Pheseline Felim Feb 25, 2020 9 min read

What Is the Best Way to Retain

Employees in Indonesia?

Source: www.kochiesbusinessbuilders.com.au (2018)

Indonesia was ranked as top country in Asia-Pacific for its employee engagement levels in 2018. According to a
report released by Aon (Figure 1), human resources (HR) consulting agency, employees in Indonesia were
engaged very well. The number slightly decreased between 2016 and 2017, but then significantly increased to
76% in 2018, meaning that. The data indicated that employers in Indonesia would successfully retain their
employees.
In fact, Indonesian companies are still struggling to high turnover rates, especially on millennials generation. Take
for example, Urbanhire and RedDoorz have turnover rate of 10% and 20%-25% respectively, exceeding the ideal
rate of maximum 10% in a year (Akhlas, 2019). Figure 2 shows that there are 63 million millennials with
productive age of 20-35 years old or almost a quarter of the Indonesian population (Badan Perencanaan
Pembangunan Nasional cited in IDN Research Institute, 2019). They are characterized by fleas – jumping from
one place to another place quickly. Millennials tend to move after 2-3 years working in a company, and only 1 out
of 10 stated that they would stay working at a company for more than ten years. This phenomenon evokes a
question of what is truly the best way to make talents stay long at the companies.

The Traditional Employee Engagement in Indonesia

Indonesian companies have done some approaches to retain their employees. The most common ways are pay
rises or bonuses and career progression. Both strategies were believed to be the top motivations of Indonesian
employees to stay at the companies at the percentage of 56% and 53% respectively (Michael Page, 2016).
Indonesian people work for money, so it will be a good motivation booster when they are rewarded by
performance bonuses. A case to this is Wego, Singapore travel metasearch company in Indonesia, which relies
on a bonus system to successfully maintain good employees (Hills cited in Emerhub, 2013).

Indonesia has several regulations on workforce wage in which companies have to take into account. Firstly, the
Indonesia government set a minimum wage of every region annually through legal regulation released by the
Indonesian Ministry of Manpower. The governor of each province then must publish the Regional Minimum Wage
after collecting recommendations from every regency and city. The total amount of salary is based upon an
agreement between employer and employee as long as it is not below the regulated amount.

Secondly, according to the Ministry of Manpower Regulation No. 78 of 2015, employee wages can be structured
as salary without any allowances, salary with fixed allowances, and salary with fixed and variable allowances.
Basic salary must be minimum 75% of total basic salary and fixed allowances. Employees can also receive other
benefits (non-wage), including religious holiday allowance, bonuses, work facilities compensation, and service
compensation for certain businesses. There are several types of bonus in Indonesia. Employees may get annual
bonus (usually in cash), tantiem which is incentive from company’s net profit, retention bonus to hold employees
leave the company within agreed period, or year-end bonus for outstanding employees.
Thirdly, although there is no regulation on pay rises, the Indonesian Ministry of Manpower guides the companies
in managing wage structure and scale through Regulation No. 1 of 2017. The recommended methods consider
employees’ class, position, tenure, education, competencies, as well as the company’s capability and productivity.
Hence, makes Indonesia has various ranges of salary by city, regency, and industrial sectors.

However, emphasis on financial rewards are shortcomings to make employees loyal to the companies. It is logical
that while increment and bonuses are the top influencers for employee retention, they are also top influencers for
employee attraction. Consequently, Indonesia employers become competitive in terms of hijacking the excellent
talents from other companies, named it as ‘salary war’. They can offer higher salary and more benefits than
talents’ current companies. It was expected that 82% of employers in Indonesia would like to increase employee
salary to more than 5% in the next 12 months (Michael Page, 2017). As Indonesian people are likely to move jobs
for money, not surprisingly, they will be more interested in the company with better offers.

Furthermore, Indonesian employees tend to be ambitious in terms of job promotion. Having a good position in an
organization means giving them power to perform among the team members (Whitfield, 2010). Otherwise, if
employees get low respect in the workplace, it would cause 26% more likely to quit (TINYpulse, 2018). This
method may be useful to keep them stay. Nevertheless, Indonesian workers, especially millennials, consider
organizational hierarchy is just a formal norm. They prefer to work in collaboration with their leader or senior
management, where they can handle challenges to develop well (DBS, 2018).

The Emphasis of Employee Experience in Employee Engagement

While employers believe that the rewards are able to retain the employees, the result is questionable. Robert
Walters Salary Survey 2019 in Greater China and Southeast Asia showed that pay rises and career progression
are the major motivation for switching jobs in Indonesia. Besides, millennials were reported that the main factor in
choosing companies to work is salary, and they will move to other companies mainly because of lack of self-
development in the workplace (IDN Research Institute, 2019). It shows that there are changing motivations of
Indonesian employees to stay at their companies and the old ways of employee engagement are no longer valid
in Indonesia.

Employees, especially millennials, in the digital era nowadays expect productive, engaging, and enjoyable work
experience. They will find jobs that suit their lifestyles and enable them to grow and connect each other for greater
meaning and purposes in the workplace (Bersin, et al., 2017). In other words, employees do not only demand for
physical needs, but also great feel in the whole working life cycle.

