Job advertisements are on the decline in November, but that doesn’t worry Noel de Leon, president and chief executive of Mercer Human Resource Consulting. What bothers him is the raging “war for talent” that has lured skilled professionals and managers away from the Philippines in rising numbers, a phenomenon that many local companies seem to be oblivious to.

In November, BusinessMirror’s Job Ads Index declined by 7 percentage points from its base in June, dragged by broad-based declines from practically all sectors of the economy. Sectors that posted double-digit declines include agriculture, manufacturing, electricity, gas and water, and business consulting. Sectors like engineering and construction, cyberservices, public administration and defense, education, health and social work; and international organizations posted positive growth but they were not able to prevent a wholesale slide of the index.

BusinessMirror has been tracking down job advertisements since June as a way to monitor short-term business confidence as well as help determine the dynamics of labor demand. The assumption is that companies are likely to post advertisements for jobs if they expect higher volumes of business in the months ahead. That is why job advertisements tend to rise prior to the peak of business activity in a given period. Conversely, business managers go slower on seeking manpower when purchase orders are not rising.

In November the total job advertisement posted in three leading print media and three leading online job sites ranked by Alexa.com reached 24,354, a 7-percent decline from its base in June. The top advertisers includes cyberservices, construction and engineering, human resource companies, manufacturing; wholesale and retail, hotels, restaurants and resorts, financial intermediation, transportation, storage and communication, and health and social work. These sectors comprise more than 88 percent of the total job advertisements.

In terms of skills demanded, more than 60 percent of the job advertisements were for professional and technical, clerical and related jobs, and administrative and managerial. The rest is shared by production and related workers, sales and service workers. To the extent that these advertisements reflect the formal economy, the labor demanded seems to show that the labor market is still primarily looking for “knowledge workers.”

Seasonal factors

On a month-on-month basis, the total number of job advertisements peaked at more than 35,000 job advertisements in July. It went down slightly in August and rose continuously to reach almost 34,000 in October, then plunged to more than 24,000 in November. But Mercer’s de Leon is not worried.

“You have to consider that people are not leaving their jobs because it’s the time for Christmas bonuses. That’s one critical factor why companies are not posting job advertisements,” said de Leon.

“Even executive search firms know they can’t get people because normally companies give bonuses on or after Christmas. Some companies still have to compute and here in Mercer this is true especially for top management. Our performance bonuses are given March 2007. So if you want to hire me, you have to consider that,” he added.

Many employees, he explained, could not even express any intention to leave the company prior to the release of their performance bonuses because that would automatically disqualify them from receiving such windfall.

“On the day I have to receive the bonus, I should still be with the company,” de Leon said.

“In the Philippines, performance and Christmas bonuses are given in December so normally, recruitment for executive positions, as well as professional and technical people, is done after December. So they lie low in November and December,” he added. “Besides, it’s the Christmas season and people are busy preparing for Christmas and New Year to bother about leaving or looking for a new job.”

De Leon expects the job ads to pick up in March and April. “So that trend is natural and we should not worry about it,” he said of the seasonal decline.

What worries de Leon is what he calls “the war for talent” that is raging in the Asia-Pacific region that is luring away a lot of skilled professional, managerial and technical people in the Philippines that are needed by the local economy.

“Poaching” for talents, he explained, is particularly acute in the information technology and information technology-enabled sectors as well as engineering and construction. Too bad, he said, that it is occurring right at the very moment when the country’s cyberservices industry is trying to grow and mature.                

In November, more than 30 percent of the job advertisements were for overseas placements. Economic sectors with higher shares of posted job ads for overseas placements included mining and quarrying, electricity, gas and water; construction and engineering, hotel, restaurants and resorts, transportation, storage and communications, and health and social work.

Aging population

“There’s a war for talent out there because China is growing so fast and its population is aging,” explained de Leon. “Japan also has an aging population. If you look at the demographic profile, its working population has been going down since five years ago. But the trend for rising demand for skilled workers is really Asia-Pacific-wide.”

In a regionwide survey by Mercer Consulting this year, de Leon revealed that 50 percent to 77 percent of companies in Japan, South Korea, China, Hong Kong, Taiwan, Singapore, Malaysia, Thailand, Indonesia, Vietnam, Australia and New Zealand have expressed hiring intentions even as many of them are experiencing double-digit attrition rates.

“And where are they going to get new talent? Naturally, many of them would recruit from the Philippines,” de Leon said.

In terms of skills, the results of BusinessMirror’s job monitoring in November indicate that the poaching for skilled workers was actually more acute in production, clerical and related skills, and services workers. While overseas demand for professional and technical and managerial were within the 9 percent to 15 percent range, about 45 percent to 59 percent of the job ads for production, clerical and service workers were for overseas placements.

But de Leon believes that the low percentage shares for professional and technical could be understated as foreign recruiters most of the time simply approach potential recruits directly.

“Because of the information technology these days, it’s so easy for recruiters to get to their potential recruits. We were in Bicol visiting relatives when my son, an IT professional, got a call from abroad. They negotiated right at that moment and in a few weeks’ time my son left the country,” said de Leon.

