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One in four employees in the organised sector in India is preparing to switch jobs, reports the management consultancy, Hay Group, in its study, Preparing for Take-Off. The study conducted in 2013, covering 700 million employees across 19 countries, pegged the employee turnover rate in India at 26.9 per cent, and 21.2 per cent worldwide. The significance of these numbers stands out starkly against the backdrop of the likely spike in the demand for talent, with the economy slated to grow at 5.5 per cent as per Reserve Bank of India estimates.
Why do employees leave?
A lack of challenging role, stimulating assignments, developmental and career progression opportunities, along with compensation ostensibly falling short of industry standards, are among the top triggers for attrition, finds a Hay Group study. Yogi Sriram, senior vice-president and head of corporate human resources, Larsen and Toubro, is of the view that compensation is seldom the real reason for leaving. Rather, it is an outcome of the disillusionment that stems from the absence of intellectual stimulation and a lack of engagement with work. The performance management system, too, works as a double edged sword, generating a perception of unfair and inequitable treatment, emanating partly from the difficulty in establishing the reward-rating linkage.
There is truth in the axiom that people join companies and leave managers. Chandrashekhar Mukherjee, vice-president and head, people management, National Stock Exchange of India, attributes the fall in engagement levels to the inability of line managers to play the catalyst in acculturating, developing and counselling people through difficult work situations.
Arvind N Agrawal, president, corporate development and human resources, RPG Enterprises, points out that by virtue of better education and capability levels, coupled with soaring life style aspirations, people are fastidiously focused on role enhancement and career progression. Moreover, making career choices based on peer pressure and parental advice, in the absence of any rigorous career counselling, lead to people ending up in jobs that they are not cut out for, and soon start looking for exit routes. Others succumb to the demands of high pressure and demanding corporate environment. Besides, the practice of planned attrition, in addition to office politics, stress and long travel time leading to poor work-life balance, also adds to the churn.
What is the cost?
The average direct cost of replacing an employee in terms of recruitment, on-boarding and training, according to one estimate, is to the tune of six to nine months salary. While for low to mid level positions, the cost ranges from 16 to 20 per cent of the annual salary, for senior executive positions it could even touch 200 per cent.
Even more significant is the indirect cost in terms of the plummeting engagement levels prior to the actual exit. According to a 2010 study by the performance management consultancy, Gallup, 8 per cent of India's workforce is actively engaged, 55 per cent not engaged and 37 per cent actively disengaged. People in the disengaged category have in effect 'checked out', but continue to hang around in the absence of better opportunities elsewhere. In the interim, their discretionary effort in the form of taking ownership and running the extra mile can take a nosedive by as much as 50 per cent. Those falling in the actively disengaged category can not only vitiate the environment through their negative influence but cause untold damage by sabotaging projects and driving away customers.
Turn around the turnover
While a certain degree of turnover is inevitable even in the top organisations, with employees constantly under pressure from competing market opportunities, and employers relentlessly striving for higher performance levels, it is imperative for organisations to articulate a retention strategy based on a symphonic interplay of different talent management functions.
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Building trust: Invoke employee trust by identifying and communicating a strong employee value proposition built around the company's values and culture and ensure alignment with the actual employee experience. For instance, support the professed value of work-life balance with a generous leave policy and a culture where employees are encouraged to and are comfortable availing leave. A case in point is the journey of HCL Technologies, which became the fastest growing global IT services company under the leadership of Vineet Nayar, who had defied conventional wisdom by implementing the philosophy of employees first and customers second.
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Supporting personal development: Former French footballer Zinedine Zidane had catapulted to the glorious heights of international football partly because of being double footed - the ability to kick the ball equally powerfully with both feet. Organisations, too, need to play the catalyst in supporting employees in inculcating and broadening their competencies through formal, on-the-job and cross functional training, developmental opportunities by way of mentoring and coaching, industry exposure through participation in external events and cross functional experience via short-term assignments across geographies. This will propel people to stick around even in the absence of a regular vertical movement.
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Developing managers: A manager is the strongest or weakest link in driving employee engagement. Often, people are promoted to managerial roles as a reward for their stellar performance as individual contributors. Organisations then expect them to continue their winning spree, little realising that their new roles call for new skills. While managers quickly learn the ropes of their new role in producing deliverables, they often overlook the softer aspects around motivating team members by providing role and goal clarity, reinforcing positive behaviour through appreciation, inducing course correction through honest and regular developmental feedback, and helping broaden their competencies through training and delegation. Managerial training is, therefore, a potent retention tool.
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Communicating frequently: It is important, says Mukherjee, to set up a structure for a two way communication by institutionalising a communication matrix comprising climate surveys, townhalls and employee meetings with CEO, department heads and HR. This would not only help disseminate information about new businesses, geographies, strategies and challenges, but also create an open environment encouraging employees to voice their opinions and concerns.
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Focusing on high potentials: The epicentre of any retention strategy, according to Agrawal, lies in identifying those at the top of the performance potential matrix and keeping them energised through a set of carefully crafted, customised measures. By ensuring that the top performers are in the green on important parameters like job responsibility, personal development, remuneration and involvement, and by watching out for, and addressing the red flags, the RPG group has achieved 89 to 90 per cent retention in top talent.
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Engaging with flexibility: Robust policies around relocation, sabbatical, work-time flexibility through consultant role options, and carefully thought-out career paths both for generalist and specialist roles would also go a long way in retaining employees.
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Establishing basic talent management processes: Mohinish Sinha, leadership and talent practice leader, Hay Group India, points out that barring the sector leaders and the large multi-national companies, which can boast of mature people processes, talent management is low priority in the vast majority of companies in corporate India. Therefore, any retention strategy would have to start with setting up the basic integrated talent management processes which connect the entire life cycle of employee experience.
- Employees, too, are responsible: Employees sometimes run the risk of becoming victims of existential neurosis and ennui, according to Sriram, by expecting too much too soon, and taking a short, rather than a long term view of their careers. Instead of expecting challenging, career enhancing assignments to come their way, they need to make an effort by embracing the seemingly unglamorous and difficult tasks, including jobs on the shop floor. This will give them a solid grounding for growth and more fulfilment.
Charu Sabnavis
Founder-director, Delta Learning
Founder-director, Delta Learning
