'Not all attrition is bad'

Q&A/ Russell Huntington, Director, Human Capital Group, Asia Pacific, Watson Wyatt

Russell Huntington believes the Indian economy's growth outstrips even that of the Industrial Revolution. But unless businesses get their HR strategies in shape, they may not be able to reap the benefits of this prosperity, he warns.

Huntington knows what he is talking about. As director of the human capital group at HR consultancy Watson Wyatt, he is a frequent visitor to India and advises many of the country's top companies.

On a recent visit to Mumbai, Huntington spoke with Govindkrishna Seshan on how to increase India's talent pool and the need for sound retention strategies in emerging economies. Excerpts:

What are the key issues facing HR managers in Asia Pacific?

Most countries in the Asia Pacific region are seeing dramatic changes in their economies: the pace of growth of the Indian and Chinese economy is already well documented.

But, perhaps not surprisingly, the labour market has not adjusted. That is why there is a sellers' market for talent. Across Asia Pacific, there is now a tremendous shortage of talent.

It is especially acute in India and China, but other nations too are facing similar situations. The unemployment rate in Australia, for instance, is the lowest in 30 years. Companies are facing a talent war that cuts across borders.

How should a company cope with this challenge?

Companies are realising that, to attract and retain talent, they need to look beyond just salary, promotions or benefits. They need to offer a value proposition that is unmatched by others in the market.

It's no longer just about the pay, so companies don't need to break the bank anymore. Instead, they need to look at job design. When we survey employers for best practices, employees from winning organisations almost always say that their jobs offer them continuous challenges.

When asked why they have stuck with their companies, the most common reply is that whenever they feel they are getting bored, the company has given them a new and more exciting challenge.

This could be by giving them a new role, a new project or a new field altogether. To begin with, companies must look at creating engaging challenges to excite their young workforces.

Then, youngsters are most worried about career development. So companies must look at empowering their employees. I know of a Korean company, which employs a few thousand people, that sends employees on a year-long paid sabbatical to study leadership anywhere in the world.

Although this is given to only a select few, it sends a strong message that the company is concerned about the development of its employees. In the Philippines, many companies are setting up dating agencies to help their employees find partners.

Again, the message is that the company cares for its employees and is not just worried about profits and losses. Next, companies must ensure their middle-level managers are good "people" managers. This isn't easy, because you are asking technical or professional people to be less technical and more people-oriented.

Many organisations now lose employees to huge payhikes offered by competitors. So salaries are still important....

As I said earlier, being a smart payer is good but it doesn't really help to be the highest payer. Companies must understand that when they lose employees to a 50 or 75 per cent pay hike, it is not a failure of their retention strategy. They are essentially losing these employees to attraction.

Higher salaries will attract employees, but will not retain them. Employees will not stick to a job they find boring or where they do not see growth, even if you offer them a 100 per cent raise.

What should an organisation's strategy be, in such a situation?

To begin with, it is important to recognise that not all attrition is bad. The director of a leading Indian BPO told me that he would like employees to leave the company after the first year as the cost of training fresh employees is far lower than holding on to experienced ones.

That is very sector specific but still, when a company loses some of its people to attraction from a competitor, it can always hire fresh talent. Of course, people will only work with a company when the work is interesting and the culture is good.

Another way to deal with attraction is to treat different sets of employees differently. Companies need to identify their critical talent and reward them well. They can choose whom they do not want to lose and who they can do without.

How do companies in other Apac countries deal with attrition and attraction?

Chinese companies are more strategic and tactical about finding and retaining talent. They are looking at ways to fight and reverse brain drain.

Many young Chinese go overseas for their education and over 60 per cent usually disappear into the workforce of the country where they study. Given the acute shortage for talent in the country, many Chinese companies are tracking international institutes that have a good proportion of Chinese students to bring these people to their workforces.

Typically, companies go to these countries, offer students summer placements in their company offices back home "" students find this exciting as it means a free trip back home.

During the summer, they assess the candidate and, if found good, they make him or her an offer on completion of the course. Now this shows the extent of commitment exerted by these companies to find talent.

There are other examples. Singapore, for instance, wants to grow from a total population of 4.5 million to 7 million by 2030. Obviously, they aren't planning to achieve that by just having more babies. Instead, the country has thrown itself open to the world. Professionals can obtain a work visa in as little as two days. Given its population, India may not look at a similar remedy. In that case it needs to take serious measures to increase its talent pool.

What can companies here do?

Over half the population of educated women do not work outside the home in India. Now, this may be cultural, but there are definitely ways to work around that.

In most European countries, this was the norm two generations ago. But companies worked around it and today almost all educated women in these countries work. Indian companies need to facilitate this change. This would mean looking away from the nine-to-five system of work hours, this would mean setting up a day-care facility for employees' children in your company.

Some companies may need to look at setting up infrastructure to provide employees with work-from-home options. While these may seem to be extraordinary initiatives, the results they bring are also extraordinary: once women take to working, the talent pool will nearly double.

Look also at the serious commitment with which China has overhauled the level of education imparted in its universities. India must emulate that.

What are the challenes ahead for HR managers?

Going forward, the supply-demand situation is only likely to worsen. So companies need more detailed strategies. They will have to look seriously at employees from every age group, study their preferences and choices and then build their policies around these findings. It is a lot like marketing.

Companies need to research the psyche and understand what excites the employees they need most. After that, they need to tweak their work culture accordingly.

It doesn't stop there. They also need to advertise and brand themselves around these propositions. We will see many more companies advertising and carrying our employer branding.

Companies that are doing this at the moment have already figured out what turns on their employee target group. This trend will only increase.

In other words, not only will companies have to market their products, they will also have to market the job of making the products.