This competition for talents has affected almost all sectors of the economy. According to the Personnel Management Association of the Philippines (PMAP), industries suffering from high turnover rates these days include pharmaceuticals, banking, consumer goods, hotels and restaurants, electronics and semiconductors, and telecommunications and computers. About 33 percent to 59 percent of employees leaving their jobs in these industries, according to a PMAP survey, went abroad.

This trend was recently confirmed by Watson Wyatt’s Total Rewards Survey of 148 companies in the Philippines engaged in manufacturing, business process outsourcing, banking, and other industries.

“Eighty-two percent of these 148 companies reported an average turnover rate of 12 percent [in 2006],” said Patrick Marquina, associate consultant for Watson Wyatt Philippines, a human resource company. 

Retention tools

As such, companies are seeking innovative ways to attract and retain employees.

“Retention now is the major issue among companies operating in the Philippines,” said Ging Igual, a growth leader at Watson Wyatt Philippines in an interview with BusinessMirror.

It’s a particularly serious problem for electronics companies that are not willing to pay for talent, added Fred Blancas, vice president for corporate communications of International Microelectronics Inc., a global electronics company belonging to the Ayala group.

“What I think electronics companies should do to retain their excellent workers, especially the engineers and other technical workers, is to compensate them well and, more important, provide them a fair share of challenges,” he said.

When asked about their strategy to retain people, Blancas replied: “First, we ensure that our managers and engineers get the right compensation package. Second, we try to give them challenging opportunities for growth. Lastly, we try to provide a favorable working environment.  We also inculcate in them a sense of pride in being an employee of a Filipino company that has gone global. We tell them that our being global offers plenty of advantages to them and they just have to take more responsibility upon themselves—be innovative, flexible, agile—to reap the rewards.”

According to Igual, however, retaining good people is not all about giving higher pay. Among call centers and outsourcing companies, an important part of their retention tools, she said, include providing good cafeterias and pantries and gyms. Most companies could only pay so much so they had to devise “creative rewards systems” that provide more incentives for greater productivity, she said.

“There is a saying which goes like this: People join a company but leave a boss. In a survey that we did several years ago, the boss is the No. 1 reason for leaving. Lack of career path, lack of feedback, lack of recognition, no learning or training development programs, unchallenging work, etc., are higher on the list. Pay was, I think, No. 9 or 10 from the top 10 reasons why employees leave,” explained de Leon.

According to de Leon, retention tools are a mix of a competitive base pay, benefits, career, culture, working environment and even the brand or prestige of the company.                

“People are attracted to successful companies. People want to become a member of a winning team. [Charismatic] leadership also plays a major role in attracting and retaining people. Salary increases must be dictated by the market and the company policy on where they want to position themselves relative to the market,” de Leon said.

Another strong retention tool is providing housing, Igual said. Some companies also link up with top universities to provide MBA degrees to top managers and high performers, she added.

“For IT people, they are focused on training while research and development companies provide continuous exposure to what’s new in the business,” she said.

Igual explained that in many cases, the retention tools employed by companies would depend on the age and responsibilities of workers. Younger ones, or those who are in 20 to 25 years old, usually go for cash options as well as opportunities for travel and training. Those in the 30s who are married with children would rather have security and medical benefits, as well as educational opportunities. Those in their 40s care about loans and housing. And those 50 and above usually want golf shares, good retirement insurance, longer vacation days and burial assistance.

“If you are targeting the X and Y generations, you must design your compensation and rewards based on the need of these types of people. They want cash and they want it now—not after 20 years in the form of retirement benefits. These people don’t intend to retire in your company. They are in transition to a better paying job,” de Leon said.

He added: “If you are a research and development company, you want your scientist to stay and work in your company until they die—they have your technology, patents, proprietary knowledge, etc. in their heads. When they leave your company, they carry it with them and can share them to their next employer. If you want your people to consider you as their first and last company, you must have a very attractive retirement and other long-term benefits package.”

De Leon also suggested making these key employees part-owners by offering them company stocks.

For Intel Philippines, a leading electronics firm, its retention strategy is enhancing industry level supply of technical experts and engineers.

“We recognize this difficulty of getting and maintaining talent. Toward this end, we have our higher education programs as a means to ensure a steady pool of qualified talent,” said Maria Teresa Pacis, external communications manager of Intel Philippines. “These programs are geared toward encouraging more people to obtain Masters in Science and other higher qualifications like PhDs. Last year, we launched the University of the Philippines’ degree program, an online program to encourage working people to work toward a masteral degree.”

As Igual stressed: “Creativity matters because you can’t always raise your pay.” 

Job advertisements are on the decline in November, but that doesn’t worry Noel de Leon, president and chief executive of Mercer Human Resource Consulting. What bothers him is the raging “war for talent” that has lured skilled professionals and managers away from the Philippines in rising numbers, a phenomenon that many local companies seem to be oblivious to.