 "It's not about money")
Between April and June 2014, Infosys' employee attrition rate touched 19.5 per cent, the highest in the company's 30-year history. The firm witnessed a spate of exits of its top level executives since June last year when co-founder NR Narayana Murthy was called back from retirement (Murthy has gone back into retirement since then). As a reaction, perhaps, Vishal Sikka approved 5,000 promotions across sales, delivery and business enabling functions, and across geographies, in his first week as Infosys' new CEO. But are increments and promotions enough to retain talent? How can companies create job fulfilment, motivation and improved recognition for employees and prevent them from exiting?
Give young leaders the freedom to take risks: Jaideep Shergill
For long, businesses the world over have tried different measures to retain valuable employees. Their efforts have mostly taken the shape of impressive compensation and benefits. Yet, their success rate in retaining employees has in recent years registered a sharp fall. One reason for this is the limitation of material incentives. Companies today recognise that monetary rewards - though a powerful factor motivator of employee performance - do not always beget a desirable outcome. With young employees treating pecuniary benefits as tactical incentives for an immediate spurt in output, many of the 'employee motivation schemes' fail.
Increasingly, organisations are focusing on an employee's personal development. There is growing acknowledgement that developing bright and enterprising talent is not just the most efficient, but also the only reliable way to find committed leaders. The new approach has its risks. For all the talk of nurturing talent, a firm's brightest often absorb the 'high-grade' training and then hot-foot it to a competitor. Recent research shows that a staggering 55 per cent of employees drop out of development programmes, with nearly half the top talent leaving within five years of being employed.
Organisational heads are often confused at the high rate of attrition of star performers, even after they are provided with huge monetary rewards and development programmes. This bears deeper analysis because it exemplifies what is going wrong for most companies today. What we're seeing is organisations focusing on the individual's 'ability' without considering his/her organisational commitment.
Meeting employee aspirations is only useful if there is a reciprocal commitment to nourish the organisation. The latter simply hasn't happened in sufficient measure. While the need for stimulating work, recognition and the chance to individually prosper are incentives, the absence of alignment of personal ambitions with organisational goals has hit collective performance.
The answer lies perhaps in giving young leaders greater ownership of their work and the freedom to take risks. We must make them accountable for success and failure, even while imbibing them with a sense of organisational commitment. The onus is on the senior management to convey a clear vision for both organisational and personal development. It must be made clear, in the long run, that the two aims coexist mutually. One cannot happen without the other.
(Sushma Rana, director, talent and people development, MSLGROUP, India, also contributed to the article)
Participate in the employee's growth dream: Ajith Nair
Our research with employees indicates that in the Indian context, loyalty is possibly conditional. High employee engagement with an organisation does not always mean lifetime relationships and loyalty. Employees these days constantly evaluate how the organisation that they work for is able to or likely to meet their personal and professional needs.
While base pay/salary is a key driver of retention in the Indian context, employers could do well not to ignore critical factors like career advancement opportunities, job security, the length of commute and retirement benefits. Additionally, employees, especially the millennial workers, look to balance work and personal lives. The role of organisational leaders becomes all the more crucial at mid to senior levels in engaging employees. Trust and confidence in senior leadership and the organisation's financial performance play a greater role in driving retention among employees. Yes, money is important but how can a company achieve a balance in ensuring that employees continue to stick on when it goes through a period of churning, when employees don't exit despite high salaries, increments and designation hikes? Based on our research, here are some answers:
Loyalty might be overrated but performance is not. A focus on performance might be more useful compared to chasing loyalty as an end in itself.
Create tools to periodically gauge interest of employees: Sumit Mitra
The organisation's culture, the career opportunities that it offers, the learning and finally the recognition that eventually comes with the experience of spending time in an organisation are the key drivers for retaining employees. Several industries don't think twice about hiring human talent from rivals because almost everyone can offer fat salaries and designation hikes. These tactics can help organisations retain talent for some time but not in the long run.
As part of our employee engagement surveys, which we conduct regularly to gauge how our employees are feeling about the company and whether we need to tweak certain HR strategies, out of the 26 engagement drivers, 'pay' scores very low. There's no doubt that companies need to be competitive in terms of the pay scale, however, it ceases to be a multiplier of employee engagement and retention.
At Godrej, our employee value proposition of Tough Love, Whole Self and Your Canvas establish a work culture that gives our employees the opportunity to pursue their career and personal aspirations while aligning their individual, personal dreams to the larger business vision. As a part of our Tough Love proposition, we believe that variable remuneration is a strong driver of performance. While we strive to be competitive on fixed remuneration, our economic value added-based variable remuneration allows for bonus payment without a cap. In years of good performance, we have had some of our businesses paying out seven-eight times their target bonuses. As part of our Whole Self philosophy, we support our employees in their interests within or even outside the organisation. Such 'thought tools' eventually become more effective in retaining employees in the long run.
