Talent retention seen as top employer challenge in 2024

Talent retention seen as top employer challenge in 2024

EMPLOYERS will need to rethink their job offerings amid increasing voluntary turnover, estimated at 15.9% last year, risk and employment consultancy WTW said.

Patrick Marquina, WTW’s head of work & rewards for the Philippines, said that the labor market continues to shift despite inflation declining.

“Voluntary turnover and attrition continued to increase and reached 15.9% in 2023 compared to 14.2% in 2022,” he said.

“The typical reasons cited for leaving were better pay and growth opportunities, relocation or family migration and flexible work arrangements or work-life balance,” he added.

Mr. Marquina said that the increasing number of voluntary departure is likely to continue in 2024.

“Employers in the Philippines will continue to face significant talent challenges including the attraction and retention of key talent,” he said.

“Winning the talent race will require employers to stay focused on balancing the entire package of rewards they offer, both monetary and non-monetary, in order to remain competitive and align with employees’ needs and wants,” he added.

A compensation survey conducted by WTW found out that companies in the Philippines project an overall median salary increase of 5.7%, which was also the actual salary increase last year.

“The average salary increase has also continued to rise steadily over the last few years since the pandemic,” WTW said.

“However, inflationary pressure and concerns over a tight labor market continue to influence factors on salary budget planning,” it added.

The study found that workers in biopharma and life sciences, financial services, outsourcing, consumer products, and technology are projected to have salary increases higher than the 5.7% projected median salary across all industries.

Projected salary increases in financial services and outsourcing are at 6%, consumer products and retail trade 5.9%, and biopharma and life sciences 5.8%. 

Meanwhile, projected salary increases in the real estate, construction and engineering, and manufacturing sectors are 5.7%.

In terms of changing work dynamics, WTW said that it expects millennials and Gen Z to form 80% of the country’s workforce by 2025, after the Gen Z workforce grew 100% last year.

In 2023, the Gen Z workforce accounted for 19.9% of the labor force from 10% in 2022.

“With the significant workforce changes in the Philippines, employers are now being challenged to rethink their work models, optimize organizational structures and forecast people resources needed to operate,” WTW said.

In its research, WTW said that the employers are currently doing three things to address the changes in the workforce such as in digitalization, working conditions, and alternative talent sources.

“Two in five employers, or 44%, said that they are expecting greater use of technology and automation,” it said.

Meanwhile, a third of the 44% of the employers said that they are redesigning jobs to reallocate work between employees and new technologies.

However, only 14% of the respondents said that they are prepared for the use of alternative talent sources.

Mr. Marquina said that the changing work environment can involve “a range of interrelated people, business and operational risks.”

“Organizations that have effectively managed the risk accompanying work transformation are more likely to report outperforming their peers than those that have not when it comes to financial performance, employee retention and productivity,” he said. — Justine Irish D. Tabile