Introduction

Malaysia's attrition rate (voluntary turnover) is a growing occurrence plaguing the nation for the past few years. According to data gathered from AON Hewitt, across industries in Malaysia, the attrition rate had grown from 9.5% in 2015 to 13% in 2017.

Human Resource (HR) are tasked to solve this issue as it carries direct and indirect cost affecting revenue sustainability, organisation performance and workforce morale. Therefore, this article aims to break the voluntary turnover cycle by providing the appropriate strategies to increase retention in the workforce.

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Which industry has the highest turnover rate in Malaysia?

A high turnover rate can influence the productivity and increase cost of a company, below is a graph obtained from Qualtrics to show which industry faces the highest attrition risk based on employee intention to stay within a year.

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Based on the data above, the retail sector is the highest when it comes to attrition risk of 26%, while the lowest risk is those only in the IT & Tech industry reported 14%. The survey also states that Malaysia has the second-lowest employee engagement in the South East Asian (SEA) region, from 59% in 2016 to 54% in 2020. HR should play close attention if they are within the high turnover industry, as the estimated cost for employee turnover ranges from 90 - 200% of the position's annual salary, yet this does not consider the costs related to the learning curve the new employee has to overcome.

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What are the factors that impact workforce retention?

While there are various approaches to retain your workforce, here are a few factors to retain your employees with data provided from Randstad Euromonitor for Malaysian employees.

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Among the highest retention factor, attractive benefit (64%) followed by healthy work-life balance (49%), strong management (44%), and career path progress (41%). Therefore, HR should prioritise employee benefit as a solution to keep their workforce retained.

As a quick recap employee benefits is generally known as non-wage compensation given to employees in addition to their regular salary, which often indicates one's job satisfaction, interest in growing the company and enables employees to be engaged in their work.

Moreover, providing benefits increases employee engagement, based on a study from Quantum Workplace found that:

• Employees who said their organisation provided health and well-being benefits were 11% more engaged than those that did not.
• Organisations that provide benefits measure almost 2% fewer hostile employees than those that do not provide health benefits.

Furthermore, a study conducted by Gallup showed that an increase in employee engagement could lead to a 21% spike in productivity and a 22% spike in profits. Therefore, HR should not view benefits as another unwarranted expense rather than something that brings value to the company if they can identify benefits meaningfully and execute them correctly with proper communication.

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Which Employee Benefit to focus on?

According to a 2018 Clutch survey, 62% of employee prioritise health insurance coverage over any other benefit as it is most important in terms of job satisfaction. Employee medical insurance is generally one of the simplest but most effective steps you can take to reward and attract talent.

It’s no surprise that medical benefit is important considering that medical care in Malaysia is expensive as recent findings from Mercer showed that the inflation rate surpasses the national economic inflation rate by four-time and is reported to increase a year-on-year average of 13.6%.

Let begin with classifying medical coverage in two categories:

• Inpatient Medical Coverage
• Outpatient Medical Coverage

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Outpatient Coverage

Outpatient care covers you if you do not need to be admitted overnight at a hospital. This may consist of routine services such as check-ups or visits to clinics, and to a certain degree, surgical procedures so long as they allow you to leave the hospital or facility on the same day, it can still be considered outpatient care.

Here are a few examples of outpatient coverage:

• Medical practitioner consultation costs
• Diagnostic tests
• Prescription medication
• Scheduled health screenings

Inpatient Coverage

Inpatient treatment implies any medical service that requires admission into a hospital. Inpatient care tends to be directed towards serious illnesses and trauma that require one or more days of an overnight stay at a hospital.

Here are a few examples of inpatient coverage:

• Intensive care rooms
• Diagnostic tests (such as X-rays, MRIs, CT/CAT scans, and laboratory tests)
• Surgery expenses
• Anaesthetist and operating theatre charges

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How much do organisation spend on medical coverage ?

Data acquired from the Malaysian Employers Federation (MEF) Fringe Benefits provides insights across 18 industries involving manufacturing and non-manufacturing sectors. The expenditure covers both outpatient coverage (medical consultation and treatment) and inpatient coverage (medical & surgical treatment, specialist treatment and room & board).

For 2020 in the SME Landscape, data from MEF showed that employers have spent RM 62.5 million, with inpatient contributing
RM 36 Million and outpatient contributing 26.4 Million. Insurance Coverage for average medical consultation RM 496,141.21, consisting of inpatient ( hospitalisation and surgical) at RM 339,150.18 and outpatient ( medical consultation and treatment ) at RM 156,991.03.

For the full breakdown of medical coverage, refer to the tables below.

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Outpatient Coverage

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Inpatient Coverage

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The Main Takeaway

As both inpatient and outpatient treatment can be sought at both private and public sectors. However, it is generally known that the public sector tends to be overcrowded due to its affordability. In contrast, while it may come across as an expensive option, the private sector is generally less crowded, making acquiring medical care the fastest option as an appointment is made with convenience with patients in mind.

Therefore, to keep your employees healthy and returning to the workforce in the fastest timeframe possible, gaining private medical treatment is a much viable option to consider. To avoid heavy cost placed on your employees, it is highly recommended to acquire a comprehensive medical insurance plan covering both inpatient and outpatient, ensuring your employees’ health in the long term.

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Conclusion

Providing employee benefits is essential to retain and attract more employees. The ongoing pandemic has accelerated the need to keep their workforce satisfied, empowered, and motivated as employees work from home.

Companies would need to bear in mind that the costs of losing talented people in your team and recruiting others are much higher than getting corporate health insurance, which is the current most desirable employee benefit and the basics of any benefits package.

If you would like to understand how you can use employee benefits to retain your employees, get a free consultation today from us today.

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