Indonesian companies should initiate the Employee Experience (EX) program, which involves all aspects such as
workplace, HR, technology, and management practice that affect workers on the job. The collaboration of those
aspects is to generate valuable interactions from pre-employment to post-employment.
Referring to Figure 3, companies must concern matters on essential stages which employees will go through. The
first stage is the time when candidates are attracted to the company’s job opening. They enjoy the recruitment
process which is practical, clear, engaging, and align with the employment brand. After that, employees get proper
onboarding orientation to know the organization structure and core values, their team, job function, as well as
future career. They are also engaged in building strengths and purpose with an enthusiastic vibe. Thus, it
encourages them to perform well and get recognition for excellent work through a fair and comprehensive
assessment. Besides job promotion and pay rise, promising career path should be offered by employers to trigger
employees’ participation in continuous development and feedback. In the end, they will have a positive exit
experience because employers appreciate their contribution, thus generating 'proud' alumni or brand
ambassadors (Gallup, 2018).

EX is not the replacement of employee engagement but closely related. EX brings about strong employee
engagement. Companies can breakdown the key concept of EX to engagement programs based on the
company’s purpose and culture with the perception of how experience is impacting performance. The quality of
EX in each stage is determined by the relationship between the employees and their manager, certainty of role
function, trust from the team, workplace, and opportunity to giving back to the community as well-being (Gallup,
2018).

The concept of EX is similar to customer experience in AIDA (Awareness, Interest, Desire, and Action) marketing
model by Elmo Lewis in 1898 which is still used by marketers today. The company puts employees as the same
role as customers who are influential stakeholders to financial impact. They are aware of the company, interested
in joining the team, desired to perform and develop well, and voluntarily promote company’s culture and values
through social media or other channels. They are satisfied with having a great experience from the company.

Challenges to Deal With

EX is trending yet challenging approach of talent management. The concept is not new as some global
companies have been doing this since 2015 and continuously booming in the following years (Ellis, 2018).
However, EX still sounds unfamiliar for Indonesian companies as only a few companies are exposed to applying
this approach or using EX term in their job title.

It is not an easy task to transform the traditional employee engagement by HR alone to modern and collaborative
workforce management (Satter, 2016). HR must develop a strategy to convince the management team and
change the perception that employees are not static capitals, but impactful customers who deserve greater
treatment than commodities. When employees feel recognized for the work they do by their leaders, they feel two
times highly engaged and will stay at their jobs longer than those who do not (OC Tanner).

The efforts to succeed in EX also require a large amount of investment. Companies should adjust the workplace
that is supportive for work productivity and innovation. Cozy interior and facilities like coffee machine, free-flow
snacks, suitable laptops or computers for work, and Internet access will enhance employees' performance. Small
personal human touch can also make employees happy. Performance recognition, such as annual nice
celebration or meal out, gift cards, charitable giving, and symbolic awards, can improve psychological motivation
and employee engagement rate (OC Tanner). Spending on these efforts may be an issue for the organization.

The HR team is accountable for overcoming these challenges. They have to prepare EX map to be presented to
the senior management team. The plan includes list of practices and how much costs they require, as well as
measurement tools to evaluate them. These are customized based on the company’s purpose, brand, and culture.

Time for Indonesian Companies to Change

Indonesia companies can learn from other companies’ success before implementing EX concept. A case to this
point is DHL, global logistics company, who won Overseas Project of the Year at the UK Employee Engagement
awards and as Top Employer in Africa in 2015. The company put employees’ motivation as the priority of its global
strategy. They launched Certified International Specialists learning and development program where the African
staff in any country participate in training to invigorate their skills. DHL also practiced out internal initiatives such
as Employee Appreciation Weeks, Employee of the Quarter, Employee of the Year awards, and Employee
Opinion Survey. The opinion survey measured employee satisfaction and engagement by analyzing feedback and
then take corrective action for better improvement in the following year.

Furthermore, Indonesia can learn from one successful company, for instance, Maybank Indonesia. Its current
Human Capital Director, Irvandi Ferizal, stated that employees in the bank are accustomed to have conversation
with colleagues, team leaders, and directors to create a good support system in terms of religion, mental health,
and well-being. The practices have led Ferizal to win Human Capital Director for Employee Engagement 2018,
representing Maybank Indonesia (Gupte, 2019).

EX has proven to generate significant outcomes for the organization. According to Willis Towers Watson (2019),
companies which implement EX have significant outcomes. They are three times likely to report their employees
as highly engaged, 10% less possible to face difficulty in recruiting and retaining employees, and 17% lower to
experience turnover. It can be the encouragement for Indonesian employers to start adopting this approach in
their workforce management.

In conclusion, although Indonesia has a remarkable score in engaging employees, companies in the country are
still struggling to retain their employees. Focusing only on salary increases, bonuses, or job promotion is not the
main reason for employees to stay in the company. Meanwhile, allowing employees to experience enjoyable
whole working lifecycle will result in more powerful engagement. EX is a potential practice of retaining employees
in Indonesia, even though there are some challenges to deal with. However, they can learn from some successful
companies.

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