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How job hopping hurts productivity

In the push to raise productivity in Singapore, technology and training get plenty of attention. Grants to improve workers’ skills and upgrade technology abound, with the 2014 Budget extending incentives that started in previous years.

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In the push to raise productivity in Singapore, technology and training get plenty of attention. Grants to improve workers’ skills and upgrade technology abound, with the 2014 Budget extending incentives that started in previous years.

However, what gets short shrift but may have an even greater impact on productivity and on companies keeping jobs in Singapore is the tendency for workers to hop from one job to another at the drop of a hat.

With labour productivity falling 1.3 per cent in the second quarter of this year from a year ago, it may be time to look into getting workers to stay on longer in a job.

Indeed, workers in Singapore are among the most frequent job hoppers in the world. Recruitment firm Robert Half found that finance and accounting staff here, for example, are “the world’s most chronic job hoppers, serving a shorter period of tenure in a job than anywhere else in the world”.

A recent Randstad Workmonitor survey also showed that more than 70 per cent of employees here would change jobs immediately for more money or a better career opportunity.

The negative impact of this high turnover on productivity and costs at companies are huge. And though employees may think job hopping gives them better career prospects and more money, the actual impact may not be as positive as they imagine.

Research on the medical industry by Harvard professor Robert Huckman, for example, found that turnover negatively impacts productivity at hospitals — fortunately, though, without an increase in the rate of mortality.

The financial cost is high as well. Dr Wayne Cascio, professor of management at the University of Colorado, found that the cost of replacing workers in skilled and semi-skilled jobs is typically 1.5 to 2.5 times their annual salary. And a study in the United States showed that turnover in some industries can reduce corporate earnings and stock prices by 38 per cent, said C-Suite Analytics CEO Richard Finnegan.

Job hopping may even affect whether companies relocate to or stay in Singapore. A senior corporate executive at a Japanese firm that recently opened a new office here said one of the differences between Japan and Singapore is that staff in Japan stay and work in the same company. In Singapore, job hopping is common and creates challenges, he said. His comments reflect the increasing difficulties Singapore may encounter as it seeks to attract similar market-leading companies to set up shop here when those firms know that staff turnover is high.

Employees may be short-changing themselves as well. As researcher Jeanne Meister described the issue in Forbes, recruiters are increasingly screening out chronic job hoppers and instead seeking prospective employees who seem to offer longevity, because they question job hoppers’ motivation, skill level, engagement and ability to get along with colleagues.


So, what can companies do? Experts point to a variety of solutions which, while less common here, could have a big impact on reducing turnover.

One solution is to offer an attractive working environment. Mr Josh Bersin, a principal at talent management consultancy Deloitte Development, said that while compensation was clearly a factor in keeping employees, it is only a “hygiene factor” for mid-performing staff, as job fit, career opportunities and work environment are equally or more important.

Moreover, companies that scored in the top 20 per cent for building a “recognition-rich culture” by praising staff and giving them frequent, visible awards for results had 31 per cent lower voluntary turnover rates.

Similarly, ExecuNet CEO Dave Opton told TechRepublic that leading companies go out of their way to retain good workers. “It’s not only about money. It’s also quality of life incentives such as flexible schedules, telecommuting and liberal vacations.”

Researchers at the University of Minnesota confirmed that flexible schedules reduced turnover by 45 per cent.

Companies also need to stop taking employees for granted. Mr Jason Peetsma, managing director of recruitment agency Odgers Berndtson, told the BBC he found that staff could increase their salary by 10 to 15 per cent by moving to a new company, whereas they get only a 5 to 10 per cent increase when they are promoted internally. “Employers abuse the loyalty card,” he said.

The salary differential in Singapore is even higher, and proactively managing salaries rather than waiting for staff to show up with a better offer can reduce turnover.

While companies have long put up with high turnover amid low unemployment and increasingly demanding staff, the impact of high turnover on companies, staff and the economy is huge. Employers could do well to focus more on incentives and practices to reduce turnover, rather than overwhelmingly emphasising technology and training.

In the end, though, it is up to companies to change their practices and reduce turnover so they can realise higher productivity gains, achieve better financial performance and grow the economy faster.


Richard Hartung is a financial services consultant who has lived in Singapore since 1992.

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