the HRM
“We hire fresh graduates, train them. But when they [new recruits] are ready to work, another bank hires them. Just for a little increment in salary, they join another institution,” said Suman Sharma, CEO of Sunrise Bank. As a banker who has spent nearly two and a half decades in the banking sector, Sharma observes employee retention as a major challenge for banking institutions lately.
His observation in staff retention is what many HR chiefs of Nepal’s leading private sector organizations face as a big challenge today. The heads of HR departments of all sectors be it in banking, manufacturing, hospitality, health, or information technology, agree retaining employees is not an easy task.
While organizations generally want their employees to stay for a longer period of time, the entry of new players, growing competition and attractive salary and perks offered by them make it difficult for many organizations to retain employees.
In an interaction titled ‘Employees Retention Challenges and Way Forward’ organized by the HR Society Nepal, HR chiefs of many institutions said that as organizations invest hugely in new recruits from training to grooming, staff turnover is always a costly affair for them.
According to HR managers, especially the new recruits change jobs just after working for a short period of time. Organizations spend a huge resource on training to fully prepare recruits for the workplace. The new recruits start working and learn about the working culture and their job nature. But when they are supposed to perform, they leave for another company. HR managers say that they have to initiate the whole new process of recruitment again resulting in adding unnecessary burden on organizations.
When a staff resigns, there is a loss of institutional knowledge, and also the position becomes vacant, say HR professionals. Hiring and training new employees means restarting the entire process all over again. “Obviously, it is natural for companies to expect from staff after providing on-the-job training. However, employees leave without thinking about the company’s investment and time. When a staff member leaves, the company again has to open the hiring process, which is time-consuming,” shared Neelam Shree Gorkhali of WorldLink.
The banking sector is one of the sectors that are on an expansion drive. In the last six months, especially after the easing of the second lockdown, banks and financial institutions (BFIs) are adding new branches and making their digital presence stronger. CEOs of BFIs say the “The banking sector is on an expansion drive. New branches are being opened in nooks and corners. This has given new and better alternatives for employees but created a new problem for the management as staff retaining has become a challenge,” said Sharma.
One of the reasons for high staff turnover is differences between the job description and actual work assigned. When the HRM talked to a few professionals in the banking and manufacturing sectors, they said the company often exploits the staff to the possible extent. “When it comes to work, companies want staff to work extra hours. But when it comes to increasing benefits, the company is always reluctant,” a staff at a commercial bank said.
The challenges in staff retention vary from sector to sector. If the banks are struggling to retain their staff due to increased competition, then organizations in the hospitality and medical sector have different sets of challenges.
For the hospitality sector, for instance, it is about finding ways to encourage young professionals to work in the country at a time when they are enticed by lucrative offers from abroad. Monica Scheiblauer, General Manager of Yak & Yeti Hotel says the Nepali hospitality sector is facing a dearth of skilled human resources as many migrate to Middle East countries for better job prospects. In the hospitality sector, many employees are going to the Middle East as their salary is also almost five times that of Nepal. “Nepal has a huge potential in the tourism sector. However, the country is lagging behind,” she said, adding that the hospitality sector in the Middle East gets Nepali workers at a cheaper rate. “Though the hotels in the Middle East pay less to Nepalis, the amount is still way higher than the amount Nepali hotels pay.”
The experience of Kishore Maharjan, Chairman of Star Hospital, is not different from Scheiblauer’s. Maharjan who spent 33 years in the banking sector before moving to healthcare says that managing human resources is extremely critical in the medical sector due to high staff turnover.
“Retention of nurses is very difficult as they are in demand abroad. They get good remuneration abroad which Nepali hospitals cannot provide,” said Maharjan. “The average retention period for nurses is of two years.”
Nepal produces as many 2,000 nurses every year which Maharjan terms the ‘satisfying’ number. But, another challenge for private healthcare institutions, according to Maharjan, is that even those nurses who stay in Nepal want to work in healthcare institutions operated by the government.
Recently, the United Kingdom decided to take 10,000 nurses from Nepal. Although nurses would get almost Rs 7.5 million a year, the Nepali health sector will face a crunch of health care workers.
And, for the development sector, the nature of job contracts makes it tough for organizations to retain staff for a longer period. As INGOs & NGOs are most rely on donors’ funds, the job contracts are usually open-ended. “We generally have a one-year or two-year job contract. This makes the attrition rate high and makes our jobs as HR head to retain staff more difficult,” said Binod Shrestha, Senior Manager – HR and Personnel Development at Helen Keller International.
