Each year, close to 3,000 people—a significant percentage of them skilled workers and professionals—leave the Philippines to migrate or work abroad. There is therefore a nagging concern that this trend would 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.
But according to Noel de Leon, a human resource professional and chief executive officer of Strategic Organizational Management Services (STORMS), a corporate executive search company, this perspective is not necessarily accurate. “Attracting and retaining staff is really not all about money,” he says.
He emphasizes that contrary to common belief, SMEs could actually compete with the multinational corporations (MNCs) in the talent marketplace because SMEs usually have greater flexibility in hiring and firing. And he says that it’s not actually healthy for a company to hold on to some of their staff forever anyway. Here are excerpts of Entrepreneur’s interview with de Leon:
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. Sabi nila [As they say], in HR buzzwords, ‘people join a company, but they leave a manager.’”
It’s not about the salary rate
“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. The Germans are paid very high but their productivity is higher, so the salary cost is actually low. Multinationals tend to raise salaries every year, but if I’m an SME, I could still compete with them in some other ways, like offering variable pay. You may even pay higher, but through innovative ways of motivating your staff and doing the business processes, you can be assured of greater productivity.