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Learning from China’s attrition woes

In the next 40 days, as Chinese workers return to their respective provinces to celebrate the lunar new year, some employers may not see 50 percent of them ever again. That’s how high the attrition rates are in China, as I was told by the head of a manufacturing enterprise that used to operate in Shenzhen. The skyrocketing wages in China, compounded by high attrition rates, are driving Japanese and other factories to relocate in the Philippines and other Southeast Asian countries.

When some expatriate managers in Shanghai told me about the high attrition rates, I decided to accept the invitation of a colleague to travel to Suzhou, known as the “Venice of the Orient” because of its very scenic canals. There I was introduced to the manager of a social enterprise called MicroBenefits, the mission of which is to help factories reduce the attrition rates by providing more humane and engaging environments for workers.

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The social entrepreneur explained to us in greater detail the problem of attrition by citing the case of a certain factory producing electronic components for a US multinational company. The following explains the extreme situation faced by the factory manager, whose name was Furong: “Pressure was mounting on Furong because he had lost nearly 10 percent of his workforce over the past week and was averaging an employee churn rate of about 15 percent per month. Each time he lost workers, the factory’s productivity dropped. With so much turnover, he didn’t have time to think about productivity problems. He barely even had time to focus on his output. The bulk of his resources went to recruiting and training replacements for the workers who were constantly leaving. There was a shortage of labor and Furong felt like the factory was at the mercy of the workers, with little he could do to prevent turnover. They even had trouble retaining workers during orientation; frequently workers would quit during the first few minutes on the job, while taking the factory tour.”

That sounds like the summit of attrition: leaving even before starting to work. It must be really bad!

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Without being an alarmist, I thought of the business process outsourcing industry in the Philippines, especially the voice-oriented call centers, and resolved to communicate the work of MicroBenefits to our BPO employers who are also being challenged by the high rate of attrition as competition for workers heats up. I know of call center agents who would move from one employer to another for a difference of a few hundred pesos in their monthly salary. If we do not address the problem of job satisfaction and engagement in the industry, it won’t be long before the Philippine BPO industry suffers the same attrition rates as their counterparts in India, where such rates can reach as high as 100 percent in a given year. That is one reason Indian companies are investing in the BPO industry of the Philippines.

Very briefly, MicroBenefits is dedicated to improving the livelihood of frontline workers through an economically sustainable business model that creates value for customers. Its value-driven product suite is designed to: develop employee skill sets, improve employee reward, enhance employee satisfaction and loyalty, and boost company retention rates. Its current product portfolio consists of five key offerings: welcome kit, discount card, company link, company IQ, and reporting and communication.

The welcome kit includes basic information about the company, information about the benefits it offers in conjunction with MicroBenefits, and a postcard with a picture of the factory for employees to send home to their families. Discount cards are negotiated by MicroBenefits with stores in the area, which provide workers with essentials such as clothing, groceries, haircuts, etc. The participating stores display stickers on the front window to welcome employees of the local factory. The company link facilitates connections among factory workers by creating a company network. This facilitation happens through the “friend matcher” function pairing workers within their company based on proximity of hometown and mutual interests, and allowing them to message each other and begin a connection. The company IQ allows for continuing education through mobile learning opportunities offering more than 60 modules, including topics such as English training, financial literacy, feminine hygiene and computer skills.

Finally, there is a platform for reporting usage of the application and communicating company information to employees.

Although MicroBenefits has applied its business model to manufacturing operations within the Chinese culture, it will be relatively easy to adapt this model to service-oriented enterprises in the Philippine cultural and educational setting. For example, the “friend matcher” function would be even more culturally attractive to Filipino workers. Also, many of the less educated BPO workers would appreciate the mobile learning opportunities, especially through their smartphones.

Those interested in more details about its work in China may log on to http://www.microbenefits.com. They may also e-mail Richard Roque at [email protected]

Bernardo M. Villegas ([email protected]) is senior vice president of the University of Asia and the Pacific.

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TAGS: attrition woes, bernardo m. villegas, China, column
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