The unhealthy competition, according to Nilima Shrestha, Senior Officer-HR at Premier Insurance makes it difficult to retain the staff. “Companies poach staff. As there are many insurance companies, both life and non-life, those working in this sector can move to another company at any time,” she mentioned.
According to Richa Koirala, Talent Manager at the CloudFactory, young professionals are getting offers from foreign companies for remote working. “As youths are interested in foreign companies, they accept the offer right away. Retaining employees in the IT sector has become a tough job, especially after countries eased Covid-19 restrictions. With countries already opening borders, the number of IT graduates going abroad is massive. In the IT sector, training the newcomers, and retaining the existing staff is extremely difficult,” said Koirala.
Managing Retention
During the Covid-19 pandemic, many organizations laid off employees without paying them properly. Those who survived the layoff also felt the shock of the pandemic as their salary got reduced in many organizations.
During the peak of the pandemic, it was financially difficult for companies to hire new staff. They didn’t want to add extra burden by hiring new staff. “Employee retention was not a problem for one and a half years during the pandemic. But after economic activities resumed, employees started to resign. This was the result of exploitation during the pandemic,” an HR staff said.
Chief executives and HR managers agree that staff turnover can be managed better if enough attention and mentoring are given to the employees. “Supervisor can ensure people working under them are trained and mentored well,” said Sharma, adding, “Give them a sense of security and show them there is future in that organization.”
Sharma says that making the overall work environment enjoyable for the employees is important for staff retention. “The HR department alone cannot manage all. The heads of other departments also have to step in to impart knowledge to employees, to mentor them,” he said.
According to Maharjan, it is important to have a continuous evaluation of staff. “Periodic incentives, giving recognition to their works and identifying employees’ aspirations are key if we have to retain staff,” said Maharjan.
According to Nilima Shrestha, some employees are also insecure if the company would be able to fulfill their demands. “In a competitive market, companies give staff cars, among other benefits. Any staff would want to change their lifestyle. To improve their lifestyle, employees quit, and companies can’t stop them,” she said.
While many companies adopt measures such as retention bond signing, many believe it may not be the effective way and often becomes controversial. “Signing bond is a harsher way,’ said Maharjan. According to Sharma, when BFIs tried to adopt the practice of retention bonds, the banking regulator Nepal Rastra Bank questioned them.
Monica Scheiblauer
General Manager, Hotel Yak & Yeti
Young minds are migrating to foreign countries for better job opportunities and further education. As a result, organizations find it extremely difficult to find young and brilliant minds. Even if they find one, they will go abroad after working for some time in Nepal. When I talk to young kids, they say that they don’t see any chances for growth in Nepal. This is a serious problem. Nepal needs to create opportunities to stop people from going abroad for job opportunities.
In the hospitality sector, employees are going to the Middle East as their salary is also almost five times that of Nepal. Nepal has a huge potential in the tourism sector. Though the hotels in the Middle East pay less to Nepalis, the amount is still way higher than the amount Nepali hotels pay.
Suman Sharma
CEO, Sunrise Bank
We hire fresh graduates, train them. When they [new recruits] are ready to work, another bank hires them. Just for a little increment in salary, they join another institution. Lately, employee retention has been a major challenge for organizations.
The Nepali banking sector is on an expansion drive. New branches are being opened in nooks and corners. This has created new and better alternatives. And retaining has been a challenge.
The banking industry, and other organizations too, run in a system. If a company increases benefits to retain a certain staff, it has to increase the paycheck of other staff too. This only creates problems. We have a certain period for appraisal.
Kishore Maharjan
Chairman, Star Hospital
Retention of nurses is very difficult as they are in demand abroad. They get good remuneration abroad which Nepali hospitals cannot provide. The average retention period for nurses is of two years. Nepal produces as many as 2,000 nurses every year. Although the number is ‘satisfying’, nurses go abroad, and those who stay in Nepal want to work in government health institutions. At the same time, managing doctors is also a difficult task. Since they are also revenue earner for the hospitals, doctors’ salary is much higher than that of senior managers of banks and financial institutions.
Binod Shrestha
Senior Manager – HR and Personnel Development, Helen Keller International
Like every sector, the development sector is also facing the issue of staff retention. The development sector – INGOs & NGOs- depend on donors. Hence, we don’t have an open-ended contract. We generally have a one-year or two-year job contract. This makes the attrition rate high making the jobs of HR heads to retain the staff harder.
