Brain drain has been making rounds in the Malaysian media again as of late, as the country ruminates on its rising rates of human capital flight. As of March 2023, approximately 1.8 million Malaysians are living abroad in hopes of seeking better opportunities. As the national average brain drain rate rises to 5.5% – almost double the global average rate of 3.3% – it may be time for employers to consider reflecting on their data to find ways to step in and plug the brain drain.

The continuing issue of brain drain in Malaysia

Like most developing countries, Malaysia’s brain drain issue is not a novel one. Just in the past 20 years alone, the country has seen multiple and regular reappearances of the issue in the news cycle. Despite the moderation of inflation rates in the country and the stabilising Ringgit strength, the rising human capital flight still poses a significant threat to the nation’s job market and economy. 

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There are multiple and interrelated factors that commonly inspire high-achieving talents to move abroad, including a shortage of economic and professional opportunities, discrimination, and political and economic instability. 

While the Malaysian government has rolled out several policies and programs in the past to encourage the return of subject matter experts from their success overseas, the nation’s brain drain dilemma cannot be resolved without the combined effort from entities in the private sector as well. I believe that there is still room for improvement in employee engagement, salary issues and the prevalent entry-level job shortage that can be addressed by private entities to appeal to local talent to slow down the brain drain rate. 

The toll of brain drain on a developing country

The exodus of skilled Malaysians to more developed countries can have adverse effects on the local economy. As high achievers are often great additions to the team to raise the bar and instil healthy competition to intrinsically motivate employees, developing countries are especially prone to the stagnation of their local talent pool in the event of an increasing human capital flight rate. This means that Malaysia could suffer a shortage of high-calibre talent that is needed to push the country’s human capital development and productivity. 

On top of that, with the subject matter experts and higher-ranking individuals earning money abroad, Malaysia loses its revenue from income taxes of these higher-earning individuals which may exacerbate the nation’s weakened economic growth

Taking action with insightful data and effective measures

So how can the private sector alleviate the problem while balancing the interests of multiple parties? In my experience, having the right data at your fingertips can be a great first step to understanding the issue and finding the root of the problem. As the issue of brain drain is predominantly affected by salary concerns, employers need to find better and smarter ways to reward and compensate their highly skilled high-performing employees. Merit increases are a great example of how employees can be incentivised to stay and perform better, which requires a great deal of data on the workplace.

With people analytics, you can build a strong foundation of HR metrics and workforce management to empower company managers with the right data at any time. As an employer, it is crucial to uncover the truth of what really motivates your existing employees to stay in your organisation and incentivise their efforts and performance well. While attracting high-quality talent from the job market requires competitive pay, other benefits like career development and compensation need to be applied to retain your top talent, and people analytics would help you plan your workforce and compensation strategies better.

With the right data, employers can help the country grow a thriving workforce in the job market by creating attractive opportunities that can compete with the offers abroad. Visier’s Smart Compensation and award-winning Workplace Dynamics™, for instance, works by guiding companies to develop a flourishing workplace with an effective and transparent culture, foster high-performing teams with the right training and development, and increase collaboration and communication between teams. In return, these can help their company maximise its impact while minimising cost. At the same time, as talent retention and acquisition increases, HR teams and managers are able to access the information to the workforce insights and find ways to tackle any possible threat of burnout or issues by understanding individual strengths and weaknesses. This way, they can help to hone specific skills, compensate their talent better and offer peer support when needed to further strengthen their workforce. 

Leveraging technology to foster better talent retention 

Take one of our clients, Pitney Bowes, for example. The global technology company – offering solutions in e-commerce, shipping, mailing, and financial services – was faced with the challenge of democratisation and simplification of their HR data collection for their senior management. As a result, their HR department was unable to access their workforce data in time to analyse, identify and predict any staff issues that may come up. On top of that, their HR and workforce data were inconsistent and incompatible with Finance, which diminished its validity further and caused distrust. 

After applying Visier’s people analytics solutions tailored to their needs, Pitney Bowes saw visible and impactful changes to their company. They witnessed a 10% reduction in turnover rate among their truck drivers, democratised their people analytics data to 400 self-serving users for easy access to people data, and increased the senior leaders’ trust in the HR data and reporting system. 

The future of Malaysia’s workforce

As Malaysia continues to grow into its role as a dynamic hub for technology, innovation and entrepreneurship, I am optimistic that more companies will see the benefits of adopting people analytics into their business. On top of the government’s efforts to incentivise corporations to offer competitive wages and their returning expert program, I believe that the brain drain will reduce over time as more private companies take the step to empower their HR processes with high-quality and actionable data. 

The article titled “Bleeding talent: Brain drain rate doubles the global average in 2023, what can be done in Malaysia?” was contributed by Terrence Yong, VP & General Manager of Visier APAC.

About the author

Terrence Yong is the GM for Asia Pacific for Visier, the recognized global leader in people analytics, providing on-demand answers to people-powered businesses. Founded in 2010, Visier reveals the fundamental questions and actionable truths capable of elevating your employees and your business to new heights.

Terrence has a unique mix of startup and enterprise experience, most recently as Chief Business Officer for Pulsifi, a HR technology company. Prior to that, he held regional and country leadership roles over a 20-year career with SAP and Microsoft.

Terrence has an MBA in Finance from the University of Manchester Business School, and an Electrical and Electronic Engineering degree from the University of Melbourne. He is a member of Singapore Institute of Directors and Young Presidents’ Organization.