Talent war heats up: turnover to cost NZ in 08

News Release

Talent war heats up as staff turnover to cost New Zealand in 2008

Workers need more than champagne and iPods to stay in their jobs

- Staff turnover to cost 1.5 times the annual salary of the worker

- Wages to increase faster than productivity

- Unless employers focus on career and skill development for retention

2008 risks being the year of the revolving door if employers continue to focus on simply attracting new staff, rather than developing and retaining current employees. Resulting staff turnover is expected to cost New Zealand businesses over the coming 12 months, leading information services company Unisys has predicted.

“At a time when the skills shortage is squeezing the New Zealand economy, staff turnover is turning into a major problem that is already costing the country’s businesses 1.5 times the annual salary of the replaced worker. It costs more to continually replace staff, and in a tight labour market each new hire drives up wage levels for the same job role without a corresponding increase in productivity. With good staff also goes intellectual property and the valuable relationships they established with customers and business partners. All indications are that this will get worse in 2008,” said Ms Terry Shubkin, NZ Manager – Account and Service Delivery Management, Unisys New Zealand.

Unisys’ top three strategies to keep good staff:
1. Accept that staff don’t want the same job forever – find out what challenges stimulate them and develop a tailored progressive career path within the organisation.
2. Identify and groom best performers – work out what technical and business skills will develop the individual and ensure they access the training and experience to attain them.
3. Support work-life balance – offer mobile tools and flexible work arrangements to better manage time and encourage programmes which support a healthy lifestyle.

“Now is the time for businesses to examine their employees’ needs and expectations in order to create an environment to retain, not just attract, the right staff. Once they’ve joined the company, you need to be able to offer career development through training, experience and exposure to the challenges and opportunities that excite them. The employer needs to take an active role,” said Ms Shubkin.

Unisys analysis shows the cost of replacing a worker is around 1.5 times that person’s yearly salary. Based on latest Linked Employer-Employee Data1 figures, 17 percent (302,100 people) of New Zealand workers changed jobs in the 12 months to June 2006. The Labour Cost Index report ending June 20072 showed a 4.2 percent increase in wage rates, while the Statistics New Zealand annual labour productivity figures showed productivity growth averaged 1.4 percent in the measured sector from 2000–2006. A study by the Australian Chamber of Commerce found that 69.9 percent of businesses are concerned about wage levels increasing without a corresponding increase in productivity3.

“The New Zealand labour environment is challenging: we have an unemployment rate of 3.6 percent, around 14.7 percent of Kiwis have a Bachelor degree or higher and 16 percent aren’t employed4. In other words, employees are qualified, they are getting younger, they are on the move and they don’t expect to stay with the same employer for the life of their career.

“Instead of offering potential staff champagne and iPods when they join, like some firms are reported to be doing, New Zealand businesses need robust talent management programmes which will nurture staff, provide the right long-term rewards and show workers a real career path,” Ms Shubkin said.

Unisys has proactively tackled the problem of keeping good staff through its Unisys Aspire talent management programme which began in New Zealand and Australia in 2003/04, and has since expanded throughout Asia-Pacific. The Aspire programme is designed to accelerate the readiness of the region’s high potential individuals by ensuring they are identified and then developed and prepared to step into senior leadership roles within Unisys. Two of the three streams of the programme – Future Leader and Emerging Leader – also include a management certification from Macquarie Graduate School of Management (MGSM) in Australia. To date, 46 employees across the region have completed the programme.

A healthy work-life balance is equally important for creating employee engagement. But it encompasses far more than merely how many hours you work in the office. It also requires a combination of physical and emotional wellbeing. While there aren’t statistics published for NZ, studies have found that Australia’s annual productivity cost attributed to obesity is estimated to be $1.7 billion.5 This highlights the direct benefit for businesses to ensure they have a healthy and productive workforce.

The Living Well @ Unisys programme is designed to actively encourage employee health and wellbeing. It incorporates a range of ongoing activities including lunch time seminars covering a range of topics from nutrition to managing stressful situations, an interactive website and employee activities, and free water bottles and lunchboxes to encourage staff to keep hydrated and bring healthy lunches to work.

Linked Employer-Employee Data, New Zealand, June 2006, shows that 302,127 people changed jobs in the 12 months to June 2006.
2Statistics New Zealand Labour Cost Index report ending June 2007
3Australian Chamber of Commerce and Industry survey “Industrial Relations – Concerns for Australian Businesses” – September 2007
4 Statistics New Zealand, Census 2006, New Zealand 2006,
5Access Economics Report: The Economic Costs of Obesity, October 2006

ENDS

About Unisys Asia Pacific
Unisys offers clients solutions for secure business operations by aligning technology with business strategy. Drawing on a history of industry innovation and expertise, Unisys provides specialised services, delivered by trusted consultants. In Asia Pacific, Unisys delivers services and solutions through subsidiaries in New Zealand, Australia, China, Hong Kong, India, Korea, Malaysia, The Philippines, Singapore, Taiwan and Thailand and through distributors or resellers in other countries in the region. For more information, visit www.unisys.com.

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