. 1 reason why people stay. Among the major reasons cited were these: allowing employees to dress casually, ‘challenging work,’ and having a defined career path. Salary was the last factor cited by the respondents.

When I became an entrepreneur myself, I learned that people stay with you 30 to 40 percent of the time only because of money. But I found that 60 to 80 percent of the factors are actually other things such as the work environment, the company culture, and fun. If they enjoy working with you, they are not inclined to leave. In other words, ‘people join a company, but they leave a manager.

2. SME’s are more nimble and can react quicker

The problem sometimes is that managers confuse the concept of ‘salary rate’ with ‘salary cost’, but these are actually two different things. The salary rate is what you pay the person; the salary cost is related to productivity.

If you are a small company, you can be more flexible. If the founder of the company is also the president, he can make a decision in a day in contrast to a bigger corporation that can take ages to decide because of the control measures in place.

Multinationals have high overheads because they maintain high-cost offices; in contrast, an SME can just be based in one’s backyard. The SME can only have a few people, and some of them probably would be relatives of the owner; its president probably would be the son or daughter of the owner. So the SME can compete better because it can act swiftly and it can adjust quickly.

3. Minimize cost through outsourcing

Outsourcing and subcontracting are very hot issues. My advice is this: you must have your core competency. You should have your core group. For instance, if manufacturing is your key competitive advantage, then you should hire manufacturing managers and supervisors.

4. There’s such a thing as a ‘healthy turnover’

Managers should always assume that some of the staff would leave for one reason or another. And it’s good that some of your people leave; it will enable you to infuse fresh blood into the company. Imagine, if no one’s leaving and you are not hiring new talent, there will be no new ideas, no new ways of doing things. There’s such a thing as a ‘healthy turnover’. That’s why some companies that have very attractive retirement packages are having regrets because everybody wants to stay for 30 years. You want to fire them but they just don’t want to leave. So you don’t get fresh blood. The best assumption is that people will eventually have to leave.

5. Succession planning is key

Some call centers complain that they just lose their people after they had invested in their training. There’s really no foolproof solution to that. It’s like a bucket with holes at the bottom. But you can manage the situation through succession planning. You can make the hole at the bottom smaller through measures like creating a corporate culture conducive to success and coming up with good incentives and rewards. You should also have a continuous sourcing program while developing your own people. That’s why many companies have a redundancy strategy. If, say, the IT manager is a strategic post, you may want to hire an understudy so that if the IT manager leaves, there’s always a replacement.

Noel de Leon is a human resource professional and the CEO of Strategic Organizational Management Services (STORMS), a corporate executive search company. You can reach him thru info@stormconsulting.com.ph.