Losing Qualified People

7/29/2019 Losing Qualified People

1/7

The often unseen costof attrition, voluntaryand involuntary, canbe staggering fororganisations. Here'syour primer on goodleavers and badleavers.ABT-PeopleStrongStudy

The Good

Are You

LosingPeople?

btspecial

RITESH

SH

ARM

A


2/7

AnATTRITION STUDY

now? With com-panies desperateto cut headcountcosts in any

case? Right. Attrition cuts bothways, even in a downturn. Whiledownturns can spawn lean and

mean organisations, no companywould like its best talent to walkaway at any time, least of all whenthey are needed the most. Period.

So, while forced attrition wasout of the purview of our surveysample, it has been added as partof the research when the jobsenvironment changed. H eres aprimer that tells you why employeesleave. Because, theres no greatertime to stand up and ask: Are we

losing the wrong people?TheIndia Attrition Study 2008,

done between October 2008 andM arch 2009, is a partnershipbetween BT and PeopleStrong tofigure out why employees quit. Inthe good times before September-October 2008, attrition in IndiaInc. was as high as 20 per cent (andup to 40 per cent in the boomingservices sector). Now, with theeconomy in a recession, BT-

PeopleStrong Research says, IndiaInc. is not only losing fair bit oftop performers but plenty of theUniversal Leavers, who form anycompanys backbone.

Also, organisations that haveshed chunks of the workforce areleft with insecure employees whotend to jump ship if they can toavoid a pink slip. HR expertsunderline that, in a downturn,voluntary attrition means letting

go of top performers. Companiesthat ignore attrition in a downturn

do so at their own peril.High-end talent is always high

on aspiration, says Shekhar Arora,Executive Director for HR at heavyvehicles maker Ashok Leyland.

Their worry is not one of survival,but how fast they climb up the cor-porate ladder. You tend to losethem at all times if you do notreasonably address their concerns,says Arora.

Losing employees to thecompetition is also top of mind forSRF Ltd, the Delhi-basedmanufacturer of nylon tyre cordfabric and such like. The mainchallenge at present is to instill con-fidence in people and allay theirfears of losing jobs. Since it is agood time to pick up talent fromthe market, it is also a problem toretain talent. They could also bean easy pick for others, says Suresh

Tripathi, President (HR), SRF.

Managing AttritionSome companies are adopting atwo-pronged approach. On onehand, companies are strengthen-ing systems to identify the top per-formers and to reward and retainthem. On the other, non-perform-ers are being put on performance

improvement exercises: if there isno improvement, they are askedto leave.

With companies looking atsmaller headcounts, most are easingout at least five per cent of thebottom performersor so theythink. The question is: how good isa company in identifying real bot-tom performers?

Tripathi says organisational

tolerance and values decide thetimeframe and the process forhandling poor performers. SRF itselfhas an individual who wasconsidered a write-off in one rolebut has now become a key talentand one of the most sought-afterprofessionals. Our patience andprocess of giving opportunity haspaid. At the same time, we havepeople who did not improve despitemultiple role changes as well as

different assignments. We let themgo, says Tripathi.

While SRF got it right, howmany have the patience to do allthis in a slowdown, when the focusis on cutting costs?

One of the first challengesHRmust surmount while facing theeconomic downturn is resisting thepressure to right-size as first option,

THE ATTRITION CHALLENGE

In a slowdown, companies are forced to check theirstaffing budgets

Wages costs hadballooned in the past fewyears, due toa scramble for talent

Though the intentis to ease out the bottom performers,that may not always happen

Keeping top performerssecure and motivated becomesa key challenge

Understanding thepattern of leavers identified in thestudy can help

More than one-fourth of the Leavers withinManufacturing in North are Top Performers.


3/7

says N.S. Rajan, Partner for HumanCapital and Global Leader ofHRAdvisory, Ernst & Young.

Other major people challenges

of the changed times, say H Rexperts, are performance manage-ment systems, scope of givingdifferential reward to top per-formers, controlling salary hikesas business profitability goes down,improving employee productivityand managing moralethings thatstand true irrespective of marketconditions.

Toppers and Early Leavers

Spread across 59 companies fromeight industry verticals (SeeMethodology), theBT-PeopleStrongIndia Attrition Study 2008categorises Leavers asTopPerformers, Early Leavers (thosewho leave within 12 months of

joining) and Universal Leavers (allthe remaining Leavers who areimportant for sustaining currentoperations of a company).

The proportion of Early Leavers

is relatively higher in the servicessectorBFSI, ITES, Retail andTelecom. FMCG and Manufacturinghave the smallest proportion ofEarly Leavers. In IT, close to one intwo people leaving is a TopPerformer, which doesnt augurwell for the future.