Give young leaders the freedom to take risks: Jaideep Shergill
For long, businesses the world over have tried different measures to retain valuable employees. Their efforts have mostly taken the shape of impressive compensation and benefits. Yet, their success rate in retaining employees has in recent years registered a sharp fall. One reason for this is the limitation of material incentives. Companies today recognise that monetary rewards - though a powerful factor motivator of employee performance - do not always beget a desirable outcome. With young employees treating pecuniary benefits as tactical incentives for an immediate spurt in output, many of the 'employee motivation schemes' fail.
Increasingly, organisations are focusing on an employee's personal development. There is growing acknowledgement that developing bright and enterprising talent is not just the most efficient, but also the only reliable way to find committed leaders. The new approach has its risks. For all the talk of nurturing talent, a firm's brightest often absorb the 'high-grade' training and then hot-foot it to a competitor. Recent research shows that a staggering 55 per cent of employees drop out of development programmes, with nearly half the top talent leaving within five years of being employed.
Organisational heads are often confused at the high rate of attrition of star performers, even after they are provided with huge monetary rewards and development programmes. This bears deeper analysis because it exemplifies what is going wrong for most companies today. What we're seeing is organisations focusing on the individual's 'ability' without considering his/her organisational commitment.
Meeting employee aspirations is only useful if there is a reciprocal commitment to nourish the organisation. The latter simply hasn't happened in sufficient measure. While the need for stimulating work, recognition and the chance to individually prosper are incentives, the absence of alignment of personal ambitions with organisational goals has hit collective performance.
The answer lies perhaps in giving young leaders greater ownership of their work and the freedom to take risks. We must make them accountable for success and failure, even while imbibing them with a sense of organisational commitment. The onus is on the senior management to convey a clear vision for both organisational and personal development. It must be made clear, in the long run, that the two aims coexist mutually. One cannot happen without the other.
(Sushma Rana, director, talent and people development, MSLGROUP, India, also contributed to the article)
Jaideep Shergill
CEO, MSLGROUP, India
CEO, MSLGROUP, India
Participate in the employee's growth dream: Ajith Nair
Our research with employees indicates that in the Indian context, loyalty is possibly conditional. High employee engagement with an organisation does not always mean lifetime relationships and loyalty. Employees these days constantly evaluate how the organisation that they work for is able to or likely to meet their personal and professional needs.
While base pay/salary is a key driver of retention in the Indian context, employers could do well not to ignore critical factors like career advancement opportunities, job security, the length of commute and retirement benefits. Additionally, employees, especially the millennial workers, look to balance work and personal lives. The role of organisational leaders becomes all the more crucial at mid to senior levels in engaging employees. Trust and confidence in senior leadership and the organisation's financial performance play a greater role in driving retention among employees. Yes, money is important but how can a company achieve a balance in ensuring that employees continue to stick on when it goes through a period of churning, when employees don't exit despite high salaries, increments and designation hikes? Based on our research, here are some answers:
- Companies should ensure that the base pay or salaries are aligned to market: Set clear expectations on compensation and how it links to performance.
- Career development and growth needs are a key driver of retention.
- Leaders need to inspire employees to do their best and ensure that they are co-opting employees into business decisions as required.
- Wherever possible, companies need to create flexibilities in aspects such as commute, work-from-home preference (in case it is applicable for employees) etc.
- Communicating a clear value proposition goes a fair way in addressing insecurities about employment.
- Merely doling out fat sums of money is not enough to retain employees in the long run. The money game is not enough because an employee (especially those in the C suite) looks for like-minded individuals who can share the long-term vision for growth of the company.
Loyalty might be overrated but performance is not. A focus on performance might be more useful compared to chasing loyalty as an end in itself.
Ajith Nair
India Practice Leader, Organisational Surveys & Insights, Towers Watson
India Practice Leader, Organisational Surveys & Insights, Towers Watson
Create tools to periodically gauge interest of employees: Sumit Mitra
The organisation's culture, the career opportunities that it offers, the learning and finally the recognition that eventually comes with the experience of spending time in an organisation are the key drivers for retaining employees. Several industries don't think twice about hiring human talent from rivals because almost everyone can offer fat salaries and designation hikes. These tactics can help organisations retain talent for some time but not in the long run.
As part of our employee engagement surveys, which we conduct regularly to gauge how our employees are feeling about the company and whether we need to tweak certain HR strategies, out of the 26 engagement drivers, 'pay' scores very low. There's no doubt that companies need to be competitive in terms of the pay scale, however, it ceases to be a multiplier of employee engagement and retention.
At Godrej, our employee value proposition of Tough Love, Whole Self and Your Canvas establish a work culture that gives our employees the opportunity to pursue their career and personal aspirations while aligning their individual, personal dreams to the larger business vision. As a part of our Tough Love proposition, we believe that variable remuneration is a strong driver of performance. While we strive to be competitive on fixed remuneration, our economic value added-based variable remuneration allows for bonus payment without a cap. In years of good performance, we have had some of our businesses paying out seven-eight times their target bonuses. As part of our Whole Self philosophy, we support our employees in their interests within or even outside the organisation. Such 'thought tools' eventually become more effective in retaining employees in the long run.
Sumit Mitra
Executive VP, HR, Godrej Industries
Executive VP, HR, Godrej Industries