The Impact in HRM due to the increase of staff turnover as a result of Lankan Rupee Depreciation
Income vs Inflation
According to Central Bank of Sri Lanka(2022), referring to the National Consumer Price Index (NCPI) issued by Central Bank of Sri Lanka (CBSL), the headline inflation rate of Sri Lankan consumer pricing was 4.60% as at December 2020 and increased upto 14.00% as of December 2021 which now at an all time maximum inflation rate. While the inflation being increased by 9.40% within a year, the minimum annual increment of the staff pay of a normal company listed under CSE (Colombo Stock Exchange) would be around 3%-7%. (Will vary depending on company policies). Due to the negative figure difference between the income and inflation, the staff had to put a pressure on HR Department and their Management Committee to increase their salary. Failing to increase, caused a loss on staff count, hike on job hoppers and immediate migrants to other countries. As a result, the company had to advertise and re- open the vacant position which results additional expenses on account of HR budgets.
Have a look on Maslow's Hierarchy
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| Figure 1 - Maslow's Hierarchy of Needs |
According to the Maslow's Hierarchy of Needs the basic needs such as food, sleep, security and finance etc were put on test due to the rapid increase on inflations and monotonous movement on the Salary of the staff. The Human Resources professional should focus more on their staff's benefits and needs and cater it accordingly to retain them within the companies.
How HRM Professionals should aproach this issue?
- Income
Hence, the ideal move to support retaining the staff would be to convert the fixed allowances to variable incomes which might vary as per the price strategies within the country. One example would be, a company granting fixed travel/ fuel allowances to the clients should amend it to varible travel/ fuel allowances to match the current market fuel prices. Rather than granting a slabbed rupee amount, granting a slabbed distance in kilometers would be benefiting the staff to claim it as per the fuel prices which might vary as per the fuel prices.
- Work Time
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| Figure 2 - Access to WFH |
"However, the novel coronavirus outbreak has forced companies’ hands to encourage or mandate employees to work from home. This unexpected challenge for employers to manage remote workforces and for employees to remain interconnected and productive at home may ultimately offer a proving ground for future work from home policies." (Zhao, Daniel, 2022)
The work from home scenario had impacted a lot of individuals in loss of sleep since, the timing would drag overnight having their access to office materials digitally from home. And it gave a new phenomenon to the managers to get the work from the staff done overnight without any cost to the company. But the cost was the staff's mental health. Hence, the HR should interfere into such scenarios and to bring protocols such as balancing the physical presence of the staff at the workplace and the digital presence in a way that would not effect the mental health of the staff.
References
Available at: https://www.cbsl.gov.lk/en/measures-of-consumer-price-inflation
[Accessed March 2022]
Available at: https://www.glassdoor.com/research/working-from-home/
[Accessed March 2022]
As rightly mentioned working from home has effected peoples day to day life. Specially it is stressful to work from home. Do you see any way out for this issue?
ReplyDeleteYeah it is stressful. The environment at home and the supervisors pressure to complete the task pushes the employee to get stressed. I personally feel, if the WFH and working physically can be managed on a roster schedule among the each employee, it might reduce the stress at some level since they get to work in two environments in two different days.
DeleteThis is a very timely and important topic and it is presented in detail. I am also of the view that in the light of the current epidemic situation and the economic downturn in our country, this topic needs to be addressed extensively.
ReplyDeleteAgreed. And thank you for the comment
DeleteHumaidh
ReplyDeleteThis is a distinct perspective on HRM, and many Sri Lankans are currently dealing with the same issue. In such a setting, HR managers are looking for innovative ways to improve their role. This is an excellent article that expresses the current issue.
Thank You Asiri
DeleteYou have touched the two very sensitive points that face all the employees and institutes in Sri Lanka. Both of those situations cannot under control by institutes. So HR managers have to play extraordinary role in finding the mild solutions that neither harm institute nor employees.
ReplyDeleteAgreed Chaturika. And thank you for the comment
DeleteAttractive post with topical points. As a HR team they need to do take all the action to motivat the people. Since majority of the people are not clear on the future. If HR can arrange a program such as awareness session it will be a great support to build up the motivation and it will directly impact on the efficiency and productivity.
ReplyDeleteThanks,
Janaka.
Yes Janaka, HR plays a significant role in a person’s career. And I truly agree with your suggestion.
DeleteAppropriate topic.Definitely you touched the heart feelings of who work at home people.
ReplyDeleteThank You Vajita
DeleteIt's an excellent piece of writing, and it's given in great depth. I believe that all human resource managers should be searching for new methods to better their function in this epidemic crisis. Great post & all the best!
ReplyDeleteThank you Uditha
DeleteYou have raised a good point in your journal which we are always talking when it's come to HR related matter. As you said WFH might be a stressful. But if superiors can implement a proper monitory mechanism WFH might be a successful method of a business. Since we were having good n bad experiences on WFH recent pass it is high time to find a proper way. All the best !!!
ReplyDeleteTotally agreed with your point Hasitha. Thank you for the feedback
DeleteYou have clearly indicate that how the current situation of the country affected organizations and employees. As we all know the inflation is increasing rapidly but staff salaries and benefits were not adjusted accordingly in most organizations. As a result employee satisfaction level has been decreasing along with the productivity.. Good Luck..
ReplyDeleteExactly. HR should play a vital role in ensuring employee satisfaction on par with the productivity.
DeleteHi, A good topic that fits and should be talked about in recent times. While reading this I thought the above are important for HR Managers. You have given a good start to that. All the best!
ReplyDeleteHi Tharindu. Thank you for your encouraging feedback.
DeleteYou have well explained how rupee depreciation & high inflation have affected industries, how it negatively impacts staff turnover and also how HRM professionals should approach the issue. All the best!!
ReplyDeleteThank You Gayan
DeleteYou've touched on two highly delicate issues that all Sri Lankan employees and institutions face. It's a fantastic writing that goes into great detail. All the very best.
ReplyDeleteThank You Sachini
DeleteYou have well explain about staff turn over against the rupee value Depreciation in Sri Lanka, This topic is very important for Sri Lankans to understand about the present situation of Sri Lanka. Also you have described about the work time which is doubled after 2011. Now we can understand the situation in this topic. With regard to inflation in Sri Lanka also explained in a understandable manner
ReplyDeleteThank you for your encouraging feedback Rifkana
DeleteHi Humaidh, It's a great article. What will you suggest in terms of part time workers and full-time workers? Should the company treat them the same or should they practice different approaches? Ex. Allowance and raise in salary etc.
ReplyDeleteHi Mafaz! In my view, all employees should be treated as same. They can be part time or full time, their progress results the organizational success.
DeleteYou have well explain about the importance of HR Management for an Organization. Most of the employees working in Middle level they do not understand the importance of the HR team in an Organization. After reading this article simply they can understand the importance of this criteria. Can understand the Importance of HRM for Organizational sector
ReplyDeleteThank You Manoj for your encouraging words
DeleteAttractive post and good points noted, however increasing salaries may not be practical for all companies economic situation has impacted revenues and cost. also regarding WFH culture it can be finetuned to improve performance i am currently doing a blog on it i will post the link here for your reference as well
ReplyDeleteHi Farzan, I agree with your point as well. My view was on one side of the aspect, and your analysis enlightens me on the other side of the aspect as well. Thank you for your effective feedback
DeleteEmployee retain is important function of HRM present situation in sri lanka salary is same but expenses are more increased due to rupees depreciation. by this employees are turnover increased. well said.
ReplyDelete