HR heads across banking,financial services and insurance(BFSI)need to handle a few more prob-lems as at least one in two people

leaving in theBFSI sector are EarlyLeavers. T his leads to higherrecruitment costs and an unsettledenvironment where supervisors andmanagers have to continually trainnew recruits.

ICICI Prudential Life Insurancehas 15 to 20 per cent annualattrition at managerial level whilefrontline attrition is 40-50 per cent.Of this, 50 to 60 per cent attritionwould be involuntary asperformance-led exits have beenhigher this year, says Judhajit Das,

bt special


4/7

HR Head, ICICI Prudential Life. Wedo not have a phenomenon wheretop performers leave. Insurance is

still witnessing high attrition at theentry levels, he adds.Propensity to leave should

generally decrease from early careerto mid-career transition. But,according to the study, BFSI andRetail particularly suffer from hugeattrition at Managerial levels whileIT and ITES managers settle down.Most of the attrition in new-ageindustries likeIT and ITEShappens at

early and early-mid level.According to the study,

organisations in the North have todeal with the most restless work-force. The share of Early Leavers isseen to be highest in the Northwhile the Rest of India has a highshare of Universal Leavers. NorthIndia has a high share of both Earlyand Universal Leavers where,surprisingly, women form a majorchunk of early leavers, defying theusually-accepted phenomenon ofwomen being more stable.

So, is there a regional twist? AtQuatrro BPO Solutions, Mumbaiand Delhi alternate as worst inattrition while Chennai has the low-est attrition. SRF has a highpercentage of early leavers in theNorth. Samsung India, which has aworkforce of 3,000 across fourregions and 50 branches, finds thatemployees in North are aggressive.When we do exit interviews, werealise that titles and designationsare bigger carrots in North. In Southpeople look at leadership, saysSanjay Bali, Vice-President (HR),Samsung India.

Does that make a case forregion-specific policies? Says S.Y.Siddiqui, Managing ExecutiveOfficer Administration (HR, Financeand IT), Maruti Suzuki India: Just

as global companies have businessand product strategies based ondifferent geographies and regions, it

will be prudent to tweak genericHR Policies to suit region-specifictrends. This already exists in termsof Compensation Policy, HiringStrategy and Transfers to someextent in many companies.

However, there are counter-views. Says Tripathi, While there issome merit in considering region-specific HR policies, it is likely tocreate more problems We keep

rotating our people from one part ofthe country to other socommonality of policies is desirablelest any difference is seen as reduc-tion or retrograde step by people.

Quality of work is the clearwinner when pitted against salary.According to the study, career pathis topmost priority. A very highpercentage of attrition at the entrylevel or the junior level happenspurely because of salary. But yes,career growth is the main reasonfor attrition at the middle and seniorlevels, says Tapan Mitra, Chief-HR, Apollo Tyres.

Young and FootlooseThe young and restless workforce iscreating new challenges in the toughenvironment. At HSBC India, themajority of the workforce is 30years old or less, so the currentslowdown is the first that they areexperiencing. What also differenti-ates the millennial workforce is therealisation that they are far moreinformation savvy than theirpredecessors.

This workforce has access toinformation that can often be merespeculation, and given the hap-penings, specifically over the last 6-9 months, they are likely to be-lieve a lot of what they hear, says

When we do exit

interviews, we realise

that titles are bigger

carrots in North

Sanjay Bali (R), VP, HR, Samsung India

We bring people before

they join and have them

look at what we do to

reduce potential attritionPiyush Mehta, Senior VP, HR, Genpact

More than 7 in 10 leavers within BFSIin North are Early Leavers. RITE

SH

SH

ARM

A

SH

EKH

AR

GH

O

SH


5/7

bt special

THE GAMEPLAN FOR HR PROFESSIONALS

Attrition can never be wished away. One

can reduce it to the right level. But

what is even more important isareyou losing the right people?BT-PeopleStrong

Attrition Study has thrown some interestingdata. Since the study covered 59 companies

in eight industry sectors across India, for thefirst time, we have comprehensive data on

attrition. Until now, each company had only

its own data, since others would shy awayfrom sharing theirs. But, we now have the

benefit of seeing some trends that could beused to make HR strategies. Here are some

highlights:

Reducing Attrition:Losing new employeesearly leads to a lot of loss of opportunity aswell as wasted expense and energy. The

study shows that 33.8 per cent of those whoquit are Early Leavers. One of the most

effective ways to reduce attrition would be tocut this down by half. If the overall

attrition of a company is 15 per cent and

early leavers are one-third of this, then cuttingdown the latter by half would mean that

attrition would get lowered to 12.5 per cent,a huge change! A strong new employee in-

duction and orientation programme would create strong glue to hold them

back. The first 90 days are most risky. Early Leavers constitute a whopping54 per cent in BFSI, followed by a significant 40 per cent each in ITES and

