How to win the talent war

The Human Factor

"One of the popular jokes in the GE campus is any trespasser who is talented enough will be recruited," says Murali.

Aquil Busrai, his counterpart in Shell Malaysia, feels one of the main challenges for an HR professional is to recruit and retain people whose presence gives an intellectual edge to the organisation.

And A K Balyan, HR executive director of ONGC Ltd, describes one of his most important tasks as a "fight to end the flight of talented professionals" from his organisation.

The fight so far has been immensely successful, Balyan says, as ONGC has been able to hang on to its talent pool despite the entry of so many multinationals and private sector competitors after liberalisation.

Welcome to the "talent war" "" a catchphrase coined by McKinsey six years ago "" in Indian corporations.

According to a survey done by the All India Management Association (AIMA), which brought the HR honchos together at a seminar earlier this month, 90 per cent of Indian companies have talent retention problems.

One in four software companies and one in two manufacturing companies admitted to facing real problems relating to keeping back people they want.

The talent flight, however, isn't restricted to the middle and top level employees. Consider a recent A C Nielsen ORG-Marg study which said a whopping 80 per cent of engineering students in India expect to move out of their first job within two years.

Surveys done by Hewitt have, however, shown compelling evidence that better talent management pays for an organisation.

For example, employee turnover in Indian firms doing a better job of attracting, developing and retaining highly talented people is 45 per cent less than that of others.

The monetary implication of this is huge as a frontline employee in a top company costs 40 per cent of salary to replace and top management costs 150 to 200 per cent of salary to replace.

And the stocks of these companies outperform comparable indices and industry performance metrics by over 15 per cent.

Though the scale is not as high as say, a Microsoft, which has appointed 300 talent scouts whose only job is to convince top quality people around the globe to join the organisation, the heartening thing is that major Indian companies are actually doing quite a bit to retain talent.

For example, India's large software companies invest heavily in skills training and continuous education programmes to keep abreast of developing technology.

In fact, some Indian companies spend as much as 5 per cent of their annual revenues on training compared to a mere 1.5 per cent spent by most US companies, including global giants like Motorola and IBM.

Look at Infosys. The company has created what it calls "knowledge currency units", which employees can earn for contributing towards knowledge sharing, which can be accumulated and encashed by employees.

Coca Cola India president Sanjiv Gupta says: "The cost of not keeping people at the leading edge of business can be very high."

To make sure that talented people stay back, Gupta says, Coke has institutionalised the process of encouraging "intrapreneurs" to turn the particular business divisions under their charge into a profit centre and remuneration is linked to it.

Some industrial houses like the Tatas and the Aditya Birla Group rely on inter-company transfers as a tool to retain talent.

Earlier, inter-company movement was strictly restricted to just the top management and was decided solely by the chairman.

But now, the individual companies have the leeway to advertise for positions vacant within the group as well, and interested managers can apply for the positions directly to the group HRD chief.

Most companies like Wipro, Mastek and so on, which have been reasonably successful with talent retention, have also adopted a technique called the People Capability Maturity Model (P-CMM), developed by the Software Engineering Institute, a unit of Carnegie Melon University.

P-CMM's aim is to grade companies according to complex criteria, certifying such human resources issues as business environment and mobility within the company, as well as issues such as compensation and accountability.

The certification process ranges from levels one to five "" five represents the most sophisticated and effective organisations.

So, what is it about these companies that attracts and retains talented managers? McKinsey consultants, who wrote the famous book The War for Talent, have explained the core elements that make up a winning employee value proposition (EVP).

An EVP, they say, is like the company's customer value proposition; it's the compelling answer to the question, "why would a talented person choose to work here?"

Each company's EVP will be different depending on the type of talent they are trying to attract, but these are the core elements that managers look for "" exciting work, a great company, attractive compensation and opportunities to develop.

A few more perks won't make the difference between a weak EVP and a strong one. If you want to substantially strengthen the EVP, be prepared to change things as fundamental as the business strategy, the organisation structure, the culture and even the calibre of leaders in the organisation.

Talent mindset: How?

McKinsey has some answers

Find out the attrition rate of the best mid-level managers

How many positions are open now versus two years ago

Identify the top managers who can go up at least two notches

How many of your managers are already over their heads

How much more productive are top performers than the average

Finally, identify the A, B and C players