Retail. If your company operates in these industry segments, you know wherethe priority must be.Regional Practices: While each region may have its own cultural flavour,

they all fall under the gamut of common corporate policies. This study clearlyshows that different regions need to execute a different implementation plan

for the same HR strategy. For example, 40 per cent of leavers in the Northand 27 per cent of leavers in Rest of India are Early Leavers. What this

means is that there is a different need in North because of which a strongerand different approach is needed, so a common broad brush may not work.

And the gains would be much higher, too. Also, as an HR Head, it makes

more sense to implement reduce Early Leavers plan in the North as thegains there would be maximum.Quality of Attrition:No company likes to lose the Top Performers. They arethe ones who drive growth as well as the key strategic initiatives.

Surprisingly, the IT sector has emerged as the dubious winner here with 45

per cent of quitters rated as Top Performers, followed by Manufacturing at 23per cent and BFSI at 22 per cent. The best are Pharma (9 per cent) followed

by Retail and Telecom (10 per cent each) and FMCG (11 per cent).One of the best ways to keep the top performers engaged would be by imple-

menting a strong career planning program for them. Give attention to every-one, but focus on them. This is well supported by the studys findingsthe

biggest driver of attrition is Opportunity for Career Growth (25 per cent) fol-

lowed by Salary (10 per cent).

Tanuj Kapilashrami, Head, HR,HSBC India.

The challenge for organisationswith a young workforce is to keep

the flock together and preventundue anxiety from spreading. Weare committed to the governingprinciple that if our employees needto know anything about the bank,they will hear of it first from us,says Kapilashrami.

So, what is it that companiesare doing to hold on to their best?

Two-and-a-half-year old QuatrroBPO Solutions has nurtured aconcept that S. Varadarajan,

ExecutiveVP and ChiefHR Officer,calls Homing Pigeons. We are intouch with high performers wholeave us and home in on themwhenever they want to comeback, he says.

At Samsung India, attrition levelshave always been below 10 percent. Bali credits this to the factthat people have more options tomove into other roles in theorganisation. While we do notbelieve in giving hefty bonuses,everyone has an opportunity togrow and move into a bigger role. Aclear-cut career path is drawn outfor key employees, says Bali. Ifsomeone has spent more than 18months with Samsung, chances oftheir staying back are more.

Genpact, theBPO pioneer, uses apre-hiring process to help arrestattrition. We bring people beforethey join and have them look atwhat we do. If they choose to not

join, that reduces potential attri-tion, says Piyush Mehta, SeniorVice-President, HR.

Mehta says a young workforcetends to leave for higher education,so Genpact provides education atwork. Attrition levels are half forthose employees who have takenthis opportunity, says Mehta.

The Right to StayBut the bigger question is that, when

companies are looking at lightening

One of the mosteffective ways toreduce attritionwould be to cutdown EarlyLeavers by halfAadesh Goyal/

Chairman & CEO/

PeopleStrong


6/7

bt special

the ship, how do they ensure theyare losing the right people?

There really is no fool-proofway to ensure that only some

people leave and others dontduring a time when the companyis looking to reduce its head-count, says Mitra. However, hav-ing said that, each company fol-lows certain patterns.

For Apollo Tyres, the key issueis to ensure that the process istransparent at all times. Employeeswho are seen as under-performersare clearly told to improve theirperformance. Chances are given,

and we have found that this hasoften resulted in improvement.However, repeated failure orinability/ disinterest in improvingperformance is taken seriously,Mitra says.

Ashok Leyland constantlyscrutinises the quality of talent, allthe more in bad times. It has a3x3 matrix that tracks potentialvs performance across nine levels.We take care of the high valuetalent by offering them a develop-ment-linked career plan andinsulating them against businesscycles. They are our best peopleand we need them all the more inbad times, says Arora.

The middle-level talent is usedin projects that require goodperformance but are low in strate-gic thinking. It takes every exitvery seriously. We do this for lowvalue talent also as the same rea-sons could trigger dissatisfaction

among the high-end performerstoo, says Arora.

While it is not easy to regulatethe attrition trends to ensure thatonly the non-performers leave,theres no better time than a slow-down to put your house in order.

SAUMYA BHATTACHARYA

WITH N . MADHAVAN

For more details on theBT-PeopleStrong Attrition Study log

onto www.businesstoday.in


7/7

Documents

Losing Qualified People